Annual Report on Form 20-F 2009: Class 1 Circular

Transcription

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in
any doubt as to the action you should take, you are recommended to seek your own financial advice
immediately from your stockbroker, bank manager, solicitor, accountant or other independent financial
adviser authorised under the Financial Services and Markets Act 2000 if you are resident in the United
Kingdom or, if not, from another appropriately authorised independent financial adviser.
If you have sold or otherwise transferred all your Ordinary Shares in the Company, please send this document,
together with the accompanying Form of Proxy, as soon as possible, to the purchaser or transferee, or to the
stockbroker, bank or other agent through whom the sale or transfer was effected for delivery to the purchaser or
transferee. If you have sold or otherwise transferred only part of your holding, you should retain these documents.
HSBC Bank plc, which is regulated in the United Kingdom by the Financial Services Authority, is acting
exclusively for the Company and no one else in connection with the Kibali Acquisition and will not be responsible
to anyone other than the Company for providing the protections afforded to its customers or for giving advice in
connection with the arrangements described in this document.
RANDGOLD RESOURCES LIMITED
(Incorporated in Jersey with limited liability under the Companies (Jersey) Law 1991 with registered number 62686)
Proposed indirect acquisition of 10 per cent. of the issued share capital of
Kibali Goldmines s.p.r.l.
Notice of Extraordinary General Meeting
Your attention is drawn to the letter from the Chairman of the Company which is set out on pages 5 to 14 of
this document and which recommends you to vote in favour of the Resolution to be proposed at the
Extraordinary General Meeting referred to below. You should read the whole text of this document. For a
discussion of certain risk factors which should be taken into account when considering what action you
should take in connection with the EGM refer to Part II of this document.
Notice of an Extraordinary General Meeting of Randgold Resources Limited, to be held at 8:30 a.m. on
16 December 2009 at La Motte Chambers, La Motte Street, St Helier, Jersey JE1 1BJ, Channel Islands, is set
out at the end of this document. The Form of Proxy for use at the meeting accompanies this document and, to be
valid, should be completed and returned to the Company’s registrars, Computershare Investor Services (Jersey)
Limited at PO Box 83, Ordnance House, 31 Pier Road, St. Helier, Jersey JE4 8PW, as soon as possible and, in any
event, so as to arrive by no later than 8:30 a.m. on 14 December 2009. Completion and return of the Form of Proxy
will not preclude Shareholders from attending and voting in person at the Extraordinary General Meeting, should
they so wish.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain matters discussed in this document are forward-looking statements within the meaning of Section 27A of
the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934, and applicable
Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect
to the future price of gold, the estimation of Mineral Reserves and Resources, the realisation of Mineral Reserve
estimates, the timing and amount of estimated future production, costs of production, reserve determination and
reserve conversion rates. Generally, these forward-looking statements can be identified by the use of forwardlooking terminology such as “will”, “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”,
“estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words
and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”,
“occur” or “be achieved”. Assumptions upon which such forward looking statements are based are in turn based on
factors and events that are not within the control of Randgold and there is no assurance they will prove to be correct.
Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause
the actual results, level of activity, performance or achievements of Randgold to be materially different from those
expressed or implied by such forward-looking statements, including but not limited to: risks related to the
integration of the Kibali Acquisition, risks related to mining operations, including political risks and instability and
risks related to international operations, actual results of current exploration activities, conclusions of economic
evaluations, changes in project parameters as plans continue to be refined, as well as those factors discussed in the
section entitled “Risk Factors” in Part II of this document. Although Randgold has attempted to identify important
factors that could cause actual results to differ materially from those contained in forward-looking statements, there
may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that
such statements will prove to be accurate, as actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking
statements. Randgold does not undertake to update any forward-looking statements herein, except in accordance
with applicable securities laws including the Prospectus Rules, the Listing Rules and the Disclosure Rules and
Transparency Rules.
Cautionary note to U.S. investors: the U.S. Securities and Exchange Commission generally permits companies, in
their filings with the SEC, to disclose only those mineral deposits that qualify as proven and probable ore reserves
for purposes of the SEC’s Industry Guide 7. Under the SEC’s Industry Guide 7 standards, mineralisation may not be
classified as a “reserve” unless the determination has been made that the mineralisation could be economically and
legally produced or extracted at the time the reserve determination is made. Randgold uses certain terms in this
document, such as “inferred”, “indicated” and “resources”, that the SEC does not recognise and strictly prohibits
Randgold from including in its filings with the SEC. Shareholders are cautioned not to assume that all or any parts of
Randgold’s or Kibali Goldmines’ resources will ever be converted into Reserves which qualify as ’proven and
probable reserves’ for the purposes of the SEC’s Industry Guide number 7.
