Canada’s Barrick Gold has been given an extra 10 days to make a formal buyout offer for London-listed Acacia Mining, which is holding out for a higher bid.
Barrick, which is led by Mark Bristow, wants to buy the 36.1 per cent of Acacia it does not already own so that it can end a damaging stand-off with the government of Tanzania over unpaid taxes.
However, its proposed all-paper bid has been opposed by several minority shareholders, including Odey Asset Management, Fidelity and Legal & General who want a higher offer.
Mr Bristow, who does not like overpaying for assets, has warned the investors they face a “catastrophic” loss of value if they oppose a deal.
When Barrick announced it proposed an offer in May, it was pitched at an 8 per cent discount to Acacia’s share price. Since then Barrick shares have risen sharply and the offer is now worth 196p, an 8 per cent premium to Tuesday’s closing price.
News of the extension came as Acacia issued a report prepared by industry consultant SRK, which claimed its shares could be worth as much as 281p.
In order to give Barrick time to study the report and potentially increase its offer, Acacia said it had asked UK regulators to extend the bidding deadline until July 19.
“The Board continues to believe that, subject to the price offered being fair and commanding the necessary support from shareholders, Barrick acquiring the remaining shares in Acacia it does not currently own would be an attractive solution for key stakeholders,” the company said in a statement.
Acacia said the SRK report was based on eight months of work and a gold price of $1,300 an ounce.
“The preferred and high value scenarios, which support the Company’s life of mine plans, imply a valuation range of 271-281 pence per Acacia share,” the company said.
“The low value, which is considered highly conservative by the Company, implies value of 203 pence per Acacia share,” it added.
Acacia has struggled to operate in Tanzania since 2017 when the government of President John Magafuli accused the company of underpaying tens of billions of dollars in taxes over 20 years.
Last year one Acacia employee and a former employee were detained on allegations of corruption, and the company has also been accused of polluting the environment.
Acacia said if it was in a position to recommend an offer from Barrick it would “discuss appropriate steps for a stay” of the arbitration case it has launched against Tanzania.
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