Barrick launches new chapter in Tanzania

The Buzwagi gold mine in Tanzania. Source: Acacia Mining Plc.

Share this article

Barrick Gold Corp. [ABX-TSX; GOLD-NYSE] said Friday January 24 that it has formalized a set of comprehensive agreements announced in October, 2019 that lay out the framework for the company’s relationship with the Government of Tanzania going forward.

The agreements with the Government of Tanzania (GoT) aim to resolve ongoing disputes related to the operations of its recently acquired Acacia Mining unit.

News of the resolution comes more than two years after Tanzania imposed a concentrates export ban after alleging that mining companies had underpaid up to US$50 billion in taxes over the past 20 years. It recommended that an export ban on concentrates remain in place until the back taxes are paid.

The GoT subsequently stated that it would not sign any agreements related to the ongoing disputes directly with Acacia (under its previous management), a move that prompted Barrick to offer to consolidate its ownership of Acacia in order to facilitate a deal with the GoT. Acacia has three mines in Tanzania, including Bulyanhulu, Buzwagi, and North Mara.

The terms of the deal appear to resolve certain key issues, including back taxes, go-forward economic split between Barrick and GoT, lifting of concentrate export ban (in place since March 2017), which should allow Barrick to begin re-opening the Bulyanhulu underground mine.

Barrick shares advanced on the news, rising 0.66% or 16 cents to $24.40 on volume of 1.53 million. The shares are currently trading in a 52-week range of $15.62 and $26.70.

On Friday, Barrick said it has formalized the establishment of a joint venture between Barrick and the government. Barrick President and CEO Mark Bristow said the joint venture, which will give the government full visibility of and participation in operations made for and by the North Mara, Bulyanhulu and Buzwagi mines, was a pioneering move which would take Barrick’s policy of partnership with its host countries to a new level.

The agreement also ratifies the creation of Twiga Minerals Corp., a company owned jointly by Barrick and the government that will oversee management of Barrick’s local operations, which are now owned 84% by Barrick and 16% by the government.

Under the agreement, Barrick has said it will pay $300 million to settle all outstanding tax. Economic benefits of the mines will be shared on a 50/50 basis (in the form of taxes, royalties, clearing fees, and a new 16% free carried interest).  An annual tune-up mechanism will also be put in place to maintain the 50/50 split.

Barrick said it will partner with the University of Dar es Salaam and commit up to $10 million in funding over a 10-year period for training and skills development in the mining industry. The gold mining giant will also commit up to $40 million to upgrade the road between Bulyanhulu and Mwanza (a port city in northern Tanzania) as well as constructing a housing compound and related infrastructure.

“Reflecting our confidence in the potential of this highly prospective gold region, we have budgeted $50 million for brown and greenfields exploration here in 2020 alone and are looking at various opportunities to sustain and expand our operations,” Bristow said.


Share this article

Leave a Reply

Your email address will not be published. Required fields are marked *

×