Dushnisky nod to Bristow caps good day in politics as they extract VAT from DRC

Kelvin Dushnisky, CEO, AngloGold Ashanti

IN what may be a politically astute gesture, Kelvin Dushnisky, CEO of AngloGold Ashanti, acknowledged his counterpart at Randgold Resources, Mark Bristow.

Commenting on a strong performance at Kibali, a gold mine the two companies share in the Democratic Republic of Congo (DRC), Dushnisky said the company would “… also like to acknowledge the strong operating performance of our JV partner, Randgold”.

Bristow is in pole position to become CEO at Barrick Gold – provided a merger with Randgold Resources is approved by shareholders  – a title that was never made available when Dushnisky was president and executive director of Barrick.

AngloGold and Randgold each own 45% of Kibali whilst the DRC government owns the balance. But it is Randgold that operates the mine.

The joint venture partners said on October 22 that Kibali was on target for a record production number and would most likely beat its full-year production guidance of 730,000 ounces of gold for the 2018 financial year.

The two companies had also reached an agreement with the DRC’s finance ministry for the return of outstanding value-added tax (VAT) refunds. An initial $40m payment will be made with the balance to be offset against future taxes owed. An agreement has also been reached exempting local goods and services, purchased by Kibali, from incurring VAT.

“This is an important, tier-one asset for the country at large, and for us, as we work to improve returns to our shareholders,” Dushnisky said in a statement. “It’s encouraging for us as investors, and for the future development of the DRC’s mining industry, that Kibali is poised to start returning capital to those who funded the first large-scale, industrial gold mining project in one of the country’s most remote areas,” he said.

Said Bristow in a separate announcement: “With the completion of its seven-year capital investment programme, Kibali is now poised to start returning capital to the investors who funded the development of this large and complex project in a remote part of the DRC”.

The apparent advance via negotiation with the DRC government follows some tension after Société de Miniere de Kilo-Moto SA (SOKIMO), the company in which the government’s 15% Kibali stake is housed, said in September that it would “asset its rights” as there was to be a change of ownership in Kibali – a claim Bristow swiftly refuted.

The likelihood of SOKIMO driving some kind of negotiation on Kibali was dismissed in a recent report by BMO Capital Markets. “We do not see ongoing discussions between Randgold and SOKIMO as an impediment to the merger [of Barrick with Randgold] and are more likely a mechanism to extract additional concessions,” it said.