Moto Goldmines Accepts Randgold Offer

Randgold Resources and Moto Goldmines announced on August 5, 2009, an agreement whereby Randgold will acquire Moto for a combination of cash and Randgold shares valued at about $500 million. Moto’s primary asset is its 70%-owned Moto gold project in the far northeast of the Democratic Republic of Congo (DRC). A DRC company, L’Office des Mines d’Or de Kilo-Moto, holds the remaining 30%.

At the same time, Randgold announced an agreement with AngloGold Ashanti, whereby AngloGold will fully fund the cash element of the Randgold-Moto transaction in partial payment for an indirect 50% interest in the project. AngloGold will be jointly responsible with Randgold for funding project development. Randgold will be the project operator. The announcement commented that Randgold and AngloGold, together, will bring the scale and the access to capital needed to develop the Moto gold project to production. The companies have been joint-venture partners at the Morila mine in Mali since July 2000, and they both have extensive mine development and operating experience in Africa.

Moto terminated an earlier, all-share agreement to be acquired by Red Back Mining that had valued Moto at about $450 million and paid Red Back a C$15.25 million break fee with regard to the termination of that agreement.

The Moto gold project has passed the recent project review process being conducted by the DRC government. In March 2009, Moto released the results of an optimized feasibility study that details mining of six open-pits and a high-grade underground mine based on JORC-compliant probable mineral reserves of 42.3 million mt grading 4 g/mt gold and containing 5.5 million oz of gold—3.2 million oz in the open-pits and 2.3 million oz in the underground mine. In addition to its probable reserves, the Moto project has 11.3 million oz of indicated resources and another 11.2 million oz of inferred resources, ranking it among the largest undeveloped gold projects in the world.

The planned project life at start of production is approximately 16 years, based on a nominal plant throughput rate of 2.8 million mt/y. Production is expected to average 485,000 oz/y during the first five years of operation. Life of mine gold production would total 4.8 million oz at an average estimated cash cost of $318/oz of gold produced.

Pre-production and infrastructure costs to develop the Moto project are estimated at $438 million, and the capital payback period is projected at 3.1 years at a $750/oz gold price.

As featured in Womp 2009 Vol 07 - www.womp-int.com