Aim-listed gold miner Hummingbird Resources’ subsidiary in Mali has reached an agreement with that country’s government regarding operational parameters for the Yanfolila gold mine.

Hummingbird and its subsidiary, Société des Mines de Komana (SMK), have been engaging with a commission comprised of government advisers and representatives to address outstanding audit findings and clarify the application of the 2023 Mining Code to Yanfolila.

The agreement represents a comprehensive framework addressing historical matters and establishing clear operational parameters for the future operation and development of the mine.

Yanfolila is a high-grade openpit mining operation with significant underground potential. The mine produced 83 965 oz of gold in 2023 and has a reserve base of 493 000 oz of gold grading 2.5 g/t.

Some of the key terms include the State granting a 2% reduction on the country’s Special Tax on Certain Products, as well as SMK paying a settlement of about $16.4-million in two tranches.

Additionally, SMK agreed to waive historical value-added tax credit claims worth about $16.4-million, collectively settling all tax and customs matters prior to December 31, 2023.

Under the terms of the agreement, SMK commits to providing a comprehensive operating plan, addressing capital investments required to maximise current production and extending Yanfolila’s mine life.

As part of this, Hummingbird and SMK intend to restructure its existing debts to ensure operational stability.

Hummingbird says the State has confirmed its commitment to renew key exploration permits, alongside approving an extension to the Komana mining permit perimeter, which supports the company’s broader strategy in Mali.

Meanwhile, Hummingbird previously announced that the Mali government would increase its ownership in SMK to 20%, from the 10% it currently holds.

Hummingbird is in advanced discussions with its lender Consolidated Infrastructure Group to secure additional funding to meet the company’s financial obligations for the first payment to the government pursuant to the agreement.

Hummingbird interim CEO Geoff Eyre says the agreement reached between the companies and the Mali government represents a significant milestone in the relationship of the parties and provides a stable framework for Yanfolila’s development and operation.  

“Through constructive dialogue with the government, we have addressed historical matters while securing important operational agreements that support our long-term investment in the country.

“The renewal of exploration permits and extension of our mining permit perimeter demonstrates Mali's commitment to our partnership,” Eyre concludes.

This comes against the backdrop of the Mali government’s introduction of a new mining code, which resulted in it seeking millions of dollars in back taxes and dividends from gold mining companies.

Australia-headquartered Resolute Mining last year agreed to pay the Mali government about $160-million, following a dispute over taxes that resulted in the arrest of CEO Terry Holohan and two other employees. The executives were eventually released after weeks of negotiations.

Further, Canada-headquartered Barrick Gold Corporation announced this week that it would temporarily suspend operations at its Loulo-Gounkoto mine, after the Mali government seized gold stocks from the mine over the weekend amid an ongoing tax dispute with the gold miner.

Senior executives have in recent months been detained by the Malian authorities, which have also issued a warrant of arrest for Barrick CEO Mark Bristow.

Newswire Bloomberg has reported that the Mali government is expected to receive about $1.2-billion in payments from miners in the first quarter of this year, following the overhaul of the country’s mining code.