https://www.miningweekly.com

Acacia fails to change Barrick’s view on mine plans

26th June 2019

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

Font size: - +

JOHANNESBURG (miningweekly.com) – London-listed Acacia Mining’s near-5 000-word rebuttal of claims by its parent company over mine plans for its gold operations in Tanzania has failed to change Barrick Gold’s view.

The Toronto-headquartered miner, which is trying to buy out minority shareholders in Acacia without paying a premium, said on Wednesday that it had considered Acacia’s statement and that it had concluded that there was nothing new in it.

Barrick maintained that certain assumptions in relation to the mine plans were not “appropriately risked or supportable” and that adjustments would have to be made.

Acacia said on Monday that it “strongly disagreed” with Barrick’s view on its life-of-mine (LoM) plans and that it saw “no reasonable basis” for the major's proposed adjustments.

Although Barrick did not respond in detail to each point raised in Acacia's lengthy statement, the company explained why it believed Acacia’s optimisation study for Bulyanhulu “materially” overstated the value of that mine.

Barrick argued that the study was not compliant with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) standards, as it included the Deep West inferred mineral resources inventory on an equal footing to the measured and indicated mineral resources.

“If Acacia's optimisation study had been compliant with the CIM standards, Acacia would not have been able to attribute any economic value to the Deep West inferred resources, as per the CIM 2014 definitions and standards, which state that ‘inferred mineral resources must not be included in the economic analysis, production schedules, or estimated mine life in publicly disclosed prefeasibility or feasibility studies, or in the LoM plans and cash flow models of developed mines’, the reasoning for which is that inferred mineral resources are based on very limited information, have a materially lower level of confidence than measured and indicated resources, may not prove to be economic when further drilling is completed, and thus cannot be assumed to fully convert to mineral reserves,” Barrick said.

The gold major was of the opinion that the Deep West inferred mineral resources still required full geological stress modelling and that mine plans should acknowledge the risk.

Barrick’s model, which it said attributed fair value to Bulyanhulu, also has lower grades for the mine than that assumed in the optimisation study.

The takeover of minority shareholders is creating an increasingly bitter spat between the two companies, with Acacia accusing its biggest shareholder of trying to take advantage of its problems in Tanzania, where all its operations are located. Acacia argues that Barrick’s decision to unilaterally solve a tax dispute had served to undermine the company in Tanzania and that it had added further pressure to its share price.

Acacia agrees that Barrick buying out its minority shareholders would be an attractive solution, but it has an issue with the valuation of its stock.

Barrick noted in its announcement on June 18 that its buyout proposal, which valued Acacia at about $787-million, reflected a premium of 14.4% to Acacia’s closing price on May 20. Acacia said that the terms of the proposal implied a 2.9% discount to the closing price of its shares on May 20, being the last day prior to the receipt of the proposal.

Barrick CEO Mark Bristow has said that the company does not intend to improve its proposal.

Barrick has until 17:00 on July 9 to make a firm offer for Acacia.

Edited by Creamer Media Reporter

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION