Acacia Mining plc's (LON:ACA) shares plunged today as the Tanzania government accused the company of evading taxes in the country.
Tanzania's President John Maguful commissioned a second presidential committee to conduct a probe into Acacia on claims the group under-represented the amount of gold in concentrates it exports, thereby depriving the country of royalties.
In its presentation of the findings today in Dar es Salaam, the committee said Acacia had under-declared revenues and tax payments over a number of years by tens of billions of US dollars.
“The committee has established that Acacia Mining Plc has been conducting its mining business here in Tanzania contrary to the law,” said Nehemiah Osoro, chairman of the committee, which audited Acacia's mineral exports over the past 19 years.
Shares in Acacia fell 11.20% to 266.50p in afternoon trading.
The committee recommended Acacia repay outstanding taxes and royalties and re-negotiate large-scale mineral development agreements. It also suggested the government continue its ban on Acacia from exporting gold concentrate.
Acacia refutes findings...
Acacia noted in a statement today the "disappointing findings" and said it "strongly refutes these new unfounded accusations".
"We have always conducted our business to the highest standards and operated in full compliance with Tanzanian law," the company said.
"We re-iterate that we have declared everything of commercial value that we have produced since we started operating in Tanzania and have paid all appropriate royalties and taxes on all of the payable minerals that we produce. In addition, our published accounts are annually audited to an international standard in accordance with IFRS."
Acacia added that it remains open to further dialogue with the government and will provide a further update to the market once it assesses its options.
The group, which depends on three mines in Tanzania, has been losing US$15mln per month during the ban on concentrate exports.
It is now looking to close its Bulyanhulu mine, which will cost US$30mln for layoffs and breaking contracts and a further US$2-US$3mln per month in care and maintenance charges.
The Buzwagi and North Mara mines will remain operational for the time being.
Acacia's cash balance shrinks but maintains full year guidance....
Earlier this month the company said: “In light of the increased levels of uncertainty, we have seen some impact on productivity levels, but at this stage we are not making any changes to full year guidance and continue to take steps to minimise further cash outflows from the business.”
At the time, the group said its cash balance had fallen to US$165m at the end of May from US$196m at the end of the first quarter.
Meanwhile, Acacia on Friday revealed that Blackrock had reduced its holding to below 5% after selling 4.5 million shares.