Acacia Mining parent 'agrees to repay losses' to Tanzania
- Author: Zachary Reyes Jun 25, 2017,
Jun 25, 2017, 13:19
Shares in gold miner Acacia Mining tumbled once again after the government of Tanzania accused it of tax evasion stretching back years.
Acacia will pay all outstanding money it owes the government and cooperate to build a smelter, according to a Tanzanian government statement after Pres. Magufuli met John Thornton, Chairman of Barrick Gold (ABX +0.3%), which owns 63.9% of Acacia.
"Barrick and the government of Tanzania have agreed to enter into discussions in order to reach a mutually acceptable solution to the issues relating to the ban on the export of gold and copper concentrates as well as the future framework for Acacia's operations in Tanzania".
Concentrate is a powdered form of gold and other minerals that Acacia ships overseas to be smelted down into gold bars.
A report by the Presidential Second Committee appointed by the government has alleged that Acacia falsified its accounts and tax declarations, which resulted in underpayment of tax in the range of tens of billions of dollars. "We have always conducted our business to the highest standards and operated in full compliance with Tanzanian law".
"Acacia dismissed the charges as "unfounded accusations".
Acacia, which saw its own cash in the bank slip to $165m at the end of May from $196m at the end of the first quarter, argued that the findings of the first committee.
Speaking on national TV, Magufuli said firms exported minerals worth as much as 381 trillion shillings ($170.2 billion) between 1998 and 2017, declaring as much as 40% fewer containers than they actually shipped, Xinhua reports.
"With no concentrate exports since March, and assuming a worst case scenario of Acacia suspending operations for the remainder of 2017, that would equate to approximately 270,000 ounces of lost production for Barrick this year", said Scotiabank analyst Tanya Jakusconek in a note this week.
Mining contributes 3.5% to the gross domestic product of Tanzania, which is Africa's fourth-largest gold producer.
The London-listed company immediately rejected the claims.