Gold bars
Under a new mining code introduced by Malian President Assimi Goita, last year, the government could take up to 35% ownership of mining projects. Pixabay

The detention of three executives from Resolute Mining by the West African military junta due to a tax conflict has caused the Australian-headquartered gold miner's market value to drop by almost AU$500 million.

As news broke of the arrest of Resolute Mining's CEO, Terry Holohan, and two other executives by Mali's military-led government, the company's shares plummeted by 33% on Monday, dropping to 45¢ and wiping out AU$468 million from its market value. Just three weeks ago, the company's shares were trading at 88¢, according to a report by Australian Financial Review.

Resolute Mining is listed on both the Australian and U.K. stock exchanges.

The dispute was believed to be centered around tax payments and the potential renegotiation of contracts between Resolute and the Malian authorities. The executives were detained at the Economic and Financial Centre of Bamako, after a meeting with Mali government officials on Friday, the company said in a statement.

Holohan and his team were in Bamako to discuss Resolute's "business practices," including the government's demands for additional payments, with the mining and tax officials. However, Resolute had rejected Mali's "unsubstantiated" claims.

Holohan, who was British, and the two executives are in regular contact with Resolute. "The employees are being treated well and continue to receive support on the ground from the UK and international embassies and consulates," the company stated.

Western Australian Premier Roger Cook stated that Holohan was safe and being taken care of, ABC reported.

"It does underpin and underscore just how risky these jurisdictions are when it comes to undertaking these industries," Cook said. "This is a very concerning issue for both his company and obviously family. It's understood Mr Holohan is a British citizen and while the Department of Foreign Affairs and Trade does not have a consular role in the matter, it was in close contact with other embassies in the region."

Mali, a mineral-rich nation, derived around 80% of its export revenues from gold; the arrests were viewed as part of the military government's efforts to extract more financial concessions from foreign companies.

Under a new mining code introduced by Malian President Assimi Goita last year, the government could take up to 35% ownership of mining projects and had mandated that all foreign companies "renegotiate" their existing contracts.

During a quarterly earnings call last month, Resolute's chief financial officer, Chris Eger, revealed that the company was facing increasing tax demands from West African governments.

"As we are generating a lot more cash because of the gold price environment, one of the unfortunate byproducts of it is that people are looking for possibly a bigger piece of the pie," Eger said. "It is very common where we operate, and these audits happen every year."

Resolute's interest in Mali lies in its Syama mine, located in the southern part of the country. While the Malian government owned a 20% stake, Resolute held 80% of the mine, which was expected to produce more than 200,000 ounces of gold in 2024.

Last financial year, the miner reported a net profit, after tax, of US$92 million in 2023, from a revenue of US$631 million.

It's the second instance in less than a month that Malian authorities have detained employees of a foreign mining company. Four employees of Barrick Gold, who were detained for several days in September, were released, only after the Canadian miner agreed to pay Mali's officials around 50 billion West African francs (US$124 million).