Endeavour and two gold producers embrace Mali's new mining code

London-listed Endeavour Mining (EDV.L) has announced, along with two other gold producers, their agreement to transition to Mali’s new mining code, according to government officials.

This code, which increases taxes and aims to transfer significant ownership of mining assets to the state, has led to intense conflicts with mining companies since its implementation in August 2023, contributing to a 23% decline in Mali's gold production last year, totaling 51 metric tons.

On state television late Monday, Finance Minister Alousseni Sanou and the Minister of Mines revealed a new memorandum of understanding with Somika SA - an entity that is 80% owned by Endeavour and 20% by the Malian government - along with Faboula Gold and Bagama Mining.

The specifics of the agreements were not made public.

The three companies represent just a small portion of Mali's gold production, with Faboula and Bagama commencing their output in 2021, each contributing 500 kg, while the Kalana project managed by Somika has yet to initiate production.

Since the adoption of the mining code, all three have been mostly inactive.

Somika's director, Abdoul Aziz, stated that the construction of the mine "will commence six months following the agreement's signing, with production expected to begin 18 months thereafter."

"Somika is projected to operate for 10 years, generating an annual revenue of 135 billion CFA francs ($238.9 million).

In contrast, Bagama and Faboula are each anticipated to have five-year lifespans, with revenues of 50 billion and 75 billion CFA francs respectively," Sanou mentioned, noting that each firm is likely to create approximately 2,000 jobs.

Endeavour Mining chose not to provide a comment. Attempts to reach Faboula Gold and Bagama Mining for their input were unsuccessful.

Mali's largest gold producer, Barrick Mining (ABX.TO), has halted operations in the Loulo-Gounkoto complex since mid-January after the government obstructed its exports, detained several executives, and confiscated three tonnes of gold bullion.

The Canadian mining company is currently embroiled in a dispute with the government and has initiated arbitration proceedings at the World Bank’s International Centre for Settlement of Investment Disputes (ICSID).

Although Mali ranks among Africa’s leading gold producers, regulatory uncertainties have negatively impacted both investment and production.