Acacia says valuation higher than Barrick buyout offer, extends bid deadline

The logo of sponsor Barrick Gold Corporation is seen as visitors arrive at the PDAC annual convention in Toronto, Ontario, Canada March 4, 2019. Barrick on May 21 had offered 0.153 of its own shares to acquire the 36.1 per cent of Acacia it does not already own. PHOTO | REUTERS 

In Summary

• Barrick’s buyout proposal for Acacia followed two years of wrangling over a $190 billion tax bill in Tanzania.
• Barrick last month said its proposal was “more than fair,” and that some Acacia production estimates were unsupportable.
• Acacia reported a 19 per cent increase in second-quarter gold production.

By REUTERS
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Tanzania’s largest gold miner Acacia Mining Plc said on Tuesday it is worth more than a buyout
proposal by majority shareholder Barrick Gold Corp values it at, and extended the deadline for a firm bid to July 19.

Based on a review by independent technical consultant SRK Consulting, Acacia is worth 271 pence per share under a “preferred-value” scenario, with a range of 203 pence to 281 pence per share under low- and high-value scenarios, the London-listed miner said in a statement.

Barrick on May 21 had offered 0.153 of its own shares to acquire the 36.1 per cent of Acacia it does not already own.

That equates to about 193 pence per share, based on Monday’s closing prices, valuing the company at about $990 million (794.8 million pounds), compared with $787 million when it first proposed the deal, thanks to a rally in Barrick shares.

“271p is the absolute minimum the minorities will accept,” a minority shareholder in Acacia told Reuters.

“Barrick should go for that and just get this done...there is material upside for Barrick. The quicker both sides can get on and deliver that, the better.”

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Continued talks

In a separate statement on Tuesday, Barrick said it has continued talks with the Acacia Transaction Committee to acquire shares which it does not already own and is also reviewing the SRK Consulting report.

“Barrick intends to meet early next week with representatives of Acacia and SRK to discuss the SRK report and related matters,” the company said.

Barrick’s buyout proposal for Acacia followed two years of wrangling over a $190 billion tax bill in Tanzania, which was reduced to $300 million under a 2017 framework agreement.

Barrick last month said its proposal was “more than fair,” and that some Acacia production estimates were unsupportable.

Acacia, whose minority shareholders had accused the Canadian company of taking advantage of its predicament, reported a 19 per cent increase in second-quarter gold production.

The valuation scenarios assume a gold price of $1,300 an ounce, the settlement of the tax dispute between the government of Tanzania and Acacia and the lifting of the country’s mineral export ban. Spot gold was trading at $1,396.80 on Tuesday.

Barrick shares have risen almost 30 per cent to $16.08 since its close before its proposal, while Acacia shares are up 14 per cent at 181.3 pence.

Acacia said its board believes a buyout by Barrick would be an attractive solution, as long as the price is fair and supported by minority shareholders.

It also said a negotiated settlement with Tanzania is its preferred outcome.

Acacia also said that should its minority shareholders vote for a Barrick offer, it would seek a stay of arbitration, which it has said it will proceed with in the absence of a final deal.