Barrick wins more time to mull Acacia offer

Barrick Gold Corp. [ABX-TSX; GOLD-NYSE] has secured another extension to make a formal offer to buy the remaining 36% stake in Acacia Mining Plc [ACA-LSE] that it doesn’t already own.

The deadline for a firm bid was extended to July 19, 2019, to allow Barrick time to review an independent valuation of Acacia’s assets in Tanzania. However, Scotiabank has said it understands that if Barrick does not make a firm offer, then it will be prevented from making another offer for at least six months.

Barrick has said, it is aiming to resolve the ongoing dispute between the Government of Tanzania (GoT) and Acacia following a concentrate export ban that was implemented in March 2017. Tanzania imposed the 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 Government of Tanzania subsequently stated that it will not sign any agreements related to the ongoing disputes directly with Acacia (under its current management), a move that prompted Barrick to offer to consolidate its ownership Acacia in order to facilitate a deal with the GoT. Acacia has three mines in Tanzania, including Bulyanhulu, Buzwagi, and North Mara.

On May 21, 2019, Barrick announced that it had met with directors and senior management of Acacia and presented a proposal for the consideration by the independent directors of Acacia to acquire all the Acacia shares it doesn’t already own via a share exchange of 0.153 Barrick shares for each shares for each share of Acacia Mining.

On June 18, 2019, Barrick said it is prepared to extend the deadline for the announcement of a firm offer from June 18, 2019 until July 9, 2019.

The latest extension to July 19, 2019 will also allow Barrick to review SRK Consulting (UK) Ltd.’s analysis on Acacia’s share value, which was pegged in the range of 271 British pence to 281 pence.  SRK’s evaluation range is above Acacia’s closing price on July 9, 2019 and Barrick’s implied offer price.

Barrick has noted that the risk factors listed in the SRK report corroborate the importance of the issues raised in “Barrick’s View of Acacia’s Mine Plans” which were outlined in a press release on June, 18, 2019.

Those include valuations of the Bulyanhulu Mine, which assume the successful conversion of a large portion of deep high-grade inferred mineral resources to mineral reserves, said Barrick. The gold mining major now says it plans to meet early next week with representatives of Acacia and SRK to discuss the SRK report and related matters.

Barrick has previously said the GoT has made it clear that it is not prepared to enter into settlement agreements directly with Acacia. “In Barrick’s view, it is now clear that the relationship of Acacia with GoT has been so damaged by events that led to the concentrate ban being imposed by the GoT in March 2017 and by the subsequent arbitration proceedings initiated by Acacia against the GoT that is no longer possible for Acacia to continue to function as an independent public company, with substantially all of its value represented by assets in Tanzania,” the gold mining giant said.