The incident took place in the early hours of Friday morning.
Armed gunmen stormed the Byblos Hotel in the town of Sevaré, which is home to an important airforce base.
The hotel located in central Mali is also where a number of UN peacekeepers are based.
Initial reports stated that three South Africans, a Frenchman and a Ukrainian had been registered at the hotel before the attack. Meanwhile, the Russian Embassy in Mali confirmed that one of their citizens were also among the hostages.
A government statement on Friday evening gave a provisional toll of "five dead, two injured" on the Malian army side and "two killed" on the other side.
"We were able to free four hostages, but sadly we also found three dead bodies," Choguel Kokalla Maïga, a government spokesperson told RFI on Saturday.
The final death toll put the number of fatalities at twelve.
On Saturday morning, Mali special forces backed by French soldiers sealed off the hotel, driving out the commandos.
Surrounding areas are still being combed in the search for remaining attackers. Seven suspects ave been arrested, but for the time being, it's unclear what motivated the attack.
One of the two terrorists killed, is believed to have been wearing a suicide jacket, which he set off without causing any casualties.
The situation in Mali has been fraught with insecurity since islamists, some with links to Al Qaeda, seized control of cities and towns in the North of the country.
In 2013, a French-led military operation succeeded in driving them out.
Since then, a peace keeping operation has been deployed to maintain stability in the west African nation.