Resolute Mining Limited (ASX: RSG) has reported that a new Mining Convention has been inked with the Republic of Mali Government for its 80%-owned Syama Gold Mine, following which the Mali Government has granted a 10-year extension of the Syama Mining Permit.
Resolute announced that the new Mining Convention Agreement guarantees a new 10% lower income tax rate and a range of other concessions and guarantees, including exemption from Malian customs duty on the importation of fuel. In addition, the stabilisation clause guarantees that royalty rates, taxation regime, and fiscal provisions can only be improved by future legislative ammendments.
The new mining convention was due to be signed after the expiration of the original one signed in the 1980s.
Syama Mining Convention
The Mining Convention agreement, operating in parallel with the Mining Permit and with the applicable Mining Code and other relevant legislation, governs the conditions that apply to exploration and mining operations.
The agreement basically provides certainty of ownership, permitting, operation, reporting requirements, and taxation terms in relation to Syama.
Many Positives For Resolute
The new Mining Convention is estimated to deliver material value to Resolute.
RSG said that the income tax rate has been set at 25%, a 10% reduction on the previous rate of 35%. There is also the tax stability regime which protects against any future adverse changes and ensures that should a more favourable tax regime become available, RSG has the option to adopt that regime.
Convention guarantees that RSG will continue to pay the Government of Mali total royalties of 6% and also remain exempt from Malian Customs Duty on the importation of fuel which based on current consumption equate to an annual saving of ~US$20million (equivalent to US$0.40 per litre).
The previous agreement governing Syama was inked on 31 July 1987 and expired on 29 March 2019. The Mali Government has granted the extension of Mining Permit by 10 years, valid till March 2029. Further renewals, for additional ten-year periods, will be made available until the exhaustion of the Syama mineral resource.
RSG has called it a significant milestone in the development of Syama as a long life, low cost, world class gold mine.
The company’s FY19 Guidance (to 30 June) shows that Resolute aims to produce 300,000oz @ AISC US$960/oz (A$1,280/oz).
RSG’s MD and CEO John Welborn said, “Mali is a well-managed, long-standing, globally important gold mining jurisdiction. Over more than 15 years, Resolute has built a partnership with the Mali Government based on respect and the pursuit of mutual benefit.
The signing of the new Syama Mining Convention, and the granting of an additional ten year extension of the Syama Mining Permit, continues the strong relationship between Resolute and the Government of Mali.