QUALIFIED PERSONS
The mineral reserve, mineral resource and gold production estimates and all other scientific or technical
information related to Kibali included in this document were reviewed and approved by Quinton de Klerk, a
Director of Cube Consulting Pty Ltd (“Cube”), Patrick (Rick) Adams, a Director of Cube, Terje (Ted) Hansen, a
Director of Cube, Paul Kerr, a Senior Consultant (Underground Mining) employed by SRK Consulting Pty Ltd,
Fred Kock, a Lead Metallurgist of Orway Mineral Consultants (WA) Pty Ltd, Rodney Leonard, a Technical Director
of Lycopodium Minerals Pty Ltd, and Rodney Quick, an Officer of Randgold (each a Qualified Person under
National Instrument 43-101 — Standards of Disclosure for Mineral Projects of the Canadian Securities
Administrators) and documented in the Technical Report (NI 43-101) — Kibali Gold Project in the Democratic
Republic of Congo, dated 27 November 2009. This report is available under the Company’s profile on the SEDAR
website at www.sedar.com.
The information contained in paragraph 3 of Part I is sourced from the Expert’s Report set out in Appendix 1 to this
circular.
Shareholders are cautioned that, except for that portion of mineral resources classified as mineral reserves, mineral
resources do not have demonstrated economic value. Inferred mineral resources have a high degree of uncertainty as
to their existence and as to whether they can be economically or legally mined. Under applicable Canadian
securities laws, estimates of inferred mineral resources may not form the basis of an economic analysis. It cannot be
assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Therefore,
shareholders are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be
economically or legally mined, or that it will ever be upgraded to a higher category. Likewise, shareholders are
cautioned not to assume that all or any part of measured or indicated mineral resources will ever be upgraded into
mineral reserves.
2
CONTENTS
Page
TIMETABLE OF PRINCIPAL EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Letter from the Chairman of Randgold Resources Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Information on Moto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section A — Audited financial information for the three years ended 31 December 2008 . . . . . . . . . . . .
Section B — Unaudited financial information for the six months ended 30 June 2009 . . . . . . . . . . . . . .
Section C — Reconciliation of financial information on Moto for the three years and six months ended
30 June 2009 to Randgold’s IFRS accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section D — Accountant’s report on the reconciliation of financial information on Moto . . . . . . . . . . . .
PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section A — Unaudited pro forma financial information of Randgold . . . . . . . . . . . . . . . . . . . . . . . . . .
Section B — Accountant’s report on the pro forma financial information . . . . . . . . . . . . . . . . . . . . . . . .
PART V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section A — Principal terms of the Kibali Acquisition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section B — Principal terms of the Restated JV Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section C — Principal terms of the Protocol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section D — Principal terms of the Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section E — Principal terms of the Technical Services Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART VII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part A — Technical terms used in this document . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part B — Reserves and Resources definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
APPENDIX 1
Mineral Expert’s Report
3
4
5
5
15
15
26
26
26
43
62
63
65
65
77
79
79
81
86
87
88
89
89
96
96
101
101
102
104
TIMETABLE OF PRINCIPAL EVENTS
Latest time and date for receipt of Forms of Proxy . . . . . . . . . . . . . . . . . . . 8:30 a.m. on 14 December 2009
Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8:30 a.m. on 16 December 2009
4
PART I
Letter from the Chairman of Randgold Resources Limited
REG NO. 62686
LA MOTTE CHAMBERS
ST HELIER
JERSEY
JEI IBJ
CHANNEL ISLANDS
www.randgoldresources.com
TEL : +44 1534 735 333
FAX: +44 1534 735 444
30 November 2009
Dear Shareholder
Proposed indirect acquisition of 10 per cent. of the issued share capital of
1.
Introduction
The Board announced on 5 August 2009 that the Company and Moto Goldmines Limited had agreed the terms of a
recommended transaction pursuant to which Subco, a company jointly owned by Randgold and AngloGold Ashanti
Limited, would acquire all of the common shares of Moto. Moto indirectly owns 70 per cent. of a gold mining
project in the Democratic Republic of the Congo through its interest in Kibali Goldmines s.p.r.l.. The remaining 30
per cent. interest in Kibali Goldmines is owned by L’Office des Mines d’Or de Kilo-Moto, which is itself owned by
the Government of the DRC. The Moto Acquisition was completed on 15 October 2009. The Company agreed with
AngloGold to jointly acquire, fund and develop Kibali, and accordingly Moto is now indirectly jointly owned by the
Company and AngloGold.
On 31 October 2009, the Board further announced that, together with AngloGold Ashanti Limited, Randgold had
entered into an agreement for the acquisition of a further 20 per cent. interest in Kibali Goldmines from OKIMO.
The Kibali Acquisition will be effected by Jersey JVCo, a company that is jointly owned by Randgold and
AngloGold and the same vehicle which holds Randgold and AngloGold’s joint venture interest in Moto. Following
completion of the Kibali Acquisition, Randgold and AngloGold will together hold a 90% joint venture interest in
Kibali Goldmines through Jersey JVCo (both directly and indirectly) and OKIMO will hold the remaining 10%
stake.
