Acacia gold output boost drives shares higher again

(Adds CEO interview, context)

* Cash costs so low gold price almost irrelevant

* Considers secondary North American listing longer term

By Mamidipudi Soumithri and Barbara Lewis

BENGALURU/LONDON, Oct (HKSE: 3366-OL.HK - news) 21 (Reuters) - Gold (Other OTC: GDCWF - news) mining company Acacia Mining (Frankfurt: 33A.F - news) expects output this year to be about 5 percent above the top of its earlier forecast, it said on Friday, driving its shares more than 10 percent higher.

Since the start of the year, shares in Acacia have gained nearly 200 percent as the mining sector attracted investors seeking better yields in an ultra-low interest rate environment.

Gold miners have performed particularly well as gold has risen strongly following Britain's vote to leave the European Union in June.

At its post-Brexit high, the precious metal was up more than 30 percent for the year at its highest since 2014 and is still nearly a fifth higher since the start of 2016.

Investors have favoured gold since Brexit as it is seen as a safe-haven in times of uncertainty and is also a hedge against a weaker pound, boosting gold mining firms as their revenue is in U.S. dollars.

Acacia Mining said it would produce 5 percent more gold this year from the three mines it operates in Tanzania than a previous forecast of 750,000 ounces to 780,000 ounces.

The company's core profits rose to $124.8 million for the third quarter ending Sept. 30, more than five times its earnings a year earlier.

Acacia shares rose 14 percent in early trade and were 11 percent higher at 521 pence by 0939 GMT on the London Stock Exchange, making them the largest gainers on the FTSE midcap index

"This was a much stronger performance than anticipated, and Q4 could be stronger than expected too," Canaccord Genuity (Frankfurt: A0B6V4 - news) analysts said in a note.

Chief Executive Brad Gordon told Reuters the company, which has a policy of giving 15 to 30 percent of free cash flow back to shareholders, would prioritise dividend payments as the first call on cash.

Thereafter, he said there were investment opportunities in Bulyanhulu and North Mara in Tanzania and Kenya could be a new focus since Acacia bought out its partner Lonmin (LSE: LMI.L - news) from a joint venture in the east African country.

It said production problems at Bulyanhulu were offset by higher output at other mines, pushing costs down to $998 per ounce, 16 percent lower than the same time a year ago.

Gordon said the company could make money almost regardless of any gold rally, given that costs had dropped from about $1,800 an ounce in 2012.

Ideally, Gordon said, the tighter market conditions associated with last year's commodity crash could have lasted longer to remove some of the competition.

He still expects merger and acquisition activity and Barrick Gold Corp, the world's largest gold producer, is weighing a sale of its majority stake in Acacia.

Gordon said he had no news on "how and when" that would occur. It has prompted speculation Acacia might list in North America and Gordon said that could eventually happen independent of Barrick's potential divestment.

"A North American listing is something we could consider in the longer term," he said. "But London would remain the primary listing." (Editing by David Clarke)