Tanzania gives tough condition to mining giant Barrick
NEGOTIATIONS between the government and Barrick Gold Corporation (BGC) are almost complete, it has been revealed.According to the government spokesperson and Director General of Tanzania Information Services-Maelezo-Dr Hassan Abbas all agreements are in place awaiting execution. "Only one bone-Acacia- remains un-chewed.
The government has demanded that under no circumstances can Acacia be part to the agreements or have any role in the operation or management of the Barrick mining subsidiaries in Tanzania," said Dr Abbas.
In a statement he issued in Dar es Salaam yesterday, the spokesman stated that the government had acknowledged that although BGC is the majority shareholder in Acacia, which has never had any legal presence in Tanzania.
"For years, Acacia had been managing Barrick mining subsidiaries but it was operating as a rogue company that was disdainful of the Tanzanian authorities and laws of the land.
Acacia management never respected the undertakings in the Mining Development Agreements (MDAs), which provided the legal framework for the subsidiaries' operations," the statement said.
It further noted that Acacia resisted regulatory requirements for handling contracted foreign loans; concealed information, particularly in the operation of offshore accounts; undermined the country's tax laws through massive abuses of the tax havens; and persistently refused to comply with environmental laws.
"Acacia management is loathed for its high handedness in dealing with the communities they displaced in the mining areas. As a new era is dawning in the Tanzanian gold mining relations, the government does not want the presence of Acacia in any form in the country.
It has made it clear to BGC that if its gold mining subsidiaries are to continue operating in Tanzania, they must be under new operating company in which the government has a stake.
The ball is now on Barrick's court...solve Acacia or no deal," stated Dr Abbas. Following the government's firm stand, BGC has offered to buy the remaining 35 per cent of Acacia Mining, it does not already own through an allstock offer pitched at a discount to the prevailing share price.
Barrick said yesterday that it had made an indicative offer because it was clear that the Tanzanian government was not prepared to deal directly with Acacia to settle a long-running row over outstanding tax claims.
"As a consequence of the negotiations with the government of Tanzania, Barrick has had the opportunity to undertake detailed due diligence on Acacia assets and on the basis of this work has concluded that the proposal on the terms set out reflects the fair value of the company," the mining giant said in the statement.
Acacia Mining, the largest gold producer in Tanzania, with three major mines-Bulyanhulu, Buzwagi and North Mara, is locked in a long-running dispute with the government over tax evasion, breach of environmental regulations, money laundering, corruption and other issues.
"Since the proposal is in Barrick shares, the Acacia minority shareholders will be able to benefit from any future potential upside in both Acacia assets and Barrick's broader portfolio of assets," Barrick said in the statement. Barrick, one of the world's biggest gold producers, is offering 0.1533 of its shares for every Acacia share.
The proposal values London-listed Acacia at 787 million US dollars and minority shareholders are being offered roughly 147p share, against a closing price on Tuesday of 159p.
Shares in Acacia were recently trading five per cent lower at 151.2p. Acacia is reported to have received the indicative proposal from Barrick to acquire all the issued and to be issued share capital of the company not already owned or controlled by Barrick.
Barrick Gold Corp.'s Chief Executive Officer Mark Bristow said earlier this month that the company may have to end stalled talks with Tanzania over the fate of its subsidiary Acacia Mining Plc.
Mr Bristow became Barrick Chief Executive Officer in January and the following month the Toronto-based miner said it had reached a settlement proposal with the government.
He took the helm at Barrick after the miner merged with his company Randgold Resources Ltd at the start of this year, rekindling hope of a resolution.