The total consideration payable to OKIMO under the Kibali Acquisition Agreement is US$113.6 million payable in
cash on completion. Of this sum, an amount, currently expected to be US$4.7 million, will be used by OKIMO to
discharge certain debts owed to Kibali Goldmines, and a further US$10.8 million will be used by OKIMO to pay
certain sums due to OKIMO employees and former employees and a further US$8 million will be placed into a
social fund used to build roads, hospitals, an airfield and other infrastructure works in the region of Kibali.
50 per cent. of the total acquisition cost of US$113.6 million is being funded by AngloGold. Accordingly, the total
amount payable by Randgold will be US$56.8 million.
In addition to the Kibali Acquisition, pursuant to a protocol agreed by Moto and Jersey JVCo with the Government
in relation to the renewal of exploitation permits held by Kibali Goldmines, a payment of US$4.5 million was made
by Moto, 50 per cent. to the Government and 50 per cent. to OKIMO.
The Moto Acquisition did not require the approval of Randgold Shareholders, but the increased stake in Kibali
Goldmines proposed to be acquired pursuant to the Kibali Acquisition, when aggregated with the Moto Acquisition,
does give rise to a requirement to obtain the approval of Randgold Shareholders pursuant to Chapter 10 of the
Listing Rules. Accordingly, this document constitutes a “Class 1” circular for the purposes of the Listing Rules in
connection with the Kibali Acquisition.
The purpose of this document is to provide Shareholders with details of the Kibali Acquisition, to explain why the
Board believes that the Kibali Acquisition is in the best interests of the Company and its Shareholders, and why the
5
PART I - Letter from the Chairman of Randgold Resources Limited
Board unanimously recommends Shareholders to vote in favour of the Resolution to be proposed at the
Extraordinary General Meeting.
The notice of the Extraordinary General Meeting at which the Resolution will be proposed, which is to be held at
8:30 a.m. on 16 December 2009, is set out at the end of this document.
2.
Background to and reasons for the Kibali Acquisition
On 5 August 2009, the Company and Moto announced that they had agreed the terms of a recommended offer by
which Subco would acquire all the common shares of Moto. The Moto Acquisition was completed on 15 October
2009.
Under the Moto Acquisition, Moto Shareholders were entitled to receive either 0.07061 of an Ordinary Share (or,
where applicable, 0.07061 of an ADS) per Moto Share or, alternatively (at the option of each Moto Shareholder),
cash consideration of US$4.47 per Moto Share in respect of all or some of their Moto Shares, subject to an aggregate
maximum cash amount payable to all Moto Shareholders under the Moto Acquisition of approximately
US$244 million. Moto Shareholders elected to receive approximately US$76.9 million pursuant to the Cash
Election which resulted in the issue of a total of 6,628,769 Consideration Shares upon completion of the Moto
Acquisition. Pursuant to the Bid Agreement, on completion of the Moto Acquisition, AngloGold acquired an
indirect 50 per cent. interest in Jersey JVCo. (and as a result an indirect 50 per cent. interest in Moto) in exchange for
funding the payment to Moto Shareholders under the Cash Election and paying to Randgold approximately
US$171 million. Randgold and AngloGold are each responsible for funding 50 per cent. of the development of
Kibali and Randgold will provide technical services to Kibali.
Moto’s key asset is a 70 per cent. interest in Kibali which holds ten exploitation permits over one of the largest
undeveloped gold deposits in Africa. Kibali is a joint venture between Moto and OKIMO, which currently owns the
remaining 30 per cent. interest in Kibali, and covers an area of approximately 1,836 km2 with significant Mineral
Resources and growth potential. Moto completed the Feasibility Study on the Kibali Gold Project in March 2009,
which contemplated an open pit and underground mining operation producing approximately 2.4 million ounces of
gold in the first five years of operation and total Mineral Reserves estimated to be 5.5 million ounces. The Mineral
Resource estimates have been further updated in November 2009, with Indicated Mineral Resources of 13.9 million
ounces and Inferred Mineral Resources of 5.8 million ounces being estimated, and provide a solid platform for
growth. It is the Company’s intention to optimise the feasibility study during the course of 2010.
Randgold has a proven track record of finding, financing, developing and operating mines in West Africa. At present
the Company operates two mines in Mali and has mining projects at various stages of evaluation and development in
Mali, Côte d’Ivoire, Senegal and DRC. Furthermore, the Group has exploration permits and licenses covering
substantial areas in Mali, Côte d’Ivoire, Burkina Faso, Senegal and DRC. The Company’s strategy is to create value
by finding, developing and operating profitable gold mines for all its Shareholders. The Company seeks to discover
significant gold deposits, either from its own phased exploration programmes or the acquisition of early stage to
mature exploration programmes. The Company’s exploration team has made five significant gold discoveries since
its IPO in 1997. The Company actively manages both its portfolio of exploration and development properties and its
risk exposure to any particular geographical area. It also routinely reviews opportunities to acquire development
projects and existing mining operations and companies. The Directors believe that the acquisition of its interest in
Kibali is in accordance with the Company’s objectives and strategy.
