Ann: Quarterly Activities/Appendix 5B Cash Flow Report, page-23

It sounds like the Malian government want FFX to stump up the cash to clear the tailings out of the pits, and to also pay environmental bonds into an account for mine rehabilitation. The board are saying that those things should be addressed to Morila S.A, but aren't 80% of the shares in Morila S.A. owned by Firefinch, so doesn't the government have a fair point, to a limited extent?

It seems like the Malian government are not going to let them sell their 80% shareholding in Morila S.A. for one dollar ($1) until they do the following;
1. pay for the tailing reclamation in the pits,
2. pay environmental bonds into a rehabilitation account,
3. pay compensation to some communities for stopping payments to their community projects, like the agricultural farms that were created and run,
4 pay some compensation to mine workers sacked or stood down,
5 pay taxes and royalties due (if any).

The company has written back to the government saying that Firefinch has no obligation to pay any of these demands because it has no relationship or control over Morilla S.A, which is a separate entity. The company sees itself therefore as a major shareholder of Morila S.A, like any other shareholder, without any executive control or role. Owning 80% of Morila S.A. does seem to weaken that argument somewhat though, hence the reason they are so keen to sell it off, even for just one dollar. I'd say that the government of Mali is asking some reasonable questions, but I'm not sure their demands are totally fair either, at least, not all of them.

Who is currently getting the gold produced from Morila, because it would seem to be free gold for them. Is it Morila S.A? Morila S.A could distribute that gold to shareholders as a special dividend, with Firefinch getting 80% of the distribution, which they could then pay to the government. It sounds silly, and probably is. Are we able to assume that the people now collecting the gold from Morila are the same ones who made off with $200 million. Does the corruption in Africa run that deep, and is it that organized that perhaps the government doesn't even know who is involved, or if there is any. It seems at times like both Firefinch and the Mali government are both chasing shadows, both looking for the (possible) third party who playing them both.

Gw