Resolute Mining Limited a gold explorer and producer, announced on 18th April 2019, that the company and the Republic of Mali Government mutually consented on a new Mining Convention for the Syama Gold Mine. The new Mining Convention is expected by the company to improve the fiscal terms as well as stability of taxation for the company’s Malian subsidiary, Societe des Mines de Syama S.A., and following the execution of the new Mining Convention, the Mali Government granted an extension of the Syama Mining permit to the company.
As per the Managing Director and CEO of the company, John Welborn, Mali is a globally significant gold mining jurisdiction, and Mr Welborn mentioned that the company developed and built a partnership with the government for more than 15 years based on respect and the pursuit of symbiotic relationship.
The Mali Government extended the Mining Permit of the company for the Syama mine by 10-years and coupled with the new Mining Convention; it signifies the strong relationship between the company and the Mali Government.
As per Mr Welborn, the signing of the new convention and the extension of the permit is a significant milestone for the company in the development of Syama as long life, low cost, world-class gold mine.
As per the company, Mali is a preferred location of Africa’s most successful gold miners, and the new convention provides fiscal and operating certainty for the company’s Syama operations, which in turn, will allow the company to deliver long-term benefits to its stakeholders and local Mali communities. The fairly negotiated new convention will provide lower income tax and stable royalty rates for the company and provide a meaningful economic contribution for the Mali communities.
The mining requirements in Mali suggests to the holders of Mining Permit in the region to enter into a Mining Convention Agreement (Convention d’Etablissement) with the Malian Government before commencing exploration or mining activities. The agreement governs the conditions that apply to the exploration and mining activities.
The company previously entered the Mining Convention with the Mali Government on 31st July 1987, with a 30-year term, that ended on 29th March 2019. However, Resolute was seeking a few amendments in the agreement related to fiscal and operational conditions and secured those amendments and entered a new Mining Convention.
As per the new Mining Convention, the income tax rate for the company’s subsidiary is being reduced to 25%, down by 10%, as compared to the tax rate of 35% in the previous Mining Convention. The new Mining Convention saved approx. US$20 million of Customs Duty on the importation of fuel oil and the royalty paid to the Mali Government is at 6%.
The company acquired the Syama mine in 2004, as three exploration permits. Resolute converted those exploration permits into Mining Permit for a tenure of 20-years. The company holds 80% in the subsidiary, which operates the Syama mine and rest 20% is with the Mali Government.
Resolute filed a renewal application 12-months before the expiry of the permit, which was due on 29th March 2019. Resolute recently provided its annual ore and mineral reserve statement.
Upon consideration and as per the applicable law, Mali Government granted the extension of Mining Permit by 10 years, which is valid till March 2029.
The shares of the company closed at A$1.172 (as on 18th April 2019), up by 0.601% as compared to its previous close.