Equipment problems have taken the shine of Acacia Mining (ACA) whose shares fall 6% to 470.15p on news of operational issues at its Bulyanhulu mine in Tanzania. It hasn’t been able to run a processing plan efficiently since undertaking routine maintenance.

The ball mill trunnion bearing keeps overheating, so the plant cannot run consistently. It shouldn’t affect production near-term as Acacia can dip into a stockpile of material already mined. However, it raises the risk that full year production guidance may have to be downgraded if it cannot quickly find the root of the equipment problem.

Acacia is keeping its full year guidance for the mine unchanged at the moment while it undertakes an investigation of the equipment.

Acacia Mining  ACA    Summary   Shares Magazine

The gold miner has been the second best performer in the FTSE 350 this year, rising 178% thanks to an improved gold price and enjoying the benefits of a lengthy initiative to improve operational efficiency across the business.

The top performer year to date is silver and gold producer Hochschild Mining (HOC) which has risen by 429% in value, according to SharePad data.

Stockbroker Panmure Gordon has switched from ‘buy’ to ‘hold’ on Acacia, saying the share price needs positive newsflow to keep enjoying its upwards trajectory.

‘We appreciate Acacia has significantly outperformed its peers on optimism that long-anticipated cost reductions are being delivered. However, we believe that the shares have run away with deliverable valuations,’ says analyst Kieron Hodgson.

Panmure has a 400p price target for Acacia.

Issue Date: 16 Sep 2016