Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Canada’s Barrick Gold (TSX:ABX)(NYSE:GOLD) is acquiring all outstanding issued shares it doesn’t already own in Acacia Mining (LON:ACA), which gives the gold giant full control of the African miner.
The Tanzanian gold producer’s shares were suspended from trading on the London Stock Exchange’s main market, before being cancelled on Thursday.
The move follows Friday’s approval of the takeover by an UK court, which removed the last hurdle for Barrick’s takeover of Acacia, which spun off from the gold giant in 2010.
Acacia directors Peter Geleta, Rachel English, Steve Lucas Deborah Gudgeon Alan Ashworth and Adrian Reynolds will resign from the board.
Graham Shuttleworth and Martin Welsh have joined the board as directors, Barrick said.
THE ACQUISITION ENDS ACACIA’S NEAR-DECADE PRESENCE ON THE LONDON STOCK EXCHANGE. SHARES WILL BE DELISTED WITH EFFECT FROM SEPT. 18
Barrick’s original offer, submitted in May, valued Acacia at only $787 million. In July, the gold giant bowed to pressure from the African gold miner’s shareholders and submitted a sweetened $1.2 billion-offer.
Including the special dividends, which depend on asset sales, the fresh offer represented a 60% premium to Acacia’s share price at the time of the indicative takeover pitch.
As Acacia’s majority shareholder, with a 63.9% stake, Barrick led discussions over alleged unpaid taxes with the Tanzanian government, which has refused to deal directly with the local miner.
The parties reached a framework deal in February, which would see Acacia paying $300 million to settle the tax claims and splitting returns from its operations 50/50 with the country going forward.
Acacia complained about being left out of the negotiations, but Barrick’s chief executive, Mark Bristow, said it was the only way forward.
“It’s a tragedy,” he said in June. “We’re dealing with a complete breakdown of relationships.”
Acacia was ordered in July to stop using the tailings storage dam at its North Mara mine due to seepage from the facility.
Three of the company’s employees remain in jail in Tanzania awaiting charges for alleged corruption.
Barrick, the world’s No. 2 gold miner, is forging ahead with plans to sell about $1.5 billion in assets by the end of 2020. At the same time, it’s looking to buy more top-tier gold projects, in Canada and elsewhere, and invest in copper assets.
