Further to its announcement dated June 19, 2019 (“the Barrick
Announcement”), Barrick Gold Corporation (NYSE: GOLD) (TSX: ABX)
(“Barrick” or the “Company”) today provides the following response
to the announcement made by Acacia Mining plc (“Acacia”) on June
24, 2019 headed “Response to announcement from Barrick regarding
the situation in Tanzania and Acacia’s mine plans” (“the Acacia
Announcement”).
Barrick notes Acacia’s stated position that:
- Barrick acquiring the remaining shares in Acacia it does not
currently own would be an attractive solution for all key
stakeholders subject to an offer price which is fair and commands
the requisite support of shareholders;
- unless a resolution is achieved in the near term, Acacia’s
Tanzanian assets face further risks to their operations and ability
to deliver against their plans; and
- in the absence of a negotiated settlement and only as a
fallback, Acacia has sought to protect Acacia’s business through
the contractual arbitrations, but has noted that there are
significant collateral risks in Acacia’s subsidiaries continuing to
seek to protect their businesses through maintaining the
arbitrations pending a negotiated resolution.
Barrick continues to believe that the terms of
its Proposal (as defined in the Barrick Announcement) reflect the
fair value of Acacia, not taking into account any further discount
which could be applied to reflect the significant risk inherent in
the Acacia business and remaining uncertainties of any settlement
with the Government of Tanzania.
In the absence of a take-private transaction,
Barrick does not consider there is any credible alternative
solution which will preserve, to the extent possible, value for all
stakeholders.
Barrick has considered the statements made in
the Acacia Announcement and has concluded that the Acacia
Announcement contains no information of which Barrick was not
already aware. Barrick therefore remains firmly of the view that
certain assumptions made by Acacia in relation to its mine plans
are not appropriately risked or supportable and that adjustments
should be made. Whilst Barrick does not consider it necessary to
respond to each and every statement made by Acacia in its
announcement, it wishes to underline the following key points:
- Barrick notes the reference to
Canadian Institute of Mining, Metallurgy and Petroleum Definition
Standards (2014), (“CIM Standards”) in the Acacia
Announcement, and fully endorses the Acacia 2018 Mineral Resources
and Mineral Reserves Statement, which included the update to the
classification of previously reported Indicated Mineral Resources
to the Inferred Resources category at Bulyanhulu to reflect the
wide spaced drill data for the Deep West zone of the
orebody.
- Barrick maintains that the
inclusion of the Deep West Inferred Mineral Resources inventory on
an equal footing to the Measured and Indicated Mineral Resources
within the Optimisation Study of Bulyanhulu materially overstates
the value of the mine, is inconsistent with acceptable industry
practice and not in compliance with the CIM Standards. If Acacia’s
Optimisation Study had been compliant with the CIM Standards,
Acacia would not have been able to attribute any economic value to
the Deep West Inferred Resources, as per the CIM 2014 Definitions
and Standards which states that “Inferred Mineral Resources must
not be included in the economic analysis, production schedules, or
estimated mine life in publicly disclosed Pre-Feasibility or
Feasibility Studies, or in the Life of Mine plans and cash flow
models of developed mines”1, the reasoning for which is that
Inferred Mineral Resources are based on very limited information,
have a materially lower level of confidence than Measured and
Indicated Resources, may not prove to be economic when further
drilling is completed, and thus cannot be assumed to fully
convert to Mineral Reserves.
- Barrick also notes that Acacia’s
rebuttal of Barrick’s views on conversion and dilution rates by
reference to the 96.5% reconciliation factor of gold mined versus
the historical Mineral Resource Model over the life of mine (“LOM”)
is misleading. The 96.5% historic reconciliation is reflective of
Mineral Resources supported by 25m spaced drill sample data and
development face sample data and thus should not be considered
applicable to the expected conversion of Deep West Inferred Mineral
Resources, which are based upon on an average of 200m spaced drill
data. Barrick is content with the utilization of the Measured and
Indicated Resources by Acacia in its Optimisation Study, but not
the Inferred Resources in the Deep West. Furthermore, Barrick
is of the opinion that the Deep West Inferred Mineral Resources
still require full geotechnical stress modelling and therefore any
current mine plans should acknowledge this related risk.