Randgold has a history of building strong relationships with the governments in whose countries it operates,
especially in francophone Africa, and has a proven track record of delivering profits and real value to Shareholders
through long term disciplined growth based on maintaining a pipeline of high-quality development projects, strict
cost control and operational excellence. Randgold and AngloGold will jointly implement the Kibali Acquisition as
described below. AngloGold is one of the largest gold producers in the world with meaningful production and
exploration activities in Africa, including exploration activities in the DRC. The agreement to jointly develop Kibali
combines Randgold’s and AngloGold’s regional business knowledge and government relationships with their
extensive gold mining expertise.
The Directors believe that Kibali and the Kibali Acquisition brings the following key attractions:
•
Opportunity to convert Kibali into a profitable mine. The Moto Acquisition and the Kibali Acquisition
together represent an opportunity to convert this large gold deposit into a profitable mine. The Randgold capital
projects team which is responsible for Kibali is the same one which has successfully developed the Morila and
Loulo mines in Mali and is currently building the Company’s Tongon mine in Côte d’Ivoire. The Company
6
believes that the combination of Randgold’s and AngloGold’s regional business knowledge and government
relationships with their extensive gold mining expertise in Africa will assist in unlocking the value of Kibali.
•
In line with Randgold’s growth strategy. Increasing its stake in Kibali pursuant to the Kibali Acquisition is in
line with Randgold’s growth strategy of creating value by developing discoveries rather than paying a premium
for established operations.
•
Greater leverage of Randgold management’s time and expertise. As the provider of technical services to
Kibali, Randgold will dedicate its management’s time and expertise to developing the project into a profitable
mine. Through the acquisition of the additional stake in Kibali, this intellectual capital will be able to be
leveraged over a larger economic interest in the project without any incremental cost to Randgold, increasing
the return for Shareholders;
•
Removes a 20 per cent. non-dilutable interest in Kibali. OKIMO currently holds a 30 per cent. non-dilutable
interest in Kibali through its holding in Kibali Goldmines. Under the current shareholding structure, this would
mean that Randgold and AngloGold fund 100 per cent. of capital required to develop Kibali with only 70 per
cent. of the benefit following repayment of capital funding. The Kibali Acquisition reduces OKIMO’s holding
to a 10 per cent. non-dilutable interest such that Randgold and AngloGold will receive greater economic benefit
from Kibali.
•
Simplifies the historic arrangements between Moto, Kibali Goldmines and OKIMO. Historically, there have
been a number of loans, commitments and agreements in place between Moto, Kibali Goldmines and OKIMO
in relation to Kibali. Under the terms of the Kibali Acquisition, the indebtedness of OKIMO to Kibali
Goldmines will be repaid, the outstanding obligations of OKIMO to its employees and former employees will
be funded through the purchase consideration and the US$3m loan commitment from Kibali Goldmines to
OKIMO in respect of OKIMO’s obligations to its employees will be discharged.
•
Secures operational control of Kibali Goldmines. As part of the Kibali Acquisition, the joint venture
agreement which governs Kibali Goldmines is being amended to reflect the reduced holding of OKIMO in
Kibali. As part of these amendments, Kibali Services Limited, a subsidiary of Jersey JVCo will enter into the
Technical Services Agreement with Kibali Goldmines under which Kibali Services Limited will become the
Technical Services Provider, providing technical services to Kibali Goldmines including through secondment of
Randgold employees in exchange for a fee. Randgold and AngloGold will have increased representation on the
Board of Kibali Goldmines and will nominate the chairman of Kibali Goldmines, thereby enabling them to have
a greater influence over the constitution of the Executive Committee which oversees the day-to-day
management of Kibali Goldmines with the assistance of the Technical Services Provider.
•
Retains support of the Government of the DRC. The Kibali Acquisition represents an opportunity for
Randgold to acquire a further stake in Kibali and provide greater participation for its Shareholders in Kibali’s
success, while retaining the support of the Government of the DRC, which is important to the successful
development of Kibali.
•
Increase of Randgold’s Mineral Reserves and Mineral Resources. Based on the Feasibility Study and the
update to the Mineral Resource estimates in November 2009, the Kibali Acquisition will, in conjunction with
the Moto Acquisition, increase Randgold’s attributable Mineral Reserves by 2.5 Moz, its Indicated Mineral
Resources by 6.3 Moz and its Inferred Mineral Resources by 2.6 Moz.
3.
