(Bloomberg) -- Australian gold producer Resolute Mining Ltd. dropped the most in 16 years after the company’s chief executive officer was detained in Mali.
Shares in the miner fell as much as 32% early on Monday, their biggest intraday decline since October 2008 and valuing the company at just over A$1 billion ($660 million). Over the weekend, Resolute confirmed that CEO Terry Holohan and two other employees were unexpectedly held by the military-controlled government of the West African country on Friday following discussions with mining and tax authorities in Bamako, the nation’s capital.
The detained employees are being treated well and Resolute remains in “regular communication” with the three individuals, the Perth-based company said Monday. A Mali mining ministry official previously declined to comment when reached by phone.
The apparent detention follows a number of arrests in recent weeks targeting fellow gold miner Barrick Gold Corp. employees by the military government, which staged a coup d’état in 2020. Four Barrick employees were arrested last month.
Resolute and other international miners have been under growing pressure since the military seized power as Mali seeks to boost revenue from its mineral resources through a mining code adopted last year. Gold is a key pillar of the economy, which is grappling with sanctions that have threatened its ability to import goods, and remains cut off from accessing finance via the regional debt market.
The junta has in recent months ramped up efforts to renegotiate existing mining contracts with foreign companies including B2Gold Corp., Allied Gold Corp. and AngloGold Ashanti Plc. Assane Sidibe, the president of the mining commission within the National Transitional Council, told Bloomberg last year that the regulations should only apply to new contracts and renewals of existing permits.
Resolute has ramped up production at its Syama mine in the nation’s southeast and a second phase of the mine is expected to be in operation in 2025. The government holds a 20% stake in the project, which produces around 2.4 million tons of ore a year, according to Resolute’s website.
“Resolute has followed all official processes with respect to its affairs and has provided the authorities with detailed responses to all the claims made,” the company said. “While Resolute is working toward a settlement with the Government of Mali to help secure the long-term future of the Syama Gold Mine, the upmost priority remains the safety and wellbeing of its employees.”
--With assistance from Paul-Alain Hunt, Katarina Höije and William Clowes.
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