African Barrick Gold (ABG) has transferred ownership of a key gold mine back to Tanzania’s government in an arrangement that will see the State receive a part of a rehabilitation fund set up to close down the operation.

The London Stock Exchange listed company, whose shares are also cross listed on the Dar es Salaam Stock Exchange, has said that the Tanzanian State Mining Corporation (Stamico) will acquire the Tulawaka Gold Mine and its exploration licenses.

Under the arrangement, Stamico will pay ABG $4.5 million and a 2 per cent net royalty on the future production of gold in excess of 500,000 ounces but this will be capped at $500,000.

In June this year ABG disclosed that will spend about $23 million over a two-year period in closing the Tanzanian mine after its operations were stopped following declining production (See graphic).

READ: ABG mining to invest $445m in Tanzania

The mining company said that Stamico will take ownership and management of the rehabilitation fund established as part of the closure plan for the mine in return for the assumption of all remaining past and future closure and rehabilitation liabilities for the Tulawaka mine.

“This will result in a cash payment by ABG to Stamico of the balance of the rehabilitation fund, which currently stands at $17.6 million, less the transaction consideration on completion,” said ABG in a statement.

In June, ABG had said that as a result of the closure of the Tulawaka gold mine which is in the Kagera region, it will have to declare some of its employees redundant, while others will be redeployed to other sites.

READ: Workers to lose jobs as mine closes

According to Bank of Tanzania’s (BoT) latest economic report, exports declined by 1.4 per cent to $8.242 billion for the year ending September compared with $8.361 billion for the year ended September the previous year (See graphic).

BoT said that the decline was attributed to the drop in export value of gold, manufactured goods and traditional exports.

Disclosures contained in its latest annual report for the year ended December 2012 showed that the mining firm had about 5,668 employees with 5,230 in operations, 80 in exploration and 358 in administration.

Tulawaka, whose production ceased in the second half of this year, is owned by the Tulawaka Joint Venture, in which ABG holds a 70 per cent economic interest through a wholly owned subsidiary, with MDN Inc holding the remaining 30 per cent of the Joint Venture.

“Tulawaka was a highly successful mine for African Barrick Gold and this transaction provides Stamico the opportunity to further develop the domestic Tanzanian mining industry,” said Brad Gordon, ABG’s chief executive officer.

The mine, which is an open pit gold mine with underground operations, began production in June 2005 but its revenues dropped to $75.458 million for the period ended December 2012 from $131.435 million in 2011.

[email protected]