| |
Randgold takes operational control of Morila
Allan Seccombe
Posted: Mon, 04 Feb 2008
[miningmx.com] -- RANDGOLD Resources has been granted operational control of the Morila gold mine in Mali by its partner AngloGold Ashanti, which has indicated it wants to exit the project, Randgold CEO Mark Bristow said on Monday.
In other company developments, the Randgold board has approved the development of the Tongon gold mine in Cote d’Ivoire. Construction at the project could start at the end of 2008 pending to the government there approving its mining licence. Gold would be produced at the end of 2010.
Speculation has been rife since late last year that Morila could come up for sale by AngloGold Ashanti after 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.
Mining at Morila will halt in 2009 and the project will treat dumps up to
2012, by which time the entire project would have delivered some seven million ounces of gold. For Randgold, Tongon will replace the Morila ounces.
“AngloGold Ashanti has advised Randgold Resources that it is considering the disposal of its 40% stake in Morila and the two companies have agreed that in the circumstances it would be best for all stakeholders if Randgold Resources assumed the operatorship
as soon as possible, given its continuing presence in and commitment to the region,” Bristow said in a statement accompanying the company’s results.
“We would consider buying AngloGold out, but everything’s got a price. Buying Morila is buying the risks of closure,” Bristow told Miningmx in a November interview.
“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.”
AngloGold is obliged under contract to offer its stake for sale to Randgold first. There is a 20 day negotiation period once AngloGold has formally told its partner that it wants to exit Morila. At the end of that period, if a price has not been agreed, AngloGold has to put a single price tag on its stake.
If Randgold declines to buy it, AngloGold then has a limited time to bring in another
party, who in turn has a month to provide guarantees it can buy the stake.
"The best asset you can negotiate for is the one you don't really need," Bristow told Miningmx on Monday.
The question begs who would buy a minority stake in such a short life asset and if so what price would they pay. AngloGold is understandably a little hesitant to let it be sold to Randgold too cheaply in case the latter finds something in its ongoing exploration programme around Morila. Nothing has been found yet.
Nearly all of the Morila staff will come over to Randgold, who will then deploy them to other projects within the company. "Morila is not so important to us anymore," Bristow said.
AngloGold has a hedge book far under water at current record high gold prices and is said to be selling assets to buy back part of the book.
Randgold owns 40% of Morila and the government the remaining 20%.
Randgold paid a dividend of $0.12/share after fourth
quarter profit rose 26% to $14.5m, boosted by the Loulo mine in Mali.
The group’s gold output of 444 573 ounces for the year was in line with forecast, due in part to Loulo's increased contribution of 264,467 ounces at a total cash cost of $372/oz, the company said.
Morila’s gold output was lower at 449,815 oz at a total cash cost of US$332/oz against a forecast of 475 000 ounces.
“The shortfall was attributable to operational problems related to planning, grade control and plant lock-up,” it said.
Randgold unveiled what Bristow called a "significant new drill target" called Massawa in Senegal. A 5,000 metre diamond drilling programme will begin in the March quarter of this year as part of a scoping study.
| |
