Barrick Gold's (>> Barrick Gold Corp) chairman and Tanzania's president met on Wednesday and agreed to hold talks aimed at resolving an escalating dispute over an export ban which has hit Barrick's Acacia Mining PLC (>> Acacia Mining PLC).
Shares in Acacia, which is 63.9 percent owned by Barrick, jumped as much as 11 percent, to 303 pence, after the news and closed 5.5 percent higher, outpacing sector rivals <.FTNMX1770>.
Tanzania is Africa's fourth-largest gold producer, and Acacia its largest miner, with three gold mines that also produce copper in the East African country.
Acacia's market value has nearly halved to about $1.4 billion since Tanzania banned the export of unprocessed ore in March, part of a push for the construction of a local smelter to make the country's gold exports more valuable.
"I feel very optimistic that we will reach a resolution which is a win-win," Barrick Chairman John Thornton said after meeting Tanzanian President John Magufuli.
"We'll be sitting down soon with a team designated by the president and our own team."
A statement from the president's office said that Barrick is ready to discuss "the payment of compensation of losses incurred by Tanzania from the company's operations in the country."
It also said Thornton agreed to cooperate with Tanzania to build a smelter in the country.
"In one or two weeks, we will begin full negotiations... we should be able to come to a compromise," Magafulu said.
Tanzania's justice and constitutional affairs minister said the country would immediately begin the process of amending its mining, gas and tax laws to ensure it benefited more from its natural resources.
The government, which has alleged that Acacia has evaded taxes, said its audit showed the miner had 10 times more gold in containers prepared for export than it declared.
"We have never stolen, we have never evaded taxes, we have never forged documents to avoid paying royalties and we have never been unlawful," Acacia Chief Executive Brad Gordon said in a June 13 internal memo.
Acacia, which may provide a further update on a previously-scheduled call on Thursday, said that Barrick has agreed to begin talks, but no agreement has been reached.
Barrick, which reports second-quarter results on July 26, has said that if Acacia needs to revise its 2017 forecast, Barrick would evaluate adjustments to its own full-year outlook.
Acacia accounts for approximately 10 percent of Barrick's 2017 forecast output of 5.3-5.6 million ounces of gold.
(Additional reporting by Susan Taylor in Toronto; writing by Duncan Miriri in Nairobi and Zandi Shabalala in London; Editing by Marguerita Choy/David Clarke/Alexander Smith)
By Fumbuka Ng'wanakilala and David Lewis