Barrick’s Acacia Faces Further Setback as Tanzania Deal Delayed

JOHANNESBURG (Capital Markets in Africa) – Gold producer Acacia Mining Plc slumped in London trading after majority shareholder Barrick Gold Corp. withdrew a timetable for resolving a dispute with Tanzania’s government.

Barrick had previously said it would provide Acacia with a detailed proposal by the end of June, after taking control of negotiations aimed at settling a number of issues, including lifting Tanzania’s ban on the export of mineral concentrates. Nine months since announcing a preliminary deal, the Toronto-based miner — which owns 63.9 percent of Acacia — said those talks are making progress.

“In order to allow the process to continue in an orderly manner and without an arbitrary deadline, Barrick is not providing a timetable for the completion of the discussions at this time,” the company said late on Sunday.

Relations between the government and Acacia soured after Tanzania banned the export of concentrates and slapped the miner with a $190 billion tax bill. The company has been forced to stockpile output and curb operations at one of its three mines in the country as revenue and cash reserves shrink.

Acacia fell as much as 10 percent, and was down 7.1 percent as of 10:26 a.m. in London. The stock is down nearly 80 percent since Tanzania introduced the export ban in March 2017.

The latest news from Barrick did little to quell investor concerns.

“Not really an update at all and one that must be frustrating for Acacia,”Hunter Hillcoat, an analyst at Investec Plc, said in a note. Acacia “is not part of the discussions and remains left in limbo.”

Any proposal agreed by Barrick with the government would need to be approved by an independent committee of Acacia’s directors.

Tanzania will provide an update on the talks with Barrick on Wednesday, Commissioner for Minerals Shukrani Manya said by phone on Monday from the capital, Dodoma.

Tanzania has been overhauling its mining regulations in an effort to reap greater economic benefits. Acacia has been hit hard by the changes and said it would consider selling a stake in some, or all, of its gold mines in Tanzania.

Source: Bloomberg Business News