JOHANNESBURG (miningweekly.com) – LSE-listed Acacia Mining has bought put options covering 210 000 oz of gold at a strike price of $1 300/oz as it continues implementing ongoing cash outflow mitigation measures.
The group on Wednesday announced that the $3.2-million option provided a minimum price for the majority of the group’s expected doré production for the next six months above the budgeted gold price of $1 200/oz, along with full upside exposure should the gold price continue to trade above $1 300/oz.
The options will expire in equal instalments of 35 000 oz a month over the period.
This followed the reduction of operational activity at its Bulyanhulu mine, in Tanzania, earlier this week, owing to the pressures of unsustainable cash outflows at the mine owing to the ongoing concentrate ban, which was imposed on March 3.
At the time, Acacia had highlighted the negative impact of Tanzania’s gold and copper concentrate export ban, resulting in a concentrate inventory build-up of about $265-million and a negative cash flow of around $15-million a month.
Over the next three months, Acacia will focus on moving the mine to a reduced operational state, undertaking consultations with its stakeholders and ceasing underground activity, with the processing of underground ore to be halted within the next four weeks.
Despite several mitigating interventions, the loss of revenue, together with an outflow of $65-million in indirect taxes and costs from other changes to the operating environment, has led to a significant cash outflow of about $210-million in the 2017 year-to-date.