By TZ Business News Staff.
The Tanzania Government has been offered 16% ‘free carry interest’ in the gold mining company ACACIA which operates three gold mines in the country.
The offer is part of proposals advanced to settle a long lasting dispute between the Tanzania Government and the London Stock Exchange listed company which is majority owned by the Canadian gold mining multi-national Barrick Gold Corporation.
On Wednesday, February 20, 2019, the Canadian news website princegeorgecitizen.com quoted a statement issued in Toronto by Barrick’s new Chief Executive Officer, Mark Bristow, as saying Barrick has helped facilitate a deal between Acacia Mining and the government in Tanzania as the new CEO looks to reorder the company.
Barrick is majority owner of ACACIA holding 63.9% interest in the company which operates the mines Bulyanhulu, Buzwagi and North Mara in northern Tanzania.
Under the agreement, the economic benefits from Acacia’s operations will be shared on an equal basis with Tanzania’s government in the form of royalties, taxes and a 16 per cent free carry interest in the Tanzanian operations.
As Mark Bristow made the statement in Toronto, Canada, the Barrick Chief Operating Officer for Africa and Middle East, Dr. Willem Jacobs, was reported to have completed discussions with Tanzania President John Pombe Magufuli at State House in Dar es Salaam, where Palamagamba Kabudi, the Tanzania Minister for Justice, announced the Government and Barrick had worked out a plan to settle the disputes between the government and Acacia Mining.
Acacia has been engaged in a longstanding row with the Tanzania Government over alleged tax evasion and other controversies.
In a statement issued after the State House Meeting, Palamagamba Kabudi, the Tanzania Minister for Justice, said “one important thing which has happened [at the meeting] is that all those agreements which we reached in October 2017 have not been changed–one being that profits will be split by 50/50, [and the agreement on] formation of a new operating company”.
He also said “all documents relating to implementation of those resolutions are complete [from the Tanzania side]; the work remaining is from their end—and that does not concern us.
“What ACACIA says does not concern us. We do not recognize [ACACIA]–it does not concern us. We do not know ACACIA; We only know Barrick and our discussions with Barrick are complete. What remains now is for them to return here for starting implementation of what we have agreed upon; and it is our expectation that when the end of next month comes what has been agreed will have been implemented,” the Minister said.
It has also been agreed that a USD $300-million payment to the government will be made over time to resolve outstanding tax claims. The terms are similar to a preliminary agreement announced in late 2017, according to princegeorgecitizen.com which has also quoted the Barrick CEO Mark Bristow as complaining that “significant amounts of real value have been destroyed by this dispute and, in Barrick’s view, this proposal will allow the business to focus on rebuilding its mining operations.”
Bristow took on the new role in January after a merger of Barrick Gold with Randgold Resources. The Toronto-based company said work is underway to finalize the definitive agreements, which must be approved by Acacia and the Tanzanian government.
Efforts to put an end to the dispute in Tanzania, which has forced Acacia to significantly cut back on production, come as Bristow’s team at Barrick review company operations globally.
Barrick is also resolving disputes in Chile and New Guinea. The company said Wednesday [February 20, 2019] it confirmed its commitment to Chile, despite major operational issues in the country, as it reviews its Latin American strategy.
Last year, Chile ordered the company to close the part of the Pascua-Lama mining project that falls within the country. The company said last year it would take a US$429 million charge after part of the project in the high Andes was shut down over concerns of its impact to water supplies.
Barrick said it continues to work on legal, environmental and other issues as it reviews the future potential of the project, which could go ahead as an underground operation.
Earlier in the week, Barrick confirmed its long-term commitment to the Porgera mine in Papua New Guinea after Bristow met with politicians and local communities in the country.