Local share volatility follows Barrick's Tanzania plan

Global miner Barrick Gold has announced a deal with the Tanzanian government that involves a 50:50 sharing of benefits from its operations in the country, prompting sharp price movements in local stocks exposed to the region.

Canada-based Barrick announced overnight that Acacia, its subsidiary with three mines in Tanzania, had formed a new framework to handle the Tanzanian government’s new rules for mining companies that operate in the country.

It has proposed to form a new Tanzanian operating company that would manage its Bulyanhulu, Buzwagi and North Mara projects, as well as any future operations in the country, and would be jointly managed with the Tanzanian government.

The benefits of the operations will be split evenly between the company and the Tanzanian government, with the government's return to come in the form of royalties, taxes and a 16 per cent free-carried interest in the operations, as part of the new regulations set out by the government.

Acacia has also agreed to settle an outstanding tax claim with the Tanzanian government, in the form of a $US300 million payment, while Barrick is also working to negotiate conditions for a lifting of Tanzania’s new ban on concentrate exports.

The news has caused a stir among local explorers with operations in Tanzania, with the likes of Orecorp, Graphex Mining, Cradle Resources and Black Rock Mining experiencing turbulence in their share prices today.

Orecorp shares had spiked by 26.7 per cent at midday to 19 cents each before the company called a trading halt, and later telling the market that it was reviewing Barrick’s proposed framework and seeking advice on the issue.

“Based on the company’s review of the limited information that has been announced by Barrick and Acacia overnight, it is not currently possible to predict the potential impacts on the company’s Nyanzaga project,” the company said in a statement.

Shares in Graphex Mining, which operates its Chilalo graphite project in Tanzania, were 14.5 per cent higher to 31.5 cents each, while Cradle Resources, which owns its Panda Hill niobium project in the country, experienced a 16.6 per cent share price increase to 14 cents each.

Interestingly, Black Rock Mining, which controls the Mahenge graphite project in Tanzania, fell 7.8 per cent to 7 cents each.