22 April 2017

Tanzania: Fresh Blow for Acacia On Share Listing

Photo: The Citizen
Acacia mining (file photo).

Dar es Salaam — Troubled Acacia Mining Company is facing a new hurdle, with reports indicating that the mining giant is required to offload 30 per cent shareholding in its three main mines in Tanzania by the end of August.

Authorities have told the cross-listed multinational company that it will have to split the shares into three mandatory portions for listing at the Dar es Salaam Stock Exchange (DSE).

Acacia contends that the deadline has been brought forward from October 2018 and says its management was engaging the government on the challenges this move may create in the short term.

Acacia operations have been disrupted following President John Magufuli's ban on its exports of copper concentrates for processing outside the country until an investigation to establish the exact mineral content in the cargo is completed.

The August listing deadline will thus likely complicate matters for Acacia which has lamented about the unpredictability of its trade environment and relations.

The Commissioner for Minerals, Mr Ally Samaje, yesterday told The Citizen that the company was required by law to offload 30 per cent stake in the three mining companies it operates in the country.

"It must be noted that although Acacia has cross-listed shares in the DSE, it must sell 30 per cent of its own mining companies. Each mining company possessing the Special Mining Licence must list shares at DSE come end of August," Mr Samaje said when asked to clarify on the matter.

According to him, the government has already communicated on the issue with all mining companies that possess the Special Mining Licence.

Later yesterday in the evening, President Magufuli dropped Mr Samaje and replaced him with Mr Benjamin Mchwampaka. No reason was given in the announcement through a press release from the State House.

Listing at the DSE was a deliberate government decision to empower its citizens economically through the DSE activities. Both mining and mobile companies are expected to float at least 25 per cent of shares at the DSE.

In February this year the government set a deadline of six months for the companies to go public following Parliament's amendment of the Financial Act of 2016. Acacia operates North Mara, Buzwagi and Bulyanhulu gold mines. The company early in the year gave notice that it will close Buzwagi by the turn of this year. When sought for comments yesterday, Acacia vice president Deo Mwanyika confirmed they were in talks with the government over the listing demand as well as the export ban on the copper concentrate. He admitted the firm has been thrown into business uncertainty over the twin issues.

Acacia shares have slumped since revealing it had made a revenue loss of $60 million over the copper concentrate export ban imposed in March. Acacia, however, stopped the exports late last year. Earnings from gold, copper and silver processed from the concentrates earn nearly 50 per cent of the company's revenues in its Tanzania operations. The stock is down 20 per cent since news of the ban broke, according to Acasia CEO Brad Gordon.

Currently Acacia is 64 per cent owned by Canadian mining group Barrick, with the rest held by international investors.

Acacia is continuing to stockpile concentrate while it negotiates the resumption of exports, with boss Gordon flying back to Tanzania at short notice to speak to officials. "If we didn't see a route to resolve the issue, we wouldn't keep stockpiling," Acacia head of corporate development and Investor Relations, Mr Henry Wray, was quoted saying.

He insisted the company had enough cash on the books to absorb the extra cost but added that operations were under "daily review".

Acacia's North Mara mine, which produces semi-pure bars but no concentrate, is unaffected by the ban.

Tanzania is the fourth largest gold producer in Africa after South Africa, Ghana, and Mali.

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