8 November 2017

Tanzania: Acacia Gets More Time to Pay 53bn/

THE High Court has granted another month to Acacia Mining Limited's Subsidiary Company, North Mara Gold Mine Limited, to settle with five village councils from Mara Region the pending dispute involving royalty outstanding balance payments amounting to 53bn/-.

District Registrar of the High Court at Mwanza Registry, Eugine Rujwahuka, adjourned the case, which came for mention here yesterday on behalf of Presiding Hon. Judge Sirilius Matupa to December 13, 2017 pending further negotiations by the parties to the dispute.

The negotiations in an attempt to settle the dispute amicably out of court, commenced in July this year, but there was no positive agreement that has been so far reached. It is alleged that Acacia officials have been a little bit slow to conclude the deal on a number of reasons.

Among the reasons include some of the officials being engaged in other negotiations with the government team formed by President John Magufuli on the dispute on exports ban of gold and copper concentrates produced by two of Acacia's three mines in the country.

Recently, Barrick Gold Corp, the majority shareholders of Acacia Mining reached an agreement with the government, where the company agreed to cede 16 per cent of Acacia's three mines in Tanzania and make a 300 million US dollars payment to the government as a gesture of good faith.

Another reason assigned behind the delay of settling the royalty outstanding balance payments with the five village councils is the recent resignation of Acacia's top officials, Brad Gordon, who is the Chief Executive Officer, and Andrew Wray, the Chief Financial Officer.

However, the leader of the village councils, Mr. Getende Sagirai, who is also the Chairman of Nyamwaga Village in Tarime district, Mara region, has called for such negotiations to be speeded up to ensure justice is done to all parties, considering the fact that the dispute has been pending for so long.

In the dispute, the village councils, who are represented by Advocates Juvenali Motete and Joseph Rutabingwa, are Nyamwanga Village Council, Kerende Village Council, Kewanja Village Council, Nyangoto Village Council and Genkuru Village Council, all located within Tarime district in Mara region.

They are jointly and severally claiming from North Mara Gold Mine Limited, formerly East Africa Gold Mines Limited, as defendant, for payment of 26,786,250.30 US dollars due from July 2002 to December 2011, plus interest at commercial bank rate of 21 per cent from January 2012 to the date of judgment.

It is alleged that between August 24 and September 8, 1995, the villages and East Africa Gold Mines Limited separately entered into agreements, whereby the village councils, as plaintiffs in the matter, surrendered various mineral prospecting licences to the defendant.

In return, among the benefits and consideration, the defendant undertook to pay a royalty equal to the value of one per cent of all gold produced calculated at London spot price at the governing rate of US dollars.

As per the agreements, the said payments were to be effected by the plaintiffs quarterly in cash calculated on the last day of a respective quarter. Following the actual commencement of mining and production of gold from 2002 to December 2011, the actual gold produced was 2,114,701 ounces.

It is stated that such production was in relation to the findings by the appointed agent M/S KPMG Certified Public Accountants. As per the computation, the royalty share out of the entire gold pro duced was 21,147.02 ounces.

"When calculated at the spot price of 1,290 US dollars per ounce (at the time), the actual amount due to the plaintiff as one per cent royalty, is 27,279,655.80 US dollars," reads part of the plaint.

During the entire period, the defendant paid to the plaintiffs a sum of 493,405.50 US dollars only, leaving a balance of 26,786,250.30 US dollars, which they (plaintiffs) are claiming jointly and severally from the defendants.

In the written statement of defence, the defendant has vehemently disputed the plaintiffs' claims that they are frivolous because the company has been using the said royalty to pay school fees for children hailing from the villages surrounding the mine, and the plaintiffs were pretending to be ignorant of such fact.

The defendant further stated that it was due to such frivolous claims that the company agreed to have a full financial audit into the claims, but the same was in conclusive due to lack of sufficient records caused by various change from the predecessor companies as well as lack of honesty from village leaders.

It is alleged in the defence document that the company operates three major pits which are Gokona, Nyabirama and Nyabigena, and it was agreed that the calculation would base on the gold produced and sold from Nyabigena pit only and not all the three pits as alleged by the plaintiffs.

According to the defendant, available data indicates that production from the Nyabigena pit commenced in 2003 and ceased in 2010. Production report indicates that the total amount of gold produced was 685,382 ounces, while gold sold was 318,027 ounces.

It is alleged further that despite having stopped production in the Nyabigena pit and upon request from the then village leaders, the company granted a further advance payment to the villages amounting to 493,405.25 US dollars.


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