Acacia Contests $115 Million Claim Over Tanzania Mine Permit

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Acacia Mining Plc, spun off from Barrick Gold Corp. in 2010, is contesting a $115 million compensation claim from a former partner over the loss of a concession in Tanzania.

Bismark Hotels Co., a closely held Tanzanian company, began proceedings with Acacia in March to determine whether the claim is justified, Rosan Mbwambo, a lawyer for Bismark, said July 9 in a phone interview. Acacia rejects the claim as “vexatious and baseless” and will defend itself, the London-based company said in an e-mailed response to questions.

“The claim relates to an application for a prospecting license with no attributable reserves, resources or value to the company and has no impact on any current or future operations in Tanzania,” it said. “The company has made no financial provision in relation to this claim, reflecting our view of its merits.”

Bismark had a prospecting and mining partnership from 1995 to 2012 with Pangea Minerals Ltd., according to Mbwambo. African Barrick Gold Corp., Pangea’s parent company, handed exploration licenses that originally covered an area of about 68 square kilometers (26 square miles) back to Bismark in 2012, he said.

Bismark accuses Acacia of failing to renew the license for 16.8 square kilometers of the original concession, which Bismark claims led to the loss of the potential mining area, according to Mbwambo. Bismark only discovered the permit hadn’t been renewed after the partnership was terminated and it began talks with potential South African investors, he said.

‘Full-Scale Mining’

The 16.8-square-kilometer concession is now owned by a Tanzanian investor, who plans to start “full-scale mining” with a Chinese company later this year, Mbwambo said.

“Because they lost out on a potential deal, Bismark say they are entitled to be compensated,” he said.

Joseph Warioba, who served as Tanzania’s prime minister from 1985 to 1990 and is also a retired judge, is representing Bismark in the adjudication process being conducted in Dar es Salaam, Tanzania’s commercial capital, according to Mbwambo. Acacia is being represented by AKO Law, a Dar es Salaam-based law firm, it said by e-mail on Tuesday.

Karel Daele of Mishcon de Reya Ltd., a London-based law firm, said by e-mail on Wednesday he has been appointed by Acacia as the company’s adjudicator in the case.

Shares in Acacia rose 0.4 percent to 287.80 pence by 1:50 p.m. in London, extending this year’s gain to 13 percent.