It has not been a great time to be a gold mining company in Mali, as Barrick Gold (TSE:ABX) ran afoul of more problems therein. It was not so long ago that issues at the Loulo-Gounkoto mine had at least looked resolved, but some of the new stitches have burst and left both sides scrambling. Investors did not take the news well, and shares were down over 2.5% in Monday morning’s trading.
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Both Barrick and the Malian government had set up a framework not so long ago to settle some of these issues, but despite a whole lot of negotiating table wrangling, the two sides could not produce a full agreement. Basically, a cash-strapped Malian government wants more money out of the mine, and Barrick is pointing out that Mali already owns 20% of the mine and has “…received more than 70% of the economic benefits from the complex” so far.
But the Malian government seems to be committed to killing the goose that is laying the golden eggs here by blocking gold shipments and placing several employees under arrest pending trial. This may ultimately lead Barrick to shut down its Malian operations. Such a move will take with it somewhere between 5% and 10% of the entire gross domestic product of Mali, reports noted, and leave about 8,000 people out of work.
More Warrants
The Malian government, meanwhile, is doubling down, as we have seen recently, and placed an arrest warrant for the CEO of Barrick Gold, Mark Bristow. The warrant, noted a Reuters report, accuses Bristow of “money laundering and violation of financial regulations.” Given that Bristow will probably never set foot in Mali after all this, the odds of the warrant actually being executed are low at best.
Still, though, when it comes to a list of “ways to make sure no one ever does business with your country again,” this is probably pretty far up there. And with somewhere around a tenth of Mali’s entire GDP on the line, you would think Mali would be a little more solicitous of Barrick Gold and its employees.
Is Barrick Gold a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on TSE:ABX stock based on eight Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 44.45% rally in its share price over the past year, the average TSE:ABX price target of C$33.76 per share implies 44.45% upside potential.
