Barrick CEO expects deal with Mali on new mining code by year-end

Barrick Gold (NYSE: GOLD) CEO Mark Bristow is confident about concluding negotiations with Mali’s junta-led government on a new mining code before the end of the year.

Discussions between Barrick and Malian authorities on implementing new regulations at the Loulo-Gounkoto mining complex—one of the African nation’s largest gold mines—have been ongoing for months.

Sources cited by Reuters report that the West African country’s junta, which has been in power since a 2021 coup, is seeking around $500 million in unpaid taxes from Barrick as the government aims to increase revenue from the mining sector.

Bristow reportedly told Reuters that Barrick has offered Mali 55% of the economic benefits from Loulo-Gounkoto, in a deal he likened to an agreement reached with Tanzania about five years ago.

The CEO declined to comment on Mali’s cash demands or claims of unpaid taxes and fines, but said the point of the deal is to preserve the asset’s long-term value. 

While Barrick has proposed a larger share of economic benefits for Mali, Bristow said the company will continue to carry the capital risk, as  it has always done, adding that discussions are continuing.

The miner reported on Thursday that full-year production at Loulo-Gounkoto is expected to reach the upper end of its forecast (560,000 ounces).

The government issued a new mining code last year allowing for increased royalties and up to 35% state ownership of projects. The leaders have been pressing for more financial concessions from Western gold producers such as B2Gold (TSX: BTO; NYSE-A: BTG) with its Fekola mine, Allied Gold’s (TSX: AAUC) Sadiola and Resolute Mining’s (ASX: RSG; LSE: RSG) Syama.

The Loulo-Gounkoto complex currently holds gold reserves estimated at 6.7 million oz., included within a measured and indicated resource totalling 9.1 million ounces. It produced 683,000 ounces of gold in 2023, accounting for about 16% of Barrick’s 4 million oz. of production last year. Barrick holds an 80% stake in the complex, while the government owns the remaining 20%.

Barrick shares fell 0.4% to $25.61 on Thursday afternoon, valuing the company at $44.9 billion.

Lower Nevada production

Barrick missed Wall Street’s third-quarter profit estimates on Thursday, affected by higher costs and reduced production at its Nevada operations.

Gold output at Nevada Gold Mines dropped to 385,000 oz. in the third quarter, down from 401,000 oz. in the prior quarter.

All-in-sustaining costs (AISC) for gold rose to $1,507 per oz. in the third quarter from $1,255 per oz. a year earlier. Copper AISC increased 10.5% year-over-year, though it declined quarter-over-quarter.

Barrick said it expects improved performance in the fourth quarter and anticipates meeting its 2024 production target of 3.9 to 4.3 million ounces.

“Reaching the lower end of guidance is achievable, though Q4 will require significant efforts,” TD Cowen analysts noted in a report.