The Malian government is demanding a $160 million payment to settle an ongoing tax dispute in exchange for the release of the detained three executives from Australia’s Resolute Mining Ltd. (ASX: RSG), including CEO Terry Holohan.
Mali’s military-led government is insisting that Resolute Mining make an immediate payment to resolve what it claims are outstanding back taxes on the company’s operations at the Syama gold mine, one of Mali’s largest industrial gold projects. The government reportedly offered a payment plan, requesting $80 million upfront and the remainder to be paid later. If Resolute does not comply, the executives, detained since last week, risk continued detention and further pressure from the government.
The demand has led to significant financial impacts for Resolute, with the company’s shares dropping 4.1% in Sydney on Thursday, resulting in a 35% decline in value since news of the detention broke. The company’s market capitalization now stands around $574 million, down substantially since the payment demand became public.
Resolute has categorically denied the tax allegations, stating on November 11 that the claims are “unsubstantiated” and asserting that it has cooperated fully with government processes.
This substantial financial demand against Resolute Mining is part of a broader strategy by Mali’s ruling junta to extract more revenue from foreign companies operating in the country’s lucrative mining sector. Following a military coup in 2020, the new administration revised Mali’s mining code, mandating higher state revenues from gold production, which currently accounts for about 10% of Mali’s GDP and 70% of its exports. Initially intended to apply only to new agreements or renewals, recent actions suggest the government is extending these demands to existing operations as well.
Mali’s insistence on retroactive payments has extended to other foreign companies. In October, Barrick Gold Corp. (NYSE: GOLD) faced a similar challenge when four of its employees were briefly detained in what the company perceived as undue government pressure. B2Gold Corp. (NYSE: BTG) and AngloGold Ashanti (NYSE: AU) are also currently negotiating revised terms, while Allied Gold Corp. (TSX: AAUC) recently agreed to pay Mali $116 million to settle its financial obligations.
Resolute has responded cautiously to Mali’s actions, expressing hope for a resolution but remaining firm on its position.
“Resolute has followed all official processes and provided the authorities with detailed responses to all claims made,” the company stated, emphasizing its commitment to operating within Mali’s legal framework.
However, the detentions and payment demand are putting the company in a precarious position, with analysts predicting that Resolute will likely need to negotiate with the government to secure the executives’ release and avoid operational disruptions.
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