Barrick Gold Corp. said its African subsidiary will make a $300 million payment to the government of Tanzania as part of an agreement to resolve tax and revenue sharing disputes over its three gold mines in the country.
The Toronto-based mining company also said its majority controlled Acacia Mining PLC has struck a framework for a new partnership that will hand the African government 50% of the economic benefits of its mining operations.
Continue Reading Below
The details of the agreement weren't immediately available, prompting Acacia to issue a short news release stating it had yet to review the specifics of the plan, which is subject to its board's approval.
Barrick issued a second statement Thursday afternoon stating its 63.9%-owned Acacia will form a new operating company with Tanzania's government to hold its three gold mines in the country. The new company will split "economic opportunities" with Tanzania in the form of royalties and tax payments. Acacia has committed to increase local hiring and supply purchases.
Barrick said it is still in talks with Tanzania about the terms of lifting the country's ban on Acacia's exports of gold concentrate imposed earlier in March.
Acacia is Tanzania's biggest gold miner in the country with $1 billion in annual revenue. It was served with a $190 billion bill earlier this year for what Tanzanian authorities have said were unpaid taxes, penalties and interest accumulated over the past 17 years.
Aggressive actions by Tanzania President John Magufuli, who earlier this year declared an "economic war" on foreign miners, prompted some companies to cease or scale back mining operations in the country.
Benjamin Mchwampaka, minerals commissioner with Tanzania's mining ministry, said the government had negotiated "a very good deal" with Acacia, which he said was in line with a July revamp of the country's mining laws.
"Apart from the legal requirements, we will be sharing revenues equally with Acacia Mining, this is what we have been pushing for all along," Mr. Mchwampaka said. "We are very pleased."
He said the government plans to start negotiations on revenue sharing with other mining companies, as it pushes to double the mining industry's contribution to gross domestic product to 10% by 2025.
The agreement was signed in the Tanzanian city of Dar es Salaam on Thursday morning following a meeting with Barrick Executive Chairman John Thornton and Mr. Magufuli.
"We have developed a framework for a modern, 21st century partnership that should ensure Acacia's operations generate sustainable benefits and mutual prosperity for the people of Tanzania, as well as for the owners of Barrick and Acacia," Mr. Thornton said in a statement.
Write to Jacquie McNish at Jacquie.McNish@wsj.com and Nicholas Bariyo at firstname.lastname@example.org
(END) Dow Jones Newswires
October 19, 2017 16:19 ET (20:19 GMT)