LONDON (Reuters) - Acacia Mining’s (ACAA.L) top two executives have resigned in the midst of talks between its parent company and the Tanzanian government aimed at ending a long-running dispute that has hit Acacia’s operations.
Barrick Gold (ABX.TO), the world’s biggest gold miner and 63.9 percent owner of Acacia, struck a deal with Tanzania last month to end the dispute, part of which involved Acacia making a $300 million payment to the east African country.
But Acacia, whose three producing gold mines are in Tanzania and was not directly involved in the talks, appeared to have been taken by surprise by the announcement by Barrick chairman John Thornton and President John Magufuli. It said last week it could not immediately afford the payment.
Acacia said on Thursday that its chief executive Brad Gordon and finance chief Andrew Wray would both leave at the end of the year two weeks after chief operating officer Mark Marcombe also resigned.
It said Gordon was returning to Australia for family reason, while Wray was pursuing other opportunities.
“The obvious conclusion would be that those two individuals feel that the situation in Tanzania is not going to get resolved sensibly or quickly,” said Peel Hunt analyst Peter Mallin-Jones
Sudden changes in mining laws have dented the investment appeal of companies operating in countries such as South Africa and Tanzania, where nations feel they are not reaping the benefits of their minerals.
Acacia stock ended 4 percent lower at 175 pence while the wider sector rose 1.5 percent.
“I can’t see how it helps matters,” said BMO Capital Markets analyst Andrew Breichmanas, adding that Gordon and Wray had been instrumental in Acacia’s turnaround.
“While their successors are undoubtedly qualified to lead the company and see the process with the Tanzanian government through to a conclusion, the structure of the proposed agreement may introduce challenges to management’s ability to lead the company going forward and make retaining talent throughout the organisation difficult,” the analyst said.
Acacia said its head of organisational effectiveness Peter Geleta would take over as interim chief executive, while Jaco Maritz was moved to finance chief from his previous position as general manager in finance.
Investec analysts said the departures might actually help smooth a deal with Tanzania.
“Clearly not a positive given the depth of experience that Brad and Andrew have, but it could appease the Tanzanian government as Barrick will be able to say how they are sorting things out, even if it had nothing to do with them,” they said.
Tanzania in March banned unprocessed mineral exports as part of a push to reap greater rewards from its natural resources. In July, Acacia was also served with a $190 billion bill for unpaid taxes, penalties and interest.
The dispute has wiped about $1.7 billion off Acacia’s market value since the ban was introduced. The miner said in September it would shut all underground mining at its flagship Bulyahulu mine.
Chairman Kevin Dushnisky said the company would fully support its management team while seeking a resolution to the dispute in Tanzania.
Additional reporting by Barbara Lewis in London and Sanjeeban Sarkar in Bengaluru; Editing by Mark Potter and Elaine Hardcastle