Mali frees Resolute executives after $160 million deal, AFP reports
The three executives, including CEO Terry Holohan, were freed from detention on Wednesday.
UK-based mineral explorer and developer Kodal Minerals (LON: KOD) responded on Tuesday to an announcement made by its Chinese joint venture partner in the Bougouni lithium project in southern Mali, over responsibility for a $15 million tax payment owed to the country’s government.
This dispute follows an agreement reached on Nov. 1, among Kodal’s subsidiary, Kodal Mining UK Limited (KMUK), Hainan Mining Co., and the Malian government, aligning the Bougouni project with the African nation’s updated mining code, enacted in 2023.
The new set of rules seeks to increase the government’s stake in mining ventures, requiring Western miners like Kodal, Barrick Gold, and Resolute to renegotiate their ownership structures.
Dispute highlights tensions in Mali’s mining sector as the government pushes for greater control of assets under the revised code.
Under the arrangement inked last week, Mali now holds a 35% stake in the project, while Kodal and Hainan jointly hold the remaining 65%.
Hainan’s statement suggested that the tax payment, arising from its $117.5 million funding committed to the project last year, should be borne by Kodal. The lithium and gold-focused company disputes this interpretation. It says that recent agreements with Hainan and the Mali government prove that the tax payment obligation lies with Kodal’s Malian subsidiary, KMUK, which is 51% owned by Hainan and 49% by Kodal.
KMUK says it reserves the right to make a claim against Hainan if necessary, should this disagreement escalate. The company stated it would provide further updates on the matter as developments unfold.
The company’s shares lost a quarter of their value on the announcement, trading 19% lower to 0.32 pence on Tuesday afternoon in London. The company’s market capitalization now sits at £67.73 million ($88m).
The dispute highlights tensions in Mali’s mining sector as the government pushes for greater control of assets under the revised code.
Before the license transfer and the current tax payment disagreement, the Bougouni lithium project was expected to begin production in the first quarter of 2025. Estimated production has been pegged at 125,000 tonnes of spodumene concentrate annually. This output can be ramped up to 230,000 depending on the market demand, the company has said.
Located 170 km south of the capital city Bamako, the asset is situated in an area hosting several established mining operations, including Hummingbird’s Yanfolila mine and B2Gold‘s (TSX: BTO) Fekola mine.
Kodal and Leo Lithium (ASX: LLL) have been competing to develop Mali’s first lithium mine. In June, Leo Lithium decided to sell its stake in the Goulamina project to China’s Ganfeng Lithium. The Australian firm said at the time that the risks associated with operating in Mali and the impact of new mining code meant selling its part was in the best interests of its shareholders. It also noted that first spodumene production was expected in the third quarter of 2024, but did not rule out possible delays.
