29 JULY 2016
By Samantha Cole
Indeed, everyone is talking about the news that the Canada-based Barrick Gold Corporation is suddenly anxious to be rid of its 63,9 per cent equity stock in Acacia Mining PLC – still regularly referred to as “African Barrick Gold”.
Independent analysts around the world and prospective investors – especially those specializing in the gold industry, are already asking why the world’s largest player in gold mining, would want to free itself and divest of its shareholding in a multi-national conglomerate that is, for all intents and purposes, actually formed and created by themselves …and also one that recently declared a dividend in London for its shareholders – including “Mother” Barrick Gold – to the tune of hundreds of millions of US dollars? There must be an underlying reason for this most unusual, most unenterprising strategic decision…a reason that analysts would not accept from Barrick’s usual spin stories!
Acacia Mining is a publicly-listed company both on the London and Dar es Salaam stock exchanges under the symbol ACA. Acacia is also traded in New York.
Acacia Mining stock value is up more than 200 per cent since the start of the year. Not a day passes without umpteen News Alerts about the “the talk of the gold industry” – even if the increase in the gold price contributes to the increased stock value.
The company’s listing with the Dar es Salaam stock exchange has seen a boost in the value of Acacia shares by some 75 per cent that has reached an all-time high since the UK voted to exit the EU.
Furthermore, recently Acacia Mining reported better-than-expected earnings in Tanzania, surpassing market forecasts for earnings, production and costs. Overall, Acacia appears to have recently become the “new blue eyed kid on the block”!
So, observers want to know…WHY would a mother company so urgently need to rid itself of such a successful “money-printing” daughter business? Questions are being asked what has sown the seeds of discord so suddenly, this fast, of this magnitude, between a parent and its super-enterprising offspring?
Acacia Mining PLC own three profitable operating mines in Tanzania and these are Acacia’s only income producing assets in Africa. It’s no surprise that these mines are being closely observed by the Tanzania authorities, especially since the public lambasting in the Tanzania Parliament where a MP clearly addressed Barrick Gold & Acacia Mining directly by name, referring to their involvement in fraud, corruption and suppression of local companies in Tanzania.
Just a few months ago, the Tanzania Revenue Authority (TRA) achieved a guilty judgment against Barrrick & Acacia for Tax Evasion – in which the judge wrote “our respectful opinion constitutes the evidence of a sophisticated scheme of tax evasion.”
The local communities living around the areas of the Acacia mines have taken legal action in numerous claims against Acacia for several illegal cases ranging from deaths, acts of violence, rape, environment damage and more.
Barrick-Acacia have an ex-partner called Bismark Hotel Mining, with whom they are in the middle of a legal struggle involving $115 million of damages to Bismark.
Barrick Gold, Acacia Mining and their local subsidiaries have taken major, negative and harmful beatings through media coverage this year in both international and local media, online and in print.
A major slap in the face to the Tanzanian Government and its Nation was when Acacia Mining declared a dividend to its shareholders only in London. The dividend was to the value of 100’s of millions of dollars, yet they have the audacity and impudence to show an operating loss in Tanzania – to the detriment of the Government and TRA, all of which is now public knowledge.
However, in sharp contrast to all the above Acacia wheeling and dealing, Barrick and Acacia will have been deeply shocked by President Magufuli’s recent public speech that included the distinct message to multinational mining companies who continuously claim that they make losses in Tanzania, that they should rather go home back to their countries and leave Tanzanian mineral resources for Tanzanian children to inherit!
Now we see all the pieces of the puzzle start to give the clear picture that all these recent deeply distressing situations by Barrick and Acacia Mining against the People of Tanzania, would appear to be the reason why Barrick Gold suddenly send out signals to the public of their intentions to divest and disassociate itself from Acacia Mining – as soon as possible!
The news and media – both online and printed, are full of damning news reports concerning the poor management of both Barrick Gold and Acacia Mining.
Focus Africa and many other news and media specialists reported that Barrick Gold are now talking to some multinational gold mining companies to take over Acacia Mining.
Potential buyers named by Reuters are AngloGold Ashanti, Harmony Gold, Randgold, Sibanye Gold and Goldfields, all of whom are South African gold mining companies.
An international gold mining analyst has cynically commented about “people in glass houses that should not throw stones”. After all, he says, Kelvin Dushnisky and Barrick Gold together have one of the worst track records for business ethics in the world. Is this not total double standards for Barrick to point fingers at their daughter company for bad behavior?
Bloomberg’s media reports that Barrick Gold’s President, Mr. Kelvin Dushnisky, said that they were divesting from non-core assets, which was a contradiction in terms, in that Barrick, was the largest gold producer in the world, so why divest from Acacia, when Acacia is a profitable producer of gold and is a major contributor to Barrick bottom line.
Acacia Mining’s business record in Tanzania has been a roller coaster ride which will certainly negatively influence any selling price that Barrick has in mind. After all, who wants a company that is so full of problem situations that one cannot hold it like a hot potato? Selling Acacia Mining will carry all the “dirty linen” of multiple legal actions from the Government Authorities, from local communities and from local companies – the largest of which is the Bismark legal claim of $115 million dollars. Will any buyer be interested to inherit all these claims? Barrick will need to enter into their “settle out of court” mode…But history shows us how good they are at that!
As one Tanzania newspaper printed today, Friday, July 29, 2016:
“…one observer rhetorically asked: “why haven’t they been meeting their statutory obligations to the Tanzania Government, the Tanzania people in general – and, in particular, the local communities around the mine sites, as well as local companies like Bismark, who have been gypped out of their lawful dues in the interest of a few Acacia shareholders?”
Prospective buyers will need to complete a great deal of due diligence on Acacia Mining PLC, aka African Barrick Gold to ensure that they have full disclosure of all the worms that need to come out of the woodwork if they take over the company. Based on reports in the media, will they worry about information from Acacia’s top trio, Brad Gordon, Peter Spora and Deo Mwanyaki?
Another Tanzanian observer has raised suspicions that this whole sudden “let us be rid of Acacia Mining” rumour that Kelvin Dushnisky, president of Barrick Gold, has released to the world media, could be nothing more than a smokescreen warning to the Tanzania President, John P. Magufuli, who has recently demonstrated his absolute dissatisfaction with the overseas mining companies in Tanzania.
If this is the case, Mr. Dushnisky is yet to learn that nobody calls the bluff of President Magufuli!
If Mr. Dushnisky wants to play poker, he should look elsewhere for poker partners!