Canadian Barrick Gold and the Tanzanian Government have recently agreed on a framework for creating a new partnership for operations of the company’s majority-owned subsidiary Acacia Mining, Tanzania.
Acacia Mine is the largest gold producer in Tanzania, having produced over 9 million ounces of gold from a combination of their open pit and underground mines. Barrick holds a 63.9 percent equity interest in Acacia Mine.
The partnership agrees on the equal splitting of economic benefits generated by Acacia between Barrick Gold and the government. The outlined framework was signed by Barrick Executive Chairman John L. Thornton and the President of the United Republic of Tanzania, His Excellency Dr. John P. Magufuli in Dar Es Salaam, Tanzania on the 19 October 2017. The framework follows newly enacted Tanzanian laws that stipulate the need to hand 16% in shares of locally operating firms to the government.
According to Barrick Gold executive chairman John L Thornton, “Following constructive discussions with our Tanzanian partners, we have developed a framework for a modern, 21st century partnership that should ensure Acacia’s operations generate sustainable benefits and mutual prosperity for the people of Tanzania, as well as for the owners of Barrick and Acacia.” Thornton continues by saying “A partnership requires trust between the parties, and transparency is the currency of trust. Through our discussions over the last three months we have established both and this will form the basis of our relationship in the future.”
In addition, there has been an agreement to set up a working group tasked with resolving the outstanding tax claims against Acacia Mining. There has been an alleged under-paying of taxes and duties by Acacia to the Tanzanian government. Acacia has agreed to make a payment of $300 million to the Government of Tanzania, with payment terms to be settled by the working group.
All proposals are subject to review and approval by the Independent Committee of Acacia’s Board of Directors and Acacia shareholders.
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