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Capt. Amadou Sanogo said his soldiers had ceded control to avoid fighting in residential areas.
Tuareg-led rebels in Mali have taken control of the garrison town of Gao, according to the BBC, including the largest military base in the north of the country.
The number of casualties remain unknown and follows the rebel taking of the provincial capital Kidal.
Captain Amadou Sanogo, whose troops seized power in a coup last week, said his soldiers had ceded control to avoid fighting in residential areas. The BBC says the loss of Gao is a serious blow to leaders of the coup.
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The rebel advances come as Mali's new leaders face a Monday deadline to start handing back power or face economic sanctions by the land-locked country's neighbors who have threatened to close of its borders, Reuters reports.
The Associated Press reports the two towns, Gao and Kidal, are key wins for the rebels who launched an insurgency in January.
Gao is about 750 miles from Mali's capital Bamako, where officers recently overthrew the country's democratically elected government.
Mid-ranking officers ousted President Amadou Toumani Toure angry they did not have adequate weapons to tackle an alliance of nomadic and Islamist rebels, steming from heavy arms flowing from Libya's recent war, according to Reuters.