Barrick agrees to lift offer for Acacia as GoT new export ban threatens to close down UK firm

BARRICK Gold has improved its offer for the shares of minority shareholders in Acacia Mining after taking into consideration the value of certain of Acacia’s exploration properties and administrative and general savings the transaction would create.

Barrick’s new offer, which has been accepted by the Acacia board and its transaction committee, is for 0.168 Barrick shares. This values Acacia at £951m or 232 pence per share, and the 36.1% Barrick doesn’t own in Acacia at £347m.

The offer is below an independent valuation constructed by consulting engineering company, SRK, which imputed £1.1bn to Acacia shares, or some 271p/share, and falling beneath the 50% premium some of Acacia’s minority shareholders have requested.

But it is an advance on the previous offer of 0.153 Barrick shares and comes after Acacia today gave spelled out the consequences of a Government of Tanzania inspection of its North Mara mine which would quite likely leave the company with almost no cash flow.

Barrick’s new offer is also represents a premium of 53.5% to the closing price of 151p/share on May 20 and a premium of 28.2% to the volume-weighted average price per Acacia share over the twenty trading days ended on July 18.

Acacia said in a statement today that it had little choice but to accept the takeover offer by Barrick given its relationship with the GoT.

Just over two years ago, the GoT blocked exports of gold-in-concentrate from Acacia’s Bulyanhulu and Buzwagi mine after allegations in a presidential report the UK-listed firm had underpaid tax for about 20 years worth $190bn, including penalties and interest.

Between then and now, Acacia has swam against a tide of government imposts the latest of which is an export ban on Acacia’s only fully operating mine, North Mara. The firm’s transaction committee set out the series of events saying that the company had no choice but to accept Barrick’s improved offer.

“Considering the impending loss of the ability of Acacia to produce gold and operate the mine at North Mara, the Acacia Group’s cash flow from operations will be adversely impacted and the Acacia Group will be required to meet its on-going working capital requirements and other financial obligations from its existing cash balance,” it said.

“This position is not sustainable and the liquidity of the Company will be constrained in the absence of a resolution.”

Barrick, which has steadfastly stuck to its initial takeover proposal of May 22, said it had been persuaded to improve its offer after taking into account the sale of exploration assets with the net proceeds of a sale being paid to Acacia shareholders. Some $10m was also included in the value of Acacia in order to reflect the disposal by Acacia of certain excluded assets, whilst additional value was imputed to reflect general and administrative expense savings after the takeover.