KEY POINTS
- Resolute Mining to pay $160 million in tax settlement with Mali.
- CEO detained amid dispute; shares plunge 14%.
- Agreement secures operations under Mali’s 2023 Mining Code.
Resolute Mining Ltd., an Australian gold producer, has agreed to pay $160 million to the Malian government to settle a contentious tax dispute. The settlement follows the detainment of the company’s Chief Executive Officer Terry Holohan and two colleagues for over a week, signaling intensified scrutiny of foreign mining operations in the West African nation.
The company disclosed on Monday that it has already made an initial payment of $80 million and plans to pay the remaining amount using existing liquidity sources in the coming months. Resolute emphasized its commitment to maintaining operations in Mali while ensuring the safety and well-being of its employees.
Resolute settles Mali tax dispute for $161 million
The tax dispute centers on claims by Malian authorities that Resolute owes CFA 100 billion ($161 million) in back taxes, stemming from a broader audit of the mining sector. Resolute, which operates the Syama gold mine, has previously contested the claims as “unsubstantiated” but agreed to settle to secure operational stability and address rising tensions.
News of the settlement sent Resolute’s shares plunging as much as 14 percent on the Sydney Stock Exchange on Monday. The stock has declined more than 40 percent since November 10, when the detainment of Holohan and his colleagues was first reported. The company assured investors that the executives remain “safe and well” while negotiations with the Malian government continue.
The settlement occurs amid a challenging business environment in Mali, Africa’s third-largest gold producer. The updated 2023 Mining Code requires foreign operators, including Kodal Minerals PLC, China’s Hainan Mining Co., and Barrick Gold, to allocate a greater ownership share to the state.
Since coming under military rule in 2020, Mali’s authorities have increased pressure on mining companies to renegotiate contracts, aligning operations with a new regulatory framework and asserting greater control over the nation’s resources.
Resolute Mining secures Mali operations, ensures compliance
In its statement, Resolute noted that the agreement includes a framework for the long-term future of its operations in Mali, ensuring compliance with new mining regulations. The company also highlighted its priority of maintaining a safe working environment for its staff and preserving its position in the gold-rich region.
As of the end of September, Resolute reported net cash reserves of $146 million, providing a financial buffer to address the settlement without significant disruption to its liquidity. Despite the hefty payment, the company affirmed its commitment to ongoing investments in Mali and sustaining its production goals.
Mali’s political landscape
The tax dispute and the executive detentions underscore the growing challenges of operating in Mali. The military regime, led by Colonel Assimi Goita since 2020, has sought to assert greater control over the country’s resources. The involvement of the Kremlin-linked Wagner Group and the withdrawal of European forces have added complexity to the region’s geopolitical dynamics.
Resolute’s agreement with the Malian government represents a step toward stabilizing its operations amid heightened tensions but underscores the risks of operating in politically volatile regions.
