(Bloomberg) -- The downfall of Acacia Mining Plc took a new turn as the company’s top executives resigned, bringing fresh uncertainty to the future of the Tanzanian miner owned by Barrick Gold Corp.
Chief Executive Officer Brad Gordon and Chief Financial Officer Andrew Wray will step down on Dec. 31, the gold miner said in a statement. The miner’s top three executives are planning to leave, as Chief Operating Officer Mark Morcombe said last month he would resign.
The departures suggest Acacia’s relationship with Barrick, its majority shareholder, is worsening during a long-running dispute with the Tanzanian government.
Barrick last month reached a preliminary agreement with the Tanzanian government to resolve a $190 billion tax penalty, but didn’t tell Acacia about the terms of the settlement until after the deal was announced. Acacia shares have lost about half their value this year as Tanzania banned exports of unprocessed gold in March and claimed the company had under-declared export revenue since 2000.
"We can only assume that the lack of control over the negotiations with the Tanzanian government made their positions untenable,” said Michael Stoner, an analyst at Berenberg Bank, referring to the resignations. “We view this as negative news for the company.”
Barrick Chairman John Thornton agreed last month that Acacia would establish a new operating model to share the economic benefits from the mines equally with the Tanzanian government and pay $300 million to the state as a "show of good faith."
A spokesman for Barrick declined to comment on the resignations.
Though the exact terms of the deal are still to be agreed, it will include the creation of a Tanzanian operating company with substantial decision-making power, leaving little room for Acacia’s international executives, said Andrew Breichmanas an analyst at BMO Capital Markets Ltd.
It’s “clearly not a positive given the depth of experience that Brad and Andrew have, but it could appease the Tanzanian government,” Investec analysts wrote in a report. “Barrick will be able to say how they are sorting things out.”
Gordon was appointed CEO in 2013, and was successful in increasing production while reducing costs, said Breichmanas of BMO.
"The current Acacia executives have delivered an incredible turn around in terms of the performance of the operations," he said. "Given the history of the assets, there should be a decent amount of skepticism about how they are going to perform in the future under a new management team and a new structure."
Barrick’s time in Tanzania has been difficult since it entered the country in 1999. It spun off the business to create African Barrick Gold Plc, later renamed Acacia, but struggled to manage costs and community relations. Barrick holds a 64 percent stake in the company.
Under last month’s deal, Tanzanian and Barrick representatives still need to work out the details and payment terms of an agreement. Acacia’s board appointed Peter Geleta, head of organizational effectiveness, as interim CEO. Jaco Maritz, the general manager for finance, will be CFO starting Jan. 1.
Gordon is leaving to spend more time with his family, while Wray is a pursuing a new opportunity elsewhere, the company said in a statement on Thursday. Both will remain with the business until the end of the year to ensure "a smooth transition," it said.
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