Information on Kibali
Location
The Kibali Gold Project is a gold exploration property which covers an area of approximately 1,836km2 in the north
east of the Democratic Republic of Congo. The area is situated in a rural setting and lacks substantial infrastructure
development. Remnants of historical mining activities (residential buildings, processing plant, underground mine
shafts and surface workings) are present in various states of repair.
The Kibali Gold Project is located in the Moto greenstone belt, some 560km north east of the city of Kisangani and
150km west of the Ugandan border town of Arua.
7
Permits
Kibali Goldmines has been issued with ten exploitation permits under the DRC mining code in respect of the Kibali
Gold Project, most of which are valid until 2014 and the balance of which are valid until 2015. Under the terms of
the Kibali Acquisition, it is a condition to completion (unless otherwise waived) that the exploitation permits
expiring in 2014 are renewed and extended until 2029 by the Government of the DRC.
Geology and mineralisation
The goldfields at the Kibali Gold Project are located within the Moto greenstone belt, which is comprised of the
Archean Kibalian (Upper and Lower) volcano-sedimentary rocks and ironstone-chert horizons that have been
metamorphosed to greenschist facies. The goldfields at Kibali are cut by regional-scale north, east, northeast and
northwest trending faults and are bounded to the north by the Middle Archaean West Nile granite-gneiss complex
and cut to the south by the Upper Zaire granitic complex. The stratigraphy consists of a volcano-sedimentary
sequence comprising fine-grained sedimentary rocks, several varieties of pyroclastic rocks, basaltic flow rocks,
mafic-intermediate intrusions (dykes and sills) and intermediate-felsic intrusive rocks (stocks, dykes and sills). The
sequence is variably altered from slight (texture benign) to intense (texture destructive) such that in some cases the
protolith rock is unrecognisable. In the Kibali district the majority of gold mineralisation identified to date is
disseminated style, hosted within a sequence of coarse volcaniclastic and sedimentary rocks. The mineralisation is
generally structurally controlled and associated with quartz-carbonate alteration and pyrite.
The majority of mineralisation areas currently being delineated occur within two broad mineralised trends. The first
group lie within a north east trending structural-alteration corridor from the Kibali prospect in the southwest to the
Ndala prospect in the northeast, called the Kibali-Durba-Karagba Trend. The second group lies within a north west
trending zone that stretches from the Pakaka prospect in the southeast to the Mengu Hill prospect in the northwest
and is called the Pakaka-Mengu Trend.
Drilling
Mineral Resource estimates have been completed for the Pakaka, Gorumbwa, Kibali, Mengu Hill, Mengu Village,
Karagba, Chauffeur, Durba, Megi, Marakeke, Kombokolo, Sessenge, Ndala and Pamao mineralisation. The
Mineral Resource estimates are based primarily on the post-2004 drilling by Moto, as very limited records are
available to validate the pre-2004 drilling. The primary focus of the drilling strategy since June 2006 has been to
target the KCD deposit with infill and extension drilling focussed on defining the open pit as well as the
underground potential of the system.
Status of exploration, development and operations
The Kibali Gold Project is in an exploration phase which has focussed on a number of deposits within the property
boundary. Exploration activities are currently targeting mineralisation identified as having potential for extraction
by open pit and underground mining methods. Development on site is limited to buildings, roads and minor service
infrastructure to support exploration activities. Operations are confined to small scale artisanal mining conducted in
various locations throughout the property.
8
Open pit resources
A tabulation of the updated Kibali Gold Project open pit Mineral Resources classified as the in situ resources at a
nominal 0.5 g/t gold cut-off within the US$1,000 per oz whittle pit shell as of September 2009 is shown in Table 1
Table 1 Kibali Gold Project open pit Mineral Resource Tabulation — All Deposits H 0.5 g/t gold —
September 2009
Indicated Mineral Resources
Deposit
Pakaka . . . . . . . . . . . . . . . . . . . . .
Gorumbwa . . . . . . . . . . . . . . . . . .
Kibali . . . . . . . . . . . . . . . . . . . . . .
Mengu Hill . . . . . . . . . . . . . . . . . .
Mengu Village . . . . . . . . . . . . . . . .
KCD . . . . . . . . . . . . . . . . . . . . . . .
Megi . . . . . . . . . . . . . . . . . . . . . . .
Marakeke . . . . . . . . . . . . . . . . . . .
Kombokolo . . . . . . . . . . . . . . . . . .
Sessenge . . . . . . . . . . . . . . . . . . . .
Ndala. . . . . . . . . . . . . . . . . . . . . . .
Pamao . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . .
