Bristow says Acacia takeover by New Barrick “a definite option”, but calls for compromise

Mark Bristow, CEO, Barrick Gold Corporation. Pic: Martin Rhodes

THE buy-out of minority shareholders in Acacia Mining by New Barrick was “definitely one option”, said Mark Bristow, CEO of Randgold Resources.

“It’s not a bad option,” he said in an interview with Miningmx today following the publication of the UK-listed firm’s third quarter results in which it lifted profits a quarter on the back of improved gold production.

Bristow was also commenting a day before his company’s shareholders meet for an extraordinary general meeting, the main business of which is to approve a merger between Randgold and Barrick Gold to form New Barrick that Bristow will lead as CEO.

“It’s going ahead,” said Bristow of the likely outcome of the vote. But he was more cautious about the future for Acacia Resources in which Barrick Gold is the largest single shareholder with a 63.9% interest. The company is embroiled in a toxic dispute with the Government of Tanzania, primarily over allegations of unpaid tax, but which has now spilled over after Barrick Gold attempted to settle the dispute.

Last year, Barrick Gold offered to pay $300m to the Tanzanian government as a gesture of goodwill, but the amount has been left unpaid and it is thought the Tanzanians are impatient to have it paid. A number of Acacia employees have since been charged with corruption and retained in jail without bail.

Bloomberg News reported on October 24 that once New Barrick was formed, effective January 1 provided Randgold shareholders approve and court permission is granted, it would move to buy out Acacia minority shareholders, but Bristow said it required all parties to “come to the table”, including Acacia Mining’s independent committee.

The committee was formed to assess the merits of Barrick’s discussions with the Tanzanians, from which Acacia was excluded by the government. Said Bristow: “The independent committee is another of the stakeholders that needs to come to the party”. It had to recognise the value of New Barrick taking out Acacia, he said.

“You’ve got a very unfortunate situation where there’s a stand-off,” said Bristow of the dispute. “You have a board with an independent committee, a shareholder desperate to find an answer, and a government that has been left out of the cash flow. Everyone is talking past each other,” he said.

“Arbitration is not going to solve this,” he said of Acacia Mining’s representations to the International Court of Arbitration. “In this crisis – and it is a crisis – the only way to resolve it is to sit down and work it out.”

In comments that support his earlier statement that Acacia’s independent committee would have to compromise, he said a resolution would be about “… sharing the economic spoils” and recognising that the Tanzanian government “… has a say as an equity partner … It’s the importance of one paying the rent”.

“Tanzania has a broader-based mining industry than just gold and they [the government] has got a memory of successful capital solicitation,” he said.

“It has done very well in the past and the mining sector has not done as it should. That requires a level of honesty in order to rectify the past.”


  1. Thanks Mark!

    Now I hope the editor ( David) will now publish my comment about this dispute’s roots!

  2. hi goldspeculator, long time admirer of your comments!

    where can I find your comment about the disputes root

    do you have a place where all your comments from about sibanye to acacia etc are all written up in one place? a blog?

    I wouldn’t mind being able to see all your comments in one place since theres so much to be learned from them

    for example your analysis of how wheaton took sibanye to the cleaners with their streaming deal I thought was spot on and really wasn’t uncovered by any of the articles claiming it was a good deal.. love how in a comment you showed the cold hard cash flow dent that would occur!

    • Thank you very much for your kind words!

      Unfortunately, we are , for now, at the mercy of the Editor of miningmx. I will endeavour to bring to light to fellow readers why the Acacia mess came about because of overzealous management. They just misread the GoT intentions , despite such being clear to everybody else ( including Mark Bristow). The crux was simply, that why Buly & North Mara were NOT in-tax despite >$2Bn in Operating Profits as attributed to the then CEO of Acacia’s utterances! These mines together were CapEx = ±$800M. Acacia played hardball, unnecessarily so, with supposed Investment Agreements etc! The President of Tanzania was not going to have it , and everything went downhill from thereon.

      I have witnessed really difficult company/host-government tiffs in my mining career. I wish to name them:

      1. Anglo/Codelco over AngloSur assets – This was a $20Bn assets dispute! Very difficult and protracted but resolved through common sense dealing!
      2. Freeport /Indonesia over Grasberg- Another tough discussions with an asset valued at >$15Bn , with block cave investment over the next 2-3 years of $3Bn. Rio Tinto was also affected given its JV with FCX which was due in 2021. But ultimately, a sensible solution was found with 45% of the asset sold to Inalum ( Indonesian state-owned co.) for $3,85Bn.
      3. Kinross/Ecuador – This tiff was over the development of Fruta del Norte mine. Kinross wanted a stability agreement which was unjustifiable given the prevailing gold prices. Ecuador government refused to provide such special treatment. Currently, this mine is under development by Lundin Gold & Newcrest JV.
      4. Newmont/Peru – The Conga mine project was a sticky situation whereby the community was extremely opposed. Peru government was also upset from what they felt was a lousy deal they got for Yanacocha Investment Agreement. So it was a stand-off like no other ! But Yanacocha is still in production due to sensible dealing!
      5. Barrick/ Dominican Government – This was for Pueblo Viejo Tax Agreement dispute. ABX & GG did not argue endlessly given this key asset potential. They yielded to a more fair tax ( ±25%) of FCF of the operating asset which is a ±20Moz deposit.

      I can go-on about far more difficult situations than the Acacia/GoT matter. The previous management offended the GoT , and there was going to be only one winner…..THE LANDLORD!

