Resolute Mining (ASX:RSG,LSE:RSG) confirmed on Monday (November 11) that its CEO Terence Holohan and two company executives have been detained in Mali, West Africa, following weekend news articles on the detention.
According to the company, the three employees were in Bamako, Mali’s capital, to discuss with the mining and tax authorities the general activities related to its business practices and progress open claims made against the company.
“The three employees were unexpectedly detained,” Resolute said, adding that it “has followed all official processes with respect to its affairs and has provided the authorities with detailed responses to all the claims made.”
On Thursday (November 14), it was revealed that the government of Mali was demanding US$162 million, which it claimed was for Resolute’s alleged back taxes following a sector-wide audit.
Prior to this detention, four senior Malian employees of global miner Barrick Gold (NYSE:GOLD,TSX:ABX) were allegedly targeted by the military government and detained for several days in September. While the two parties agreed to a negotiation framework at the end of that month, on October 8 the government announced it wanted at least US$512 million from the company, claiming outstanding taxes and dividends.
Barrick denied the allegations made by the Malian Ministry of Mines and Finance Ministry in a statement, saying that it paid US$85 million to the government in the context of the ongoing negotiations and has consistently maintained its efforts to engage with the government since.
The detainments are part of a broader push by Mali’s military-led government to assert greater control over its mining sector, increase local ownership and secure more revenue.
While the government of Mali claims that the detentions are over back taxes, it is believed the junta aims to renegotiate agreements under its updated mining code, which requires foreign companies to cede more financial benefits to Mali.
Since the detention of Resolute’s executives was made public, the company’s shares have fallen more than 39 percent, from AU$0.66 on November 7 to AU$0.40 as of market close on Thursday.
On the same day, Resolute also announced that it had been temporarily suspended from trading on the Australian Stock Exchange following the reports surrounding its negotiations with the government in Mali.
The company has yet to comment on the payment demanded by the state.
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Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.
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