Randgold refutes Congo claim merger with Barrick introduces new partner to Kibali

Barrick-AngloGold Kibali mine, DRC

RANDGOLD Resources said the Democratic Republic of Congo’s (DRC’s) state-owned mining company, SOMIKO, was mistaken in thinking its proposed merger with Barrick Gold would introduce a new partner to Kibali, the 700,000 ounce per year gold mine it shares with SOMIKO (which has a 10% stake), and AngloGold Ashanti (45%).

It added that there were no provisions in the joint venture agreement with SOMIKO and AngloGold Ashanti that give the DRC firm “… any rights resulting from the proposed merger”. SOMIKO is an acronym for Société de Miniere de Kilo-Moto SA.

SOMIKO said earlier today that it would “assert its rights” following what it believed was a change in ownership were the merger of Randgold and Barrick to proceed, as per a proposal unveiled on September 25. In terms of the proposal Randgold shareholders would own about 33% of the enlarged group, with Barrick shareholders holding the balance.

Randgold said it had “… consulted comprehensively with SOKIMO at board and executive level in the days following the announcement of the proposed merger, as well as with the Minister of Mines and other interested parties regarding the proposed transaction”. It would “… continue to engage with all parties to demonstrate that this transaction was in the interests of all stakeholders”.

Kibali is one of the five ‘tier-one’ assets identified as key to the business case of the Barrick/Randgold merger. In an ominously written statement earlier today, SOMIKO said it noted the merger proposal, concluding that it represented “… another illustration of control transfer transactions between large global groups, conceived and structured to impose themselves, without any prior discussion, in the countries from which the resources that make up their wealth are extracted”.

“Sokimo is considering in more detail the available documentation to date and will assert its rights,” the state-owned miner said in its statement.

Kibali, which cost $2.5bn to develop, is forecast by Randgold to produce its nameplate capacity of 700,000 ounces of gold this year.

Political foment in the DRC has the potential to sap the confidence of investors as evidenced by the sharp under-performance of shares in Glencore this year, partly owing to the introduction of a new Mining Code in the country – a development that has also affected Randgold and AngloGold Ashanti. Glencore’s share is also heavily affected by a US Department of Justice investigation into the group’s trading activities.