Barrick Gold to give Tanzania mines stake and $300m to end dispute

Dar Es Salaam — Barrick Gold will give Tanzania a 16% stake in three gold mines, a 50% share of revenues from those mines and a one-off payment of $300m to resolve a dispute that has hit its operations in the country, the two sides said.

The Canadian miner and the Tanzanian government have been in talks for months after the east African country banned the export of unprocessed minerals and enacted laws to raise state ownership of the nation’s mines.

The agreement, announced on Thursday, comes after the new laws and a crackdown on mining firms slowed fresh investment in what has long been seen as one of Africa’s brightest mining prospects.

President John Magufuli has said the government’s approach was aimed at ending what he called years of corrupt practices and tax evasion that had robbed the country of revenue.

In March Tanzania banned the export of gold and cooper ore over a tax dispute with London-listed Acacia Mining, which is majority-owned by Barrick Gold. The ban was part of a push for the construction of a local smelter to make the country’s gold exports more valuable.

Magufuli did not say whether the export ban would be lifted.

He said a working group comprising Barrick and government representatives would meet for more discussions.

"Now that we are all shareholders, we can sit down over a cup of coffee and amicably resolve any outstanding issues," he said on television. "We trust Barrick, they are a true partner."

The president also ordered government officials to begin talks with other companies in diamond and tanzanite mining to achieve similar agreements.

Tanzania is the continent’s fourth-largest gold producer and Acacia is its largest miner, with three gold mines that also produce copper.

Barrick last week said it had experienced a decline in third-quarter gold production amid pressure from the Tanzanian government on Acacia.

Acacia shares were up 18% before the close.

Barrick chairman John Thornton said in the Tanzanian capital the deal would have to be approved by independent shareholders and directors of Acacia.

Tanzanian Justice and Constitutional Affairs Minister Palamagamba Kabudi said the agreement was in keeping with the mining laws passed in July.

"We have also agreed to have a 50:50 share of revenues between the government and Acacia Mining from all the mines," he said.

There was previously no revenue-sharing agreement and the government’s take from mines was only from taxes and other royalties.

Reuters