BARRICK Gold and the Tanzanian government have finalised a joint venture agreement that will take three mines formerly owned by Acacia Mining out of a three year crisis. The agreement has been submitted to the local authorities for approval.
“Twiga, which will give the government full visibility of and participation in operating decisions made for and by the mines, represents our new partnership not only in spirit but also in practice,” said Mark Bristow, CEO of Barrick Gold. ‘Twiga’ – or Twiga Minerals Corporation – is the name of the company that will operate the mines.
The terms of the joint venture are public knowledge: they include the payment of $300m to settle all outstanding tax and other disputes; the lifting of the concentrate export ban, and the sharing of future economic benefits from the mines on a 50/50 basis. The deal also allows for the establishment of an international dispute resolution framework.
The Tanzanian government imposed a ban on gold exports from Acacia following a presidential study, never published, that claimed the firm had not paid sufficient tax for up to two decades. It owed the government tens of millions in unpaid tax and penalties.
Acacia disputed the claims but its ability to operate was severely impact – it was forced to mothball the underground section of Bulyanhulu – although it continued to generate cash flow after costs. In the end, the Tanzanian government declined to sign a settlement with Acacia effectively forcing its takeover by Barrick Gold.
Speaking in August, Bristow said the integration of the former Acacia mines into Barrick would comprise “a great deal of work”.
“Rebuilding these operations after three years of value destruction will require a lot of work, but the progress we’ve already made will be greatly accelerated by this agreement,” said Bristow in a statement today. This was shortly after meeting the chairman of the Negotiating Committee of the Government of Tanzania, Palamagamba Kabudi.
Asked in August about the operating plan for the Tanzanian mines, Bristow commented that Bulyanhulu was “… a tough nut to crack”.
“It has a long life and reserves but it needs a lot of work in its deeper areas.” said Bristow. “It basically needs a new discovery, a new vein system. On its own it doesn’t make a huge lot of money unless the gold price is at its current level,” he said.