Member Info for dweill

@eltonshango you need to do a bit of reading my friend. A listed company is going to be audited both in company and at head company level. There is simply not a single iota of a chance that Acacia has not paid the requisite and contractual liability . What the Tanzanian government has done is to shred what little credibility that it had by doing a stone age big stick positioning ahead of a negotiation with Barrick that now frankly because of the President has nothing to lose. The market has already wiped out the value of Acacia in Barrick which if you look on your screen will see is UP ON THE DAY. Tanzania is cutting its own throat with a dull razor and while it is sad to watch it, there is nothing we can do - it is up to the people of Tanzania to wake up and see the reality that direct foreign investment just got switched off for political point scoring. I do like the fact that the President picked up trash from the street as seen on the net - good on him - future career path?

The 'fines' at this stage are now totally irrelevant. This is a bi-modal outcome: either Barrick negotiates a sensible solution or the mines go to care and maintenance in an orderly fashion and it goes to arbitration to be fought out over several years, and Tanzania will lose in many ways. Not only in claims that will be enforced against their external reserves but also with zilch new foreign investment. I do a lot of business in China and I can confidently say that the Chinese are not going to touch this mess when it comes to actually writing a cheque. Ironically Barrick's market cap now expresses a 'zero' value for Acacia IMO.

What Tanzania apparently is doing is to to try to nationalise the mines without paying compensation. However it will not work -Tanzania has bilateral investment treaties with both Canada and the United Kingdom. They are also party to the NY Convention 1958, and the Convention on the Settlement of Investment disputes between states and nationals of other states (ICSID). The fact that Tanzania has made such an obviously insane claim will actually weaken their case through the international arbitration process - which will take time to resolve - but effectively has killed Tanzania as a jurisdiction for foreign investment. They can just forget the $30 billion LNG project - not going to happen.

That is the scary part - how does one rationalise with idiots that a traditional shakedown is a $30mm ticket not $190 billion? Tanzania has blown their credibility and this will now probably have to work its way through arbitration and it will be a complex one. Tax claims historically have to be appealed in country - we can guess how that pans out - but this one is just ridiculous enough to amount to expropriation of the assets which is subject to ICSID arbitration. https://icsid.worldbank.org/en/Pages/about/Database-of-Member-States.aspx Tanzania is bound by the convention.

My good friend at JP Morgan spun ACA out as a sub and separately listed company many years ago - Barrick is ring fenced in any event. Tanzania now has less than zero credibility. It is sad to see a nation state cut their own wrists with a dull razor.

That is true in Tanzania, but isn't true under the rules of UNCITRAL where this matter may well end up being decided.

I personally believe that there has been no wrong doing whatsoever. ACA is audited 5 ways from Sunday and in our modern world non-compliance is a non-starter and that is good not bad. I of course have not had sight of any contracts, etc. but what I imagine is happening that has irritated Tanzania is that ACA gets VAT refunds and evidently - I don't know this so am guessing - doesn't pay royalties on copper from the concentrates which in all probabilities is two times nothing in sums. Tanzania as a nation state have their reputation on the line when they want to have a $30 billion investment for gas to liquids from oil majors. I think that they are playing a very dangerous game, totally irrational, but in Africa it regrettably this would not be the first time something insane has happened. I just hope that a solution is found that works for the country and the company.

I read in the press that the President actually has a low approval rating for Tanzania - which always gives high approval ratings to presidents. It was suggested that this is his way of scoring points with the public. I think that this brinkmanship will end up killing their gas to liquids $30 billion deal. I know I personally would not put 1p in Tanzania with this insanity going on. Looks like a recovery situation for ACA through legal channels unless Barrick can solve it with sovereign cover from the USA, China and Canada.

The Tape very rarely lies...

Negotiations between Tanzania and Barrick start tomorrow evidently. I personally would like to see a prompt and rational resolution to this matter. To quote John Thornton 'a win win for Tanzania, Barrick and its subsidiary Acacia.' If the President wants to roll the dice with the future of his people with brinkmanship that may just go very wrong, then that is his affair but it is clear that the commercial interests and the Canadian commercial attache would like to see a positive result for everyone.

Loads of cards left to play. Mr John Thornton wants to cut a deal and move on. The President evidently wants to score some points. If it goes to arbitration Tanzania will IMO be found liable. Recovery though will take a lot of time and effort - best to negotiate a settlement and be done with it but wind down operations in Tanzania and ramp Kenya. Also for Tanzania there is the small matter of the $30 billion LNG facility they are trying to finalise with the oil majors. Going nuke on Acacia when they are creating real value in the country with ridiculous charges that will easily be disproved is not the way to win friends and influence people. IMO this is all politics and posturing. It will cost some money to resolve but I really doubt that Tanzania is idiotic enough to become Zimbabwe.

I think they were completely right to file the notice of arbitration. Tanzania is part of ICSID and will be bound by the decision of an independent impartial tribunal. That fact alone may help focus their minds on being rational in the negotiations with Barrick especially with a multi billion gas to liquid facility being negotiated with the oil majors at this time. The Canadian ambassador to Tanzania was with Mr Thornton at the meeting with the president, but as one wise observer stated there is also sovereign cover from the Chinese.

That is indeed very damning comment. One would hope that Tanzania would join the world community in a compliant framework adhering to the rule of law. By treaty they already have BTW. I hope that they adhere to the carrot rather than having to face the stick.

Thanks for sharing these thoughts - I found this post very insightful.

I thought that ABX would not walk away from ACA. We are not out of the woods yet but the big guns have been brought in.

Seer - you make by point - what country on earth wants to be like Zimbabwe, North Korea, Yemen or Syria which are in total disarray.

I don't think that Tanzania holds all the cards by a long shot. There is a bilateral investment treaty in place as of 1994 with the UK. I haven't looked at all of the nexus issues yet but in our modern world a country can't just go and act irrationally and go without recourse.

I am not directly involved with ACA but I have been buying a large amount of ABX on dips in the share price. ABX has great management and at least in my opinion they have turned the ship around. I really don't think that Barrick is going to turn their back on ACA. Tanzania is at least IMO being totally unreasonable. ACA is a public company and if they have 'supposedly' been making an elicit fortune over say a decade, where did it go? They are audited three ways from Sunday! There is not a jot of a chance that they can hide anything under any circumstance. The Tanzanian argument just don't pass muster. It is simply a monetary impossibility - full stop. Can ACA trade lower - yes - is it rational? No. We are reaching levels now of insanity and as one broker said around 235 you are buying the company close to its liquidation value. This is brinkmanship taken to an extreme - no one wins in this but the real loser ultimately is Tanzania evidently. DYOR and remember - 'Sell in a panic, regret at leisure.'

When an investment loses over 85% of its value from my experience it will rarely recover - sometimes but very rarely and then it is a recovery situation to a fraction of its former valuation. I fear Stratmin is a recovery situation.

Once the 20p top of the range gets taken out I believe it will then become support. I expect that this resistance level will be breached prior to the launch of dot London in late April. Also I think that Minds and Machines have plenty of good news to provide us with between now and then. This has been a delightful investment and it is very satisfying to watch the company develop so well.