Tonnes
(Mt)
Grade
g/t
Gold
kOz
*Attrib.
gold
kOz
16.73
2.1
1,122
505
8.92
1.30
37.18
2.6
1.5
2.5
735
61
2,957
331
27
1,331
2.22
14.09
2.1
1.6
150
729
68
328
11.78
92.23
1.3
2.1
499
6,253
225
2,814
Inferred Mineral Resources
Tonnes
(Mt)
Grade
g/t
Gold
kOz
*Attrib.
gold
kOz
7.57
16.77
6.9
2.0
1,687
1,068
759
481
1.78
4.19
1.25
1.8
1.9
1.6
102
260
64
46
117
29
0.27
0.99
32.82
3.7
1.3
3.1
32
43
3,256
14
19
1,465
* Attributable gold (koz) refers to the quantity attributable to Randgold based on Randgold’s (post completion of the Kibali Acquisition) 45%
interest in the Kibali Gold Project.
KCD underground resources
Table 2 summarises the underground Resources resulting from the ankerite-carbonate-silica-albite-pyrite alteration
interpretation for the KCD deposit. The Resources detailed in Table 2 are additional to the open pit local recoverable
Mineral Resources reported for the KCD deposit in Table 1. Ongoing work is presently being conducted to
determine the appropriate modifying factors for formulating reportable underground mining Mineral Reserves.
These modifying factors will be significantly different in nature to those applied to the open pit Mineral Resources
reported in Table 1.
Table 2 KCD deposit — Kibali Gold Project underground Mineral Resource Tabulation H 2.0 g/t gold —
September 2009
Deposit
Tonnes
(Mt)
KCD . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . .
39.26
39.26
*Attrib.
Grade
Gold
gold
g/t
kOz
kOz
6.1
6.1
7,674
7,674
3,453
3,453
Tonnes
(Mt)
18.24
18.24
*Attrib.
Grade
Gold
gold
g/t
kOz
kOz
4.4
4.4
2,569
2,569
1,156
1,156
At this stage of the Kibali Gold Project, a significant proportion of the Mineral Resources remain in the Inferred
Mineral Resource category defined under the 2004 JORC Code (equivalent to the guidelines adopted for the
Canadian National Instrument 43-101) and are therefore not suitable for detailed Mineral Reserve estimation, mine
planning or financial evaluation purposes.
Open pit mining
The Feasibility Study assessment of open pit mining potential at the Kibali Gold Project has determined that the
Kibali Gold Project contains total open pit Probable Mineral Reserves of 30.7Mt at 3.2 g/t Au for 3.2Moz of gold,
based on the Mineral Resources of November 2008. These Mineral Reserves are included in the Mineral Resources
9
estimated for the Kibali Gold Project. The Feasibility Study assessment proposes that the Mineral Reserves are
mined from 6 separate pits over 8 years (including pre-strip period) with treatment of this material concurrent with
this mining period and extending for a further 9 years to give a total open pit mine life of 17 years. A conventional
excavator and truck mining system is proposed. Total material movements reach a steady state of approximately
22Mtpa for 6 years before reducing to match treatment requirements (ranging between 1.6Mtpa and 2.9Mtpa). Life
of mine unit mining operating costs (including stock reclaim) are estimated at US$2.52/ore tonne. Total capital
costs are estimated at US$98.7M for life of mine, comprised of US$19.0M capital development (pre-stripping),
US$2.5M capital works and US$77.0M capital fleet.
Underground mining
The Feasibility Study assessment of underground mining potential at the KCD deposit has determined that the
deposit contains underground Probable Mineral Reserves of 11.6Mt at 6.2 g/t Au for 2.3Moz of gold, based on the
Mineral Resources of November 2008. These Mineral Reserves are included in the Indicated Mineral Resources
estimated for the deposit. The designed underground mine has a mine life of 13 years (including development lead
time) and features a mechanised long hole open stopping method with paste fill to reach a steady state production
level of approximately 1.5Mtpa.
Unit operating cost estimates average US$29.33 /ore tonne over the life of mine. Capital expenditure estimates total
US$122.6M over life of mine consisting of US$49.7M capital development, US$71.7M capital fleet and US$1.1M
capital works. The underground mine designs and Mineral Reserve calculations used a gold price assumption of
US$600/oz.
Metallurgy, processing and infrastructure
The Feasibility Study assessment of metallurgy, processing operations and infrastructure requirements for the
Kibali Gold Project has concluded that a nominal 2.8Mtpa throughput plant processing oxide, transitional and fresh
material from open pit and underground mines of the Kibali Gold Project will produce 4.8Moz of gold over a life of
16 years. Metallurgical testwork of open pit and underground ores yielded predicted recoveries as follows:
Ore Source
KCD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pakaka . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mengu Hill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kombokolo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pamao . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sessenge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Underground . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oxide
% Recovery
Transition
% Recovery
Primary
% Recovery
85.5
88.7
NA
95.6
90.86
90.3
NA
90.1
81.7
89.3
95.9
85.0
75.9
NA
83.9
81.7
71.6
74.6
85.0
80.6
91.3
....
....
....
....
....
....
....
NOTE 1: Oxide master composite recovery was used for Pamao oxide recovery assumptions.
NOTE 2: Advice from geological consultant indicates limited transition ore for Pakaka and Pamao. Primary recoveries were used for transition
material predicted recovery.
