* Hearing was due to start on Monday
* Government blocking use of North Mara tailings dam fromSaturday
* Acacia says majority owner Barrick has undervalued it
* Barrick has no comment (Adds analyst comment in 5th paragraph, Barrick share price,updates Acacia share price in 11th paragraph)By Barbara Lewis and Yadarisa ShabongLONDON, July 17 (Reuters) - Acacia Mining said onWednesday it was seeking a stay of international arbitrationproceedings against Tanzania, a step that could ease tensionsbetween the two sides locked in a dispute following a$190-billion tax bill.However, that was tempered by the company's statement thatit had been notified of an imminent ban on the use of a storagedam that would prevent its North Mara gold mine - its mainsource of revenue - from operating.The offer to postpone arbitration, which was scheduled tostart on July 22, precedes a looming July 19 deadline forAcacia's majority owner Barrick Gold Corp,holder of a 63.9% stake, to make a firm bid to buy out Acacia.Acacia and many of its shareholders have opposed the offer,saying it is too cheap. "This appears to be a conciliatory move by Acacia after thegovernment of Tanzania effectively threatened to shut down thecompany over the past few days," analyst Tanya Jakusconek atScotiabank, wrote in a note. "It's unclear at this point how the(government of Tanzania) will respond to this gesture."International arbitration is generally a last resort formining companies in disputes with governments.
But some Acacia shareholders have said it has a good chanceof winning, which would increase the company's value and bepreferable to accepting too low an offer from Barrick.Barrick declined to comment on Wednesday.It has been leading negotiations with Tanzania over a $190billion tax bill - about four times the country's gross domesticproduct - handed to Acacia in 2017 for allegedly under-reportingoutput. Acacia denies the allegation.If the Tanzanian government agrees to the stay, thearbitration hearing would be postponed, allowing time tocomplete settlement discussions with Barrick, Acacia said in astatement.Acacia shares, which opened down 2.6%, pared losses to trademarginally lower at 181.3 pence at 2:58 pm GMT in London.Barrick shares advanced 2.5% to C$21.56 in morning trade inToronto, ahead of the benchmark NYSE Arca Gold Miners index's 1%gain.
ENVIRONMENTAL RULESTanzanian allegations that Acacia has broken environmentalregulations have ratcheted up pressure it already faces.Acacia said it had received notice from Tanzania's NationalEnvironment Management Council ordering its North Mara mine tostop using its tailings storage facility by Saturday morning,citing a breach of environment rules.Acacia said it would request the data and reports that hadspurred the government notice for the North Mara mine to stopusing the storage facility.
While the mine was issued an Environmental Protection Orderand fine in May 2019 for alleged deficiencies at a tailingsstorage facility, Acacia said it had never received any reportsthat would justify the ban on use.
It added the North Mara technical team had been working"constructively and collaboratively" with the Tanzaniangovernment.Analysts at Berenberg, which rates Acacia a "hold," said thepostponement request should be received positively by Tanzania.But they said a prolonged outage at North Mara would have a"very significant" impact on finances, given the mine makes up70% of group revenue, and cannot operate without a tailings dam.
(Reporting by Yadarisa Shabong in Bengaluru and Barbara Lewisin London; additional reporting by Nichola Saminather inToronto; editing by Jason Neely, Deepa Babington and BernadetteBaum) Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.