June 24, 2019 / 2:00 PM / 4 months ago

UPDATE 1-Acacia Mining says Barrick offer undervalues the company

(New throughout, adds current deal value, updates share prices)

By Noor Zainab Hussain and Nichola Saminather

June 24 (Reuters) - Acacia Mining on Monday strongly disagreed with majority shareholder Barrick Gold Corp's valuation of the company, saying Barrick's proposal undervalued its life of mine plans and appears to have ignored the value of its exploration and development assets.

However a fair value buyout offer from the world's No. 2 gold miner would be attractive, it added.

Barrick's proposal to take full control of its African unit to resolve a long-standing tax dispute with Tanzania has drawn the ire of Acacia's minority shareholders, who may have the ultimate vote on a deal.

Toronto-based Barrick's May 21 share-for-share proposal valued Acacia at $979 million as of Friday's close, versus $787 million when it first proposed the deal, thanks to a 27% jump in Barrick shares. Barrick said last week its proposed offer is "more than fair" and will engage with Acacia's board and minority shareholders to win them over.

Barrick shares rose 0.8% to C$20.73 in early trade in Toronto. Acacia shares were little changed at 182.2 pence in London, bringing gains since before Barrick's offer to 14.4%.

Barrick valued Acacia's assets at $1.3 billion in its 2018 annual report but said last week that following a review it had concluded that some of Acacia's assumptions about its assets were not supportable.

Acacia said its life of mine plans have been formulated in line with "industry standard methodology", adding that it hosted Barrick representatives for site visits during the first quarter of 2019 and gave Barrick its draft life of mine plans.

Acacia also said independent technical consultant SRK Consulting, which it had engaged to review its modeling, mine plans and reserve and resource statements, had concluded its processes were robust.

Barrick did not immediately respond to a request for comment.

Barrick spun off Acacia in 2010, but maintains a 63.9% stake. Its proposal last month followed two years of wrangling over a $190 billion Tanzanian tax bill, which has since been reduced to $300 million.

Acacia said in the statement that Barrick's management of the negotiations with the government of Tanzania have undermined Acacia in the country.

"The perception that Acacia has been the roadblock to the settlement has led to a material deterioration of Acacia's operating position in Tanzania," the company said, adding it did not invite Barrick's intervention into the negotiations. (Reporting by Noor Zainab Hussain in Bengaluru and Nichola Saminather in Toronto; Editing by Jan Harvey and David Gregorio)

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