Acacia Mining has confirmed that it is in preliminary talks with a couple of Chinese mining firms over their mining stakes in Tanzania.
The development comes in the wake of a government enforced ban on export of the company’s money cow, gold concentrates.
Since mid-last year, investigations into alleged tax evasion and the subsequent export ban of mineral concentrates have put the company in turmoil:
- $190 billion fine
- $707 million 2017 losses
- 43% production cut backs
- 30% fall in 2017 sales
- Plummeting shares
- Put Options
- Scrap of dividends
- Senior Officials quit (CEO & CFO)
“Its shares have fallen around 70 percent in the past 12 months due to the tax dispute as well as an industry wide export ban on minerals not processed in Tanzania. Its woes have also weighed on Barrick’s stock, which is down some 30 percent in the past year- Reuters
With these woes, it is no surprise that the embattled firm has turned to the Chinese companies it says have showed interest.
China To The Rescue
The firm recently released a statement to confirm the merger talks: “…the Company confirms that, in response to a number of expressions of potential interest from Chinese counter-parties, it has commenced a process to explore the value to the Company of the sale of a stake in some or all of its Tanzanian operations.”
While the report does not specify the names of the Chinese companies, media reports named China’s Shandong Gold Mining Co Ltd, Zijin Mining Group Co Ltd and China National Gold Group.
It is also reported that the talks are already improving things for Acacia with a boost in share performance.
“Shares in London-listed Acacia, which were down around 3 percent, rebounded after the Reuters report to trade up as much as 3.4 percent. They closed down 0.9 percent, at 162.95 pence.”
However, Acacia is still not out of the deep end as the ban on export of gold concentrates is still in place and talks between its largest shareholder Barrick Gold Corporation and the government are yet to bear fruit.
In its media statement, the company said it supports the ongoing between the government of Tanzania and Barrick Gold. It however maintains that ‘it has not received an approach from any third parties to acquire shares in the company.’