Gold mining business Acacia Mining Plc (LSE:ACA, DSE:ACA) has recently announced that even though the gold spot price reached a five year low this year, the company will achieve in 2015 the same target production of 718,651 ounces in 2014.
The announcement was done by Acacia’s CEO Bradley Gordon in an interview with Bloomberg, where he explained that a low gold price lasting for longer time will make high-cost producers to shutter mines, then cut production and eventually help the gold sector to consolidate.
The gold spot price at a current level of USD 1,175.64 per ounce in London, needs to rise at least USD 200 more to get investors back to the sector and raise output, Gordon added.
Acacia intends to bring back on track its Bulyanhulu mine which was a referent in the mining sector but due to operational issues, saw its production cut in the recent quarters, explained Gordon.
Bulyanhulu is an underground mine located in Shinyanga city, Tanzania’s northwest region which started production in 2011 and has since produced over 3 million ounces of gold.
Bulyanhulu has a life of mine over the 30 years based on its proven gold reserves of 9.5 million ounces.
In the recent years it has seen its production cut from 236,183 ounces mined in 2012 to 222,381 ounces in 2014 which yielded to rise in the cash cost from USD 803 per ounce to USD 812 per ounce in the same period.
According to Bloomberg, Acacia is seeking to expand production and cut costs across its mines in Tanzania where additionally to Bulyahulu, it operates Buzwagi and North Mara which are expected to reach production at last year levels even though the company produced in Q3-2015 163,388 below the 200,000 expected.