Dar es Salaam. Barrick Gold CEO Mark Bristow says Tanzania is a high risk market for the corporation, even as it struggles to fix a $190 billion (Sh437tr) tax dispute with the government.
Bristow said the corporation’s offer to buy the rest of Acacia Mining reflects the risk the Canadian-listed mining company faces in increasing its exposure to Tanzania.
He spoke Friday, May 24, 2019, in an interview with Reuters news agency. Barrick, the majority owner of Acacia with 63.9 percent, proposed on Tuesday to buy out the minority shareholders as part of efforts to resolve the dispute that has remained since 2017.
Acacia shareholders have expressed concern over the buyout plan, arguing the suggested offer was “ridiculous.”
Barrick’s offer values Acacia at $787 million (Sh1.81tr), a near 11 percent discount and 42 percent below Barrick’s own audited valuation of Acacia’s assets in its 2018 annual report.
But Bristow said in the interview that the offer was fair as Barrick was taking on more risk.
“We have had a good look at the assets and ... the (agreement with the Tanzanian government), which still has to be finalised, comes with risk,” he said.
“Tanzania is considered a higher risk jurisdiction and (Acacia) hasn’t been functioning as a company should be, otherwise we wouldn’t be interfering in it,” he said.
Asked whether there were alternative plans to solving the dispute Bristow said: “If we had a better plan, we would have tabled it.
“This is not an opportunity to exploit a situation, it’s a genuine attempt to mediate an outcome to a situation which has become extremely emotional and which is holding up the mining industry in Tanzania.”
Barrick clinched a framework deal with Tanzania in 2017 that required Acacia to pay $300 million, hand over a 16 percent stake in its three gold mines and split the economic benefits from its operations on a 50/50 basis.
“I can assure you there’s nothing else,” Bristow said. “No side agreement or other agreement, which we’re trying to exploit.”
Acacia declined to comment on the latest remarks by Bristow who only recently assumed the CEO position after selling his South Africa based Randgold Mining to Barrick.
Bristow is keen to push through the Tanzania deal despite open resistance by Acacia, which was locked out of government negotiations but insist it must endorse any agreed deal.
The trouble for Mr Bristow is that the Tanzanian government has completely outlawed Acacia and has declared it would not enter into any kind of settlement with Barrick with Acacia in the mix.
Barrick said on Tuesday the Tanzanian government stand means it is to take full control of the miner to make any progress.