Barrick eyes full ownership of Acacia

What you need to know:

  • The Canadian mining giant, Barrick Gold Corporation, which owns a 64.2 per cent stake in Acacia Mining, is planning a full ownership of the latter.
  • Acacia Mining is entangled in a 19-month long dispute with the Government of Tanzania. Its managing director, Assa Mwaipopo is facing charges at the Kisutu Resident’s Magistrate Court.
  • He is the third official from Acacia to be arraigned in connection to money laundering charges.
  • He is facing nine out of the 39 counts facing former Acacia vice President of Corporate Affairs Deo Mwanyika (56) along with the Bulyanhulu Gold Mine Relations Manager, Mr Alex Lugendo (41)

Dar es Salaam. The Canadian mining giant Barrick Gold Corporation plans to take full ownership of assets belonging to embattled Acacia Mining.

Bloomberg news agency reported on Tuesday that Barrick was in favour of taking back control of Acacia assets after its completes the takeover of Africa-focused rival Randgold Resources Ltd.

People familiar with the plans, who did not want to be identified because of the sensitivity of the matter, said that once the Randgold deal was in the bag, the merged group would seek solutions for Acacia.

Randgold last month agreed to the terms of a recommended share-for-share merger with Barrick Gold in a deal worth $18.3 billion (Sh40.3 trillion).

Barrick owns 64 per cent of Acacia Mining, which has three major mining operations in Tanzania, namely North Mara, Bulyanhulu and Buzwagi.

Reports have also revealed that a 36 per cent stake in Acacia is valued in the region of $303 million (Sh667 billion) based on the closing price in London on Tuesday.

The company has, however, been dogged by operational setbacks and is locked in a dispute with the government. The dispute needs to be resolved before any decision is made. Last month, Barrick reached a mutual agreement with Shandong Gold Corporation, one of China’s leading mining companies. Shandong will purchase 50 per cent of Barrick shares at $300 million (Sh660 billion), and Barrick will, in turn, invest an equivalent sum in Shandong shares.

Barrick and Shandong are also 50-50 joint venture partners at Veladero mine in Argentina.

Barrick has also sold a 51 per cent stake in Nyanzaga Gold Mine in Shinyanga Region to OreCorp. The deal has already been approved by the Fair Competition Commission (FCC).

It was still not clear whether all three Acacia gold mines in Tanzania will be reacquired by Barrick. The Toronto-based company declined to comment.

Randgold chief executive Mark Bristow, who has previously criticised the handling of the situation in Tanzania, will assume the same role at Barrick, according to Bloomberg.

Tanzania has banned exports of mineral concentrates and slapped Acacia with a $190 billion (Sh418 trillion) tax bill.

Reports further said that Barrick would need to see a resolution of the Tanzanian disputes first as it wouldn’t want to assume those liabilities, a source familiar with the situation said.

Bringing the assets back into Barrick would signal a significant U-turn by the firm. Since first spinning them off, it has scaled down its stake and tried to sell them to Chinese bidders.

Acacia, formerly known as African Barrick Gold, promised gold output of 1 million ounces a year when it first listed in London. Instead, production has declined, and this year it is forecast to be just half that figure.

Barrick has been leading negotiations in Tanzania, but progress has been slow and the relations between the company and its subsidiary have become increasingly strained.

On Tuesday, Acacia managing director for Tanzania Asa Mwaipopo, was arraigned on several criminal charges, including money laundering , tax evasion and forgery. He denied all charges and was remanded.