BARRICK Gold Corporation said it had made progress in discussions with the Tanzanian government regarding resolution of a tax dispute with Acacia Mining, the Canadian firm’s 63.9% investment, but it could not put a timeline on deal completion.
In April, Barrick Gold said in its quarterly update that a proposal delivered to the government was for a 50/50 split of the “economic benefits generated by Acacia’s operations” with the Tanzanian government.
“The government’s portion would be delivered primarily in the form of royalties, taxes and a 16% free carried interest in Acacia’s Tanzanian operations, in line with the country’s new mining law,” the company said. Barrick has already offered to make a payment of $300m to the Tanzanian government as a “goodwill gesture”.
The dispute between Acacia and the Tanzanian government erupted in April last year when the government blocked exports of gold concentrate by Acacia after presidential reviews claimed it owed “… tens of billions of dollars” in unpaid tax, penalties and interest.
“Discussions between the Government of Tanzania and Barrick are constructive,” said Barrick today. “Progress has been made on the drafting of definitive agreements necessary for the implementation of the proposed framework.”
“In order to allow the process to continue in an orderly manner and without an arbitrary deadline, Barrick is not providing a timetable for the completion of the discussions at this time,” it said.
Acacia said in response today that final acceptance of the framework agreement lay with Acacia’s minority shareholders. “Any proposal received by the company in the future that might be agreed in principle between Barrick and the GoT [Government of Tanzania] as a result of those discussions will be subject to review by the Independent Committee of the Acacia board of directors,” it added.
“The company will continue to engage with Barrick to seek to understand Barrick’s expectations for the future conduct and a timetable for the completion of its discussions with the GoT,” it said, adding that it had not been party to the discussions with the government.
Investec Securities said the announcement was “… not really an update at all and one that must be frustrating for Acacia, which is not part of the discussions and remains left in limbo”. Shares in Acacia have fallen about 63% in the last 12 months. The company is currently capitalised on the London Stock Exchange at £480m.
