Acacia warns weaker shilling may hit earnings

ACACIA gold mining company has warned that a weaker shilling could hit its second quarter earnings by reducing the US dollar value of the taxes it is owed.

The mining company, listed on the London Stock Exchange and the Dar es Salaam Stock Exchange under the ticker ACA said if the current weakness of the Tanzanian shilling against the US dollar prevailed until June 30, it would impact the end-of quarter revaluation of Tanzanian shilling-denominated indirect tax balances owed to Tanzania.

“Any accounting loss from the revaluation... may therefore impact earnings, although it has no corresponding impact on cash flow for the period,” the company said in a statement yesterday.

The outstanding Tanzanian shilling-denominated tax balance owed to the company was worth approximately $124 million at the beginning of the second quarter.

Since then the shilling has weakened against the US dollar and the tax balance has to be converted into dollars for reporting purposes. Acacia said also it expected a small reduction in its cost base due to the weaker shilling.

About 15-20 per cent of the company’s costs are denominated in shillings while the bulk of gold sales are in US dollar or dollar equivalents. Acacia will report its halfyear results on July 27.
Source: Daily News, reported from Dar es Salaam, Tanzania
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