Barrick Gold Corporation (NYSE:GOLD; TSX:ABX), the largest and majority shareholder of Acacia Mining, announced on 20th February 2019 that the Company, in its capacity as a facilitator, and the Government of Tanzania have arrived at a proposal that sets forth the commercial terms to resolve outstanding disputes concerning Acacia Mining’s operations in Tanzania.
Acacia is currently in a raw with the Tanzanian government after a presidential committee found in May 2017 that the company allegedly under-declared its exports and eventually presented it with a demand for USD 190 billion in unpaid taxes.
The gold miner has always refuted the accusation and has been since in talks with the Government of Tanzania for a resolution.
Barrick says it will present its proposal to the Independent Directors of Acacia in the near future for their consideration.
The proposed framework is consistent with the agreement announced in October 2017 and includes the following elements:
-The creation of a local operating company to manage Acacia’s operations in the country.
-Economic benefits from Acacia’s operations to be shared on a 50/50 basis. The Government’s share of economic benefits would be in the form of royalties, taxes and a 16% free carry interest in the Tanzanian operations.
-A payment of USD 300 million to the Government of Tanzania to resolve outstanding tax claims, to be paid overtime on terms to be settled by the parties.
Mark Bristow, President and CEO of Barrick, said: “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 in partnership with their respective stakeholders, and most importantly long-suffering investors, including Barrick”.
Work is underway to finalize the definitive agreements needed to give effect to the proposal.
To become effective, the proposal and those agreements must be approved by Acacia and the Government of Tanzania, in keeping with applicable laws and regulations.
Following Barrick’s announcement, Acacia noted that it has not yet received any proposal from Barrick regarding a comprehensive resolution of the Company’s disputes with the GoT.
Any proposal received by Acacia will be subject to review by the Independent Committee of the Acacia Board of Directors.
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