Barrick Gold (NYSE: GOLD) has found itself in a difficult situation recently. Having made a $285 million offer to acquire the remaining shares of Acacia Mining (LON: ACA) in a move that would complete their ownership of the African-based, London-listed mining company, the offer has come under attack both by activist hedge funds as well as Acacia itself.
Accusing Barrick of taking advantage of their current situation with the Tanzanian government, Acacia struck back at the Canadian gold miner, saying that many of its problems with Tanzania were made worse thanks to Barrick’s interventions in the negotiations.
Barrick Gold currently owns 63.9 percent of Acacia and hopes to acquire the rest of the company with this takeover offer. However, many have gone on to say that the offer is quite underpriced and is taking advantage of the fact that the London-listed miner has reached an impasse with the Tanzanian government.
While other minority shareholders, such as the hedge fund Odey Asset Management, have vowed to reject the Barrick offer, Acacia has doubled down against the Barrick offer as well.
“Acacia believes that Barrick’s intervention in Acacia’s negotiations with the government of Tanzania, the length of time Barrick’s negotiations with the government of Tanzania have taken and the way they have managed their direct negotiations, have had the effect of undermining Acacia in Tanzania,” the company said in an official statement. “In the Barrick announcement, it was suggested that certain adjustments should be made to Acacia’s life-of-mine plans to reflect significant risks inherent in Acacia’s operations. The company strongly disagrees with these views and is unclear on how Barrick can substantiate its proposed adjustments.”
Two years ago, Tanzania gave Acacia an export ban alongside a $190 billion tax bill that accused the company of falsely declaring its sales figures. Since then, Barrick has stepped in to help in the negotiations, but in the process, Acacia has been frozen out altogether.
At the moment, Acacia hopes to convince shareholders of rejecting the Barrick proposal in favor of a more attractive offer down the road, but that’s not to mean that Acacia isn’t interesting in selling at all. Management is more interested in offering the remaining stock of the company at the right price rather then being desperate.
Shares of Barrick Gold ended up rising by 4.1 percent over the course of the day, largely ignoring the response from Acacia. This is to be expected, as gold’s recent surge to six-year highs into the $1,400 per ounce price range have led to a surge in gold miners across the world. The precious metal has ended the day at $1,426.25 per share, gaining around $12 on Monday.
Barrick Gold Company Profile
Based in Toronto, Barrick Gold is one of the world’s largest gold producers, operating mines in North America, South America, Australia, and Africa. In 2018, the firm produced roughly 4.5 million attributable ounces of gold and more than 380 million pounds of copper.
Gold production will rise following the acquisition of Randgold at the end of 2018. As of Dec. 31, 2018, Barrick had 75 million ounces and 7.6 billion pounds of proven and probable gold and copper reserves, respectively, including recently acquired assets. – Warrior Trading News