Gold miner Acacia buys put options at $1,300 per ounce

* Acacia share price rallies after deep fall this year

* Analysts say option prudent given Tanzanian dispute

* Gold price climbs on North Korea tensions, dollar weakness (Adds detail on gold, context on hedging)

Acacia Mining, which is scaling back operations to cut losses and settle a dispute with the Tanzanian government, has spent $3.2 million on options to sell 210,000 ounces of its gold output at $1,300 per ounce.

Shares in Acacia, majority-owned by Barrick Gold, have lost almost half their value since the start of the year, after Tanzania banned concentrate exports at the start of March and then, in July, demanded $190 million in unpaid taxes.

By 1218 GMT, Acacia shares were up 1.9 percent on the day at 192 pence.

Gold was trading around $1,340, close to a one-year high due to tensions over North Korea's missile tests and a weaker dollar. The price has risen from around $1,200 in July.

To contain losses, Acacia said on Monday it was reducing operations at its flagship Tanzanian gold mine.

On Wednesday, the firm said it had bought options giving it the right to sell the group’s expected doré bar output for the next six months above its budgeted gold price of $1,200 per ounce. Doré bars are rough gold, an alloy of gold and silver.

An option to sell at a certain price is known as a "put", while an option to buy at a certain price is known a "call".

Miners have become wary of hedging, which allows them to lock in the price of their output, since Barrick and other major miners racked up losses unwinding options that prevented them gaining from the 12-year rally that took gold prices to record highs in 2011 just shy of $2,000 per ounce.

Analysts at Investec bank said in a note the $3.2 million spent on the put options was "a prudent strategy, particularly given the ongoing decline in the company’s cash position".

Acacia said its options also allowed it to benefit from a rise in the gold price above $1,300 ounces.

(Reporting by Rahul B in Bengaluru and Barbara Lewis and Jan Harvey in London; Editing by Jason Neely and Edmund Blair)