Barrick Gold Dangles  $787-million ‘Carrot’ to Buy Back Shares in Distrusted Tanzania Subsidiary; ACACIA Shares Value Drop in London.

Acacia Mining shares drop in value at London Stock Exchange on prospect of a Barrick Gold takeover…shares at 0753 GMT  on Wednesday, May 22, 2019 traded down 4.6% at 152.10 pence, valuing the company at 623.7 million pounds ($793.1 million).

Barrick CEO Mark Bristow




The Canadian gold mining multinational, Barrick Gold, has offered  around $787 million to shareholders in its Tanzania-focused subsidiary, Acacia Mining,  in  bid to buy back shares it does not own in the distrusted subsidiary.

The offer is path to resolve a $190 billion tax dispute with the Tanzania Government said to accrue from years of mineral exports under declarations and undervaluation. Barrick Gold Corporation owns 63.9% shares in the subsidiary.

The Tanzania Government identified Acacia Mining in 2017 as a devious, corrupt, mining company which had allegedly operated in the country for 19 years without legal registration or certificate of compliance. The Government  has consequently refused to talk to the subsidiary, agreeing to settle this dispute only  with the majority shareholder.

In October 2018, the Tanzania Prevention and Combating of Corruption Bureau (PCCB) charged a number of Acacia employees and a former member of staff for money laundering and tax evasion. Bulyanhulu Gold Mine  public relations manager Alex Lugendo and the former Acacia vice president for corporate affairs Deo Mwanyika faced 39 counts involving $4.7 billion (about Sh10 trillion) listed as counts of economic sabotage in  criminal case number 31/2018.

The accused pleaded not guilty to all charges which included tax evasion, conspiracy, a charge under organized crime legislation, forgery, money laundering and corruption.

The Acacia commercial manager Maarten van der Walt was released on bail after being charged with corruption on allegations dating back to 2013 at North Mara. The other two remained in custody because their counts were not billable according to media report.An investigations team set up in 2017 by President John Pombe Magufuli  established  that Acacia had for 19 years committed various offences, including providing wrong information, obtaining minerals by false pretense, evading tax, economic sabotage, transfer pricing manipulation and occasioning loss to the government.

The alleged offences committed by the subsidiary were described at the time as criminal and punishable by a jail sentence. The government imposed a travel ban on everybody mentioned in the probe teams.

On Friday, May 17, 2019, the Tanzania Environment Management Council (NEMC) slapped a fine of  Tsh. 5.6 billion Tanzanian shillings (about 2.4 million U.S. dollars) on Acacia Mining’s North Mara Gold Mine after it was found leaking contaminated water into residential areas and water sources.

Samuel Gwamaka, Director General of the National Environment Management Council said the mining firm has also been given a three-week ultimatum to rectify weaknesses identified in its tailing dump system.

Barrick has as a result been negotiating with the Government of Tanzania for the last two years to seek a basis for a settlement of Acacia’s ongoing disputes and to establish a viable framework under which Acacia could resume its full operations in Tanzania and rebuild its relationships with the Government, the multinational said in a statement on Tuesday, May 21, 2019.

But Acacia distributed a statement on Wednesday, May 22, 2019  stating that Barrick had provided the subsidiary with a letter from the government negotiating team, which stated that it [the Tanzania Government] would not execute final agreements for the resolution of the disputes if the company [Acacia] was one of the counterparties to the agreements, and that it would only sign such agreements “if satisfied that substantial changes have been made to the management style of the operating companies and of their shareholders”.

Barrick met Directors and senior management of Acacia on Tuesday, May 21, 2019  and presented to then a proposal to acquire all of the shares it does not already own in Acacia through a share for share exchange of 0.153 Barrick shares for each ordinary share of Acacia. The share-for-share exchange of 0.153 Barrick shares for each ordinary share of Acacia implies a value of $787-million for the Tanzania-focused miner, according to analysis by Mining Weekly.

As a consequence of the negotiations, Barrick has had the opportunity to undertake detailed due diligence on the Acacia assets and on the basis of this work has concluded that the Proposal on the terms set out above reflects the fair value of the company, the multinational said in a statement on Tuesday, May 21.

Since the Proposal is in Barrick shares, the Acacia minority shareholders will be able to benefit from any future potential upside in both the Acacia assets and Barrick’s broader portfolio of assets, the statement said.

meanwhile Dow Jones reported  on Wednesday, May 22, 2019,  that Acacia Mining shares dropped in value on the prospect of a Barrick Gold takeover.  Acacia Mining shares fell on Wednesday [May 22, 2019] after its board said it would consider a takeover proposal from former parent Barrick Gold Corp, as a possible way to resolve its dispute with the Tanzanian government.

Barrick, which still has a [63.9%] stake in Acacia, said late Tuesday that it had proposed acquiring the London-listed miner via a stock swap of 0.153 Barrick share for each share of Acacia it doesn’t already own. The deal implies a value for Acacia of $787 million and total consideration to Acacia’s minority shareholders of $285 million.

Acacia shares at 0753 GMT traded down 4.6% at 152.10 pence, valuing the company at 623.7 million pounds ($793.1 million).