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

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Shares of gold producer Resolute Mining plunged more than 30 per cent on Monday after the company said its chief executive Terence Holohan and two other employees had been detained in Mali.

The executives were in the capital Bamako to discuss with officials “open claims made against Resolute” that the group “maintains are unsubstantiated”, said Resolute, which is listed in Sydney and London.

In its 2022 financial report, the miner said it was contesting demands from Mali tax authorities for additional payments worth more than $100mn on taxes between 2015 and 2021.

The news comes as the Malian government is increasing pressure on mining companies to renegotiate their contracts. Barrick Gold and B2Gold are among the companies that operate gold mines in Mali.

Mali, a nation of 23mn people in the Sahel, the semi-arid strip south of the Sahara, commissioned an audit into all mining contracts in 2022 and rewrote the mining code to extract higher revenue from mining companies.

The new code allows the government to take 10 per cent of projects and gives it the option to take an additional 20 per cent stake within the first two years of commercial production. Companies are obliged to cede another 5 per cent stake to the government, which then has the option to sell to private Malian investors at an unspecified date.

Barrick Gold has also been in difficult negotiations with the Malian government over the new terms. In September, four Barrick executives were detained for four days. Last month Barrick Gold paid the government $85mn “in the context of the ongoing negotiations”.

Several other miners operating in Mali, such as Toronto-listed Robex Resources and Allied Gold, have recently signed deals with the government which include one-off payments as well as higher royalties, according to Peter Mallin-Jones, mining analyst at Peel Hunt.

“It looks like the junta is getting out the big stick to try and encourage the laggards to hurry up, and sign,” said Mallin-Jones, referring to the detention of Resolute officials. “The actions are likely to raise an even larger red flag over groups with operations or projects in Mali.”

Resolute’s biggest mine is the Syama mine in Mali, of which the company owns 80 per cent and the government holds the remaining 20 per cent.

The company has been investing in a new production plant at the mine, which will boost gold production from as much as 215,000 ounces this year, to 250,000 ounces next year.

Governments in the coup-hit central Sahelian states of Burkina Faso, Niger and Mali, all ruled by military juntas, have taken a harder line on mining groups operating in their countries, seeking to draw greater revenue from them.

Listed gold miners have recorded strong gains this year as the precious metal hits all-time high valuations. Shares of Resolute were up more than 90 per cent for the year before Monday’s plunge.