Barrick Gold has said it will approach the board of Acacia Mining to back its formal proposal to settle a long-running dispute with the Tanzanian government.
Barrick, which owns 64 per cent of Acacia, said it had agreed on a proposal with the government of Tanzania that would include the payment of $300m to resolve outstanding tax claims.
Barrick said “work is under way” to finalise a series of definitive agreements that would bring the proposal into effect. Acacia has been unable to export the majority of its gold from the east African country since 2017, following charges that it had underpaid $190bn in taxes over a 17-year period.
“Significant amounts of real value have been destroyed by this dispute and, in Barrick`s view, this proposal will allow the business to focus on rebuilding its mining operations in partnership with their respective stakeholders, and most importantly long-suffering investors, including Barrick,” Mark Bristow, chief executive of Barrick, said.
Barrick gave no indication of whether Tanzania’s president John Magufuli would accept the deal, however.
The proposal is based on an agreement struck between the government and Barrick’s executive chairman John Thornton in October 2017. It proposes the creation of a local operating company to manage Acacia’s mines, a 50/50 split of the economic benefits, and a payment of $300m to be paid over time.
“Work is under way to finalise the definitive agreements needed to give effect to the proposal. To become effective, the proposal and those agreements must be approved by Acacia and the Government of Tanzania, in keeping with applicable laws and regulations,” it said.
Shares in Acacia rose by 3 per cent on the news to trade at 231.8p in London.
Acacia said in a statement that any proposal would be reviewed by an independent committee of its board.