If the rights issue was 6 for 10 and Barrack bought 50% of the new shares for Tanzania government it would equal 16% and leaves $300M in cash raised by other investors who bought the RI stock at full strike price with no discount. It could work if the Tanzania Government also gave additional mining licences to Acacia, and a regular army unit to protect the Mara mine from incursions and so forth.
The only way I can see them coming up with $300M from Acacia is to have a rights issue. Barrack would have to accept dilution and leave Tanzania Government with 16% post RI.
A 1 to 1 Rights issue raises $800M. $300M goes to Tanzania Government. Barrack takes $250M back to cover their dilution losses on what they do not take up in an RI. The city investors buy a good percentage of the stock taking a hit. If they go that route the shares would bottom at a pound but gradually rally back up over time. It also requires the export of gold sands to be lifted to make an RI work. The Acacia cash raise repairs the balance sheet to where they were before all the arguments.
If existing investors get no discount the price does not fall that much and stays where it is. If they get a discount to buy in the price of the existing holding falls.
I have been watching this for a while trying to pick an entry point but "I give up".
To me looks like it would be impossible to value this for a very long time.
If you were Barrick looking at a total loss any deal is better than no deal but the conditions, new company, £300m gift, more "local ownership" just looks like the Tazanian Government have their snout in the trough.
From a far it looks like the big losers will be Acacia shareholders as they get squeezed out of the crumbs by Barrick after the Government have had their fill.
Best of luck to those that are down, hope I am wrong for you all.
Difficult to value the stock without knowing how a new company would operate. Likely to have new shares and a new name and could have new management. Government to have a say on sub-contracts that support the company. Barrick would still own half. Ordinary shareholders may or may not face a hit with all the changes. How many government employees would also be added to the Acacia pay roll? Perhaps unfair to say if it is now a sell but it looks speculative.
Welcome to Africa. Government take a 16% share of the company and 50% (.......???) of revenue in return for nothing. Now the SFO will investigate a case of bribery and send the SP down another 50%....Still the White Man's grave.
Acacia Mining parent Barrick Gold has agreed for the Tanzanian government to take a 16% stake in the London-listed company's three mines in the country and to share revenues.
Barrick, which owns 63% of Acacia, has agreed for the company to pay Tanzania a one-off $300m as a show of good faith.
Speaking at a press conference in capital Dar Es Salaam, Barrick chairman John Thornton the deal would have to be approved by the independent shareholders and directors of Acacia Mining.
Palamagamba Kabudi, Tanzania's minister for justice and constitutional affairs, said: "We have also agreed to have a 50:50 share of revenues between the government and Acacia Mining from all the mines."
Comparing the Acacia situation with the US government, the acacia mine shutdown and the US government shutdown (due to debt ceiling) are both about 4-5 weeks away. Surely, the US shutdown will be much more spooky for the markets. Will the politicians try and resolve it soon enough to avoid a cliff-hanger? The answer is no. Nobody can make good money if situations get resolved well in advance of reaching a cliff. The real money is in letting the situation deteriorate long enough. The resolution then leads to a tidy sum for some.
Tanzanian Government is waiting for Acacia to close Bulyanhulu for them to seize the mine. Likely to pursue what is left of Buzwagi mine later on. Mara virtually under a siege needing police to protect it. Barrick have no where to go to help Acacia on all of this. Mine is 5 weeks away from total shut down. Clock is ticking down here.
Just responding to your note by saying that Bulyanhulu shuts down in 6 weeks. Politicians have whipped up rioting outside of the Mara mine and police had to break it up. Acacia has been accused of stealing Mara land and politicians are inciting criminal damage against Acacia and potential violence against the workforce in the Tarime district. The whole issue is coming to a climax. I am not sure how Magafuli can unwind this situation as he has created so much tension against the company .All to easy for politicians anywhere to create hatred. It is a lot harder and longer to establish and maintain peace.
Doesn't seem to have moved much since my stopped short in July ( over 320 points gain for me there )
Still wondering if this will stay at these levels for ages now
My biggest short profits on a single stock I think .
At least from a technical side this was executed well . I don't get too nervous on longs but shorts really can get me very nervous, as Gap ups make shorting very expensive .
----For the BULL case -----( sorry to discuss just the technicals here ) ( fundamentals next time maybe)
I'd be looking at that price vs 20 day moving average crossover and then the 50 and 100 .
The formation reminds me of the IGG chart I so much discussed on that BB post the crash . Did rather well there.
IF I had to hope for a good scenario here, I'd be wanting to see a good congestion area being formed with a defined rectangle / channel of say 165 - 185 , the longer the area stays the better, it could be weeks or a couple of months patience here .
So staying patient you wait for the channel to break out . That will be the catalyst of your next trade decision IMO . And in theory the longer the pattern the better the breakout target.
Look at IGG chart for parallel
I also use 165-185 as an example ( not being precise ) 152-207 is closer to the 2 extremes post crash.
Okay it looks like a fund decided not to hold a short position so hence no RNS. Quite possibly a million short was closed off and hence the big short cover rally. This probably will have an up day but more in line with expected moves on gold etc.
Emerald it is practicing being an AIM share listing. Last six spikes like this since March were followed by a big drop. It is either a suckers rally, or corrupt insider buying on news to come out later. I am now out of here for good. It stinks to high heaven.
Bite the bullet with a rights issue. 1:1. Tanzania government agree the price of the right for 50% of the available stock. So 820M shares new total. Barrack does not take up all its allocation and takes some cash instead. Tanzanian public buy at 150p say 205M shares. Non Barrack holders can buy some at prescribed price to keep their 37%. Acacia has less Barrack and its replaced by Tanzanian Government and some independent holders. Again they resolve everything else to make it attractive for people to buy stock.
Indonesia has now stopped 4% of all gold mining production globally as they follow Tanzania. This is now leading to a fall for the first time in annual gold mine supply for 2017 in many years. Clearly a number of governments suspect fraud in the smelting industries. At the very least better regulation might be needed.
The only sensible way to resolve this is for Barrack to concede 10% of its stock to the Tanzanian government. In exchange the ban on exports ends, the 1% fee goes but probably Royalties stay at 6%. Tanzania government has a place on the company board. Everything is made more transparent and accountable. They agree a long term mining code that is acceptable to the industry otherwise nobody will develop the assets as seen in other countries who asked for to much.
The smelter costs $500M and is completely non-profitable. The country does not have enough power grid supply to support it as well. Instead the whole process could be heavily monitored at all stages which is the least expensive and environmentally favourable outcome to do. A fund internationally is created to generate the same amount of high quality jobs that a smelter would create locally in the resource engineering sector is a better idea. The companies gain from it by recruiting people trained and developed by what is created. That programme could be half government funded and half industry and management function shared.
If Magafuli sees the benefit of that approach this whole saga ends and the country does a lot better. As for Barrack yes they lose some assets but if it ends all the arguments for good, they can recover the loss over time.
Has anyone compared US fines on banks, BP, and other companies and compared them by putting the numbers in some form of matrix? I am wondering whether Tanzania is likely to take more money, in percentage terms, from Acacia, than US took, on an average, from these banks (or the worst case - BP)?
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