- The Barrick model attributes fair
value to Bulyanhulu, reflecting the uncertainty of the Deep West
Inferred Mineral Resources currently defined with drill data at an
average spacing of 200m. This results in a grade of 10.2g/t during
steady state UG production. This steady state grade profile is
consistent with both the average LOM gold grade of 9.98 g/t
achieved at Bulyanhulu and the Bulyanhulu Proven and Probable
Underground gold Mineral Reserve grade of 10.7 g/t gold (as of 31
December 2018). This contrasts to the assumed grade in the Acacia
Optimisation Study of 12.3g/t during steady state UG
production. In Barrick’s model, the Bulyanhulu grade drops to
8.6g/t over the LOM after taking into account the initial low-grade
Tailings Storage Facility (“TSF”) feed.
- The Barrick production and dilution
rates are justified through the uncertainty inherent in the
Inferred Mineral Resource and the geotechnical stress regime, at
1.7-2.6km below surface. The previous dilution rates achieved at
Bulyanhulu are not reflective of the anticipated increased
geotechnical stress regime.
- Barrick notes that its additional
US$50m capital expenditure modelled at Bulyanhulu and US$77m at
North Mara, has been benchmarked against its own similar-sized
underground operations in Africa and is not just based on
conceptual studies. Notably, at North Mara the additional capital
for the TSF is reflective of the increased rate of water drawdown
rate required from the TSF and additional remediation work required
to ensure safety of the existing TSF and construction of a fully
compliant new lined TSF facility together with the appropriate land
acquisition costs.
Barrick intends to continue to engage on these
points, and on the merits of its proposal, with shareholders,
Acacia’s Board of Directors, its management and other
stakeholders.
Takeover Code notes
The Proposal is subject to the satisfaction of a
number of customary conditions, including receiving the
recommendation of the Acacia board. Barrick reserves the right to
waive all or any of such conditions at its discretion. The Proposal
does not constitute an offer or impose any obligation on Barrick to
make an offer. There can be no certainty that any offer for Acacia
will ultimately take place, nor as to the structure of any such
offer, should one be forthcoming, even if the pre-conditions are
satisfied or waived. Barrick reserves the right to: (a) vary the
form and/or mix of consideration referred to in this announcement
and/or introduce other forms of consideration; and (b) make an
offer or other proposal on less favourable terms than an exchange
ratio of 0.153 Barrick shares for each ordinary share of Acacia
referred to in this announcement with the agreement, recommendation
or consent of the board of Acacia.
Barrick will have the right to reduce the number
of new Barrick shares that Acacia minority shareholders will
receive under the terms of the Proposal by the amount of any
dividend (or other distribution) which is declared, paid or made by
Acacia to Acacia shareholders.
This announcement does not amount to a firm
intention to make an offer under Rule 2.7 of the Code, which
regulates the making of offers for public companies listed in the
UK. There can be no certainty any offer will be made, even if the
pre-conditions referred to are satisfied or waived.
In accordance with Rule 2.6(a) of the Code,
Barrick must, by not later than 5.00 p.m. on 9 July 2019, either
announce a firm intention to make an offer for Acacia in accordance
with Rule 2.7 of the Code or announce that it does not intend to
make an offer, in which case the announcement will be treated as a
statement to which Rule 2.8 of the Code applies. This deadline will
only be extended with the consent of the UK Takeover Panel in
accordance with Rule 2.6(c) of the Code.
A further announcement will be made as and when
appropriate.
