‘Hostage’ situation causes Resolute Mining’s shares to plummet by almost a third
Resolute Mining says its top priority is the safety of staff being held in west Africa’s Mali but investors have been spooked, wiping off a third of the company’s share value.
Resolute Mining says its top priority remains the safety of staff detained by a military junta in Mali in what industry sources have likened to a “shakedown” of the gold producer.
Almost $500m was wiped from Resolute’s market value on Monday as chief executive Terry Holohan and two other staff remained under guard in the west African nation.
It is understood the two other detainees are British citizens, with one specialising in tax and the other involved in security arrangements for Resolute staff and operations.
Resolute said the executives were in the capital Bamako for talks with mining and tax authorities when they were unexpectedly detained last Friday.
The Resolute share price fell almost 33 per cent, or 22c, to 45c on the ASX on Monday, with the company anxious to secure the release of the three executives and reach a settlement with the Mali government on the future of its Syama gold mine, the third-largest in the country.
The dual-listed company was headquartered in Perth for many years but is now based in London.
West Australian Premier Roger Cook said the situation highlighted how risky some jurisdictions were for miners.
“It does underpin and underscore just how risky these jurisdictions are when it comes to undertaking these industries,” Mr Cook said.
Perth-headquartered Leo Lithium recently transferred management responsibility for the Goulamina project in Mali to Chinese battery materials heavyweight Ganfeng.
All Leo Lithium staff had left Mali by the end of the September quarter. Leo opted to sell its remaining 40 per cent stake in the project to Ganfeng for about $343m after it was unable to reach agreement with the Mali leadership over the ownership structure.
A new mining code was set to increase the government’s ownership to 30 per cent. Leo also faced an additional 5 per cent being allocated to a local entity.
Mr Holohan and his colleagues were arrested on Friday at their hotel in Bamako, and detained by Mali’s anti-corruption and financial crime unit. It is understood they have been questioned about evidence provided on tax payments and use of public goods, and they deny any wrongdoing.
Malian president Assimi Goita’s moves to introduce a new mining code have coincided with gold price reaching record highs. The new code allows the state to acquire up to 30 per cent of projects and requires all foreign companies to “renegotiate” existing contracts.
Industry sources suggest the Mali government wants an extra $250m from Resolute while the company is looking at a figure closer to $75m, and view the detention of the executive as a form of ransom.
Employees of Canada’s Barrick Gold were detained for several days in September before being released.
It has been reported that Mali is seeking about $US500m in unpaid taxes from Barrick, which operates the Loulo-Gounkoto complex in the country.
In an interview last week, Barrick boss Mark Bristow said the company had offered Mali 55 per cent of the economic benefits from Loulo-Gounkoto.
Mr Bristow declined to comment on any cash demands from the military junta or allegations around unpaid taxes and fines.
Resolute maintains it has followed all official processes with respect to its tax and other affairs, and has provided the authorities with detailed responses to all the claims made.
“Resolute’s priority remains the safety and wellbeing of its employees. The company is in regular communication with the three detained employees who remain held at the Economic and Financial Centre of Bamako,” the company said.
“The employees are being treated well and continue to receive support on the ground from the UK and international embassies and consulates.”
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