Wednesday 20 February 2019 4:46 pm

Shareholder reaches deal with Tanzania over Acacia Mining tax spat

Acacia Mining saw the light today as its largest shareholder Barrick Gold said it had reached a proposal with the Tanzanian government over a longstanding spat.

The deal would see Acacia sharing half the economic benefits of their operations in the country with the regime.

Read more: Acacia boss: 'No winners' from spat with Tanzanian government

Stocks closed up over 13 per cent as Barrick said it would present the plan, which mirrors a similar framework from 2017, to Acacia’s independent committee “in the near future”.

The agreement comes after years of back-and-forth between Acacia, it’s biggest shareholder, and President John Magufuli.

Magufuli shut down Acacia’s rights to export gold ore concentrate in March 2017, claiming the firm owed $190bn (£145bn) in back taxes – around four times Tanaznia’s annual gross domestic product.

The regime accused Acacia of underreporting the amount of ore in its concentrate.

The settlement is largely in line with a similar statement from October 2017, however this time it would allow Acacia to pay a $300m tax settlement “over time”, instead of up front.

It comes months after Barrick, which owns almost 64 per cent of Acacia, won a new go-getter chief executive in Mark Bristow when it merged with Randgold last year.

Bristow said the new deal “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.”

Acacia noted Barrick’s announcement, but said it was yet to see the proposal.

Read more: Acacia fined in Tanzania amid ongoing spat

However, analysts sounded a cautious note. Tanya Jakusconek at Scotiabank in Canada, where Barrick is based, said it was “difficult for us to be confident” until “definitive documentation is prepared”.

Jakusconek also noted there was no guarantee the ban on concentrates would be lifted, and little clarity on whether Acacia would be given VAT rebates.