  3. Dear Fellow Readers,

    Before the Acacia/GoT tiff erupted, the MCap of Acacia was ±$3Bn. This now has declined to ±$800M with the GDX being up 35% over the period. The Acacia /GoT matter is what First Quantum /Zambia Government do routinely , so much so that they have established protocol on how to handle tax disputes. First Quantum and Zambian Government are always debating taxes , and FQM just ponies up and the matter gets resolved !


    The GoT have never threatened a loss of license or ownership! Yet , the Acacia management sought to fight it !


    In its 2010 listing prospectus , ACACIA ( then African Barrick Gold ) disclosed the following:

    “ The ABG group is currently contesting the TRA ( tax authority in Tanzania) with respect to prior years taxation. For instance, the TRA has issued a letter in respect of a corporate tax audit of BGML ( Bulyanhulu ) for the period 2000-2006 taxation years of ±$247M.

    In Tanzania, then applicable law, allowed for 15% additional CapEx allowance in addition to initial CapEx incurred in developing the mine. So this was an uplift on prior years sus-Capex NOT yet offset against income. Acacia exploited this fully ALBEIT different from what was in the MDA (Mine Development Agreements) which had specific fiscal stabilization provisions and NOT this allowance which kept increasing the tax shield yearly irrespective of profitability. The Tax shield for Bulyanhulu alone was $431M in 2010, after 9 yrs of profitable production!

    So when it suited Acacia, it disregarded the MDAs. It treated its MDA’s like a fruit salad …..In a developing country….TO ITS DETRIMENT!

    GoT of Tanzania started REALLY agitating for tax payment in early 2014. Acacia management just threw the Investment Agreements across the table for them to read. Frankly, they were arrogant in their approach.

    In the intervening period, GOT started withholding taxes and imports were being NOT processed at ports and this started to frustatrate the operational planning of Acacia. On 08 March 2018 , Acacia released the following statement :

    “Acacia is pleased to announce that it has signed a memorandum of understanding (“MOU”) with the Tanzania Revenue Authority (“TRA”) whereby Acacia will begin making payments of corporate tax in 2016….. Acacia is bringing forward the payment of corporate tax by approximately three years……

    The payment was a once-off $109M , to be offset by VAT = ±$80M , thus net cash payment ±$30M……Mugafuli was furious!

    Readers might ask: Hold on GS, you mean to tell me that Acacia was NOT paying taxes all this time?

    GS : Yeb! … word : Avarice!


    The Acacia tax non-payment has been an enduring pain for GoT. So in 2007 , African Barrick Group entered into an agreement to pay a derisory mere $7M/yr ex gratia payment .

    Bulyahulu was commissioned in 2001, after a CapEx = $300M. Its MDA expires in 2025 , with a single option to renew by 15 years. The MDA was signed in 1994. North Mara was acquired as part of the Placer Dome transaction. North Mara began production in 2002. Placer Dome had bought the mine for $255M from East African Gold. The MDA was signed in 1999, and renewed in 2007. In 2010,. This was amended to be a LoM MDA. Buzwagi was a short-life mine which came into production in 2009 for $400M in Capex . The MDA was entered into in 2007 for LoM=25 yrs with a singe option for renewal for an additional 25 years. These were plain-vanilla MDA: Pay taxes at prevailing corporate rate after initial investment has been recouped!

    Total ABG /Acacia therefore:

    Prod (Koz)__________9,3Moz
    Rev ( $Bn)___________$12,8 Bn
    EBITDA( $Bn)_______$4,8Bn
    CapEx ($M)_________$2,4Bn
    Tax ( $M) ___________ ZERO(No tax payment until 2022!)
    FCF ($ M)____________$2,4Bn
    2P (2016)____________7,6Moz

    There was Tulawaka Mine , which ceased ops in 2012. From the above, Acacia pulled >$2,4Bn from Tanzania for an Invested Capital of ± $800M over the years….and yet they could NOT bring themselves to paying Taxes until the GoT lost its patience. So with 7,6Moz of 2P Reserves ,time was of an essence for GoT in 2016, and they went for the jugular!

    I am looking forward to anybody who will side with Acacia about this behaviour! The ex-CEO ( Brad Gordon) said the following :

    “The industry can be its own worst enemy when it sits down and agrees these terms, it’s gonna come back and bite us. And in this case it has.”

    Fellow Readers , I hope that all now know the facts and we will all learn from Acacia!

    Yours Truly,

  4. Fellow Readers,

    So housekeeping on dates :

    Total ABG /Acacia therefore:

    _____________________2001-2016 ( NOT 2009-2016)
    Prod (Koz)__________9,3Moz
    Rev ( $Bn)___________$12,8 Bn
    EBITDA( $Bn)_______$4,8Bn
    CapEx ($M)_________$2,4Bn
    Tax ( $M) ___________ ZERO(No tax payment until 2022!)
    FCF ($ M)____________$2,4Bn
    2P (2016)___________7,6Moz

    On 08 March 2016 ( NOT 2018) , Acacia released the following statement :

    “Acacia is pleased to announce that it has signed a memorandum of understanding (“MOU”) with the Tanzania Revenue Authority (“TRA”) whereby Acacia will begin making payments of corporate tax in 2016….. Acacia is bringing forward the payment of corporate tax by approximately three years……

    The payment was a once-off $109M , to be offset by VAT = ±$80M , thus net cash payment ±$30M……Mugafuli was furious!

    Apologies for erroneous dates due to editorial interference and censoring.

    Truly Yours,

    • Hi Goldspeculator

      I only edit your comments – and those of other commentators – when they are defamatory or fall foul of Miningmx rules, as mentioned many times before.

      To add a bit more flesh to the bones around editorial policy this time around: I enjoy robust debate but I won’t tolerate commentary that becomes vitriolic or personal. That really is the extent of my moderation regarding reader commentary.


      David McKay

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