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African News Herald > Blog > Politics > Australian gold miner’s shares plunge after chief executive detained in Mali
Politics

Australian gold miner’s shares plunge after chief executive detained in Mali

ANH Team
Last updated: November 11, 2024 2:41 pm
ANH Team
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Shares of gold producer Resolute Mining took a nosedive of over 30% on Monday following the detention of its chief executive Terence Holohan and two other employees in Mali. The executives were detained in the capital city of Bamako while discussing open claims made against Resolute, which the company maintains are unsubstantiated. Resolute, listed in Sydney and London, is currently contesting demands from Mali tax authorities for additional payments exceeding $100 million on taxes spanning from 2015 to 2021.

This development comes amidst the Malian government’s intensified pressure on mining companies to renegotiate their contracts. Major players in the industry, such as Barrick Gold and B2Gold, operate gold mines in Mali. The government of Mali, a nation with a population of 23 million in the Sahel region, commissioned an audit of all mining contracts in 2022 and revised the mining code to secure higher revenue from mining companies.

Under the new mining code, the government can acquire a 10% stake in projects and has the option to obtain an additional 20% stake within the first two years of commercial production. Furthermore, companies are mandated to cede an additional 5% stake to the government, which can then be sold to private Malian investors at a later date.

Barrick Gold has also been engaged in challenging negotiations with the Malian government regarding the new terms. In a recent incident, four Barrick executives were detained for four days, and the company subsequently paid the government $85 million as part of the negotiations. Other mining companies operating in Mali, such as Robex Resources and Allied Gold, have struck deals with the government involving one-off payments and increased royalties.

See also  Russia to beef up military aid to junta-led Mali, Niger, and Burkina Faso

Resolute Mining, with its primary asset being the Syama mine in Mali where the company holds an 80% stake, has been investing in a new production plant to enhance gold production. The company aims to increase gold production from 215,000 ounces this year to 250,000 ounces next year. Governments in coup-afflicted central Sahelian states like Burkina Faso, Niger, and Mali, all controlled by military juntas, are adopting a tougher stance towards mining companies to extract greater revenue from them.

Listed gold miners have seen significant gains this year as the price of gold reaches all-time highs. Prior to Monday’s decline, shares of Resolute had surged by more than 90% for the year. The detention of Resolute officials by the Malian government is likely to raise concerns among companies with operations or projects in Mali, signaling a heightened regulatory environment in the region.

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