Shares in Acacia drop further after Tanzania's huge tax bill

Courtney Goldsmith
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(FILES) Gold bullion is displayed at Shi
Acacia's shares have more than halved since Tanzania implemented new mining rules (Source: Getty)

Acacia Mining took another tumble today after it was slapped with a $190bn (£146bn) fine for unpaid taxes and penalties from the government of Tanzania.

Shares in the firm fell as much as 17 per cent this morning following the bill, the price tag of which was around 200 times its market capitalisation. At the time of publishing, shares were down 9.49 per cent at 167p.

Acaica has been involved in a long-running dispute with the Tanzanian government, which has accused it of under-declaring export revenues at two of its mines since 2000.

Acacia refuted the findings and re-iterated that it had fully declared all revenues.

Analyst Yuen Low at Shore Capital Markets called the government's bill "ludicrous".

Low said:

So, it appears that Tanzania has decided to continue its slide down along the Zimbab-way. The Tanzania Revenue Authority (TRA) has apparently served notices claiming that Acacia owes c.$40bn of unpaid taxes, on which it is levying c.$150bn of penalties and interest (for context, full-year 2017 revenue was $1.05bn).

Acacia has referred its row with Tanzania to international arbitration.

The company's share price has more than halved since Tanzania first introduced a controversial ban on gold and copper concentrate exports - from 533p at the beginning of March to around 167p today. The government has since implemented a series of new, strict rules on the sector.

Analysts at Investec pointed out that the $40bn tax bill is more than twice what the top five global gold miners combined have paid in taxes since 2000, adding that the company's hope for "rational discussions" look increasingly unlikely. Analysts said:

In an earlier research note we expressed concern over the behaviour and intent of the Tanzanian president and suggested that Acacia is a binary investment: worth what it was before the current situation, or it is worth the cash in its bank.

Back of mind was a view that sense would prevail, given parent Barrick appeared to have laid some grounds for rational discussions. However, this looks increasingly difficult to envisage.

Read more: Acacia loses millions in revenue due to new Tanzania mining rules

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