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UPDATE 3-Acacia-Tanzania proposed settlement on track -Barrick
October 20, 2017 / 7:44 AM / a month ago

UPDATE 3-Acacia-Tanzania proposed settlement on track -Barrick

 (Recasts with Barrick statement, adds analyst and Barrick
spokesman's comments, background, updates stock prices, changes
byline)
    By Susan Taylor and Zandi Shabalala
    TORONTO/LONDON, Oct 20 (Reuters) - Barrick Gold         
said on Friday a proposed mining settlement it negotiated with
Tanzania for its Acacia Mining          unit was not under
threat, even though Acacia said it could not immediately make a
$300 million payment included in the deal.
    Barrick, which owns 63.9 percent of Acacia, announced on
Thursday the deal whose terms include the payment, giving the
state a 16-percent stake in its three mines, and splitting
"economic benefits" from those operations with the government.
            
    Tanzania in March banned unprocessed mineral exports as part
of a push to reap greater rewards from the east African
country's resources. In July, Acacia, the country's largest gold
miner, was served with a $190 billion bill for unpaid taxes,
penalties and interest.             
    Government-appointed auditors said the company had
understated its gold shipments and that it was operating
illegally in Tanzania. Acacia has denied the allegations.
    Acacia, which has not participated in months-long talks to
resolve the issues, said on Friday its board would need to
approve any deal. Acacia executives said the company had not
received any formal proposal on the agreement and was seeking
clarity.                 
    Barrick said the proposed settlement did not require Acacia
to make an upfront payment, citing two announcements stating
that Barrick and government representatives would negotiate
payment terms. That could include staggered payments, for
example, Barrick spokesman Andy Lloyd said by phone.
    Shares of London-listed Acacia, which has lost $1.7 billion
in market value since the March 3 ban, dropped 8.1 percent on
Friday. Shares of Barrick rose 0.45 percent to C$20.22.
    The partnership model in the proposed deal is crucial to
success in a mining industry in which governments are
increasingly seeking greater benefits from resource development,
Lloyd said.
    A meeting between Barrick Chairman John Thornton and
Tanzania President John Magufuli in Dar es Salaam on Thursday
resulted in the framework agreement, Lloyd said. Acacia was
aware of the status of this week's talks, including the
possibility of a 50-50 partnership, he added.
    "It is still very early in the process," Acacia Chief
Executive Brad Gordon said on a conference call after the
company released quarterly results. "There is a long way to go
before any proposal is made to Acacia."
    Panmure Gordon & Co mining analyst Kieron Hodgson said it
was "strange" for Barrick to negotiate for a company meant to be
responsible for its own future.
    "It's akin to negotiating for your brother and then your
brother picking up the bill," he said.
    The talks were led by Thornton, who lacks a mining
background and spent years working in China after holding a
senior role at Goldman. He helped strike a near-billion dollar
deal with a Chinese miner this spring.                         
    Reflecting the March export ban, Acacia on Friday posted a
60 percent drop in third-quarter core earnings to $50 million.
It cut spending by 33 percent and said it hoped to resume
generating cash in early 2018.              

 (Reporting by Susan Taylor in Toronto, Zandi Shabalala in
London and Sanjeeban Sarkar in Bengaluru; Editing by Larry King
and Richard Chang)
  

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