Acacia rises after miner rules out imminent increase in provision for Tanzanian

 Acacia Mining shares rose 4.6 per cent on Thursday morning, after the gold producer said it did not intend to increase a provision relating to its dispute with the government in Tanzania following an announcement from its majority shareholder that it was raising the level of its own provision by $172m.

Last week Acacia’s owner Barrick Gold said it had reached an agreement with the government of Tanzania to end a dispute over Acacia’s mines in the country, which have been unable to export since March. The deal involved Acacia paying $300m to the Tanzanian government as a “good faith” payment.

Earlier this year, Tanzania accused Acacia of owing $193bn in tax and unpaid penalties to the East African country.

In Barrick’s third quarter earnings on Wednesday, the Canadian company said it increased its existing tax provision of $128m by $172m in the third quarter to allow for the $300m payment to the Tanzanian government from Acacia. The $300m payment will be paid out of Acacia’s ongoing cash flows and is conditional on it being able to sell gold, Barrick said.

But Acacia said Thursday it has still not received a detailed proposal from Barrick on the deal and could not set a tax provision for the $300m payment. Its provision remains at $128m.

“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 provisions,” Acacia said. Barrick said it expects to give Acacia a detailed proposal during the first half of 2018. It is subject to review and approval from Acacia.