Acacia-Tanzania proposed settlement on track -Barrick

(Recasts with Barrick statement, adds analyst and Barrick

spokesman's comments, background, updates stock prices, changes

byline)

By Susan Taylor and Zandi Shabalala

TORONTO/LONDON, Oct (Shenzhen: 000069.SZ - news) 20 (Reuters) - Barrick Gold (Hanover: ABR.HA - news)

said on Friday a proposed mining settlement it negotiated with

Tanzania for its Acacia Mining (Frankfurt: 33A.F - news) unit was not under

threat, even though Acacia said it could not immediately make a

$300 million payment included in the deal.

Barrick, which owns 63.9 percent of Acacia, announced on

Thursday the deal whose terms include the payment, giving the

state a 16-percent stake in its three mines, and splitting

"economic benefits" from those operations with the government.

Tanzania in March banned unprocessed mineral exports as part

of a push to reap greater rewards from the east African

country's resources. In July, Acacia, the country's largest gold

miner, was served with a $190 billion bill for unpaid taxes,

penalties and interest.

Government-appointed auditors said the company had

understated its gold shipments and that it was operating

illegally in Tanzania. Acacia has denied the allegations.

Acacia, which has not participated in months-long talks to

resolve the issues, said on Friday its board would need to

approve any deal. Acacia executives said the company had not

received any formal proposal on the agreement and was seeking

clarity.

Barrick said the proposed settlement did not require Acacia

to make an upfront payment, citing two announcements stating

that Barrick and government representatives would negotiate

payment terms. That could include staggered payments, for

example, Barrick spokesman Andy Lloyd said by phone.

Shares (Berlin: DI6.BE - news) of London-listed Acacia, which has lost $1.7 billion

in market value since the March 3 ban, dropped 8.1 percent on

Friday. Shares of Barrick rose 0.45 percent to C$20.22.

The partnership model in the proposed deal is crucial to

success in a mining industry in which governments are

increasingly seeking greater benefits from resource development,

Lloyd said.

A meeting between Barrick Chairman John Thornton and

Tanzania President John Magufuli in Dar es Salaam on Thursday

resulted in the framework agreement, Lloyd said. Acacia was

aware of the status of this week's talks, including the

possibility of a 50-50 partnership, he added.

"It is still very early in the process," Acacia Chief

Executive Brad Gordon said on a conference call after the

company released quarterly results. "There is a long way to go

before any proposal is made to Acacia."

Panmure Gordon & Co mining analyst Kieron Hodgson said it

was "strange" for Barrick to negotiate for a company meant to be

responsible for its own future.

"It's akin to negotiating for your brother and then your

brother picking up the bill," he said.

The talks were led by Thornton, who lacks a mining

background and spent years working in China after holding a

senior role at Goldman. He helped strike a near-billion dollar

deal with a Chinese miner this spring.

Reflecting the March export ban, Acacia on Friday posted a

60 percent drop in third-quarter core earnings to $50 million.

It cut spending by 33 percent and said it hoped to resume

generating cash in early 2018.

(Reporting by Susan Taylor in Toronto, Zandi Shabalala in

London and Sanjeeban Sarkar in Bengaluru; Editing by Larry King

and Richard Chang)