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"[The SRK report has] a preferred value of 271p per Acacia share"

Acquisitive major Barrick Gold (TSX: ABX) has gained more time to make an official bid for the portion of Acacia Mining (LSE: ACA) it doesn’t already own, while Acacia has released an independent report that puts its preferred value at 271p per share.
"[The SRK report has] a preferred value of 271p per Acacia share" "[The SRK report has] a preferred value of 271p per Acacia share" "[The SRK report has] a preferred value of 271p per Acacia share" "[The SRK report has] a preferred value of 271p per Acacia share" "[The SRK report has] a preferred value of 271p per Acacia share"

Acacia has reduced operations at Bulyanhulu in Tanzania due to the export ban

Staff reporter

Barrick had again asked Acacia to seek more time for the major to declare a firm intention to make an offer for the remaining 36.1% in the Africa-focused miner, with the UK Takeovers Panel granting another extension to the deadline, from July 9 to July 19. 

Acacia reiterated its belief that the Barrick acquisition would be an attractive solution, subject to the price offered being fair and gaining the necessary support from shareholders.

It also released a report by SRK Consulting which took eight months and included an independent valuation.

"The preferred and high value scenarios, which support the company's life of mine plans, imply a valuation range of 271-281p per Acacia share," Acacia said.

The report's release comes after Barrick in June said its due diligence on Acacia's assets had identified significant risks and concluded certain Acacia assumptions "were not appropriately risked or supportable".

Acacia had refuted the criticism and hit back, saying Barrick had undermined the company in Tanzania by shutting it out of negotiations with the government to resolve issues including a US$190 billion tax bill and a concentrates export ban.

"SRK's comprehensive review and its advice to the board of Acacia concluded that the company's geological and resource modelling and processes which were used in formulating its life of mine plan scenarios and resource and reserve statements as reported in the CPR are robust," Acacia said yesterday.

Hours ago, Barrick said it was reviewing SRK's report against its due diligence study of Acacia's assets.

"Barrick notes that the risk factors listed in the SRK report corroborate the importance of the issues raised in … Barrick's June 18, 2019 press release, not least since the valuations of Bulyanhulu assume the successful conversion of a large portion of deep high-grade inferred mineral resources to mineral reserve," Barrick said.

The major said it intended to meet early next week with Acacia and SRK representatives to discuss the report "and related matters".

Barrick, which merged with Africa-focused Randgold Resources at the start of this year, said it reserved the right to vary or reduce the proposed offer of 0.153 shares for every Acacia share.

Arbitration ball in Barrick's court

Peel Hunt analysts have noted the Takeovers Panel extension forces a decision by Barrick just ahead of an Arbitration Tribunal hearing, scheduled for July 22.

Acacia said yesterday if it was in a position to recommend shareholders vote in favour of a Barrick offer, it would "seek to discuss appropriate steps for a stay of the arbitration with the GoT and the Arbitration Tribunal".

"We believe this clarification makes it hard for Barrick to walk away from an Acacia offer and also maintain a good relationship with the GoT going forward," Peel Hunt said in a note.

"It is now up to Barrick to offer a way forward that prevents the GoT from going to arbitration."

Meanwhile, with the gold price around US$1,400/oz, Peel Hunt said its spot price Acacia valuation had risen to 284p, the equivalent of 0.225 Barrick shares per Acacia share.

"We have maintained since the initial Barrick proposal that we believe this is fair value for Acacia shares and minority shareholders," Peel Hunt said.