Barrick Gold bids for remaining stake in Acacia Mining to alleviate ongoing dispute with Tanzanian Government

Barrick Gold Acacia Tanzania bid remaining stake mining
Barrick Gold has proposed an exchange of 0.153 Barrick shares for each ordinary Acacia Mining share.

After months of negotiations with Government of Tanzania, Barrick Gold and Acacia Mining may be on the cusp of a resolution, which involves Barrick proposing to acquire the remaining shares in UK-headquartered and Tanzanian gold miner Acacia.

Barrick Gold already owns a 63.9% stake in UK-headquartered Acacia and has proposed a share for share exchange of 0.153 Barrick shares for each ordinary Acacia share.

According to Barrick, the offer values Acacia at US$787 million and provides total consideration to Acacia’s minority shareholders of US$285 million.

Acacia has been tangled up in an ongoing dispute with the Government of Tanzania for two years, and during the last few months, Barrick has been in negotiations with the governing body.

In a statement earlier this week, Barrick noted it had negotiated with the government a means to resuming full operations and rebuilding relations.

However, the Government of Tanzania has stated it is not prepared to enter into a settlement with Acacia, but a basis for a settlement with Barrick had been developed.

The government said it will only sign an agreement with Barrick if it is “satisfied that substantial changes have been made to the management style of the operating companies and of their shareholders”.

Acacia Mining

Acacia owns the North Mara, Bulyanhulu and the Buzwagi gold mines in Tanzania’s north-west.

The company also holds 3,500 square kilometres of exploration licences across Tanzania, Kenya, Burkina Faso and Mali.

During 2018, produced 521,980 ounces of gold across its mines.

Acacia has been embroiled in a struggle with the Tanzanian government over tax evasion accusations, which Acacia denies.

Included in the accusation was a US$190 billion tax bill, which has since been pared back to $300 billion.

Then, in October last year, the Tanzanian Government brought criminal charges against Acacia’s operating subsidiaries, three Acacia employees and one former employee.

Each of the entities and employees have denied the allegations and are defending all charges.

According to Acacia, the allegations appear to relate to historic structuring and financing of its Tanzanian subsidiaries and include charges on tax evasion by under-declaring exports, conspirator, forgery, money laundering and corruption.

Is a resolution on the cards?

Acacia informed its shareholders it would be taking steps to clarify the Government of Tanzania’s position on an agreement.

The company also told its shareholders to “take no action” regarding Barrick’s bid until it had gauged a clear picture of the situation and what had occurred in the talks between Barrick and the Tanzanian Government.

Acacia noted it had made its official announcement “without the consent or approval of Barrick”.

The company also stated Barrick had until 18 June 2019 to either make its offer binding or walk away from the proposal.

Prior to a definite decision, Barrick will carry out due diligence on Acacia’s assets.

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