Firefinch purchased an 80% interest in Societe des Mine de Morila SA, the owner of the Morila Gold Mine in Mali on 11 November 2020.
A document called a partial assessment from the tax department of Mali was received by Morila SA.
The Assessment advises that the tax department disputes the amounts due in relation to various employment taxes, withholding taxes and VAT paid by, or claimed by Morila SA for the tax year ending 31 December 2017.
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The Assessment also advises that the tax department believes that Morila SA has materially understated its income from gold sales. In 2017, the mine produced approximately 70,000 ounces of gold and sold 67,612 ounces of gold for net revenue received of US$92.65 million.
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The mine has reviewed its records and has no reason to revise the amount of gold produced or the revenue received. Firefinch notes that this gold production was disclosed to public exchanges by the previous owners of Morila SA: Barrick Gold and AngloGold Ashanti.
The tax department has advised that, based on advice from the government department responsible for customs and exports, it believes the revenue from gold sales for 2017 should be US$146.9 million.
The basis for this higher estimate was not provided. The Company’s internal records and receipts of sales from Rand Refinery in South Africa confirm its production and revenue as disclosed in its 2017 tax return.
The Company is confident that the source of information utilised by the tax department to establish Morila SA gold sales is incorrect.
The Company believes the Assessment of employment tax, withholding tax, VAT and gold revenue is incorrect and is seeking to meet with the tax department after it has submitted its position, along with the supporting documentation, in coming days.