Acacia Mining PLC (LON:ACA) has decided not to increase its provision for tax owed to the Tanzania government even though Canadian parent Barrick more than doubled the estimate of the amount it owes.
In a statement today, Acacia said it had noted that Barrick had increased its existing tax provision of US$128mln with respect to the historical uncertain tax positions by US$172 mln to US$300mln.
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“Acacia does not intend to make any changes to its own provision of US$128mln as a result of Barrick’s announcement of an agreement of a proposed framework,” it said.
“Once Acacia has received and had the opportunity to assess a detailed proposal, Acacia will also be able to assess the potential impact on Acacia’s historical uncertain tax positions.”
It also noted the Barrick statement said a detailed proposal for review would be available during the first half of 2018.
Barrick announced last week that it had thrashed out a settlement to the increasingly bitter row between 64%-owned subsidiary Acacia and the Tanzanians.
Under the proposed framework, economic benefits from Acacia's operations would be split on a 50/50 basis with the government, Barrick said.
"The government's shares will be derived from royalties, taxes, and a 16% free carried interest in Acacia's Tanzanian operations, in line with the country's new mining law."
READ: Acacia Mining switch to gold bar production will financially transform Tanzania mine
A new Tanzanian operating company will be created to manage Acacia’s Bulyanhulu, Buzwagi, and North Mara mines, while Barrick said a payment of US$300mln will also be made to the government by Acacia.
Any proposal agreed in principle between Barrick and the government will require Acacia’s approval according to the London-listed group.
Tanzania imposed a ban on the export of gold and copper concentrates in March. Concentrate exports represent 30% of the Acacia's output.
The government has claimed Acacia owes royalties on undeclared exports from the Bulyanhulu and Buzwagi mines. It said it was owed back taxes of US$190bn.