Barrick Mining Corp. ABX-T is set to lose control of its Malian operations after a local court ordered a state-appointed administrator to temporarily take over the Loulo-Gounkoto gold mine.
The Bamako Commercial Tribunal’s ruling Monday follows months of tension between Toronto-based Barrick and Mali over a new fiscal agreement for the massive gold mine in the West African country.
The court named Soumana Makadji, a former health minister in Mali, as the administrator of the mine for the next six months. The Bamako Commercial Tribunal did not respond to a request for comment.
The Mali government brought the case against Barrick in an apparent effort to put further pressure on the company in their negotiations, which have gone on for more than a year. Mali jailed four Barrick executives in November and issued an arrest warrant for chief executive officer Mark Bristow in December, accusing him of money laundering.
When Loulo-Gounkoto was in operation, it accounted for about 15 per cent of Barrick‘s production. Barrick inherited its Malian operations after it bought Randgold Resources Ltd. in 2019.
After Monday’s ruling, Barrick in a statement said it remains the legal owner of the mine, despite losing control of it.
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While Barrick is still committed to negotiating with Mali, the miner said, it is also ramping up its efforts to resolve the dispute through the international arbitration proceedings it launched last December.
“The arbitration tribunal’s consideration of the case is even more important in light of today’s decision by the Bamako Commercial Tribunal to place the Loulo-Gounkoto complex under temporary provisional administration,” Barrick said in the statement.
“We view this scenario as the worst-case outcome for Barrick,” said Josh Wolfson, analyst with RBC Dominion Securities Inc. in a note to clients.
“It is most appropriate to assume zero go-forward production for Barrick, while some partial value recovery could be possible through a protracted arbitration process on a longer-dated basis.”
Loulo-Gounkoto is 80 per cent owned by Barrick and 20 per cent by Mali. But the West African country in 2023 introduced a new mining code that decreed the government in conjunction with local investors could claim a 35-per-cent stake in mining projects.
Mali around that time also conducted audits of international gold miners operating in the country. The government subsequently demanded Barrick pay at least US$417-million for allegedly not paying its fair share of taxes, a claim the Canadian miner has refuted.
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“While the company has made a number of good faith concessions in the spirit of partnership, it cannot accept terms that would compromise the legal integrity or long-term viability of the operations,” Barrick said in its Monday statement.
John Ing, a veteran gold analyst with Maison Placements in Toronto, expressed confidence that Barrick will land an acceptable pact with Mali over time.
Mr. Ing pointed to Mr. Bristow’s track record of successfully working with the governments of Tanzania and Papua New Guinea in the past to patch up similar fiscal and monetary disputes.
“Eventually there’s always been a resolution,” Mr. Ing said in an interview.
“It’s difficult for governments to run everything from post offices to transportation, let alone a gold mine. The mine is a big contributor to the GNP of the country, and both suffer.”
Barrick’s valuation has suffered owing to its exposure to jurisdictions such as Mali and Pakistan. It has underperformed many of its competitors over the past few years and slipped down the global gold mining rankings.
Fellow Canadian gold miner Agnico Eagle Mines Ltd., which has mostly mines in Canada, passed Barrick last year in market value.
“There are companies such as Agnico Eagle, which have largely stuck to what I would consider safe jurisdictions,” Mr. Ing said. “And you know one time Paul Penna, the founder of Agnico, said that he would never go to a place where you couldn’t wear an overcoat.”
Barrick’s shares fell by 0.75 per cent on Monday on the Toronto Stock Exchange to close at $29.10 apiece.