FROM THE BROKING DESK
The news that Barrick Gold (TSE:ABX) had come to a settlement with the Tanzanian Government was taken very well by the market; shares in Acacia Mining rose over 35%. The settlement Barrick has struck will see the Tanzanian Government take a 16% stake in three gold mines operated by Acacia, an as yet undefined 50/50 split of economic benefits and a one-off payment of US$300m. The deal will need to be approved by both the shareholders and directors of Acacia, but it is effectively a Barrick subsidiary, with the Canadian gold miner owning 63.9% of the company and having two of the seven board seats.
Problems started when the Tanzanian Government banned the export of unprocessed minerals and enacted laws to increase state ownership of mines. This seriously shook investor confidence in the country and threatened a number of mining projects. While the deal looks quite exacting, it should be remembered that just four months ago Acacia was being asked to pay a whopping US$190bn in unpaid taxes. Tanzania is Africa’s fourth largest gold producer, and Acacia is the largest gold miner in the country. It is expected that a slew of similar deals will now be struck across the industry.
A company that we keep a close eye on in Tanzania is Peak Resources (ASX:PEK) ††, which is developing the Ngualla Nd/Pr Project. Peak got a lot of interest from investors at our recent Mobility Metals Conference, but — unsurprisingly — the situation in Tanzania was seen as an issue. Peak has actually received good support from the government so far, with environmental permits being issued and an application for a mining licence already made. The new mining minister, Angellah Kairuki, said this week that her top priority is to improve relations with investors and grow the mining sector for the economic benefit of all. Also, late last month Chiku Galawa, the Songwe Regional Commissioner, met with Peak and made public her support for the project.