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June 25, 2019

Acacia Mining rejects $979m Barrick offer

Acacia Mining has responded to Barrick Gold’s valuation of the company, disagreeing with the exchange rate of 0.153 Barrick shares for each Acacia share.

By Umar Ali

London-headquartered gold mining business Acacia Mining has responded to majority shareholder Barrick Gold’s valuation of the company, disagreeing with the exchange rate of 0.153 Barrick shares for each ordinary share of Acacia.

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Barrick’s proposal values Acacia Mining at $979m following an increase of 27% in Barrick shares, compared with $787m when it first proposed the deal in May 2019. Barrick currently holds a 63.9% stake in Acacia, which represents the company’s operations in Tanzania.

In a statement, Acacia Mining said: “The company strongly disagrees with Barrick’s view on Acacia’s life of mine plans, which it understands to underpin Barrick’s valuation and price of the proposal, and sees no reasonable basis for Barrick’s proposed adjustments”.

Acacia Mining claims that Barrick’s offer undervalues the company’s exploration and development portfolio, maintaining that its life of mine plans had been divulged to Barrick in the first quarter of 2019 and formulated in line with industry standard methodology.

However, the company stated it would be open to a fairer buyout offer from Barrick, adding in the statement: “Acacia continues to believe that, subject to an offer price which is fair and which commands the requisite support of shareholders, the acquisition by Barrick of the Acacia shares it does not currently own, would be an attractive solution for key stakeholders.”

Barrick’s proposal to take full control of Acacia is an attempt to resolve a two-year tax dispute between the mining company and the government of Tanzania. This tax dispute began with the imposition of a $190bn tax bill on Acacia that has since been reduced to $300m, following a ban on Acacia’s gold and copper exports for tax evasion in March 2017.

In a statement, Barrick said: “Barrick has been negotiating with the Government of Tanzania (‘GoT’) for the last two years to seek a basis for a settlement of Acacia’s ongoing disputes with the GoT and to establish a viable framework under which Acacia could resume its full operations in Tanzania and rebuild its relationships with the GoT.

“While a basis for a settlement has been developed but not finalized, in meetings this past weekend, the GoT stated that it is not prepared to enter into a settlement directly with Acacia.

“As a consequence of the negotiations with the GoT, Barrick has had the opportunity to undertake detailed due diligence on the Acacia assets and on the basis of this work has concluded that the Proposal on the terms set out above reflects the fair value of the company.”

The GoT has had a number of disputes with Acacia, ordering the company to resolve a spillage incident in March 2019 and fining the company $129m over environmental damage in January 2019 and $2.4m in May 2019.

In a separate statement on its website, Acacia said: “The continuation of the export ban will not only hurt Acacia’s ability to conduct future business in the country, but will directly and negatively affect the lives of thousands of Tanzanians.

“The security of the 36,200 indirect and induced jobs that rely on Acacia’s mining operations, as well as the company’s ability to invest in education, infrastructure and health projects will all be under threat.

“As a company, we are and always have been committed to acting responsibly towards the people of Tanzania, their environment and their communities. Foreign investment and the private sector plays an important role in the economic advancement of Tanzania and we ask that the people of Tanzania’s economic future is not put at risk.”

 

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