ACACIA Mining, the Tanzanian gold miner in which Barrick Gold owns 64.9% stake, has been dealt a serious blow after two of its most senior executive directors – its CEO, Brad Gordon, and Andrew Wray, CFO – announced their resignations.
Through a statement, the company said Gordon was returning to Australia “for family reasons” while Wray was “pursuing an opportunity elsewhere”. However, both Brad and Andrew will remain with the Company until the end of the year to ensure a smooth transition.
The executive departures come less than a fortnight after Barrick agreed a framework agreement with the Tanzanian government which included a $300m payment by Acacia in order to resolve a tax dispute.
The tax dispute involves the value of gold concentrate exports from Acacia’s Bulyanhulu and Buzwagi mines, which the Tanzanian government said had been under-estimated for about 17 years. Barrick also agreed to part with a 16% stake in Acacia Mining in order to comply with new legislation passed by President John Magafuli’s government in June, which positions the state to take up equity positions in firms operating within its borders.
Kelvin Dushnisky, chairman of Acacia Mining, sought to put a optimistic spin on events whilst acknowledging the work that Wray and Gordon had done.
The role of Gordon, who was appointed Acacia CEO when it was still African Barrick, in August 2013, cannot be under-estimated. Apart from the company’s rebranding, he led it to production last year of 829,705 ounces at an all-in sustaining cost (AISC) of $958/oz. This compares to the 641,931 oz produced at AISC of $1,362/oz when he joined in 2013.
In April, the Tanzanian government said it would block exports of concentrates after presidential reviews said the country was owed ‘tens of billions of dollars’ in unpaid tax, penalties and interest. It has also declined to return VAT owed to Acacia – a development that put the skids under the firm’s share price which fell two-thirds. Shares in the company were nearly 6% down in London trade today.
The blockade on exports resulted in Acacia putting its flagship Bulyanhulu mine on care and maintenance in an effort to stem cash losses. At the end of 2016, Gordon spoke of improving the dividend to shareholders amid a $114m increase in net cash to $218m.
As of this year’s third quarter end, Acacia had net cash of only $24m which was forecast by Investec Securities to deteriorate to $8m by the year-end, before improving again.
“The board will continue to provide the management team with our full support as the Company focuses on delivering against our operational targets, which remain unchanged from the third quarter results, while seeking a resolution to the situation in Tanzania,” said Dushnisky in a statement.