B2Gold gets Menankoto permit and ends dispute with Mali

Mali has agreed to issue an exploration permit to B2Gold (TSX: BTO; NYSE-AM: BTG) for its Menankoto project, the company says.

The permit will be given to a new Malian subsidiary of the Canadian mining company, bringing an end to a dispute that began in March, after the country rejected B2Gold’s request to continue exploring the project for another year.

The Menankoto project is located about 20 km from B2Gold’s flagship project, the Fekola mine, which is projected to produce 560,000 to 570,000 ounces of gold in 2021.

The company has been exploring the Menankoto region for the past seven years with an investment of nearly US$27 million. It had planned to spend $8.3 million to explore the area this year. But its request for a one-year extension, which was filed in accordance with Mali’s 2012 Mining Code in October 2020, was denied, based on Mali’s 2019 Mining Code.

The company then commenced arbitration proceedings in June through its Malian subsidiary, Menankoto SARL, under the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, a global institution which provides dispute resolutions between investors and nations.

With news that the permit will now be granted, the company has withdrawn from the arbitration proceedings.

B2Gold expects the new permit will be issued this year for a period of three years, after which the contract can be renewed for two additional three-year periods.

Brian Quast, a mining analyst at BMO Capital Markets, expects the agreement to have a positive impact on B2Gold’s shares as the new permit will allow the miner to resume its exploration activity in the prospective Anaconda area, comprised of the Menankoto permit and the Bantako North permit, and is one of the company’s “higher-profile” exploration targets, and reduces risk.

“While operations have been unimpeded during the arbitration proceedings, we think signs of constructive relations between the parties could spur a risk-relief rally in the shares in the near term,” Quast stated in a research note on December 10.

B2Gold’s shares closed at $4.71 per share, down 0.42% on the day. Over the last year the company has traded in a range of $4.21 and $7.67 per share.