Mark Bristow, CEO, Randgold Resources
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Randgold would consider buying out Morila
Allan Seccombe
Posted: Wed, 28 Nov 2007

[miningmx.com] -- RANDGOLD RESOURCES would be interested in buying AngloGold Ashanti out of the Morila mine in Mali provided it would continue to make a profit at the operation and be able to fund closure costs, said CEO Mark Bristow.

AngloGold has not specifically said it would sell its stake in the mine that will have produced seven million oz of gold once opencast mining is terminated. Mining will halt in 2009 before operations move on to dump retreatment up to 2012.

However, AngloGold CEO Mark Cutifani has said five or six of the company’s 21 mines were demanding a “disproportionate” amount of much management effort in relation to the value they are delivering.
We’d be happy to take on the other half
The smaller, shorter life assets will come under particular scrutiny and Morila is thought to be included in that process. Cutifani said an announcement on the asset review would be made in February or March 2008.

Randgold and AngloGold each own 40% of cash-generating Morila and the Mali government the remainder. The mine is forecast to produce about 500,000 oz in 2007.

Bristow declined to comment on whether there had been any indication from AngloGold to Randgold that it wanted to exit the mine, saying if there had been any such overture it would be subject to a confidentiality agreement.

“We would consider buying AngloGold out, but everything’s got a price. Buying Morila is buying the risks of closure,” Bristow told Miningmx.

It would make no sense to sell the mine to a junior company that doesn’t have the expertise or balance sheet to properly close the mine down, he said.

“We would certainly take on that responsibility provided there is value in the deal for us,” he said. “We’d be happy to take on the other half provided we ended up with more profit and we could clearly see our way to financing the closure risk.”

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Randgold will continue exploring the tenement around Morila.

“We as Randgold are very committed to explore until we close the door. The environment is geologically prospective,” he said.

Randgold will issue six million shares – with an over allotment allowance of another 900,000 shares -- raising about $200m towards its Tongon development project in Cote d’Ivoire, which has a $267m capital requirement over its 10 year life.

Of the $267m cost, $38m is for a mobile plant and the remainder for sustaining capital.

Part of the $200m could go towards acquisitions.

Randgold already has $100m in cash that it raised for its underground Loulo mine in Mali. It’s the insurance for the project, but all the capital required for the project has been funded out of profits and working cash flow.

Randgold is unlikely to return to the market to fund Tongon. “There’s every indication that we have more than enough to complete the project,” Bristow said.

Tongon will start production in 2010 and produce on average 245,000 oz/year at a total cash cost of $359/oz. Combined with the Yalea and Loulo mine, Randgold should have production of 600,000 oz by 2012.