March date for $300m Barrick goodwill pay

Dar es Salaam. Barrick Gold Mine is finally set to pay the government $300 million (over Sh714bn at the current exchange rate), part of its mining reform agreement with the government, it has emerged.

Constitution and Legal Affairs Minister, Prof Palamagamba Kabudi (pictured), revealed the pay cheque could come as early as March this year, with the paper work for all the other agreements in the deal finalised.

Barrick separately confirmed the development in a statement that suggested the pay would likely unblock the ban on export of copper concentrates that has been in place since 2016.

Prof Kabudi was speaking shortly after President John Magufuli held talks, at the State House, with a delegation from Barrick led by Chief Operation Officer (COO) responsible for Africa and Middle East, Dr Willem Jacobs.

Kabudi led the Tanzanian team in the negotiations with Barrick as the government pushed to raise its revenues and participation in local mineral exploitation.

The negotiations which have dragged for a while has seen a significant disruption of Acacia mining activities in the country. Barrick hold 64 per cent shareholding in Acacia.

Sources told Reuters news agency yesterday that Barrick and Acacia will meet next week to agree on the final deal with the government. Acacia was locked out of the negotiations and yesterday issued a statement reiterating it had not seen the suggested deal with Tanzania.

Reports say the initial agreement had been difficult to reach due to differing views from the government and the two companies about how the $300 million would be paid.

The news from Dar es Salaam yesterday sent London-listed shares in Acacia, up 6 percent to their highest since October 2017, when an initial framework agreement was announced.

Barrick’s announcement confirms the 2017 deal which called for the creation of a local firm in Tanzania to manage Acacia’s assets, a 50-50 split of economic benefits and a $300 million payment to resolve all outstanding tax claims.

“While the original deal details have been known for over a year now, we believe that the actual execution of the US$300 million payout... will remove a major overhang for Barrick and Acacia,” Credit Suisse analysts said in a note.

The final settlement also marks a victory for Barrick’s new chief executive Mark Bristow, who took the helm in January after the gold company merged with Randgold Resources.

“Significant amounts of real value have been destroyed by this dispute and, in Barrack’s view, this proposal will allow the business to focus on rebuilding its mining operations in partnership with their respective stakeholders,” Barrack’s Bristow said in a statement.

“This announcement provides opportunity for Bulyanhulu to be restarted and some value to be recreated within the company,” said Investec analyst Hunter Hill coat, referring to a mine where Acacia lowered operations due to the export ban.

The government in 2017 handed a $190 billion tax bill - about four times the country’s gross domestic product - for underreporting output.