Acacia Mining seeks answers after Barrick U-turn
Acacia Mining has been left wanting more answers after parent company Barrick Gold announced “constructive” discussions with the Tanzanian government had led to the removal of the “arbitrary deadline” for a framework agreement.
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Canada's Barrick, which owns 63.9% of Acacia after spinning out its Tanzanian gold assets in a separate London-listed listed company in 2010, had been working with President John Magufuli's government to draft a definitive agreement for the implementation of the proposed framework agreed last October between Barrick and Tanzania.
Barrick had previously said that it would provide a detailed proposal by mid-2018.
A year ago, Barrick agreed to compensate the government of Tanzania to try and resolve a dispute that saw what was then a FTSE 250-listed mining group accused of under-declaring its gold shipments and "mining illegally" and by October had agreed to share the "economic benefits generated by Acacia’s operations" with Tanzania "on a 50/50 basis going forward", with Barrick agreeing Acaica would make a payment of $300m to settle a claim for back tax.
But Barrick on Sunday said it would not providing a timetable for the completion of its discussions with the Tanzania government "in order to allow the process to continue in an orderly manner and without an arbitrary deadline".
Barrick added that "if it is able to conclude discussions satisfactorily" a proposal will be provided to Acacia's independent committee for consideration.
Acacia, which has not been directly involved in those discussions to date, said it "will continue to engage with Barrick to seek to understand Barrick’s expectations for the future conduct and a timetable for the completion of its discussions".
With the Acacia team appearing to be locked out of the negotiations, analyst Simon Gardner-Bond at Peel Hunt said Acacia also has no real sense of the timeline for these discussions, so it still cannot update investors on when the independent directors can review said agreement, let alone investors.
"So investors still can't really gauge what the outcome for Acacia will end up being and hence whether the shares present an opportunity or not. Investors also can't start gauging how consistent the Tanzanian government will be in sticking to its side of the deal and therefore what discount to its peers may be appropriate.".