Barrick Offers to Buy Rest of Project to Resolve Government Dispute

Source: Streetwise Reports 05/30/2019

The situation and the gold major’s proposal are discussed in a Haywood report.

In a May 23 research note, Haywood analyst Kerry Smith reported that Barrick Gold Corp. (ABX:TSX; GOLD:NYSE) proposed to acquire the remaining 36.1% interest in Acacia, taking Barrick to 100% ownership, to end the two year-long dispute with the Tanzania government.

“The successful resolution would be a positive catalyst, and we view this proposal as a positive step in that direction,” added Smith. However, were the acquisition to be successful, improving the relationship with the government of Tanzania will still require much work.

The proposal translates to 0.153 Barrick shares per Acacia share, or a value to Acacia of US$787 million or US$285 million to shareholders of the 36.1% that Barrick does not own. By 5 p.m. on June 18, 2019, Barrick must announce whether or not it intends to make a formal bid.

Regarding the dispute with the East African country that began in 2017, Smith explained, it claimed Acacia owed unpaid taxes of US$193 billion for 2000 through 2017, banned the export of concentrate, impacting Acacia’s sales, and indicated it will only communicate with Barrick. Earlier this year, in February, Barrick announced it arrived at a proposal to resolve the outstanding Acacia issues.

In the past week, though, the Tanzanian government said it will not enter a settlement with Acacia and will only sign an agreement if it finds substantial changes have been made to the operating companies’ management style.

As for Acacia’s current stance, according to a press release issued, Smith noted, it intends to take no action until it clarifies the Tanzanian government’s position.

Haywood has a Buy rating and a CA$19 per share target price on Barrick Gold, whose stock is currently trading at around CA$15.88 per share.

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Disclosures from Haywood Securities, Barrick Gold, May 23, 2019

Analyst Certification: I, Kerry Smith, hereby certify that the views expressed in this report (which includes the rating assigned to the issuer’s shares as well as the analytical substance and tone of the report) accurately reflect my/our personal views about the subject securities and the issuer. No part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations.

Important Disclosures

The following Important Disclosures apply for Juggernaut Exploration:

▪ Haywood Securities, Inc. has reviewed lead projects of Barrick Gold and a portion of the expenses for this travel have been reimbursed by the issuer.

Other material conflict of interest of the research analyst of which the research analyst or Haywood Securities Inc. knows or has reason to know at the time of publication or at the time of public appearance: n/a.

Research policy is available here.

( Companies Mentioned: ABX:TSX; GOLD:NYSE,
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