* Acacia seeks direct talks with Tanzania
* Spat deepens with charges in Tanzania this week
* Shares slump the most since July 2017 (Updates with shares, analyst)By Zandi ShabalalaLONDON, Oct 19 (Reuters) - Acacia Mining threatenedto use a bilateral investment treaty to force face-to-face talkswith Tanzania over a long-running tax dispute that has seen thegold miner hit with a huge tax bill.
Acacia's parent Barrick Gold has been negotiatingwith the Tanzanian government over the issue for 19 months butno final settlement has been reached and Acacia's managementstresses that it wants direct involvement in any talks.An investment treaty between Tanzania and Britain couldcompel the east African country to have dialogue with Acaciaover a period of six months, interim chief executive PeterGeleta told Reuters."It's a further right that we have under the bilateralagreements between the countries," he said."But our first intention is to get parties to the table andto come up with a negotiated resolution, you don't want to fightthese fights in court, its not what we want to do."Shares in Acacia sank as much as 16 percent on concerns thatthe dispute was escalating before making up some ground to tradedown 9.8 percent by 1235 GMT. Acacia's has lost overthree-quarters of its market value since a ban on the export ofunprocessed minerals was instituted last year.Tanzania's President John Magufuli has sent shockwavesthrough the mining industry with a series of actions since hiselection in 2015 that he says are intended to distribute revenueto the Tanzanian people.Acacia in July 2017 began international arbitration for twoof its mines against Tanzania after the government tore upmineral rights agreements, forcing a re-negotiation of thosecontracts.
$190 BILLION DEMANDTanzania banned the export of raw minerals in March 2017,introduced tough laws and hit Acacia with a $190 billion taxcharge.Acacia maintains it has not been given the full documentfrom a framework agreement struck by Barrick and the governmenta year ago that was meant to remedy these issues."We didn't give them (Barrick) any mandate to negotiate,they are negotiating on behalf of themselves as a majorshareholder," said Geleta, who took on his role last November.
"We are now trying to use this to get direct dialogue and Iabsolutely believe it will be advantageous. And not through athird party which has been happening with Barrick."
The dispute ratcheted higher this week when Tanzanianauthorities charged three of Acacia's local subsidiaries, anemployee and a former staffer with money laundering and taxevasion. The two accused individuals were still in custody as thealleged offences were not eligible for bail. Acacia said all theaccused had pleaded not guilty.
Barrick said it would merge with African miner RandgoldResources in September, sparking hopes that its newchief executive could help resolve issues at Acacia.
RBC Capital Markets analyst James Bell said there was "clearvalue opportunity," in Acacia, "but we continue to expect thatinvestor focus will remain on the outcome of the Tanzaniangovernment negotiations with Barrick as well as any implicationsfrom the Barrick Randgold merger."
(Reporting by Zandi ShabalalaEditing by Kirsten Donovan/Keith Weir)