Goldminer Resolute agrees to pay $160m after Mali detains chief executive

A London-listed goldminer said it would pay $160 million to the government of Mali to help to resolve a tax dispute that has led to its boss and two other executives being detained there.
Resolute Mining has signed a memorandum of understanding to settle all outstanding claims by the west African country, including those related to tax, customs levies, maintenance and management of offshore accounts.
The miner has made an initial payment of $80 million as part of the settlement from existing cash reserves and will make future payments of about $80 million in the coming months from existing liquidity sources, it said in a statement. The company had net cash of about $157 million at the end of October and $196 million of reserves including bullion.
• Three Resolute Mining executives detained in Mali
The company is continuing to work with the government on steps for the release of Terence Holohan, the British chief executive, and two other employees.
Holohan was appointed in 2022 to lead a turnaround of the company’s Syama goldmining project in Mali, including reducing costs and boosting production at the site. The company began trading in London in 2019 in addition to its primary listing in Sydney.
In London, where the value of its stock has halved over the past month, the shares fell 1p, or 5.3 per cent, to close at 19¾p.
The Sydney shares have resumed trading after being halted last Thursday amid press speculation over the status of negotiations with the Malian government.
The executives were in Mali’s capital, Bamako, to hold discussions with the mining and tax authorities regarding general activities related to the company’s business practices, the company said.
• Resolute Mining shares suspended in Australia
In its 2022 annual report the company said it had received demands for tax payments of $101 million from the Malian authorities in relation to 2015 to 2021.
The Syama goldmine in Mali is Resolute’s largest asset and produced about 212,000 ounces of gold last year, which would be worth more than $500 million at current prices. The Mali government already has a 20 per cent stake in the mine.
The dispute underscores rising tensions between the military junta that took power in 2020 and foreign miners operating there. The government has been applying pressure on companies to sign up to a new mining code that would allow the state to take a stake of up to 30 per cent in projects and an additional 5 per cent at a later date, which could then be given to private Malian investors.
In 2022 the government issued a moratorium on granting new mining permits while it audited existing miners operating in the country.
The price of gold has enjoyed a significant rally this year as investors have bet on interest rate cuts and flocked to the traditional “safe haven” asset as geopolitical tensions have escalated.
Resolute has said in the past that it signed a legally binding mining convention with the previous government, which runs until 2029.
London-listed companies that have not signed up to the new mining code include Hummingbird Resources and Cora Gold, although both are in discussions with the Mali government. Companies that have completed the renegotiations with the government include B2Gold and Allied Gold, which are both Canadian. Kodal Mining, which is building a lithium mine in southern Mali, signed up to the new code earlier this month.
The FTSE 100 gold mining company Endeavour Mining has one site in Mali where it has undertaken early exploratory work, but the project has not been given the go-ahead for development and has not applied for mining permits.
In August Endeavour agreed to transfer ownership of its Boungou and Wahgnion sites in Burkina Faso for $60 million, ending a dispute with a local mining company over the sale of the two gold mines.
Shares in the Aim-listed Hummingbird Resources and Cora Gold, which have yet to sign up to the new mining code, have fallen 14 per cent and 5 per cent respectively since the detention of the Resolute Mining boss.
Discussions with the Mali government over the code have piled more pressure on Hummingbird, which has already suffered operational setbacks at its Yanfolila mine in Mali. The company received a takeover approach this month from Nioko Resources, a West African investment group and its largest shareholder, and reached an agreement with its lenders to defer $30 million in debt repayments that fell due at the end of October. Geoff Eyre, interim chief executive, is undertaking a technical and financial review of the business.
Yanfolila produced 13,992 ounces of gold during the third quarter, sold at an average price of $2,216 an ounce.
Cora Gold has yet to start generating cash from its Sanankoro goldmining project in the south of the country, which it is looking to develop into an open-pit oxide mine. It has yet to receive its mining licence after the government moratorium on new permits.
Sanankoro is one of two projects being pursued by Cora, alongside the Madina Foulbé mine in Senegal, although it is the most advanced. Exploration work has identified five main deposits and it is estimated to contain about 920,000 ounces of gold.
Cora has estimated that it could produce about $71.8 million of free cashflow in its first year of production — six times the company’s market value — and $234 million over the lifetime of the mine, based on a gold price of $1,750 an ounce.