Acacia Mining Discredit Tanzanian Committee Findings on Export of Gold and Copper Concentrates

Acacia Tanzania Committee findings mineral export of gold and copper

Tanzanian gold producer Acacia Mining (LSE:ACA) issued an update with respect to the findings of the Presidential Committee’s investigation into the export of gold and copper concentrates, which were presented to the President of Tanzania H.E. Dr. John Magufuli on 24th May 2017.

Although Acacia has not yet received a copy of the full report, it has analyzed the summary findings published and made a number of observations that discredit the findings.

In particular, the company explains that its own verified data shows that the 277 containers of mineral sand at Dar Es Salaam port, which have been the object of the investigation, contain 26,000 ounces of gold in total.

Each of these containers contain on average around 3 kg (around 100 ounces) of gold, 3 kg of silver and 3,000 kg of copper.

The Committee’s findings, however, were that the gold content of these containers, which represent one month’s production, totaled 7.8 tons (or 250,000 ounces).

The company reminds in its update that in 2016 it produced and sold 250,000 ounces of gold in concentrate from these two mines in the whole of the year.

However, the Committee’s findings imply that Bulyanhulu and Buzwagi each produce more than 1.5 million ounces of gold per year, Acacia explains.

This would mean they are the two largest gold producers in the world; that Acacia is the world’s third largest gold producer; and that Acacia produces more gold from just three mines than companies like AngloGold Ashanti produce from 19 mines, Goldcorp from 11 mines, and Kinross from their 9 mines, Acacia concludes.

The company also stresses that its declarations of gold production and sales revenues exactly match the gold and silver ounces and copper tons that the company produces, sells and declares.

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“Acacia’s production and financial statements and figures are all fully audited, and demonstrate that Acacia does not benefit from the extra gold (10 times more gold) that the Committee’s findings imply Acacia has not declared […]Our exporting of the concentrate takes place in full compliance with Tanzanian law and the legal agreements that we have with the Tanzanian Government,” the update reads.

Acacia indicates that it will make further detailed observations once it receives the Committee’s full report.

Tanzania Mineral Concentrates Exports Investigation
Tanzania issued a ban on the export of mineral concentrates and ores for metallic minerals such as gold, copper, nickel and silver, with effect from 2nd March 2017, and established two special committees to examine the extent, types and values of minerals contained in mineral sand in containers for export in various locations in the country.

The ban heavily affected Acacia Mining, who reported a reduction in sales of almost 35,000 ounces lower than production in its results for Q1 2017, because of the ban, the company explains.

Following the presentation of the results of the investigation, on the same day, President Magufuli revoked the appointment of the Minister of Energy and Mines Prof. Sospeter Muhongo, with immediate effect.

The president also dissolved the board of directors of the Tanzania Minerals Audit Agency (TMAA), the government’s body responsible for monitoring and auditing of mining operations, and suspended its Chief Executive Officer.