Kinross Gold’s Tasiast gold mine in Mauritania.
Canadian mining company Kinross Gold Corp. on Monday said it reached an agreement with Mauritania’s government under which the company will pay a total of $25-million to resolve disputes over fuel use, tax exemptions and mining licenses.
Under the deal, the government will give Kinross a 30-year exploitation license for its new project Tasiast Sud. Mauritania will receive a 15-per-cent free carried interest in the project, with an option to purchase an additional 10 per cent after further feasibility work is completed.
The deal terms are similar to those agreed by Barrick Gold Corp. in January when it ended a long-running tax dispute with Tanzania by giving the government a stake in three gold mines.
Mauritania will reinstate a tax exemption on fuel duties and repay around $40-million in VAT refunds to Kinross, the company said in a statement.
Kinross will pay the government $10-million to resolve disputes around fuel use and tax exemptions, and $15-million upon receiving the Tasiast Sud exploitation license, to resolve disputes around its application to convert the exploration license into an exploitation license.
It also said it would now pay an escalating royalty – tied to the price of gold – from 4 per cent for prices below US$1,000 an ounce, to 6.5 per cent for prices of US$1,800/oz and above.
The gold price has soared as the global pandemic drives investors into safe-haven assets, and was last trading just above US$1,700 an ounce.
Kinross, whose Tasiast gold mine produced 391,097 ounces of gold last year, said the agreement further develops a “positive foreign investment climate” in Mauritania.
Mines Minister Mohamed Abdel Vetah said: “Tasiast is an important contributor to Mauritania and we believe our new agreement will be a positive model for other foreign mining investors.”
A workers’ strike at Tasiast mine last month resulted in a two-week shutdown which the company said would not affect 2020 production.
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