Barrick Gold says it expects the final deal with the government of Tanzania to be concluded by mid-2018, paving the way for a strategic partnership between the two.
Detailed legal agreements are now being drafted but the full proposal would be ready by the end of the first half of this year, pending review by Acacia, the gold mining giant said in a statement posted on its website yesterday.
“Discussions between the government of Tanzania and Barrick concerning the proposed framework agreement for Acacia Mining Plc’s operations in Tanzania have been constructive and continue to progress,” the statement said.
“We continue to target the first half of 2018 for the completion of a detailed proposal for review by Acacia,” the statement added.
Negotiations between Barrick Gold and the Tanzanian government started in July last year, three months after President John Magufuli banned the exportation of copper concentrates by Acacia. Soon after the ban President Magufuli formed two committees to probe the chemical composition and amount of minerals as well as the economic value of the exported copper concentrates. The first committee headed by Prof Abdulkarim Mruma presented its report in May while the second, chaired by Prof Nehemiah Osoro presented its findings in June. The two committees established that Acacia Mining was under declaring bot the amount of minerals in the concentrates and its value.
An initial deal was reached in October 2017 for a 50:50 share in economic benefits in the form of royalties, taxes, and a 16 per cent free carried interest in Acacia’s Tanzanian operations. In the October agreement Barrick also offered to pay Tanzania $300 million as a goodwill gesture. A new Tanzanian operating company would also have to be established to manage Acacia’s three mines. Acacia operates Buzwagi, Bulyanhulu and North Mara mines. The process to close Buzwagi mine is in final stages after gold resources were depleted.
The bone of contention, The Citizen understands, remained the $190 billion tax bill that the government had slapped Acacia before the start of the July negotiations. Acacia Mining has repeatedly said it is negotiating with potential Chinese investors who are interested in acquiring some shares in one or more of the firm’s mines in Tanzania.
Barrick Gold started gold mining activities in 1996 as African Barrick. It then re-branded to Acacia Mining in 2014 and listed at the London Stock Exchange. It then cross-listed at the Dar es Salaam Stock Exchange.