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Resolute Shares Suspended as Mali Demands $160 Million

A truck moves through a tunnel to pick up rock ore from the digging floor at the Yalea underground gold mine, part of the Loulo-Gounkoto gold mine complex operated by Randgold Resources Ltd., in Loulo, Mali. Photographer: Simon Dawson (Simon Dawson/Bloomberg)

(Bloomberg) -- Resolute Mining Ltd. shares were suspended as Mali demanded the Australian gold miner pay about $160 million to resolve a tax dispute that’s seen its chief executive officer detained.

The company’s shares in Sydney were suspended pending an announcement, it said in an exchange filing Thursday. The stock fell 6.4% during the trading session and has tumbled 40% since news of the detention of CEO Terry Holohan, along with two colleagues, became public at the weekend. 

The Malian government’s position is that Resolute – which operates the Syama gold mine – should pay the state 100 billion CFA francs ($162 million) to settle a dispute mainly concerning alleged back taxes following a sector-wide audit, according to people familiar with the matter. The parties have been discussing a potential agreement that would see the company pay half that sum now and half at a later date, one of the people said, asking not to be named as the matter is private.

Holohan and two colleagues have been held in the capital, Bamako, since late last week after the Resolute boss traveled to the city for meetings with the nation’s tax and mining authorities. The detention comes as the military rulers of Africa’s third-largest gold producer ratchet up pressure on mining companies to renegotiate contract terms.

“The latest developments can be considered an escalation,” said Ryan Cummings, a director at Signal Risk, an Africa-focused risk management company. They show “an overt willingness by the transitional government to engage in rent-seeking behavior at the risk of divestment of a strategic sector which is a significant tax revenue earner,” he said.

Resolute, which had net cash of $146 million at the end of September, will remain in a trading halt until Monday or when the announcement is released to the market, the company said. In a statement on Nov. 11, the Perth-based miner said the claims against the firm were “unsubstantiated” and it was “continuing to work with the government on a resolution.” Resolute’s shares were down a little more than 40% for the week at 10:30 a.m on Thursday in London, where the firm’s shares continue to trade.

Mali’s mines and finance ministries didn’t respond to requests for comment.

Government Negotiations

Resolute and a previous Malian government concluded a so-called convention for its Syama asset that runs until 2029, but the nation’s military junta has upped pressure on firms operating gold projects to renegotiate after passing legislation last year that increases the state’s share of economic benefits from mining projects. The tougher stance coincides with a 25% jump in the price of bullion this year.

The Malian authorities have also threatened to reclaim Barrick Gold Corp.’s Loulo mine permit when it expires in 2026. Mark Bristow, CEO of the world’s No. 2 gold producer, said last week that his company is discussing a “mutually acceptable outcome” with the country’s leaders.

Allied Gold Corp. and B2Gold Corp. have recently announced agreements that will govern the future operations of their Sadiola and Fekola projects in the country. They will also pay about $116 million and $204 million, respectively, to the state under the deals, according to company statements.

Mali has been under military rule since 2020, when interim leader Colonel Assimi Goita ousted the West African nation’s elected president, citing the previous regime’s failure to repel the Islamist insurgents. Since then, mercenaries from the Kremlin-backed Wagner Group have been deployed to the country, while European forces and a United Nations peacekeeping mission were forced to withdraw.

(Updated with information on London shares in sixth paragraph)

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