Gold miner Resolute stumps up $250m amid Malian ‘hostage’ standoff
Resolute Mining appears to have run the gauntlet of sending its CEO, Terry Holohan, to the troubled West African nation of Mali despite a previous security incident.
Resolute Mining appears to have run the gauntlet of sending its chief executive, Terry Holohan, to the troubled West African nation of Mali despite a previous security incident involving executives linked to the gold miner.
Resolute faces giving up a big piece of its Syama gold mine to Mali’s military junta on top of paying out almost $250m as the company looks to secure the release of three employees – including Mr Holohan – who have been detained for the past 10 days
The demand for a $250m payment as part of what industry sources described as a shakedown of the ASX-listed gold miner by Mali military junta was revealed by The Australian on November 10.
Sources in Mali now suggest executives with links to Resolute were detained in a separate incident earlier this year amid escalating tensions with President Assimi Goita and his minister of economy and finance, Alousseni Sanou, who has been at the forefront of negotiations with miners.
Resolute refused to comment on the earlier incident, understood to have involved key figures in its Mali subsidiary, Societe des Mines de Syama.
The London and ASX-listed miner also declined to comment on what security advice it had received before Mr Holohan opted to travel to Mali and was subsequently detained.
Mr Holohan and two other Resolute staff were arrested on November 8 in the capital Bamako. The company’s ASX share price fell 5.6 per cent when it emerged from a trading halt on Monday, and has plunged from 67c to 38c since the arrests.
Gold heavyweight Barrick Gold paid out $US85m in securing the release of four of its executives in a similar incident in September.
Mali is understood to be seeking as much as $US850m ($1.3bn) from Barrick to settle tax and other claims around its Loulo-Gounkoto mining complex
A mining executive with extensive experience in Africa said resource nationalism was becoming widespread.
“Mali is moving forcefully down that path. However, when a government wants 35 per cent of any project on virtually a free carry basis, it becomes very difficult to justify investment,” the executive said, on condition of anonymity.
“It is a destitute country with a very powerful leader in charge that is targeting the only viable industry, which is mining.
“It looks as if they are shaking down gold companies to keep going.”
Resolute said on Monday that it had made an initial settlement payment of about $US80m to the Mali government from cash reserves, with a second payment of $US80m due in the next few months.
It is understood Resolute had been trying to settle a dispute with authorities in Mali for about $75m, but bowed to pressure in trying to secure the release of its employees.
The payments are set out in a protocol signed by Resolute and the government that includes a framework for more detailed discussions about the long-term future of the company’s Syama gold mine and the safety of Resolute employees.
The discussions will cover moving Resolute’s assets in Mali to the country’s 2023 Mining Code. The code allows the state to acquire up to 35 per cent of projects, including 5 per cent of local entities, and requires all foreign companies to “renegotiate” existing contracts.
Mali currently owns 20 per cent of Syama, with Resolute facing the prospect of receiving little, if anything, in compensation if the stake increases to 35 per cent.
“Unfortunately, the company is unable to offer insight on these matters until discussions are finalised,” a Resolute spokesperson said.
Under the mining code, Mali can base any valuation around increasing its stake in mining assets on a percentage of the pre-construction costs. In the case of a company that spent $10m on drilling and a feasibility study, Mali could increase its stake by 25 per cent for $2.5m.
Resolute said the protocol covered the settlement of all outstanding claims by the government against the company, including those related to tax, customs levies, maintenance and management of offshore accounts.
Resolute said it was now up to the government on “remaining procedural steps” for the release Mr Holohan and the two other employees.
“They remain safe and well and continue to receive support on the ground from the UK and international embassies and consulates,” London-headquartered Resolute said.
The three men were in Bamako for talks with mining and tax authorities when they were detained at the Economic and Financial Centre. The conditions there are described as basic, with long power outages.
Mali insiders said the withdrawal of some 12,000 UN peacekeepers and thousands of French and other troops had left a big hole in the local economy.
The Mali government has used Russia’s mercenary Wagner group to maintain rule.
To join the conversation, please log in. Don't have an account? Register
Join the conversation, you are commenting as Logout