Acacia Mining has rejected a takeover bid by majority shareholder Barrick Gold, saying the proposed price does not reflect the full value of the mining firm.
Barrick, which holds a 63.9 per cent stake in Acacia, last month proposed the buyout in the form of a share-for-share exchange of 0.153 Barrick share for each ordinary share of Acacia.
The move is part of efforts to resolve Acacia’s dispute with the Tanzanian government.
Barrick had valued Acacia at $787 million, but the latter has rejected the proposal and accused its main shareholder of taking advantage of problems “it has helped inflame” to buy the company at a knockdown price.
“Acacia continues to believe that, subject to an offer price which is fair and which commands the requisite support of shareholders, the acquisition by Barrick of the Acacia shares it does not currently own would be an attractive solution for key stakeholders.
“However, the Company strongly disagrees with Barrick’s view on Acacia’s life of mine plans, which it understands to underpin Barrick’s valuation and price of the proposal, and sees no reasonable basis for Barrick’s proposed adjustments,” Acacia said in a statement.
Barrick has been negotiating with the government of Tanzania for the last two years to seek a basis for a settlement of Acacia’s ongoing disputes with the government, and the two sides have already signed a framework that includes upfront payment of $300 million as a gesture of goodwill and subsequent 50/50 revenue sharing.
“Acacia was given no meaningful opportunity to respond to Barrick’s proposal to the government of Tanzania or the proposed framework, before they signed the framework documents,” the firm said.
While a basis for a settlement has been developed but not finalised, Bar-rick says the government refused to enter into a settlement directly with Acacia.
The government declared Acacia “unwanted in Tanzania”, and demanded that Barrick sort out the standoff if it wanted a deal.
“As a new era is dawning in the Tanzanian gold mining relations, the government does not want the presence of Acacia in any form in the country,” the government said in a statement released by its spokesperson, Dr Hassan Abassi. “The ball is now in Barrick’s court. Solve Acacia or no deal.”
The government made it clear to Barrick that if its gold mining subsidiaries are to continue operating in Tanzania, it must be under a new operating company in which the government has a stake and there is no presence or participation of Acacia.
However, Acacia says it started supporting Barrick’s discussions with the government after realising that it was the most pragmatic way to progress the possibility of a settlement.
“Acacia believes that Barrick’s intervention in Acacia’s negotiations with the government of Tanzania, the length of time Barrick’s negotiation has taken and the way they have managed their direct negotiations, have had the effect of undermining Acacia in Tanzania.
“Acacia did not request that Barrick negotiate with the government of Tanzania, nor did Barrick seek consent of Acacia prior to its engagement with the GoT in June 2017. Indeed, Acacia was continuing its own engagements with the highest levels of the government at the time and had no reason to believe that these engagements would not continue,” Acacia said.
Barrick has until July 9 to make a formal offer.
Acacia has been unable to export gold-bearing ore from Tanzania, where it operates three mines, since March 2017. The government also slapped Acacia with $190 billion in tax bill over what it termed as under-declaring.