Allied Gold deepens Mali ties with 10-year Sadiola permit
Allied Gold (TSX:AAUC) has received a 10-year permit for its Sadiola gold mine from Mali’s ruling junta, which last month adopted a new mining code designed to boost state interests in mining projects.
The permit also provides for the development of the nearby Korali-Sud — or Diba — oxide gold deposit and the continuation of phased expansion at Sadiola, and is due to be formally received by Allied within a few weeks.
Located in the Kayes region of western Mali, the Sadiola mine is wholly owned by Société d’Exploitation des Mines d’Or de Sadiola SA (SEMOS), which is in turn 80% owned by Allied and 20% owned by the Government of Mali.
The mine was purchased from IAMGOLD (TSX:IMG) at the end of 2020.
Based in Toronto, the company is now expected to file a feasibility study and tolling agreement for Korali-Sud with the Malian authorities, after which other necessary approvals should fall into place. This, Allied noted in a statement on Tuesday, would ensure contributions to production from Korali-Sud in the third and fourth quarters of this year.
The permit will be issued under Mali’s newly decreed 2023 Mining Code, which took effect in early August.
In November 2022, Mali issued a moratorium on all new mining licences, permits, and approvals while it audited existing miners in the country and assessed its earlier 2019 Mining Code.
The new code allows the government — which came to power after a 2021 coup and is currently led by Colonel Assimi Goïta as interim President — to take a 10% stake in all new mining projects. An additional 20% can be purchased by the state within the first two years of commercial production, while another 5% can be relinquished to locals should they be affected by mining-related activities.
Naturally, the new rules impose higher fees and a lump sum on disputed taxes. While the amount of the payments to the Mali Government were not disclosed by Allied, the Blood Gold Report, published in December 2023, found that Allied paid more than US$63 million ($93.6 million) in tax and royalties to the state in 2022.
Such payments have become a point of contention in recent years given the country’s close ties to Russia’s Wagner Group, the private military company accused of murder, rape, torture, and war crimes, not just in Mali but across Africa.
“In Africa, Wagner has been deployed in a number of countries across the continent since 2017,” the Blood Gold Report said.
“In each country it enters, Wagner deploys military trainers, mercenary fighters, and propaganda experts to support anti-democratic regimes, drive instability, and commit human rights abuses. The mercenary group’s ostensible provision of ‘security services’ creates a framework for lucrative business contracts for the extraction of natural resources including diamonds, oil, timber, and especially gold.”
European diplomatic and security sources have suggested Mali’s payments to Wagner stand at US$10.8 million per month.
Allied nevertheless seems undeterred. Sadiola has been designed as an integrated two-phase project, with the first based on operational stability, establishing infrastructure, and capturing plant-scale processing information. This phase is expected to cost US$65 million over 2025, with the majority dedicated to plant modifications, including $5 million for cyanide detoxification.
The second stage aims to “position the Sadiola gold mine as a top-tier, generational, low-cost gold mine,” and includes a new processing plant specifically designed to process fresh ore. Construction is expected to begin in late 2026 with completion expected in 2028, at a cost of around US$400 million.
Source: https://mining.com.au/