Gold miner pays Malian government £127m after boss’s arrest over tax dispute

An Anglo-Australian gold miner has agreed to pay £127 million to the Malian government to resolve a tax dispute that led to the arrest of the company’s British boss.

Resolute Mining has handed over £63m in the first step to secure the release of its chief executive Terry Holohan and two other senior managers, who are in custody.

Resolute shares have fallen more than 40 percent since news of Holohan’s arrest became public last week, erasing all of the stock’s gains from the recent surge in gold prices.

The arrests came amid rising tensions between Mali and Western mining companies. A military junta, which took control of the West African nation in a coup in 2020, is trying to extract more revenue from the sector.

Mali is one of Africa’s top gold producers, but it is also one of the poorest countries in the world. Last year, the government rewrote Mali’s mining code to funnel more revenue into state coffers.

Authorities began renegotiating existing mining contracts under the new law this summer, and the detention of Western executives has begun to become a pattern.

Under the updated rules, the state can acquire a stake of up to 30 percent in mining projects and an additional 5 percent later to be handed over to private Malian investors. Previously, government ownership was limited to 20 percent.

Meanwhile, certain tax exemptions have been abolished and companies are being asked to repay back taxes.

Many smaller miners have already signed the updated code, but larger players such as Resolute, listed in Sydney and London, and Canadian rival Barrick Gold, have yet to complete negotiations.

Holohan was in Mali for talks with mining and tax authorities when he was “unexpectedly” detained on November 8.

The British businessman joined Resolute in 2021 as chief operating officer before being promoted to chief executive the following year, taking over the role when Stuart Gale abruptly resigned.

Holohan, a mining industry veteran, had previously worked in Africa for 30 years and then spent a decade in Asia.

He had flown to Bamako, the capital of Mali, to discuss claims brought against Resolute relating to taxes, customer liens, maintenance and management of offshore accounts. The company said the claims were “baseless.”

In September, four Barrick executives were detained in the country for four days. The New York-listed group was forced to pay £67m in relation to its ongoing negotiations with the Malian government in October.

Authorities have demanded a total of £277 million in back taxes, the Financial Times reported.

Russ Mould, investment director at brokerage AJ Bell, said: “Governments have been trying to increase their share of the value of metals and minerals mined by companies since time immemorial, so this is not a new trend by no means, even if the events in Mali put a new spotlight on it.’

Resolute, which had previously said the tax claims were unfounded, said yesterday that its agreement “sets the framework for more detailed discussions with the government on the long-term future of operations in Mali, including the migration of the company’s assets.” company in Mali by 2023″. Mining Code and maintain the safety of the company’s employees.

The first £63m paid by Resolute will come from existing cash reserves, with the rest of the money to be delivered in the coming months.

The total amount Resolute agreed to transfer is more than the company’s entire cash reserves. As of October 31, the company had a net cash balance of £124m.

Resolute said the detained executives “remain safe and well and continue to receive support on the ground from the UK and international embassies and consulates.”

“The company notes that operations at the site continue as normal and have not been affected,” a spokesperson said yesterday.

Resolute’s gold mine in Syama – 186 miles southeast of Bamako – is the company’s largest asset and contributed almost two-thirds of its annual sales last year.

The company owns an 80 percent stake in the project and the remainder is owned by the Malian government.

Resolute shares fell 5.3 per cent, or 1.1p, to 19.7p yesterday.