Resolute Mining Faces Turmoil as Mali Detains Executives Amid Tax Dispute

Highlights:

• Market Impact: Resolute Mining Ltd (ASX: RSG) saw its shares plummet by 34%, wiping nearly $500 million off its market value at the time of writing, following the detention of its executives in Mali.
• Tax Dispute and Tensions: The detained executives, including CEO Terry Holohan, are involved in a tax dispute and contract renegotiation with Mali’s military-led government, which recently intensified fiscal demands on foreign mining companies.
• Industry Trend: Resolute’s situation highlights increasing risks for foreign miners in West Africa, as evidenced by recent detentions of Barrick Gold employees over similar tax disputes in Mali.

Detention Sparks Market Plunge

Resolute Mining Ltd (ASX: RSG), an Australian gold mining company, experienced a significant setback after its CEO, Terry Holohan, and two executives were detained in Mali amid an escalating tax dispute. This development wiped nearly $500 million from Resolute’s market value, with its shares dropping 34% to 44¢ at the time of writing, marking a drastic decline from the 88¢ they held just three weeks ago.

Dispute with Mali’s Government Intensifies

The detained executives, held at Bamako’s Economic and Financial Centre, are receiving consular support, and according to Resolute, are “being treated well.” The standoff reportedly revolves around tax payments and potential contract renegotiations, echoing the Malian government’s recent moves to increase fiscal pressure on foreign mining companies. This initiative aligns with Mali’s revised mining code, which allows the government to acquire up to 35% of foreign-run mining projects.

A Tough Landscape for Mining Companies

Resolute’s Syama mine, which produces 80% of its output, lies at the heart of the dispute, with the government demanding additional payments. Amid high gold prices, such demands are becoming common across West Africa, noted Resolute’s CFO in a recent earnings call. This is the second instance within a month where foreign mining employees have been detained, as seen with Barrick Gold’s recent tax-related standoff in Mali.

As negotiations with the Malian government continue, Resolute remains focused on securing a resolution that supports the long-term future of its Syama mine while prioritizing the safety of its detained employees.

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