Shares in Acacia Mining have fallen more than five per cent after it revealed it would not progress with a £3bn merger with Canada's Endeavour yesterday evening.
The FTSE 250 gold miner's share price fell as much as 5.32 per cent at 451.8p in morning trading.
In separate statements, Acacia and Endeavour said progressing with a deal would not have been in the best interests of shareholders.
Earlier this month, the Tanzanian government decided to ban the exports of gold and copper concentrates, which make up about 30 per cent of Acacia's revenues.
Discussions between the two firms stalled after the ban was announced, and sources close to Endeavour said the company didn't need the deal.
Yuen Low, analyst at Shore Capital, said Acacia is in urgent need of diversification.
"For us, [the ban] was a reminder of Tanzania’s growing resource nationalism and highlighted Acacia’s relatively urgent need for operational diversification – Acacia’s assets in Kenya and West Africa are all still relatively early stage," said Low.
"We wonder if, following the concentrate ban, Endeavour decided to seek terms improved in its favour (we know we would have). Perhaps they pressed just a bit too hard?"
Analysts at RBC Capital said Acacia's shares have traded at a 25 to 35 per cent discount over the past year. "Our analysis suggests this is due to multiple factors including the majority shareholder overhang, the relative lack of liquidity, and the single-country Tanzania risk. These are all factors that would have been ameliorated had the merger progressed."
They added: "Over the long term, we expect that Acacia will continue to increase value via development at North Mara and Kenya, and solutions to the structural discount are still likely to be pursued. We look to a further update on the concentrate export situation as the next potential catalyst for the shares."