RESOLUTE Mining has agreed to pay $160m to Mali in terms of a memorandum with the West African government in which the gold miner will also migrate its mining properties to Mali’s 2023 Mining Code, made law last year.
In an announcement on Monday morning, the Sydney- and London-listed firm said $80m had already been paid to the Mali government with the balance of the cash sum to be paid “in the coming months” using existing liquidity sources.
Resolute had about $145.6m in net cash as of the end of the September quarter, and a total of over $250m in available liquidity.
Shares in the company lost nearly 5% on the Australian Securities Exchange, extending losses for the month to about 54%. The firm’s share price weakness is also related to a 5.8% decline in the dollar gold price over the same period.
“Further details on other elements of the Protocol (the memorandum) and the impact of their implementation will be provided following further legal and financial analysis together with the finalisation of documentation,” said Resolute Mining today.
The payment relates to a dispute between Resolute and the Mali government over alleged unpaid taxes. Resolute described the claims as “unsubstantiated last week following the detainment of its CEO Terry Holohan and two other company employees in Bamako, Mali’s capital, shortly after a meeting with government authorities on the matter.
In addition to the tax, other claims related to customs levies, maintenance and management of offshore accounts are also settled, the company said.
Regarding the detainment of Holohan, Resolute commented it was “working with the Government on the remaining procedural steps for the release of the three employees”. Holohan and his colleagues “remain safe and well and continue to receive support on the ground from the UK and International Embassies and Consulates,” Resolute said.
The agreement between Resolute and Mali, termed a “protocol” will not go down well with investors who have watched an increasingly heavy-handed approach by the country’s military junta.
After legislating the 2023 Mining Code, Mali set about negotiations with mining companies. Some agreed terms in Mali relatively quickly, such as Allied Gold and B2Gold.
Barrick Gold, however, had employees detained as it worked on its negotiations with the Mali government. They were released but the Toronto-listed company continues to negotiate a payment amid claims of $300m to $500m is owed in alleged unpaid taxes. Barrick paid $85m in early October to Mali “in the context of the ongoing negotiations”.
Barrick CEO Mark Bristow said on November 7 that he was prepared to cut a new economic deal with Mali. “We have been there for 20 years so it makes sense for Mali to get more than 50% of the economic benefits of mining,” he said. “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 the firm’s 510,000 to 560,000 ounce a year Loulo-Gounkoto mine in Mali in 2026.