Enquiries:
Kathy du Plessis Investor and Media Relations +44 20 7557 7738
barrick@dpapr.com |
Mark BristowPresident and CEO+1 647 205 7694+44 788 071 1386 |
Website: www.barrick.com
Publication on WebsiteA copy of
this announcement will be made available (subject to certain
restrictions relating to persons resident in restricted
jurisdictions) at www.barrick.com no later than 12.00 noon (London
time) on 27 June 2019 (being the business day following the date of
this announcement) in accordance with Rule 26.1(a) of the Code. The
content of the website referred to in this announcement is not
incorporated into and does not form part of this announcement.
Overseas jurisdictionsThe
release, publication or distribution of this announcement in
jurisdictions other than the United Kingdom may be restricted by
law and therefore any persons who are subject to the laws of any
jurisdiction other than the United Kingdom should inform themselves
about, and observe, any applicable requirements. The information
disclosed in this announcement may not be the same as that which
would have been disclosed if this announcement had been prepared in
accordance with the laws of jurisdictions outside the United
Kingdom.
The Barrick shares mentioned in this
announcement (the "Shares") have not been and will not be
registered under the US Securities Act of 1933 (the “Securities
Act”) or under the securities laws of any state or other
jurisdiction of the United States. This announcement does not
constitute an offer to sell, or the solicitation of any offer to
buy the Shares in the United States. Accordingly, the Shares may
not be offered, sold, resold, delivered, distributed or otherwise
transferred, directly or indirectly, in or into the United States
absent registration under the Securities Act or an exemption
therefrom, nor shall there by any sale of the Shares in any
jurisdiction in which such offer, solicitation or sale would be
lawful.
Cautionary Statement on Forward-Looking
InformationCertain information contained or incorporated
by reference in this press release, including any information as to
our strategy, projects, plans, or future financial or operating
performance, constitutes “forward-looking statements”. All
statements, other than statements of historical fact, are
forward-looking statements. The words “will”, “imply”, “could”,
“possible”, “seek”, “propose”, “may”, “can”, “should”, “could”,
“would”, and similar expressions identify forward-looking
statements. In particular, this press release contains
forward-looking statements including, without limitation, with
respect to the future growth, results of operations, performance,
business prospects and opportunities of Barrick and Acacia,
including gold production from Acacia’s mines; the Proposal; the
integration of Acacia’s business with the existing operations of
Barrick; the impact of the Proposal on the financial position of
Barrick and Acacia; impairment charges to be recorded by Barrick;
and the outlook for Barrick’s and Acacia’s respective businesses
and the gold mining industry generally based on information
currently available. These expectations may not be appropriate for
other purposes.
Forward-looking statements are necessarily based
upon a number of estimates and assumptions including material
estimates and assumptions related to the factors set forth below
that, while considered reasonable by the Company as at the date of
this press release in light of management’s experience and
perception of current conditions and expected developments, are
inherently subject to significant business, economic and
competitive uncertainties and contingencies. Known and unknown
factors could cause actual results to differ materially from those
projected in the forward-looking statements, and undue reliance
should not be placed on such statements and information. Such
factors include, but are not limited to: expectations regarding
whether the Proposal will be formally announced including whether
the pre-conditions to formal announcement of the Proposal will be
satisfied, and the anticipated timing of a formal announcement;
expectations regarding whether the Proposal will be completed,
including whether any conditions to completion of the Proposal will
be satisfied, and the anticipated timing for completion; the
combined company’s future plans, business prospects and
performance, growth potential, financial strength, market profile,
revenues, working capital, capital expenditures, investment
valuations, income, margins, access to capital and overall
strategy; expectations regarding the receipt of any necessary
regulatory and third party approvals and the expiration of all
relevant waiting periods; the anticipated number of Barrick common
shares to be issued as consideration for the Proposal, the expected
total capitalization of Barrick on a consolidated basis following
the Proposal and the ratio of the Barrick common shares to be held
by Barrick shareholders and Acacia shareholders, respectively,
following the Proposal; the anticipated benefits of the Proposal;
expectations regarding the value and nature of the consideration
payable to Acacia shareholders as a result of the Proposal; the
