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Acacia gets almost $200bn adjusted Tanzanian tax assessments

The Bulyanhulu gold mine, Tanzania

The Bulyanhulu gold mine, Tanzania

Photo by Acacia Mining

24th July 2017

By: Henry Lazenby

Creamer Media Deputy Editor: North America

     

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VANCOUVER (miningweekly.com) – The Tanzania Revenue Authority (TRA) has issued two Acacia Mining subsidiaries with adjusted tax assessments totalling nearly $200-billion in alleged unpaid taxes, penalties and interest owed.

This is the latest blow to the operator, whose first-half performance this year was severely impacted by the government’s blunt export ban on concentrate exports from the Bulyanhulu and Buzwagi mines.

Acacia said on Monday that Bulyanhulu Gold Mine (BGML) and Pangea Minerals (PML), the respective owners and operators of the Bulyanhulu and Buzwagi mines, have received a series of notices of adjusted assessment from the TRA for historical corporate income tax, covering 2000 to 2017 for BMGL and 2007 to 2017 for PML.

The assessments have been issued as part of the government’s allegation that Acacia under-declared export revenues, and appear to follow on from the findings of the ‘first presidential committee’, announced on May 24, and the ‘second presidential committee’ announced on June 12.

Acacia on Monday refuted each set of findings and reiterated that it had fully declared all revenues. The miner has previously stated it was losing up to $1-million a day as a result of the export ban.

Tanzania's President John Magufuli last week threatened to close down all gold mines in the country if mining companies delayed talks with his government aimed at resolving the tax evasion allegations.

“We have yet to receive copies of the reports issued by the first and second presidential committees. The allegations made by the first and second committees are included in the matters that both BGML and PML have already referred to international arbitration,” Acacia stated.

According to the latest tax assessments, BGML owes the government about $154-billion, while PML owes about $36-billion. The assessments claim a total of about $40-billion in alleged unpaid taxes and about $150-billion in penalties and interest owed.

Acacia disputes these assessments and is considering all of its options and rights.

Because of the impact of the export ban, Acacia is now targeting the lower end of the production guidance range of 850 000 oz to 900 000 oz of gold for 2017.

Acacia has been exporting concentrate from Bulyanhulu since 2001 and from Buzwagi since 2010 and has fully declared all associated gold, copper and silver revenue.

Tanzania’s general ban on the export of metallic mineral concentrates followed a Presidential directive to promote the creation of a domestic smelting industry. Following the ban, Acacia ceased all exports of gold/copper concentrate, including the 277 containers that had been approved for export prior to the ban which are now being held in Dar es Salaam at the port and a staging warehouse.

Gold production during the first six months this year reached a high of 428 203 oz, 4% higher than in the first six months of 2016.

Bulyanhulu and Buzwagi continue to stockpile concentrate, which has resulted in the build-up of about 127 000 oz of gold contained in unsold concentrate. The company also reported 8.3-million pounds of copper and 107 000 oz of silver contained in the unsold concentrate.

Barrick Gold, which owns 63.9% of Acacia, lost more than 5% on the TSX on Monday to close at C$19.29 a share, while the LSE-listed equity of Acacia shed 21% to close at £1.84 apiece.

Edited by Samantha Herbst
Creamer Media Deputy Editor

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