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Mali intends to sell gold reserves to Barrick Complex to fund operations

Two sources say that the administrator appointed by the Malian court to Barrick Mining’s Loulo-Gounkoto site, who is Barrick Mining’s Loulo-Gounkoto Complex, plans to sell a metric ton (one tonne) of gold in its storeroom when operations resume after a six-month hiatus.

Barrick Gold, a Canadian mining company, temporarily halted its operations in January when the Malian government confiscated gold stocks at the Loulo-Gounkoto Complex.

Two sources claim that former health minister Soumana Mahadji was appointed temporary administrator in December and enlisted Samba Toure, the chairman of the state mining company, to assist with operations.

Before the suspension, Barrick, world's third largest gold miner, produced 15% of its gold at the site. This has affected the national gold production and reflects the conflict between Mali, and international miners.

Mark Bristow told Barrick CEO that the company only received informal information regarding the restart of the gold shipment and the information was not formal.

Bristow stated that "if it's true, then any plans made by the administrator to resume operations and sell gold at the site would in our opinion be illegal."

Three additional sources confirmed that the plant began operating again on Monday, for the first since January.

Makadji, and the Mali mines ministry did no respond immediately to questions by. Toure was not available.

Barrick suspended its operations after Mali banned exports, arrested executives and confiscated bullion. The company also initiated international arbitration in order to settle the dispute.

The decision to restart the complex follows a two-year standoff that has erupted between Barrick and Mali’s military-led Government over alleged tax disputes, and the company’s refusal to accept a new mining codes aimed at increasing state revenue through soaring gold price.

Investors who have invested billions in West Africa now face new rules, as the military governments seeking a larger share of mining revenues.

According to data, gold prices rose 25% in the first four months of this year, peaking at $3,500 an ounce.

Setting a Precedent?

The sale of the gold ton, which had been sitting in Loulo Gounkoto's room of gold since operations were suspended and was separate from the three tons that were seized in January, would be Makadji’s first major action after taking over the largest gold mine in Mali and third-largest gold mine in Africa.

The restarting of the mine without Barrick’s cooperation could set a precedent in West Africa for state intervention.

The funds from the planned sale of gold, which is worth approximately $107 million, will be used to fund operational expenses including salaries, fuel, and unpaid contractor dues.

Barrick's CEO has promised to take the government's actions before international courts.

Bristow added that Mali did not act in good faith.

Three sources who were present at meetings with Makadji said that he had told Barrick employees, union representatives, and subcontractors, he was committed to resume operations and maintain salaries.

CHALLENGES

Six people have said that Loulo Gounkoto's size and complexity will present significant challenges to the new management.

One person said that even if production begins, it would take at least four more months to return to the normal pace. Four months was the case with Barrick Gold. But now, it is the provisional administration so it may be longer.

Barrick, meanwhile, has lowered its output forecast for 2025, and the chief of the mine is not optimistic about the mine's future under the provisional management.

Bristow stated that "we do not believe the administrator or his advisors are capable of running this mine." We are worried that this will have a serious impact on the future prospects of the mine complex.

Loulo Gounkoto’s all-in-sustaining cost was $100 million for the quarter ending December 2024. This is a cost metric that miners use to determine the cost of producing one ounce of gold.

Barrick has blocked intranet and emails in Mali since losing control of the complex.

Three sources claim that only Bamako-based employees were paid in June. Those on the ground remain unpaid.

Bristow stated that the administrator is responsible for salaries in June and Barrick has provided a detailed note of handover.

Two sources also said that it would be difficult to recall key staff who are expatriates. One of the sources said that these included Australian jumbo drilling operators who have been absent since January.

Last year, the company's employees left after Malian authorities arrested Resolute Mining CEO Bristow during a discussion on a new mining code.

Some Malian employees have been temporarily transferred abroad, while others have resigned. Most contractors have not paid their staff since January and have either suspended or laid them off. Reporting by Divyarajagopal, PortiaCrowe and Tiemoko Diallo from Toronto; editing by Veronica Brown and Bernadette Baum.

(source: Reuters)