(Ecofin Agency) - Mali’s new mining code, adopted in 2023, enables the government to earn CFA500 billion more from the mining sector yearly. This code, however, is yet to be applied to the country’s active gold mines. 

The Malian government and Allied Gold, a Canadian company, have agreed in principle (AIP) to renew the firm’s operating permit for its Sadiola gold mine for 10 more years. This AIP or memorandum of understanding would make Sadiola the first mine already in production subject to Mali's new mining code.

The new code allows Mali to hold a maximum stake of 35% in mines, up from 20% previously. The 35% includes 5% for local investors. Allied Gold revealed that it negotiated certain derogations for royalties payable under the new code without providing further details.

"The compromise on the terms of the Memorandum of Understanding represents an important milestone, providing certainty for the future of the Sadiola gold mine while reinforcing Allied's long-term commitment to Mali as a prolific jurisdiction for precious metals mining," the company wrote in a statement dated September 3, 2024.

Active since 1997, Sadiola is one of Mali's oldest gold mines. Allied Gold produced 171,007 ounces at the mine last year and targets 205,000 ounces this year. The company plans to ramp up production at the mine by integrating resources from the neighboring Diba deposit, with average production of 400,000 ounces per year from 2029.

Impact of the New Mining Code

The new agreement comes to settle disputes about unpaid debts owed by Allied to the government. 

Before the new mining code was adopted, an audit revealed a shortfall of 300 to 600 billion FCFA ($500 million to $1 billion) in mining revenues for the State. The audit, however, did not indicate the mines behind this shortfall.

Bamako claims the new code will allow it to generate additional annual revenues of at least 500 billion FCFA ($842 million) and increase mining's contribution to GDP from around 10% to 20%.  However, whether the new code will apply to existing gold mines, which account for most of Mali's gold production, has not yet been officially determined

According to several companies, these mines should remain subject to the code in force at the time of commissioning. In Mali, Canada's Barrick Gold and B2Gold operate the Loulo-Gounkoto and Fekola gold mines respectively, while Australia's Resolute is active at the Syama gold mine. The UK's Hummingbird Resources is also active at Yanfolila.

Emiliano Tossou

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