Barrick Gold given more time to make formal bid for Acacia Mining

Acacia is Tanzania’s biggest gold producer and operates three major mines there — Bulyanhulu, Buzwagi and North Mara (pictured). (Image courtesy of Acacia Mining)

Canada’s Barrick Gold (TSX:ABX)(NYSE:GOLD) has been given three more weeks to make a firm offer for the percentage in Africa’s Acacia Mining (LON:ACA) it doesn’t already own.

The Toronto-based miner, which has a 63.9% stake in the African company, now has until July 9 to come up with a new bid, Acacia said in a statement. The original deadline for the proposed takeover, submitted in late May, was set to expire on Tuesday.

Tanzania’s No.1 gold producer also said it’s open to an offer, “subject to the price offered being fair and commanding the necessary support from shareholders.”

Acacia has been embroiled in a battle with Tanzania since 2017, when the  government banned exports of unprocessed metal and slapped it with a $190 billion tax bill— equal to almost two centuries worth of revenue.

The company was also forced to cut output by a third from two of its three mines in the country — Bulyanhulu and Buzwag.

Since then, the relationship between Barrick and Acacia has been strained and progress moving an agreement forward has been “almost impossible,” chief executive Mark Bristow acknowledged last month.

Confirming the deadline extension, Barrick said it would allow for “the continuation of discussions with the independent directors and further engagement with Acacia’s shareholders concerning the proposal.”

The gold giant reiterated Tuesday its belief that the African miner’s ongoing dispute with Tanzania’s government has made it impossible for the miner to function as an independent public company.

“In the absence of a take-private transaction, Barrick does not consider there is any credible alternative solution which will preserve, to the extent possible, value for all stakeholders, and no such alternative has been presented by Acacia,” it said in a separate statement.

Acacia, which owns and operates Tanzania’s three major mines, is set to try resolving some of its issues with the government next month, in London, through international arbitration.

The new deadline given to Barrick may overlap with the legal proceedings, with most analysts opposed to the idea.

“We view [arbitration] as the least attractive outcome for minority holders,” Berenberg said in a note published on Tuesday. “In this scenario, we would assume that the conclusion of the international arbitration case is likely to be the best way for it to preserve shareholder value.”

Despite Barrick’s offer values Acacia at a discount, Bristow has said the bid is the most “appropriate” and “elegant” solution to the long-running row over outstanding tax claims that has hit the African miner’s bottom-line.

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