NOTE 3: No oxide samples sourced from Mengu Hill. All ore logged as oxide from this deposit is assumed to be treated as transition ore.
The processing plant incorporates conventional crushing and grinding circuits, an oxide CIL circuit, an ultra-fine
grinding and flotation circuit followed by a CIL circuit for transitional and fresh material types, and conventional
elution and gold room facilities. A 28Mt capacity tailings dam will be constructed progressively over the
operation’s life. A key feature of the Kibali Gold Project is the construction of a 2 stage hydro-electric power
station (ultimate generating capacity 20MW) on the Nzoro River with supplemental and back-up power being
sourced from diesel-fired generators installed at the plant site. The process plant and infrastructure requirements
have an estimated pre-commissioning capital cost of US$339M. This estimate excludes capital expenditure
associated with open pit and underground mining activities. Life of mine total capital expenditure for processing
and infrastructure activities is estimated to be US$396.6M. Life of mine operating costs for processing and general
and administration activities is estimated to be US$17.14/tonne. Unit processing costs for oxide and transition/fresh
material types vary over life of mine according to material hardness (throughput determining), power supply
(hydro-electric / diesel components) and labour compliment (expatriate / DRC national).
10
Financial performance
Financial modelling of the exploitation of Probable Mineral Reserves of the Kibali Gold Project as part of the
Feasibility Study (using US$750/oz as the base case gold price) yielded the following results:
Initial Capital Payback Period 3.1 years
Mine Life (total operation life post processing plant commissioning) 16 years
After-tax cashflows for the Kibali Gold Project are estimated to be:
Year
(1)
Cashflow (US$m) . . . . . . . . . (438)
Year
(Cashflow (US$m) . . . . . . . . .
1
134.6
2
127.0
3
160.9
4
159.4
5
188.2
6
121.8
7
119.7
8
112.8
9
93.7
10
60.5
11
52.4
12
43.2
12
34.6
14
17.6
15
14.3
16
32.4
Sensitivity analysis conducted on the Kibali Gold Project’s financial performance for variation in gold price, capital
costs, operating costs and mined grade concluded that the project was most sensitive to gold price. Specific effects
on annual cashflows for all input variations are included in detail.
4.
Principal terms of the Kibali Acquisition
Under the terms of the Kibali Acquisition Agreement, Jersey JVCo has agreed to acquire from OKIMO a further 20
per cent. interest in Kibali Goldmines, which will leave OKIMO with a 10 per cent. interest (non dilutable) in Kibali
Goldmines and Kibali. The total consideration payable to OKIMO under the Kibali Acquisition Agreement is
US$113.6 million payable in cash on Completion. Of this sum, a sum, currently estimated to be US$4.7 million, will
be used by OKIMO to discharge certain debts owed by it to Kibali Goldmines, a further US$10.8 million will be
used by OKIMO to pay certain sums due to OKIMO employees and former employees and a further US$8 million
will be placed into a social fund used to build roads, hospitals, an airfield and other infrastructure works in the region
of Kibali. Fifty per cent. of the total acquisition cost of US$113.6 million and fifty per cent. of the expenses of the
transaction will be funded by AngloGold.
Completion of the Kibali Acquisition is conditional, inter alia, upon:
•
the approval of Randgold Shareholders; and
•
the renewal of those of the Exploitation Permits which are due to expire in 2014 pursuant to the Protocol.
Further details of the Kibali Acquisition Agreement are set out in Part V of this document.
In connection with the Kibali Acquisition, OKIMO has agreed that the joint venture agreement governing the
operation of Kibali Goldmines shall be amended to reflect certain matters in relation to the operation of Kibali
Goldmines, and to reflect OKIMO’s reduced shareholding in Kibali Goldmines. A summary of the main changes
which are reflected in the Restated JV Contract, are set out in Part V of this document.
Pursuant to the Protocol, and in consideration of the payment by Moto of US$4.5 million (which sum is in addition
to the consideration payable for the Sale Shares and which has been paid half to the Government and half to
OKIMO), the Government has agreed with Moto to extend the Exploitation Permits for additional periods of
15 years from their current expiry dates. In addition, the Government of the DRC undertake for such time as Kibali
is in commercial production to renew all of the Exploitation Permits on their respective earliest future renewal dates.
Furthermore, the Government acknowledge that no further payment shall be required to be made in connection with
the Moto Acquisition. The Protocol Consideration was paid by Moto on 13 November 2009. Further details of the
Protocol are set out in Part V of this document.
Pursuant to the Declaration, the Government confirm to Randgold, AngloGold, Moto and Kibali Goldmines the
provisions of the Protocol and provide certain further confirmations including stability provisions under the Mining
Code and the Mining Regulations. Further details of the Declaration are set out in Part V of this document.
5.
