Acacia Mining has hit back at its biggest shareholder Barrick Gold, promising a detailed response to claims that its mine plans are not appropriately risked or supportable.
“The company strongly disagrees with a number of statements made in the announcement,” said Acacia, which operates three gold mines in Tanzania.
On Tuesday UK regulators gave Toronto-listed Barrick a further three weeks to make a formal offer for the 36 per cent of Acacia it does not already own.
Shortly after the extension was granted, Barrick published a detailed statement that criticised Acacia’s mine plans and said its relationship with the government of Tanzania was so damaged it could no longer function as a publicly listed company.
Acacia has been in embroiled with a bitter dispute with the government of Tanzania over unpaid taxes and had not been able to export gold-bearing ore since March 2017.
Barrick, which is led by Mark Bristow, a hard-charging South African executive, says its all-stock offer is the only credible way to end the row and reach a deal with the government, which is refusing to deal directly with Acacia.
In the statement Barrick directly challenged the Acacia’s assumptions for the restart of its flagship Bulyanhulu mine, saying it was more cautious on grade, annual mining volumes and production rates. It also called upon minority shareholders to back its all-paper offer, warning of a “catastrophic” loss of value if they oppose the deal.
Analysts said Barrick’s statement was an aggressive attempt to justify the level of its proposed offer, which was pitched at a 9 per cent discount when announced last month.
Following a 17 per cent gain in Barrick’s share price — driven by higher gold prices — the value of the all-stock offer has increased. It is now worth almost £720m or 175p a share, roughly the same level Acacia’s was trading at on Wednesday morning.
“Barrick clearly wants more time to convince minorities that the proposed exchange ratio is fair and as such has issued an announcement laying out the strategic and valuation metrics behind its indicative offer,” said analysts at Berenberg.
“Barrick claims that the minorities have little choice but to accept its offer in order to preserve value. We note that the international arbitration case offers minorities another option to recover value, so Barrick is not the only game in town,” said Berenberg.
Numis Securities said Barrick’s bid was “egregiously low” and well below “what we believe to be current fair value for the shares, 250p, which itself reflects a discount to our net asset value of 300p”.
“We view the technical issues raised by ABX in relation to the operations as neither new nor news,” it added.
Some shareholders regard Barrick’s bid as highly opportunistic and say it does not reflect the value of Acacia’s assets. Before the export ban was implemented more than two years shares in Acacia were changing hands for more than 500p.
“Barrick’s advisers, Rothschild, have made their client look like clowns in this circus of a takeover approach,” said one Acacia shareholder.” Trying to get shareholders to sell to you at a discount because you rubbish the assets and then arguing it is now at a premium to the original approach, after a huge rally in the gold price . . . these guys really need to replace their advisers if they want a chance of winning this
Barrick has until July 9 to make a firm offer for Acacia.
“The company is also surprised with the circumstances and timing of the announcement, which immediately followed earlier announcements regarding Acacia’s agreement to Barrick’s request for an extension to the[bidding] deadline. The company will provide a detailed response to the relevant aspects of the announcement, as appropriate, in due course,” Acacia said.
https://www.ft.com/content/c9a8dd4a-9260-11e9-b7ea-60e35ef678d2
2019-06-19 07:22:00Z
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