Barrick Gold reaches deal with Tanzania over Acacia Mining
Barrick Gold Corp. has reached an agreement to settle its long-running tax dispute between the government of Tanzania and the mining companies formerly operated by Acacai but now managed by Barrick. Barrick acquired the companies as part of a $1.2 billion transaction approved by a British court last month.
The tax deal includes the payment of $300 million to settle outstanding tax and other disputes, the lifting of a concentrate export ban, the sharing of future economic benefits from mines on a 50-50 basis and the establishment of a unique, Africa-focused international dispute resolution framework, Barrick said in a statement.
“Barrick is definitely back in Tanzania,” Barrick president and chief executive Mark Bristow told reporters in Dar es Salaam, Tanzania’s commercial capital.
“A true partnership can only be described when you have 50/50 and our joint venture with the government of Tanzania is exactly that - a committed partnership to develop Tanzania’s gold assets for the benefit of all stakeholders,” said Bristow.
Reuters reported that in conjunction with the finalization of the agreement, a new operating company called Twiga Minerals Corporation was formed to manage the Bulyanhulu, North Mara and Buzwagi mines. Twiga is the Swahili word for giraffe, Tanzania’s national symbol. Tanzania will acquire a free carried shareholding of 16 percent in each of the mines and will receive its half of the economic benefits from taxes, royalties, clearing fees and participation in all cash distributions made by the mines and Twiga. An annual true-up mechanism will ensure the maintenance of the 50/50 split.
“This company has been registered in Tanzania and it will be headquartered in Mwanza, Tanzania,” Palamagamba Kabudi, Tanzania’s foreign minister said.
Kabudi, speaking at the news conference, said the deal marked a new partnership with Barrick under the new Twiga Minerals name.
“Twiga will make our new partnership an example to other mining ventures who are investing in Tanzania and who want to invest in Tanzania.”
He said details of the deal would be submitted to the country’s attorney general for review and he expected that to be completed by November 15.
The deal comes days after the Canadian company fell short of analysts’ estimates for third-quarter gold production due to low output at its North Mara mine in Tanzania.
“Rebuilding these operations after three years of value destruction will require a lot of work, but the progress we’ve already made will be greatly accelerated by this agreement. Twiga, which will give the government full visibility of and participation in operating decisions made for and by the mines, represents our new partnership not only in spirit but also in practice,” Bristow said in a statement.
Photo: Haul trucks at a Barrick Gold Corp mine. Shutterstock