The Bulyanhulu headframe in Tanzania. (Credit: Acacia Mining)

TANZANIA – Acacia Mining of London, U.K. and the Tanzanian government have reached a deal whereby they will share the benefits from Acacia’s operations on a 50:50 basis going forward. Acacia is 63.9% owned by Toronto’s Barrick Gold.

Acacia has three operating mines in Tanzania – Bulyanhulu, Buzwagi and North Mara. Taxes relating to the gold and copper produced at Bulyanhulu have been a major source of disagreement, with the government alleging that the company under reported production by 90% to avoid taxes. The government claims the company owes it almost US$200 billion in unpaid taxes and royalties.

Now Barrick and the government are forming a working group focused on resolving the outstanding tax claims. As a gesture of good faith, Acacia will make a payment to the country of US$300 million, terms of which will be worked out.

Barrick also outlined some of the details of the agreement:

• A new Tanzanian operating company will be created to manage the three mines and any future operations in the country.
• The new company will maximize employment of Tanzanians and build local capacity in all sectors of the business. More goods and services will be sourced locally. Finally, more gold will be smelting locally, as opposed to be shipped overseas in concentrates.
• The Tanzanian government will receive is 50% of economic benefits will be paid as royalties, taxes, and a 16% free carry interest in the operating company.
• Barrick and the government are reviewing conditions for lifting of the country’s export ban on gold and copper.

The proposal is subject to review and approval by an independent committee of Acacias board and its shareholders.

More details are posted at www.AcaciaMining.com.