For the last two years, Acacia’s fortunes have been hard hit by President John Magufuli’s government ban on further exports of mineral concentrates from its three gold mining operations in the country pending payment of a $190 billion tax bill. Since then Acacia’s own shares have been on a free fall with no sign of recovery.
Efforts to end the impasse have borne little fruit and Acacia now wants a truce with the Tanzania government.
“Acacia’s desire is to engage the government of Tanzania and continue to seek a direct negotiated resolution of the dispute. We still seek to continue demonstrating our long-term commitment to Tanzania, our people, and the mining industry going forward,” the company said in a statement last week.
Acacia’s latest statement is in response to an offer by Canadian-based majority shareholder Barrick Gold Corp to buy the company’s assets, including the three goldmines it operates in Tanzania.
Barrick Gold, which owns 64 per cent of Acacia Mining, has tabled a proposal to acquire the remaining 36 per cent stake at 0.153 Barrick shares for each Acacia ordinary share.
Barrick, which has extended its discussion deadline on the offer to July 9, said recently that its reduced share price offer “reflects the fair value of Acacia” in its current state, based on a “detailed due diligence on all its assets.”
In 2017, Barrick moved to intervene the dispute and opened the negotiations with Dar es Salaam. The negotiations between Barrick and the Tanzanian government, from which Acacia was excluded, led to the signing of an agreement that included a $300 million one-off payment to settle outstanding tax claims and an equal 50-50 share-out of all future economic benefits from the three mining operations between Acacia and the government.
But Acacia has now distanced itself from Barrick and according to a statement it released on June 24, the London Stock Exchange-listed firm says it remains deeply distrustful of Barrick’s ultimate motive in the deal.
Acacia says Barrick’s intervention has proved more damaging for its material operations in the country.
“Acacia did not invite Barrick into our negotiations with Tanzania; we had our own engagements with the highest levels of the government at the time and had no reason to believe that these engagements would not continue,” the company said. “With the length of time Barrick’s negotiations with the government have taken, and the way they have been managed, they have had the effect of undermining Acacia in Tanzania.
However, Acacia’s protest may be too little too late. The Tanzanian government recently announced its intention to “cut all ties” with Acacia Mining and instead work with only Barrick on the implementation aspects of the 2017 deal.
“The government insists that under no circumstances can Acacia be a party to the agreement, or have any role in the operation or management of the Barrick mining subsidiaries in Tanzania,” government spokesperson Dr Hassan Abbasi said.