Barrick Gold Corp. (TSX:ABX) says it has reached a new partnership deal with the government of Tanzania to settle a tax dispute with its majority-owned Acacia Mining plc that will include profit sharing and a $300 million payment.
The company says it signed a framework with Tanzania Thursday that outlines the path to set up the structure, which will include sharing on a 50-50 basis the economic benefits of Acacia Mining’s three gold mines in the country.
Barrick says the two sides have also agreed to form a working group to resolve the outstanding tax claims, and as a gesture of good faith Acacia would make the $300 million payment.
The deal, still subject to approval by Acacia, is the outcome of months of talks after the Tanzania government handed London-based Acacia a US$190-billion tax bill in July, alleging the 63.9-per-cent Barrick-owned company owes that much in back-taxes and penalties.
Tanzania had also imposed an export ban on concentrated gold and silver in March, which Barrick said at the time could impact about six per cent of its estimated 5.3 million- to 5.6-million ounces of gold production for the year through Acacia’s mines.
Acacia Mining’s share price was up almost 18 per cent on the London Stock Exchange following the news, while Barrick’s share price had ticked up half a per cent on the Toronto Stock Exchange by late morning.