0,6 Cent ist Plusquamperfekt.
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Date: April 13, 2006
As The Resource Grows At Moto Goldmines Project in DRC, So Too Do The Niggles(Verzögerungen?) From Its Governmental Partner
By Our Man In Oz
Champagne corks ought to be popping at Moto Goldmines, a small Australian-based explorer with its best assets in Africa and shares which listed recently on AIM as well as in Canada. Last week, Moto reported that it was adding an astonishing one million ounces of gold a month to its namesake project in the Democratic Republic of Congo The latest calculation of the global resource base at the Moto project in the north-east corner of DRC is an eye-popping 16.1 million ounces, with the promise of more to come as a four-rig drilling program grinds out more samples for company geologists to gawk over and assay laboratories to process. Within a matter of months, Moto should be in a position to proclaim a world-class resource base of 20 million ounces, and announce the next stage in planning for a project to produce around 240,000oz of gold a year at a cash cost of just US$220/oz for at least 12 years – a prize which appears to have become just a bit too good for the local partner in the project to ignore.
Within days of Moto proudly telling the world what it had discovered so far, a curious dispute broke out with Moto’s partner in the project and, technically, the “holder” of the licence areas covering the goldfield. The partner is a Congolese government agency known as L’Office des Mines d’Or de Kilo-Moto. Okimo, as it is known, is entitled to a range of interests, varying from 20 to 30 per cent in the tenements covering the Moto goldfield. In early March, Moto , the company, said it had started talks aimed at simplifying the contractual arrangements governing the gold project with Moto aiming to acquire a proportion of Okimo’s direct interest in certain parts of the project. According to reports from Congo, Okimo’s chief executive now describes the talks as being in dispute.
Details of who said what and to whom are yet to become clear, and Moto said in its latest statement filed on April 11 that it “did not propose to comment publicly on the discussions until they are either finalised or terminated”. It added that existing contractual arrangements were valid and remained in force; it was not aware of any legal proceedings challenging the interest; and that relevant ministries in the Congo government had instructed Okimo not to attempt unilaterally to renegotiate or cancel any agreements with Moto.
For anyone outside Congo, and perhaps even those inside, this is a confusing situation, worsened by the mention of legal proceedings and the “support” of government ministries.Investors have shown their concern by marking down a company which has the potential to become a major gold producer if it can shake off the problems of doing business in a country which has a poor track record for political, and military, upheaval. On the Australian market, where Moto trades as a depositary receipt, the price has been falling as the gold resource and the gold price have been rising. Australian investors have an aversion for anything beyond their shores, some even viewing Tasmania as foreign.
From a recent high of A$1.85 on March 28, Moto has slipped back sharply to trade around A$1.30 on the Australian market. Apart from Moto’s statement “disputing that it is in dispute” with its Congolese Government partner there is the influence of a big share placement completed on March 31, just before the “non-dispute” surfaced. That deal saw the issue of 5.5 million common shares in Canada at C$7.65 a pop raised C$42 million through a syndicate of underwriters led by Haywood Securities and including BMO Nesbit Burns and RBC Dominion Securities. The cash raised is being used, according to Moto, to make cash payments to acquire additional interests in the area, and fund ongoing works.
The capital raising and non-dispute was taking place as Moto’s chief executive, Klaus Eckhof, gave a glowing presentation to a gold conference in Perth on April 5. Speaking to Minesite after that talk, Eckhof said the gold occurrences at Moto were contained in a mix of settings some of which could be compared with the AngloGold Ashanti’s Morila mine in Mali, or Barrick’s Goldstrike property in Nevada. “We’ve got four rigs on site,” Eckhof said. “That’s the maximum there because otherwise logistically it’s not easy to manage more than that.”
Eckhof said getting to the sprawling site involved working out of Nairobi in Kenya or Kampala in Uganda, either flying in, or driving across 100kms of dirt road in the DRC. Once there, bucketloads of gold wait to be drilled and/or mined, a reminder of the Moto fields historic days as a place which yielded more than three million ounces of gold. The latest resource estimate of the field, released on April 7, is of an indicated resource of 43.44 million tonnes at 2.7 grams a tonne for 3.756 million ounces of gold, and an inferred resource of 100.86/t at 3.8g/t for 12.353m/oz – with the two estimates producing the combined resource of 16.1 million ounces.
Eckhof, when speaking with Minesite, dismissed concerns about security of tenure at Moto. “Okimo, last week, put out another statement saying basically that now they want to have a free carried interest to production,” he said. “These sort of things are going to crop up quite often, especially now because of the deposit being so big, people are now saying perhaps they should have some more, something different. But, in general the DRC has proven to be a place in which you might have a dispute, or a problem, but everything reverts back to normal. However, it will have an impact on the share price during the period of uncertainty.”
Managing through these tricky periods is a challenge for Eckhof, and a test for investors. He believes normality will return, describing the situation at Moto as one of “zero geological risk”, but a high degree of political risk. “It is exactly the opposite to what you see in Australia where the geological risk is high and the political risk low,” Eckhof told Minesite. If he’s right, and the risk can be managed, then Moto has the potential to become a major gold producer – while providing its shareholders with a action-packed ride on the way to that goal. He still has a trump card in chairman Sam Jonah who is respected throughout Africa for running Ashanti before it was acquired by AngloGold despite the major hiccup over hedging.
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