Financial pain is mounting at Barrick Gold Corp.'s subsidiary Acacia Mining PLC, as the miner continues to grapple with a crippling export ban in Tanzania.
On Monday, London-based Acacia posted a US$707-million net loss for 2017, the bulk of which was due to a US$644-million charge incurred because of the export ban.
The ban led to US$264-million of lost revenue, Acacia said. The company is also scrapping its dividend, in the midst of dwindling cash reserves.
Last March, the government of Tanzania ordered Acacia to halt exports of gold concentrate, and later accused the company of drastically underpaying its taxes, slapping it with a US$190-billion tax bill.
"I don't think many people would have faced what we faced last year in their whole careers," said Peter Geleta, interim chief executive officer of Acacia Mining, in a conference call with analysts on Monday.
In October, Barrick, which owns about 64 per cent of Acacia, announced it had reached a provisional agreement with Tanzania that should pave the way for the lifting of the export ban. Under that agreement, Tanzania is set to receive a 16-per-cent equity stake in Acacia's mines in the country, continuing royalties and a payment of US$300-million.
Barrick continues to negotiate with the Tanzanian government on Acacia's behalf. Mr. Geleta said he expects a detailed proposal from Barrick on a final agreement with Tanzania in the first half of this year.
"Notably there was confirmation today that any agreement presented to Acacia, and agreed on by Barrick and the Tanzanian government, would be a holistic solution that would include the lifting of the export ban and a schedule to settle the tax bill," wrote Jefferies & Co. analysts Ian Spence and Christopher LaFemina, in a note to clients on Monday.
Shares in Acacia fell by 3.9 per cent on the London Stock Exchange on Monday, and have declined by about 60 per cent since the concentrate ban was brought in last year.
Barrick is far from the only Canadian company navigating a difficult operating environment in Africa, where government policy can change on a dime, and companies often have little choice but to acquiesce to demands.
Lately, shares in Vancouver-based Ivanhoe Mines Ltd., which operates a massive copper project in the Democratic Republic of the Congo (DRC), have come under pressure, after the government there announced plans a few weeks ago to bring in a new punitive new tax regimen.
In December, Toronto-based junior gold company Banro Corp. was granted creditor protection under the Companies' Creditors Arrangement Act (CCAA), after about two decades of toil in DRC. Early in its existence, Banro had its assets seized by the DRC government.
Barrick, in the meantime, is set to release its fourth-quarter and year-end results on Wednesday after the market close.
Last week, the world's biggest gold company by production said it will take a $429-million charge in the quarter, owing to moving 14 million ounces of gold at its stalled Pascua-Lama project in South America to "resources" from "reserves." Resources is a far-less-certain category of recoverable gold than reserves.
With files from reporter Geoffrey York in Johannesburg