Acacia Mining shares surge as Barrick strikes deal with Tanzania
Shares in beleaguered gold miner Acacia surged as much as 30pc after its majority owner Barrick revealed it had struck a tentative deal to resolve a bitter dispute with the Tanzanian government.
The stock jumped to 255.50p after Canadian mining group Barrick - which owns 64pc of Acacia - unveiled a breakthrough in talks.
However it pared back some of the gains to close at 212p amid some confusion about the details of the agreement. Barrick said after the market had closed that Acacia would form a new joint venture with the Tanazanian government to operate its three mines in the county. The government will take a 16pc free carry stake in the operations to draw a greater share of the "economic benefits" from the mines.
Barrick said its executive chairman John L Thornton had signed the agreement with John Magufuli, the Tanzanian president, in Dar-es-Saleem today.
A working group has also been formed to resolve “outstanding tax claims” against Acacia, which will make a one-off payment of $300m (£228m) as a gesture of goodwill.
Mr Thornton said: “A partnership requires trust between the parties, and transparency is the currency of trust. Through our discussions over the last three months we have established both and this will form the basis of our relationship in the future.”
Acacia’s share price collapsed in March after the government banned it from exporting powdered gold concentrate, which amounts to around 30pc of its output.
Barrick said the two parties would continue to work towards resolving the export ban.
The government had accused Acacia of under-reporting the amount of gold it was exporting and claimed it was owed back taxes up to $190bn.
Acacia, which presents its third-quarter results on Friday, had been on the verge of closing one of its mines to stem its losses. It is entirely dependent on its operations in Tanzania for its cashflow, and has consistently denied avoiding tax.
However, in an interview with the Telegraph earlier this year before the export ban hit, Acacia boss Brad Gordon admitted that the company had struck rather generous tax deals when it began operating in the country 15 years ago. He said Acacia was voluntarily overpaying to make up the difference and that such tax deals, which can incentivise miners to invest in a new country, can “come back and bite us”.
Acacia’s management has sat out the negotiations with Tanzania over the last three months as it is understood the president preferred to speak to the parent company. Acacia appeared to be taken by surprise by Barrick’s announcement, telling investors it was “seeking further clarification” on the deal, which must go to Acacia shareholders for approval.
This article was on The Daily Telegraph's website, for some reason the link won't post over
