Robex Resources Inc. is thrilled to announce the execution of an agreement with the Government of Mali (the “Government” or the “State”) that settles all tax and customs disputes arising from any period before December 31, 2023. The two parties will work to formalise this agreement within the next 90 days. All monetary values are stated in Canadian dollars unless specified otherwise.
Overview of Nampala Gold Mine Operations
Robex operates the Nampala Gold Mine located in southern Mali, which has yielded 230,000 ounces of gold since its first pour in January 2017. The Company has announced plans to divest from this project to concentrate on the development of the Kiniero Gold Project in Guinea, West Africa.
Remarks from Leadership
Matthew Wilcox, Chief Executive Officer and Managing Director of Robex, stated: “The signing of this comprehensive agreement marks the conclusion of extensive negotiations with the commission set up by the Government of Mali concerning our operations at Nampala. This agreement resolves all existing tax assessments, customs disputes, and outstanding assessments related to Nampala SA, while establishing a strong partnership with the Government. Nampala is now effectively starting afresh, providing the Company with enhanced certainty and stability in Mali.”
Key Aspects of the Agreement
Establishing a Robust Economic Partnership
The Government of Mali has launched significant reforms within the mining sector, leading to a comprehensive review of all mining agreements. This effort culminated in the adoption of Decree No. 0399/PT-RM on July 09, 2024, which introduces the “2023 Mining Code” and sets new standards for mining permits.
Nampala SA is set to enter into a new mining convention in accordance with the “2023 Mining Code,” with both parties committed to completing the agreement within a maximum of 90 days.
Government Stake Increase
According to the terms of the agreement, the articles of association will be amended to permit the Government to increase its ownership stake in Nampala SA from 10% to 20% in preferred shares, in line with other mining operations in the country. Robex will collaborate on a shareholder agreement that allows for the appointment of at least two directors representing the Government on the Board of Directors of Nampala SA.
Taxation Modifications and Exemptions
The agreement also encompasses elevated revenue-based taxes and royalties, albeit with specific exemptions. Importantly, the Government has approved a 2% reduction in revenue-based taxes and royalties applicable to Nampala, which is expected to help offset the expenses related to fuel imports that were previously exempted under the Nampala Mining Convention.
Additionally, the Company will be entitled to any future amendments to the “2023 Mining Code” or its Implementation Decree that are more advantageous than those currently established in the agreement.
Resolution of Outstanding Tax Matters for Nampala SA
The agreement effectively resolves all income tax assessments and customs disputes outstanding for any period prior to December 31, 2023.
Financial Commitments and Waivers
As part of the agreement, Nampala SA will pay 10 billion CFA francs, roughly translating to $22.3 million, derived from its operational revenue, and will waive the refund of VAT credits amounting to 5 billion CFA francs, or about $11.2 million. On May 10, 2024, the Company received a final notice of reassessment from the Malian tax authorities for the fiscal years 2019 to 2021, with a maximum exposure of FCFA 39.7 billion (including interest and penalties), or approximately $88.8 million. This assessment primarily pertained to corporation tax. As of June 30, 2024, a provision of FCFA 19.3 billion, or around $43.1 million, was recorded, reflecting the most likely cash outflow at that point.
Following this agreement, the Company anticipates a reversal of the provision to be reflected in its upcoming quarterly financial statements, which will also consider any effects on the VAT receivables.
Ensuring the Future Viability of the Nampala Mine
Robex is committed to presenting the Government of Mali with an operational plan for the Nampala mine that aims to preserve jobs, make necessary investments to prolong the mine’s operational lifespan, and adhere to the Local Content Act’s requirements.
Engaging with Potential Buyers for the Mine
Robex is actively pursuing discussions with potential buyers for the planned divestment of all its assets in Mali, which includes the Nampala mine. Although management has initiated discussions, no reasonable offers have been received thus far. Any prospective transaction will require confirmatory due diligence, approval from TSXV, and adherence to the standard conditions typically associated with such transactions, which include obtaining all necessary corporate, shareholder, and regulatory approvals.
Given the geopolitical context affecting investments in Mali, the pool of potential buyers is currently quite limited. Consequently, the Company cannot guarantee that a definitive agreement will be reached or that the conditions necessary for closing the sale of its Malian assets will be fulfilled, nor can it predict when this might occur, if at all.
