Barrick moves closer to resolving dispute

Deal includes Acacia Mining paying $300M in instalments

Barrick Gold Corp. has reached an agreement with the Tanzanian government on a $300 million (U.S.) payment, a milestone toward resolving a dispute that has crippled the miner’s subsidiary in the African country, according to people familiar with the situation.

Executives from the Torontobased producer and Randgold Resources Ltd., which is being bought by Barrick, met with Tanzanian negotiators on Dec. 7, said the people who declined to be identified as the talks are private. During that meeting, the two sides made significant progress on a deal that includes Acacia Mining PLC paying $300 million in instalments. The terms are now being handed off to a tax working group in Tanzania for review, the people said.

Once that group is satisfied with the numbers, the deal would have to be reviewed by Acacia’s board and the U.K. listing authority, and then voted on by shareholders, which could delay a resolution. Tanzania’s president, John Magufuli, would also need to review the findings to be certain it’s in the best interests of the country, one of the people said.

Barrick, Acacia and Randgold declined to comment, as did Idris Kikula, chairman of the state-run Tanzania Mining Commission. Acacia shares jumped as much as 6.5 per cent in London, before closing up 5.4 per cent at 198.9 pence, the highest since January. Barrick rose 3.1 per cent at the close in Toronto.

In 2017, Tanzania banned exports of unprocessed metal and slapped Acacia with a $190 billion tax bill equal to almost two centuries of revenue, leading to a collapse in the stock. A preliminary framework agreement struck between Barrick executive chairman John Thornton and Magufuli cut Acacia management out of the negotiating process. The deal involved Acacia and Tanzania splitting the economic benefits of operations going forward, which was less contentious than a $300 million payment, according to people familiar with the talks.

The relationship between Barrick and Acacia has been strained. Corruption charges have been levied against Acacia and some of its employees, further complicating sensitive talks.

The appointment of Randgold CEO Mark Bristow to head the company after the merger was seen as offering fresh hope for stalled talks. Randgold’s Willem Jacobs, who will head Barrick’s Africa and Middle East division, was at the meeting, as was Barrick senior executive Kevin Thomson, the people said.