Africa-focused Hummingbird Resources (AIM: HUM) announced on Wednesday it had reached an an agreement with Mali’s military-led government to operate the Yanfolila gold mine under the country’s new mining code.
As part of the deal, Hummingbird pays a $16.4-million settlement in two instalments and gets a 2% reduction on the country’s special tax on certain products. The miner also agreed to waive historical value-added tax credit claims of the same amount, and will present a plan to enhance production and extend Yanfolila mine’s life.
“We have addressed historical matters while securing important operational agreements that support our long-term investment in the country,” interim CEO Geoff Eyre said in the release. “The renewal of exploration permits and extension of our mining permit perimeter demonstrates Mali’s commitment to our partnership.”
The agreement follows Barrick Gold (TSX: ABX; NYSE: GOLD) suspending its operations in the West African country after the junta seized gold stockpiles on Saturday that several sources told Reuters equalled at least US$245 million. The regime in the poverty-stricken nation has been shaking down Western gold miners to conform with a mining law passed in 2023 that increases stakes and taxes for the state.
Shares in Hummingbird Resources gained 1.9% on Tuesday in London to 2.65 pence, valuing the company at £43.4 million. They’ve traded in a 52-week range of 1.25 pence to 12 pence.
Increased stake
Hummingbird, currently being acquired by creditor Nioko Resources, said it has increased the government’s holding to 20% from 10%. The company produced 83,965 oz. of gold in 2023 from Yanfolila. The high-grade open pit operation has significant underground potential and a reserve base of 493,000 oz. of gold grading 2.5 grams gold per tonne.
This agreement comes as West African governments, particularly in the Sahel, take aggressive measures to assert control over mining operations.
Other companies, including Allied Gold (TSX: AAUC) and B2Gold (TSX: BTO; NYSE-A: BTG), struck agreements in September with the Malian government to secure their operations.
Some negotiations have taken an unpleasant route. In November, the junta detained Resolute Mining (ASX: RSG; LSE: RSG) CEO Terry Holohan and two other employees for nearly two weeks before the company agreed to pay US$160 million. Last year, the regime issued an arrest warrant for Barrick CEO Mark Bristow.
The Hummingbird deal, negotiated by its subsidiary, Société des Mines de Komana, and a government commission, resolved outstanding audit findings and provided a framework for the mine’s continued operation and development, the company said.
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