Barrick's Mali Mine Deal Spur 8.5% Stock Surge, $1.5B Cash Flow Outlook

Barrick Mining Corp. has reached a $430 million settlement with Mali to resolve a two-year dispute over its Loulo-Gounkoto gold mining complex. The Canadian company agreed to pay 244 billion CFA francs, with 144 billion to be paid within six days and the remainder through tax-credit offsets according to reports. The deal ends a legal and operational standoff that led to the shutdown of one of Barrick's most important assets.

As part of the agreement, Barrick will regain full operational control of the mine, and all pending arbitration claims against Mali will be withdrawn.

The Malian government has also agreed to drop charges against the company and take steps to release four employees who were detained during the dispute. The settlement includes Barrick's acceptance of Mali's 2023 mining code, which significantly increased the state's share of mining revenue.

The resolution comes after months of escalating tensions, including the seizure of gold, the detention of key personnel, and a provisional administration imposed by the Malian government. The renewed 10-year operating license for the Loulo-Gounkoto mine now clears the way for Barrick to resume production, potentially boosting output by 670,000 ounces next year and generating $1.5 billion in operating cash flow.

Why the Standoff Happened

The dispute began when Barrick refused to comply with Mali's new 2023 mining code, which raised royalties and increased the state's ownership stake in mining projects. In response, Mali demanded back taxes, detained the company's staff, and placed the mine under provisional state control. Barrick retaliated by initiating arbitration at the ICSID.

Tensions peaked in 2024 when the Malian government issued an arrest warrant for Barrick's former CEO, Mark Bristow, and seized three tons of gold from the mine. The situation worsened as foreign mining companies faced growing pressure from Mali's military-led government, which sought to bolster state revenues amid ongoing security challenges and economic instability.

The new agreement includes a financial settlement, with 144 billion CFA francs to be paid immediately and an additional 50 billion through tax credits. Another 50 billion CFA francs was already paid in 2024 according to reports. Mali expects to receive $900 million in annual dividends and royalties under the new terms, significantly increasing its share of the mine's profits.

How Markets Reacted

Barrick's shares surged 8.5% to a 13-year high on Monday following the announcement, reflecting investor relief over the resolution of the costly and disruptive dispute. Analysts at BMO Capital Markets said the mine's restart could improve Barrick's production outlook and strengthen its balance sheet. The company also announced a significant dividend increase and a $500 million boost to its share repurchase program, signaling confidence in its financial resilience according to market analysis.

The stock's sharp rise was welcomed by investors, who had been concerned about the uncertainty surrounding the mine's operations. The resolution not only removes a key risk but also stabilizes production expectations for Barrick, which had been forced to operate under constrained conditions for much of the past two years.

Barrick's ability to negotiate a favorable settlement was seen as a strategic win, especially given the broader trend of African governments seeking to exert greater control over natural resources. The company's decision to accept the 2023 mining code, while paying a substantial sum, was viewed as a pragmatic move to regain access to one of its most critical assets.

What This Means for Investors

For investors, the resolution with Mali represents a major turning point for Barrick's operations in Africa, where the company holds several high-grade gold assets. The return of the Loulo-Gounkoto mine to full production is expected to support Barrick's 2025 production guidance, which currently projects gold output in the range of 3.15 to 3.50 million ounces. The mine alone contributed 723,000 ounces of gold in 2024, making it one of Barrick's most valuable contributors.

Analysts are now watching how quickly Barrick can bring the mine back online and whether the company will face further regulatory challenges in other African markets. While the resolution with Mali has reduced immediate operational risks, broader geopolitical uncertainties-particularly in regions affected by conflict or political instability-remain a concern.

Barrick's recent announcement of a dividend increase and expanded buyback program suggests the company is focused on rewarding shareholders even as it navigates complex regulatory environments. With gold prices reaching record highs, the company's ability to stabilize and scale production could further enhance its value proposition for long-term investors.