Mining Companies Take Different Paths in Mali

Gold mining companies are taking different paths after a bloodless political coup in Mali where the West African nation’s leader resigned on Aug. 19 to avoid a violent overthrow of his government after he was surrounded and detained by soldiers involved in the mutiny.

Toronto-based Barrick Gold Corporation (GOLD – Get Rating) and AngloGold Ashanti Limited (AU – Get Rating), of Johannesburg, South Africa, are gold mining companies partnering in Mali that announced an agreement on Aug. 31 to sell their 80% ownership in the country’s Morila mine for $22-27 million in cash to publicly traded Mali Lithium Limited (ASX:MLL). In contrast, Vancouver, Canada-based B2Gold Corp (BTG – Get Rating) reported on the day of the resignation that it will continue to operate its Fekola mine in Mali unimpeded as it monitors the nation’s “evolving political situation.”

The deal to sell the Morila mine, announced 10 days after the coup began on Aug. 18, provides the partnership with an exit strategy that will remove the political risk inherent in operating a business in a country that is undergoing upheaval. The final sale price will depend on adjustments at the time the deal is closed, possibly as soon as October, and meeting certain conditions, including approval of the transaction by the government in Mail, which owns the other 20% of the Morila gold mine.

President Ibrahim Boubacar Keita, who took power in 2012 during a previous political coup in Mali, won a national election in 2018 to continue his regime. However, he could not solve problems that included a poor economy worsened by the COVID-19 pandemic, highway banditry, a jihadist insurgency, alleged corruption and growing public unrest.

His resignation, aired on state television in Mali, included dissolution of the nation’s legislature and his own government, in the presence of armed members of the military who detained him in their surprise move to seize power. The mutinying soldiers, reportedly led by Col. Malick Diaw, deputy head of the country’s Kati military camp, and another commander Gen. Sadio Camara, also detained the nation’s Prime Minister Boubou Cissé. A spokesman for the soldiers who seized the country’s leaders, amid international condemnation for the coup, called for “a civil political transition leading to credible general elections.”

Gold Mining Companies Take Different Paths in Mali Amid Civil Unrest

With the unexpected chaos, the gold mining companies are taking divergent paths to extract value from their current mining assets in Mali. The financial stakes are high as silver and gold respectfully have soared 51.04% and 27.33% this year through Sept. 4.

The precious metals have outperformed the NASDAQ Composite, jumping 26.09%; the S&P 500, rising 6.07%; and the Dow Jones Industrial Average, dipping 1.42%, also through Sept. 4. The strong rise of silver and gold followed $6 trillion-plus in COVID-19 aid from federal stimulus and Federal Reserve actions.

A recent pullback in gold and silver prices gives investors on the sidelines a second chance at purchasing precious metals, as well as their related stocks and funds.