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Barrick gains more time for Acacia bid

Gold major Barrick Gold (TSX: ABX) has gained more time to make a bid for the portion it doesn’t already own of Africa-focused Acacia Mining (LSE: ACA).
Barrick gains more time for Acacia bid Barrick gains more time for Acacia bid Barrick gains more time for Acacia bid Barrick gains more time for Acacia bid Barrick gains more time for Acacia bid

Barrick has scrutinised Acacia’s assets in Tanzania including the North Mara operations

Staff reporter

Separately, Barrick said it had conducted detailed due diligence on Acacia's assets and expected to record "a material impairment to its carrying value of Acacia in the current quarter".

The UK Takeover Panel has allowed an extension from June 18 to July 9 for Barrick to announce a formal intent to bid for Acacia.

In a statement, Acacia said it had agreed to Barrick's request to seek the extension.

"The board of Acacia believes that, subject to the price offered being fair and commanding the necessary support from shareholders, Barrick acquiring the remaining shares in Acacia it does not currently own would be an attractive solution for key stakeholders," it said yesterday.

Barrick currently owns 63.9% of Acacia.

Barrick said its proposal, of 0.153 of a share for every Acacia share, implied a value of US$887.8 million for Acacia - which was a 12.8% increase on the value implied last month due to share price movements to June 17.

The major reiterated its view that the Tanzanian government would not negotiate with Acacia to resolve its problems in the country, which include a concentrate export ban, criminal charges, Bulyanhulu remaining on care and maintenance, possible further environmental penalties for North Mara and Acacia's interim CEO understood to be unable to enter Tanzania.

Barrick said it had done detailed due diligence of Acacia's assets and had identified inherent "significant risks" and "concluded that certain assumptions made by Acacia were not appropriately risked or supportable and that adjustments should be made".

It said resource uncertainty at Bulyanhulu was a key area of concern and it expected higher restart costs than Acacia had assumed.

At North Mara, Barrick said it had reduced the grade for inferred and unclassified underground material, and increased costs and capital expenditure, saying Acacia's mine plan had assumed higher grades for inferred material than the measured and indicated resource, it adjusted costs to be "more realistic" and increased capex for areas including improving the tailings facility to address environmental risks.

"Given the value implied by Barrick's adjusted LOM plans, this represents an indicator of impairment and Barrick expects to record a material impairment to its carrying value of Acacia in the current quarter," it said.

"Barrick continues to believe that the terms of the proposal reflect the fair value of Acacia, not taking into account any further discount which could be applied to reflect the significant risks inherent in the Acacia business and remaining uncertainties of the settlement with the GoT [government of Tanzania]."

Both companies' shares closed up more than 1% yesterday, while Barrick is up 4.5% year-to-date whereas Acacia is down 5.6%.