Shares of an Australian gold miner plunged after its chief executive was arrested in Mali
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Shares of gold producer Resolute Mining fell more than 30% on Monday after the company said chief executive Terence Holohan and two other employees had been detained in Mali.
The executives went to the capital Bamako to discuss with officials “public statements against Resolute” that the group “believes are unfounded,” it said. firmlylisted in Sydney and London.
In its 2022 financial report, the mining company said it was contesting a request from Mali’s tax authority for additional payments worth more than $100 million in taxes from 2015 to 2021.
The news comes as the Malian government is increasing pressure on mining companies to renegotiate their contracts. Barrick Gold and B2Gold are among the companies that operate gold mines in Mali.
Mali, a country of 23 million people in the Sahel, a semi-arid strip of land south of the Sahara, has audited all mining contracts by 2022 and rewritten its mining code to extract more revenue from mining company.
The new code allows the government to hold 10% of the project and gives it the option to receive an additional 20% stake within the first two years of commercial production. The companies are obliged to cede another 5% of shares to the government, which the government then has the option to sell to private Malian investors at an unspecified date.
Barrick Gold is also stuck in difficult negotiations with the Malian government over new terms. In September, four Barrick executives were detained for four days. Last month Barrick Gold paid the government $85 million “amid ongoing negotiations”.
According to Peter Mallin-Jones, mining analyst at Peel Hunt, several other miners operating in Mali, such as Toronto-listed Robex Resources and Allied Gold, have recently signed agreements with the government. government, including one-time payments as well as higher royalties.
“It seems like the administration is using a big stick to try to encourage laggards to sign quickly,” Mallin-Jones said. “These actions will likely raise even bigger red flags for groups with operations or projects in Mali.”
Resolute’s largest mine is the Syama mine in Mali, the company owns 80% of the mine and the government holds the remaining 20%.
The company has invested in a new production plant at the mine, which will boost gold production from 215,000 ounces this year to 250,000 ounces next year.
Governments in coup-hit central Sahelian states such as Burkina Faso, Niger and Mali, all ruled by military juntas, have taken a harder line against mining groups operating in their countries, Find ways to get more revenue from them.
Listed gold miners have recorded strong gains this year as the precious metal surged in price All-time high valuation. Resolute shares had risen more than 90% in the year before Monday’s decline.
