Acacia threatens Tanzania with legal action as dispute escalates
Acacia Mining (LON:ACA), the Tanzanian gold producer dealing with an ongoing dispute with the country’s administration, has threatened to sue the government in international court as concerns about the safety of its staff mount.
The company, majority owned by Barrick Gold (TSX, NYSE:ABX), has been waiting for the Canadian gold giant to negotiate a settlement with President John Magufuli, after he stopped Acacia from exporting concentrate 20 months ago and said it needed to pay $190 billion in back taxes.
This week, the miner was hit with fresh charges of money laundering and corruption and some of its employees were detained. All the accused have pleaded not guilty.
Delivering third quarter results, Acacia’s interim chief executive Peter Geleta said Friday he wasn’t aware of any material developments or progress in the talks between Barrick and Magufuli. He noted he has only seen a “significant escalation” of government actions against the company.
“I am particularly concerned with the criminal charges now being brought against several current or former employees over the past week,” Geleta said. “We will also be reaching out to the Government to seek the opportunity for direct dialogue regarding the ongoing disputes between the Government,” he said.
The executive warned that failing a negotiated resolution of the conflict, Acacia may pursue a claim under a bilateral investment treaty between Tanzania and the United Kingdom.
Acacia shares fell 11 percent on the news, extending this year’s decline to 28 percent.
In terms of results, the ban on exports of concentrates keeps taking a toll on the company’s coffers. Gold output in the three months to September reached 136,640 ounces, 29 percent lower than a year earlier, but ahead of the first and second quarters of this year. Earnings before interest, tax, depreciation and amortization (EBITDA) fell 11 percent as a result of lower gold production and prices. Net cash increased in the quarter to $74 million.