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Report on Business Acacia Mining, independent consultant push Barrick Gold to increase takeover offer

Barrick Gold Corp. has been given more time to table a formal takeover bid for Acacia Mining PLC, as its London-based subsidiary pushes for a materially higher offer.

On Tuesday, just hours before a deadline set by a British takeover panel was set to expire, Barrick was granted a 10-day extension to consider a report by an independent mining consultant that argues Acacia is worth about 38 per cent more than Barrick is willing to pay.

In a release, Acacia said that SRK Consulting (UK) Ltd. has calculated the “preferred” value for Acacia to be 271 pence ($4.45) a share.

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In May, Toronto-based Barrick said it was willing to pay 0.153 of its own shares for each Acacia share it doesn’t already own, or roughly 197 pence a share.

Barrick’s push for Acacia, which operates three gold mines in the east African country of Tanzania, is strongly motivated by a desire to end a geopolitical quagmire that has engulfed its subsidiary for more than two years.

In 2017, the government of Tanzania banned Acacia from exporting gold concentrate, and accused it of US$200-billion in tax fraud. Acacia’s management has largely been locked out of negotiations to end the spat, as Barrick, as Acacia’s biggest shareholder, instead acted on its behalf. Late in 2017, Barrick announced a tentative agreement that would have seen Acacia pay a US$300-million penalty to Tanzania, but a final deal was not reached. In May, Barrick said that Tanzania won’t sign any agreement if Acacia remains as a counterparty.

A number of Acacia’s minority shareholders and analysts have argued Barrick’s current proposal for Acacia is opportunistic and too low. But chief executive Mark Bristow has repeatedly said he has no intention of increasing the offer. Acacia reiterated on Tuesday that it is open to doing a deal with Barrick if the price is fair.

Barrick did not respond to a request for comment on Tuesday.

In 2010, Barrick spun off a minority stake in Acacia (then called African Barrick) to lower its exposure to geopolitically risky Africa. A few years later, Barrick almost sold its remaining stake in Acacia to a state-owned Chinese mining firm, but talks collapsed after the price of gold went into a tailspin.

Acacia shares rose by 1.5 per cent to close at 181 pence apiece on the London Stock Exchange on Tuesday.

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Barrick shares closed at $21.09 a share, up 1.6 per cent on the Toronto Stock Exchange on Tuesday.

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