Resolute Mining Ltd (ASX:RSG, LSE:RSG) has signed a memorandum of understanding known as the ‘protocol’ with the Government of Mali, setting a framework for discussions about the long-term future of its operations in Mali. This includes transitioning the company’s assets to the 2023 Mining Code and prioritising employee safety.
The Protocol resolves outstanding claims by the Malian Government related to tax, customs levies and management of offshore accounts.
As part of this agreement, Resolute has made an initial payment of approximately US$80 million from existing cash reserves, with an additional US$80 million to be paid in the coming months from existing liquidity.
Further details will follow after additional legal and financial analysis.
Resolute faces the prospect of relinquishing a significant stake in its Syama Gold Mine to Mali's military junta while also confronting a demand for nearly A$250 million.
The company is currently working to secure the release of three employees, including CEO Terry Holohan, who has been detained for the past 10 days.
UK and international consular teams are assisting locally. The company confirms its site operations are continuing as normal and remain unaffected.
The Australian reported on November 10 that the A$250 million demand, described by industry sources as part of a "shakedown" of the ASX-listed gold producer, underscores escalating tensions between the company and Mali's ruling regime.
Ongoing tensions
Sources in Mali indicate that executives connected to Resolute were detained earlier this year in a separate incident, highlighting increasing strain between the company and the administration of President Assimi Goita. Negotiations with miners have been spearheaded by Mali's Minister of Economy and Finance, Alousseni Sanou.
Resolute declined to comment on the earlier detentions, which reportedly involved key figures in its Mali subsidiary, Société des Mines de Syama. The company also refused to disclose security advice received prior to the detention of its executives.
Resolute’s ASX-listed shares fell 5.6% upon resuming trade after a halt and have plummeted from A$0.67 to A$0.38 since the arrests. The initial payment of US$80 million to Mali’s government, with a second instalment due within months, are part of a protocol aimed at resolving disputes and securing the employees’ release.
The updated code allows the state to hold up to 35% of mining projects with minimal compensation. Mali currently holds 20% of Syama, raising concerns that Resolute may receive negligible compensation if the stake increases. A Resolute spokesperson noted that further discussions are ongoing.
A mining executive described the situation as emblematic of resource nationalism in Africa, stating: “When a government wants 35% of any project on virtually a free carry basis, it becomes very difficult to justify investment.”
Resolute confirms that detained employees remain safe and are receiving consular support as the company awaits government action on their release.
Barrick in a similar situation
Barrick Gold Ltd, a major player in the gold sector, reportedly paid US$85 million to secure the release of four executives in a comparable incident in September.
Mali is now believed to be seeking up to US$850 million (approximately A$1.3 billion) from Barrick to resolve tax disputes and other claims related to its Loulo-Gounkoto mining complex.