President Magufuli (pictured) had accused Barrick Gold of "stealing from us" in a live televised address this week.
MINING | GOLD
Tanzania has agreed to negotiations with Canadian mining giant Barrick Gold which it accuses of operating illegally and evading taxes, a government statement said.
Barrick is the majority shareholder in London-listed Acacia Mining which a presidential commission report said this week was not registered to operate in Tanzania and had failed to pay taxes worth billions of dollars. Barrick refuted the allegations.
On Wednesday, its executive chairman John Thornton flew to Tanzania to meet with President John Magufuli after news of the allegations caused the company's share price to fall.
Barrick "is ready to discuss with the Tanzanian government the reimbursement of money lost by Tanzania as a result of the company's operations in the country," the presidency said in a statement, without giving further details.
Barrick released a statement describing the meeting as "constructive and open".
It said the parties agreed "to enter into negotiations to seek a resolution that is in the best interests of all stakeholders, including Tanzania, Barrick, and Acacia."
Barrick Gold shares listed in New York rose 0.3 percent in midday trading to $16.38.
Magufuli had accused the company of "stealing from us" in a live televised address this week, but welcomed the proposed discussions.
He said a special committee would be appointed aimed at reaching an agreement for reimbursement.
On Monday, a government commission said fraud in the mining sector had cost Tanzania $84 billion (75 billion euros) over 19 years and blamed foreign companies for failing to declare revenues.
Tanzania is rich in minerals and ranks fourth among gold producers on the continent. Gold is the country's leading mineral export and one of its primary sources of revenue.
It also exports copper, nickel, silver, diamonds and other precious stones such as tanzanite.
In March, Tanzania said it was banning exports of non-processed ore in a bid to promote the development of the mineral processing sector, create new jobs locally and increase revenues generated by the sector.
The presidency statement on Wednesday also said Thornton had agreed that Barrick would "cooperate" in the construction of a smelter in Tanzania.
Last month, Magufuli dismissed the country's mines minister after receiving a report from geologists that said mining companies had underestimated their mineral exports in order to pay lower taxes.