Gold mining company Acacia Mining (LSE: ACA) recently issued a press release announcing that the Tanzanian Fair Competition Commission (FCC) has granted its approval for OreCorp (ASX: ORR) to increase its interest in Nyanzaga Mining Company Limited (NMCL) to 51%.
This move remains subject to: (i) the approval of the newly established Mining Commission, the application for which was lodged at the same time as the application for FCC approval; and (ii) the future payment of USD3 million to the Acacia Group.
In addition, members of the OreCorp Group have now entered into a completion agreement with Acacia and other members of the Acacia Group to allow OreCorp Tanzania to move to 100% ownership of NMCL, and thereby 100% ownership of the Nyanzaga Gold Project.
This move remains subject to: (i) the Tanzanian regulatory approvals referred to above; (ii) the grant of the Special Mining Licence (SML) in respect of the Project; and (iii) the making of a future payment of USD7 million.
Following completion Acacia will retain a net smelter return production royalty over the Project, capped at USD15 million.
Both OreCorp and Acacia believe that a simplified ownership structure of NMCL is beneficial to the future development of the Project and would enable it to be best placed to provide significant benefits to Tanzania and all stakeholders.
Nyanzaga Gold Mining Project
Located in Northwest Tanzania, Nyanzaga hosts a JORC 2012 compliant Mineral Resource Estimate (MRE) of 3.1 million ounces at 4.0 g/t gold. The MRE is the foundation of a Definitive Feasibility Study for project financing purposes (Project Financing DFS) currently underway.
The grant of the Special Mining Licence (SML) will be required before the Project Financing DFS is completed and any financing for the construction of the Project can be undertaken.
Upon grant of the SML, the Government of Tanzania will become an equity holder in the Project, acquiring a free carried interest of not less than 16% in the project in accordance with the Tanzanian Mining Act.
Why is Acacia Selling Off
Once Tanzania largest gold producer and exporter, Acacia Mining is currently in a tax row with the Government of Tanzania 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 producer has always refuted the accusation and has been since in talks with the Government of Tanzania for a resolution.
Meanwhile, the company has published its unaudited results for the six months ended 30 June 2018, indicating a gold production of 254,759 ounces, 41% lower than H1 2017, and confirmed that it has commenced a process to explore the sale of a stake in some or all of its Tanzanian operations.