Acacia Mining announces exits of CEO, finance boss

03Nov 2017
The Guardian
Acacia Mining announces exits of CEO, finance boss
  • Their voluntary resignations come just two weeks after parent company Barrick Gold struck an unprecedented deal with the Tanzanian government over future profit-sharing

TANZANIA’s leading gold mining company, Acacia Mining Plc, yesterday announced the simultaneous resignations of its top two executives in a development seen as poignant against the backdrop of ongoing mining sector reforms in the country.

According to a statement released by the company from its London headquarters early yesterday, chief executive officer Brad Gordon and chief financial officer Andrew Wray have issued separate notifications of their intentions to step down voluntarily from their positions at the end of the year.

While Gordon will be“returning to Australia for family reasons”, Wray “is pursuing an opportunity elsewhere”, the statement said, adding that they will remain with the company until the calendar year-end “to ensure a smooth transition.”

The company has appointed its head of organisational effectiveness, Peter Geleta, as interim CEO and current general manager for finance, Jaco Maritz, as CFO effective from January 1, 2018, according to the statement. Geleta will also replace Gordon on the Acacia Mining board of directors.

The resignations comejust two weeks after AcaciaMining’s Canadian-based majority shareholder company,Barrick Gold Corporation,struck a deal with the Tanzanian government aimed at ending a long-running dispute over mineral sand exports from the country.

Under the agreement, the government will own a 16 percent stake in the three gold mines operated by Acacia in the Lake Zone- Bulyanhulu, Buzwagi and North Mara - while economic benefits from allthree mines will be split with government on a 50:50 basis.

A new operating company will also be established to manage the minesas well as future operations in the country.It was furthermore agreed that Acacia will make a $300 million payment to Tanzania as a "show of good faith" towards eventually resolving an outstanding $190 billion backtaxes bill slapped on Acacia by the Tanzania Revenue Authority (TRA).

But outgoing CFO Wray said last week that the company, which was not directly involved in the talks leading to the agreement, can’tafford to pay the $300 million.

Britain’s Financial Times newspaper yesterday described the resignations of Gordon and Wray as "a serious blow" to the company, whose shares dropped nearly 6% in London Stock Exchange (LSE) trade yesterday.

“The obvious conclusion would be that those two individuals feel the situation in Tanzania is not going to get resolved sensibly or quickly,” the paper quoted Peel Hunt analyst Peter Mallin-Jones as saying.

But it also quoted Investec analysts as saying the departures could 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,” the Investec analysts said.

Richard Hatch, analyst at RBC Capital Markets, said: "With the challenging situation in Tanzania, and (the Acacia) management’s limited role in negotiations with the Tanzanian government, we believe that this announcement will not come as a great surprise to the market."

"However, we do view the departure of Gordon and Wray as a negative for sentiment around Acacia shares, particularly given the positive changes both have made to the business since their respective appointments, both in terms of operational and financial performance."

Barrick Gold has a 63.9% stake in Acacia. Gordon was appointed Acacia CEO in August 2013, when it was still going by the name African Barrick.

Yesterday’s statement described the new interim CEO Geleta as a 35-year mining industry veteran who, prior to joining Acacia in May 2012, held senior roles at both Barrick Gold Corporation and AngloGold Ashanti.

New CFO Maritz was initially employed by Placer Dome before it was bought by Barrick.

Acacia Mining chairman Kelvin Dushnisky, who is also president of Barrick Gold, said the company was confident that the new appointees would "move seamlessly into their new roles."

According to Dushnisky, the company also remains focused on meeting operational targets "while seeking a resolution to the situation in Tanzania."