Backed down? or no option? Without knowing the intrinsic details, what if it was purely a case of;
Pay the duties or the good don't get released from port?
Looking at the company announcements that initially flagged the import duties being paid that are not consistent with the Mining Code (Article 118, 2012) nor the Establishment Agreement (2016). Since mid July (2023) LSMA had paid US$4 million (approximately) in taxes/import duties as per announcement 4th September - Goulamina on schedule post discussion with Mali Government. https://announcements.asx.com.au/asxpdf/20230904/pdf/05th0x499tnqd6.pdf
The Company estimated to pay a further US$16.1 million for the quarter, period ending 30th September, with a total exposure for LSMA for these unplanned taxes and import duties being US$45 - 50 million. Furthermore, as per the quarterly activity report for the period ending 30th June the project was 30% complete, but also included the arrival of key components being the ball mill, primary and secondary crushers, initial structure steel, permanent accomodation that had all arrived without having any taxes nor import duties applied.
Also at the end of the quarter, several supply items remained in transit including additional steel and accomodation units, water treatment plants, HDPE water supply pipe, vibrating grizzly, ball mill transformer, conveyor belting and pipework steel. ~ In transit isn't a definitive description, as in to mean still on a boat or on the road from port, if it was the latter this would indicate that no taxes or import duties were paid on these items? ** This being based on my understanding goods don't get released until taxes/import duties are paid - more than happy to be corrected.
As at the 31st December the project was at 60% completion with a further US$9.1 million paid in the quarter and a total of US$18 million paid (2023) in import duties and taxes, although this is less than first estimates but regardless an unjustified cost!
The Company released an update 22nd March 2024, with the project at 85% completion and the import duties and taxes increased to US$23 million.
It is my opinion only, the ruling government (junta) was already entrenched and obviously working with LMSA under the 2012 Mining Code and the 2016 Establishment agreement but this all changed when the Traore resigned and Keita was appointed as Minister of Mines in a government reshuffle.
Will LSMA be able to claim back the import duties and taxes that are not consistent with neither the Mining Code or Establishment agreements?, which are part of the ongoing negotiations before you scoff the "claim" back, Randgold/Barrick have had multiple arbitration decisions in their favour over tax claims. ~ albeit, that those monetary victories went towards addition VAT credits, etc.
Further to the above, by way of background both Barrick and B2 Gold and to a lessor extent Resolute Mining have all been in constant disagreements in regards to extra tax claims regardless of whether the ruling government was democratically elected or a junta controlled government post a Coup d'etat. ~ as previously posted, Barrick (Randgold) appears to be a yearly occurrence since 2011.
Shareholders of LLL (and FFX) haven't have exposure to this whilst being an explorer, FFX had amended tax assessments for 2017, 2018 against them after the acquisition of Morila that appeared to have disappeared from their reporting regime without any indication of outcome/s.
The upcoming quarterly will be an interesting read as to where the commencement of production schedule currently is, but there are still a lot of hurdles by way of permits that will need to be issued before commissioning.
@JackSpark I agree it appears the amount being attributed to import duties / taxes has either stopped or slowed, but that would be consistent with project materials being mostly already on site?
Thankfully our mining licence is obviously still in tact with the amount of ore movement to the ROM pad over the previous 2 quarters.
cheers
LLL Price at posting:
50.5¢ Sentiment: Hold Disclosure: Held
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