Randgold's Moto takeover advances

Allan Seccombe | Thu, 06 Aug 2009 09:41

[miningmx.com] -- MOTO Goldmines accepted a takeover offer valued at $500m from Randgold Resources, which has its sights firmly set on Moto’s 22.5 million ounce project in the Democratic Republic of Congo.

Moto terminated an agreement on what turned out to be an inferior all-share offer from Red Back Mining and paid it a termination fee of C$15.25m.

Randgold, which has struck a 50:50 joint venture agreement with South Africa’s AngloGold Ashanti on the Moto project in the DRC, made an offer of 0.07 of a Randgold share for every Moto share and built in a cash component, giving Moto shareholders an option to take U$4.47 per share up to a total value of $244m.

“Moto’s board of directors has unanimously recommended that the shareholders and option-holders of Moto vote in favour of the Randgold transaction,” TSX-listed Moto said in a statement.

The Randgold offer has received the support of holders of 38% of Moto shares. By the close of play on 4 August, the transactions was valued at $500m, giving Moto shareholders a seven percent premium over the Moto share price on 29 May, the day before Red Back made its offer.

“Moto is one of the better gold prospects around in probably one of the worst geographical locations. It’s a challenge for us,” Randgold CEO Mark Bristow recently told Miningmx. But the company favoured buying an asset before it’s built and create the returns for itself rather than inheriting someone else’s decisions.

Randgold is raising around $300m to add to its $200m cash pile to fund its pipeline of projects, including the Gounkoto and Massawa projects as well as towards developing Moto.

Moto’s optimised pre-feasibility showed the cost of developing a mine of above $400m. “We see it materially in excess of that amount of capital,” Bristow said.

AngloGold is paying $244m to buy into the Moto project. There are still funds needed to build a mine.

“It’s still early days and the reason we’re there is because we see potential. There are challenges. We think what we’ve done is appropriate,” AngloGold CEO Mark Cutifani told Miningmx last week.

Moto owns 70% of the Moto gold project in DRC, with state-run Okimo holding the rest.

“Both Mark Cutifani and myself are under no illusion as to the challenges one faces in building a gold mine in a country going through significant transformation. It heightens the risk,” Bristow said.