Barrick Settle All Disputes With Tanzania About Acacia Gold Mines

Barrick Settle Acacia Dispute with Tanzania

Barrick Gold Corporation (NYSE:GOLD) (TSX:ABX) has recently reached an agreement to settle all disputes with the government of Tanzania (GoT) concerning the mining companies formerly operated by Acacia Mining but now managed by Barrick.

Acacia, a former subsidiary of Barrick and Tanzania’s largest gold producer, has been on a dispute with the GoT since May 2017 when a presidential committee accused the company to have under-declared its mineral exports and eventually presented it with a demand for USD 190 billion in unpaid taxes.

The company has always refuted the accusation and has been since in talks with the GoT for a resolution, without success.

Barrick, the largest shareholder of Acacia, announced on September 2019 a scheme to acquire the shares it did not already own in the company, which has become effective in the same month.

The terms of the agreement submitted by Barrick to the Tanzanian Attorney General for review and legalization includes the payment of USD 300 million to settle all outstanding tax and other disputes; the lifting of the concentrate export ban; the sharing of future economic benefits from the mines on a 50/50 basis; and the establishment of a unique, Africa-focused international dispute resolution framework.

In conjunction with the finalization of the agreement, a new operating company called Twiga Minerals Corporation (Twiga) has been formed to manage the Bulyanhulu, North Mara and Buzwagi mines in Tanzania.

The GoT will acquire a free carried shareholding of 16% in each of the mines and will receive its half of the economic benefits from taxes, royalties, clearing fees and participation in all cash distributions made by the mines and Twiga. An annual true-up mechanism will ensure the maintenance of the 50/50 split.

RELATED:  Tanzania Diamonds and Tourism Up in Q4 2017, Gold Down

Speaking after a meeting with the chairman of the Negotiating Committee of the GoT, Prof Palamagamba Kabudi, Barrick president and chief executive Mark Bristow said the agreements introduced a new era of productive partnership with the GoT and would ensure that Tanzania and its people would share fully in the value created by the mines they hosted.

Tanzania Gold
Tanzania gold reserves are estimated at 45m ounces (oz). Gold production in Tanzania stands at around 50t per year which makes it the 4th largest gold producer in Africa after South Africa, Ghana, and Mali.

According to the Monthly Economic Review of the Bank of Tanzania (BOT), in August 2019 gold exports rose by +25.1% to USD 1,915.3 million, driven by volume, and accounted for more than half of non-traditional exports.