The open pit North Mara mine, which is based in Tanzania, has a chequered past, with villagers illegally entering the site to scour tailings that may contain small quantities of gold, and some have been killed or injured by mine security guards and police.
“The North Mara decision to go underground … minimises our impact on the community, reduces the opportunity for illegal miners to enter that operation, and reduces our footprint with respect to needing land to dump waste,” chief executive Brad Gordon told Reuters on Thursday.
Acacia, formerly African Barrick Gold Plc, has been cutting mining costs, reducing its workforce and increasing output to counter the sharp drop in gold prices that has forced many gold and silver miners to shelve projects.
The company, unveiling its long-term strategy at an investor meeting in London, said the underground expansion was expected to produce 450,000 ounces of gold over a five-year mine life at an all-in sustaining cost (AISC) of under 750 dollars per ounce.
Acacia’s AISC, which includes production and exploration expenses, was 961 dollars per ounce sold from the North Mara mine in the nine months to 30 September.
Gordon said Acacia expected the underground operation to produce about 50,000 ounces next year and about 100,000 ounces per year over the following four years.
Acacia said it expected group production of more than 750,000 ounces next year and more than 800,000 the year after, before easing off.
The average AISC would be about 900 dollars per ounce for the next five years, Acacia said. The company said in October it expected full-year costs of about 1,100 dollars per ounce sold.
“Drop in costs is a big positive and may compensate for a slightly weaker longer-term production profile than we had been expecting,” Canaccord Genuity analysts wrote in a note.
The miner, which assumed its new name on Thursday, also said it had signed an exploration joint venture with Canada’s Sarama Resources Ltd to work on the South Hounde Project in Burkina Faso.
Apart from North Mara, Acacia has two other producing mines in northwest Tanzania – Bulyanhulu and Buzwagi. It also has exploration projects in Tanzania, Kenya and Burkina Faso.
Acacia’s shares were down about one per cent at 233 pence at 1225 GMT on the London Stock Exchange.