Acacia scales back after stand-off with Tanzania

Troubled gold firm Acacia Mining is to scale down operations at one of its mines as its stand-off with the Tanzanian government drags on.

The FTSE 250 firm has been leaking cash since Tanzania decided to crack down on foreign operators, including banning exports of gold concentrates.

Today, Acacia said it would halt underground mining at its Bulyanhulu mine and stop processing underground ore within four weeks “in order to preserve the viability of our business over the longer term”.

It said the shake-up in Tanzania had caused negative cash outflows of $15 million (£11.6 million) a month at the mine, but it hopes the changes will help it to return to positive cashflow in 2018.

Acacia said the changes will mean a “significant reduction” in staff at the mine, where there are 1200 employees and 800 contractors.

The firm also downgraded guidance for annual gold production, which it said will be 100,000 ounces below the bottom end of its range of 850,000-900,000 ounces.

Acacia was spun out of Canada’s Barrick Gold, which retains a 64% stake and is engaged in talks with the Tanzanian government, which has slapped it with an improbable $190 billion tax bill. Acacia said the discussions were ongoing.

Shares fell 13.9p, or 7%, to 193.2p.