* Acacia seeks direct talks with Tanzania
* Spat deepens with charges in Tanzania this week
* Shares slump the most since July 2017
By Zandi Shabalala
LONDON, Oct 19 (Reuters) - Acacia Mining ACAA.L threatened to use a bilateral investment treaty to force face-to-face talks with Tanzania over a long-running tax dispute that has seen the gold miner hit with a huge tax bill.
Acacia's parent Barrick Gold ABX.TO has been negotiating with the Tanzanian government over the issue for 19 months but no final settlement has been reached and Acacia's management stresses that it wants direct involvement in any talks.
An investment treaty between Tanzania and Britain could compel the east African country to have dialogue with Acacia over a period of six months, interim chief executive Peter Geleta told Reuters.
"It's a further right that we have under the bilateral agreements between the countries," he said.
"But our first intention is to get parties to the table and to come up with a negotiated resolution, you don't want to fight these fights in court, its not what we want to do."
Shares in Acacia sank as much as 16 percent on concerns that the dispute was escalating before making up some ground to trade down 9.8 percent by 1235 GMT. Acacia's has lost over three-quarters of its market value since a ban on the export of unprocessed minerals was instituted last year.
Tanzania's President John Magufuli has sent shockwaves through the mining industry with a series of actions since his election in 2015 that he says are intended to distribute revenue to the Tanzanian people.
Acacia in July 2017 began international arbitration for two of its mines against Tanzania after the government tore up mineral rights agreements, forcing a re-negotiation of those contracts.
$190 BILLION DEMAND
Tanzania banned the export of raw minerals in March 2017, introduced tough laws and hit Acacia with a $190 billion tax charge.
Acacia maintains it has not been given the full document from a framework agreement struck by Barrick and the government a year ago that was meant to remedy these issues.
"We didn't give them (Barrick) any mandate to negotiate, they are negotiating on behalf of themselves as a major shareholder," said Geleta, who took on his role last November.
"We are now trying to use this to get direct dialogue and I absolutely believe it will be advantageous. And not through a third party which has been happening with Barrick."
The dispute ratcheted higher this week when Tanzanian authorities charged three of Acacia's local subsidiaries, an employee and a former staffer with money laundering and tax evasion. two accused individuals were still in custody as the alleged offences were not eligible for bail. Acacia said all the accused had pleaded not guilty.
Barrick said it would merge with African miner Randgold Resources RRS.L in September, sparking hopes that its new chief executive could help resolve issues at Acacia.
RBC Capital Markets analyst James Bell said there was "clear value opportunity," in Acacia, "but we continue to expect that investor focus will remain on the outcome of the Tanzanian government negotiations with Barrick as well as any implications from the Barrick Randgold merger."