anticipated mineral reserves of Barrick following completion of the
Proposal; and the expenses of the Proposal; fluctuations in the
spot and forward price of gold, copper, or certain other
commodities (such as silver, diesel fuel, natural gas, and
electricity); the speculative nature of mineral exploration and
development; changes in mineral production performance,
exploitation, and exploration successes; risks associated with
projects in the early stages of evaluation, and for which
additional engineering and other analysis is required to fully
assess their impact; the duration of the Tanzanian ban on mineral
concentrate exports; the ultimate terms of any definitive agreement
to resolve the dispute relating to the imposition of the
concentrate export ban and allegations by the Government of
Tanzania that Acacia under-declared the metal content of
concentrate exports from Tanzania and related matters; diminishing
quantities or grades of reserves; increased costs, delays,
suspensions and technical challenges associated with the
construction of capital projects; operating or technical
difficulties in connection with mining or development activities,
including geotechnical challenges and disruptions in the
maintenance or provision of required infrastructure and information
technology systems; failure to comply with environmental and health
and safety laws and regulations; timing of receipt of, or failure
to comply with, necessary permits and approvals; the impact of
global liquidity and credit availability on the timing of cash
flows and the values of assets and liabilities based on projected
future cash flows; adverse changes in our credit ratings; the
impact of inflation; fluctuations in the currency markets; changes
in national and local government legislation, taxation, controls or
regulations and/ or changes in the administration of laws, policies
and practices, expropriation or nationalization of property and
political or economic developments in Tanzania and other
jurisdictions in which the Company or its affiliates do or may
carry on business in the future; lack of certainty with respect to
foreign legal systems, corruption and other factors that are
inconsistent with the rule of law; damage to the Company’s
reputation due to the actual or perceived occurrence of any number
of events, including negative publicity with respect to the
Company’s handling of environmental matters or dealings with
community groups, whether true or not; the possibility that future
exploration results will not be consistent with the Company’s
expectations; risks that exploration data may be incomplete and
considerable additional work may be required to complete further
evaluation, including but not limited to drilling, engineering and
socioeconomic studies and investment; risk of loss due to acts of
war, terrorism, sabotage and civil disturbances; litigation and
legal and administrative proceedings; contests over title to
properties, particularly title to undeveloped properties, or over
access to water, power and other required infrastructure; business
opportunities that may be presented to, or pursued by, the Company;
our ability to successfully integrate acquisitions or complete
divestitures; risks associated with working with partners in
jointly controlled assets; employee relations including loss of key
employees; increased costs and physical risks, including extreme
weather events and resource shortages, related to climate change;
availability and increased costs associated with mining inputs and
labor. In addition, there are risks and hazards associated with the
business of mineral exploration, development and mining, including
environmental hazards, industrial accidents, unusual or unexpected
formations, pressures, cave-ins, flooding and gold bullion, copper
cathode or gold or copper concentrate losses (and the risk of
inadequate insurance, or inability to obtain insurance, to cover
these risks).
Many of these uncertainties and contingencies
can affect our actual results and could cause actual results to
differ materially from those expressed or implied in any
forward-looking statements made by, or on behalf of, us. Readers
are cautioned that forward-looking statements are not guarantees of
future performance. All of the forward-looking statements made in
this press release are qualified by these cautionary statements.
Specific reference is made to the most recent Form 40- F/Annual
Information Form on file with the United States Securities and
Exchange Commission (“SEC”) and Canadian
provincial securities regulatory authorities for a more detailed
discussion of some of the factors underlying forward-looking
statements and the risks that may affect Barrick’s ability to
achieve the expectations set forth in the forward-looking
statements contained in this press release.
The Company disclaims any intention or
obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise,
except as required by applicable law.____________________1 CIM
Definition Standards for Mineral Resources & Mineral Reserves
2014, page 4 definition of “Inferred Mineral Resources”.
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