Shares in African Barrick Gold are down sharply on Wednesday morning following news that Tanzania might introduce a ‘super profit tax’ on minerals.
From Bloomberg:
Tanzania, which vies with Mali to be Africa’s third-biggest gold producer, may introduce a “super profit” tax on minerals similar to the one implemented in Australia, the East African nation’s planning commission said.
“Considering the increasing trend in mineral prices, it is optimal to introduce a super-profit tax on the windfall earnings from the mineral sector,” the commission said in a report today in Dodoma, the capital. Australia’s implementation of a similar levy earned the country $9 billion a year, it said.
Oh dear.
All of African Barrick’s mines are in Tanzania and today’s stock slump leaves its share price almost 30 per cent below last March’s float price of 575p.
Given the performance of the gold price in that time, that’s a pretty shocking performance:
But then African Barrick, a former FTSE 100 constituent, has been plagued by problems since the day it was demerged from Barrick Gold.
First, there was a shock production downgrade just four months after listing due to delays accessing higher grade ores. That was followed a couple of months later by the discovery of an organised and systematic fuel theft racket at its Buzwagi mine, which forced another production downgrade.
More recently seven people were killed during a raid on its North Mara Gold mine and now there’s the prospect of a super tax in Tanzania.
Told ya it was cursed.
Update: 12.54pm.
Meanwhile….
CityAM has been taking a look at the seizure of the UK IPO market with a rather explosive front page splash.
FEUDING has broken out between allthe key players within the City of London’s crucial fundraising business, in a development that threatens to devastate confidence in London’s faltering flotations market. Key advisers, investors and bookrunners are at loggerheads and briefing against each other, in the worst breakdown in relations in the City in living memory.
According to numerous sources who have spoken anonymously to City A.M. banking consultants such as STJ Advisors, hired sometimes secretively by private equity groups wishing to offload companies on the London market, are clashing with the bulge bracket investment banks that are responsible for bringing flotations to the market.
Meanwhile, another key group of City financiers – the buy-side firms that invest in newly floated firms – are continuing to warn that new shares are being offered at too high a price.
Related link:
Police repel African Barrick mine invasion – FT
The LSE’s IPO pipeline – FT Alphaville