B2Gold's Fekola Mine in Mali.B2Gold/Supplied
A military coup d’état in Mali raised the possibility of eventual supply chain disruptions for B2Gold Corp., the Vancouver-based miner that operates one of West Africa’s biggest gold mines, and underscored the risks for Canadian companies operating in the politically unstable region.
On Tuesday, Mali president Ibrahim Boubacar Keïta resigned after being detained by mutinous military officers in the capital city of Bamako. The soldiers, who are part of a group called the National Committee for the Salvation of the People, vowed to cede power once democratic elections are eventually held. The coup came after months of protests against the previous Mali government and amid periodic insurgency from terrorist groups.
Internationally the coup was condemned.
Both the United Nations and the African Union (AU) called for the immediate release of Mr. Keïta. The Economic Community of West African States (ECOWAS) also ordered its member states to close their regional borders with Mali.
“There’s a heck of a lot of uncertainty as far as who’s actually running this country right now,” said Chris Thompson, analyst with PI Financial.
“But the bigger problem is the political void that Mali seems to be moving into plays right into the hands of the jihadists and this terrorist element. Who knows what the new Mail is going to look like.”
Shares in B2 fell by 7.5 per cent to close at $8.18 apiece on the Toronto Stock Exchange on Wednesday.
B2 said in a statement that its Fekola mine, which is located about 500 kilometres west of Bamako, has been unaffected by the coup, its staff are safe and its supply chain is in good shape until at least the end of the September.
In an interview, B2Gold’s chief executive officer, Clive Johnson, said that Fekola is particularly well stocked with supplies such as fuel, because of contingency planning owing to the COVID-19 pandemic. And even if the borders remain closed beyond September, the company could still cope.
“If we got into a situation where our supply chain started to get threatened, we would always have the option to stop physical mining for a period of time and actually just run the big stockpiles of good grade ore we have through the mill,” Mr. Johnson said.
Mr. Johnson said that stockpiles at Fekola could keep it in operation for an additional several months, if need be.
B2, which is Canada’s fifth largest gold miner by market value with a $9.2-billion capitalization, has mines in Namibia and the Philippines, but Fekola is the company’s biggest and most profitable operation by far. Last year, it produced 456,000 thousand ounces of gold.
The coup in Mali once again highlights the risks that Canadian miners face in a particularly volatile part of the world. Last year, 39 employees of Montreal-based Semafo Inc. were killed in an apparent jihadi attack on a bus convoy in Burkina Faso. The tragedy devastated the company’s share price and eventually culminated in the sale of Semafo to Britain’s Endeavour Mining Corp. earlier this year.
Josh Wolfson, analyst with RBC Dominion Securities Inc., wrote in a note titled It Comes With the Territory that the coup in Mali reinforces the geopolitical risk of operating in West Africa.
B2 owns 80 per cent of Fekola, with the Mali government owning the rest. In recent years, a number of African countries, including Tanzania and the Democratic Republic of Congo, have pushed back hard on Canadian miners and demanded better financial terms. But Mr. Johnson says he’s not worried about any eventual new Mali government tampering with B2′s current royalty and taxation structure because of the country’s long history of honouring its mining convention, which locks in financial terms for companies for extended periods of time.
Barrick Gold Corp.‘s shares fell by 3.3 per cent on the Toronto Stock Exchange to close at $38.26. Barrick operates the Loulo-Gounkoto mining complex in western Mali. In a statement, Barrick said that its operations were not affected by the coup. Loulo-Gounkoto produced 141,000 ounces of gold in the quarter ending June 30, representing just more than 10 per cent of Barrick’s overall production.
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