Hummingbird Resources has struck a significant deal with Mali’s military-led government, finalizing a $16.4 million agreement to operate the Yanfolila gold mine under the newly minted 2023 mining code. This move is pivotal, not only for Hummingbird but for the broader landscape of mining in Mali, a country that has seen its fair share of upheaval and uncertainty in recent years. The 2023 mining code has introduced provisions allowing the state to increase its ownership in new mining ventures, a shift that could reshape the dynamics of foreign investment in the region.
The agreement, executed by Hummingbird’s subsidiary, Société des Mines de Komana, aims to resolve lingering audit issues while establishing a clear framework for ongoing operations and future developments at Yanfolila. The deal involves a two-part payment structure, which indicates Hummingbird’s commitment to maintaining its foothold in the region despite the financial hurdles it faces. The company will also enjoy a 2% reduction in Mali’s special tax on certain products, which is a welcome relief amid tightening margins in the gold mining sector.
In a strategic move, Hummingbird has agreed to relinquish historical value-added tax credit claims of equivalent value, a decision that speaks volumes about the company’s willingness to foster a cooperative relationship with the Malian government. Interim CEO Geoff Eyre emphasized the importance of this agreement, stating, “This agreement represents a significant milestone in our relationship with the Government of Mali and provides a stable framework for our continued operation and development of the Yanfolila Gold Mine.” His remarks highlight a growing trend among mining companies to engage in constructive dialogue with local governments, particularly in regions where political stability can be as elusive as gold itself.
The backdrop to this agreement is a landscape marked by financial struggles for Hummingbird, compounded by its recent acquisition by Nioko Resources, a subsidiary of its creditor CIG. This acquisition is pivotal as it aims to inject fresh capital into Hummingbird, which has been grappling with operational challenges. The mining sector in Mali is in a state of flux, as evidenced by Allied Gold and B2Gold’s recent agreements with the government for their respective operations at the Sadiola and Fekola mines. Meanwhile, Barrick Gold’s recent halt in operations due to government seizures of gold stockpiles underscores the risks that foreign companies face in this volatile environment.
As Hummingbird sets its sights on boosting production and extending the operational life of Yanfolila, the implications of this agreement extend beyond the company’s immediate interests. It signals a potential shift in how mining companies operate in Mali, as they navigate the complexities of local governance and regulatory frameworks. The success of this partnership could serve as a blueprint for future ventures, encouraging other companies to engage more deeply with local stakeholders. In a sector often criticized for its extractive practices, this evolving relationship could foster a more sustainable approach to resource development in Mali, benefiting both the government and the companies involved.
