BARRICK Gold will agree to a “slight skewing” of economic benefits from mining in Mali’s favour as it sought to resolve a tax dispute with the West African nation’s interim government.
In October, Mali accused Barrick of breaching a framework agreement – which Barrick denied – aimed at ending the dispute. The dispute relates to alleged taxes owed from the 510,000 to 560,000 ounce a year Loulo-Gounkoto mine.
“We have been there for 20 years so it makes sense for Mali to get more than 50% of the economic benefits of mining,” said Mark Bristow, CEO of Barrick Gold. “We recognise the merit in that but it needs to be done in the proper way.”
He said that in return Barrick was seeking a stabilisation agreement related to mining licence renewals. A licence is due to be renewed at Loulo Gounkoto mine in 2026.
Mali’s government, a military junta in power since 2021, predicted serious consequences if the dispute with Barrick was not settled. President Assimi Goita has struck a take it or leave it approach to investors, saying they could leave the country if they failed to accept the country’s 2023 mining code.
Bristow declined to comment on a Reuters report which put the claim at $512m, but said his company had concluded many negotiations of this nature before, often agreeing to increase host country participation in mining.
“We had a similar situation in Tanzania and more recently in Papua New Guinea and we have had a good outcome. So let’s sit down and formalise it,” he said.
In 2020, Twiga Minerals – a joint venture between Barrick and Tanzania – paid a maiden interim cash dividend of $250m. Twiga was formed as part of a settlement with the Tanzanian government which had earlier blockaded gold exports amid claims of unpaid tax.
Bristow was commenting shortly after Barrick published details of its third quarter in which net earnings came in one third higher at 28 US cents per share compared to earnings in each of the previous two quarters.
The improvement was owing to an increase in the average gold price received of $2,494/oz (Q2: $2,344/oz) which offset a quarter-on-quarter decline in gold production to 943,000 oz. Barrick said full year production would be at the lower end of production guidance of 3.9 to 4.3 million oz.
The improved gold price resulted in higher cash flow generation of $444m, about $104m higher than in the second quarter. It enabled Barrick to cut net debt to $500m.
“We are geared up for a big finish,” said Bristow of the current quarter with production improvements anticipated at Nevada Gold Mines, which it shares with Newmont, Porgera in Papua New Guinea, and Kibali in the Congo.
“Work is still needed on our all in sustaining costs (AISC) but we will do that over the coming years which will open up margins,” he said.
AISC in the third quarter edged up to $1,507/oz compared to $1,498/oz in the second quarter. Barrick guided to AISC of between $1,320 to $1,420/oz for the year.