Financing of the Kibali Acquisition
Randgold’s 50 per cent. share of the consideration for the Kibali Acquisition will be funded by Randgold from its
available cash resources. Randgold’s share of the aggregate consideration (including the Protocol Consideration) is
11
US$59.05 million. The balance of the consideration is payable by AngloGold, which it has stated will be funded
from its own available cash resources.
6.
Financial information on Kibali
As at 31 December 2008, Kibali Goldmines had gross assets of approximately US$137.2 million. For the year ended
31 December 2008, Kibali Goldmines made a loss before tax of approximately US$21.3 million.
As at 30 June 2009, Moto had gross assets of approximately AUS$297.3 million and as at 31 December 2008, Moto
had gross assets of approximately AUS$260.0 million. For the year ended 31 December 2008, Moto made a loss of
approximately AUS$14.1 million. Prior to April 2009, Moto held 100% of Kibali Goldmines. Moto issued a 30 per
cent. stake in Kibali Goldmines to OKIMO in April 2009 and has since then consolidated 100 per cent. of Kibali
Goldmines in its financial statements and has shown a 30 per cent. non-controlling interest to reflect the minority
interest of OKIMO in Kibali Goldmines.
Historical financial information on Moto is contained in sections A, B and C of Part III of this document.
Shareholders should read the whole of this document and not rely solely on the summarised information set out
above.
7.
Management of Kibali
The Restated JV Contract will make various changes to the management of Kibali. Following Completion, the
administration and management of Kibali Goldmines will be carried out by Kibali Goldmines’ management board
which will be comprised of eight members, six of whom shall be appointed by Border (a wholly-owned indirect
subsidiary of Moto) and two of whom shall be appointed by OKIMO. The Kibali Goldmines Board will appoint a
five man Executive Committee, the members of whom will be employees of Kibali Goldmines who will be recruited
by Kibali Services Limited, the Technical Services Provider to Kibali Goldmines save that OKIMO has the right to
nominate one member of the Executive Committee, who need not be recruited by Kibali Services Limited. In
addition, the Executive Committee shall be chaired by the Chairman of Kibali Goldmines. The business of Kibali
Goldmines will be conducted by the Executive Committee with the assistance of the Technical Services Provider,
through the Technical Services Agreement. AngloGold has agreed that the fees payable pursuant to the Technical
Services Agreement shall be paid for the benefit of Randgold. Further details of the Technical Services Agreement
are set out in Section E of Part V of this document.
8.
Current trading and prospects
The Company remains committed to meeting its annual production target as disclosed at the beginning of 2009 in its
fourth quarter and full year 2008 financial results. The drilling programme at Massawa has been completed and the
Company is on track to finish the pre-feasibility study on this project by the end of 2009. Furthermore, phase 1
drilling and a scoping study at Gounkoto were completed in the third quarter of 2009 and the Company has
commenced a pre-feasibility study on the project, anticipated to be completed by the end of the first quarter of 2010.
Both of these projects represent significant growth opportunities for Randgold.
Randgold is expanding its exploration horizons to encompass the prospective rocks of the Congo Craton. This area,
which ranges from the well known deposits of Tanzania through the east of the DRC and the Central African
Republic to Cameroon, could, the Directors believe, become the next gold belt to deliver multi-million ounce
deposits.
In November 2009, the Company completed the acquisition of a further 5% of the issued share capital of Société des
Mines de Tongon SA, the owner of the Company’s Tongon mine in Côte d’lvoire, for total consideration of US$10
million.
In November 2009, the Company completed the sale of its entire interest in the Kiaka gold project in Burkina Faso
to Volta for an aggregate cash consideration of C$4 million to be paid over a period of 24 months following closing
of the transaction and share consideration of 20 million common shares in Volta which were issued on closing. The
fair value of the consideration to be reflected in Randgold’s income statement for the fourth quarter and year ended
31 December 2009 is expected to be approximately US$10.9 million.
Kibali is currently at feasibility stage. Following Randgold’s acquisition of its interest in Moto, work is ongoing to
review and update the Kibali geological model to integrate all surface and underground mapping and historical data
with drill data for the project. The Company expects to be in a position by January 2010 to give a definite timeline on
12
the development of Kibali. During 2010, Randgold will be looking to optimise the Feasibility Study, including reestimating the project’s Mineral Resources and Mineral Reserves in the light of the updated geological model.
The Company’s financial results are and will be subject to the movement in gold prices. In the past financial year,
the general trend in gold prices has been upwards and this has had a positive impact on revenues. However, it should
be noted that fluctuations in the price of gold remain a significant risk to the Company.
9.
Financial effects of the Kibali Acquisition
Randgold’s proportion of the consideration payable pursuant to the Kibali Acquisition will be funded through its
own cash resources. The Kibali Acquisition will therefore have the effect of reducing the Group’s cash balance.
Since Kibali is at feasibility stage, all costs associated with its development are capitalised and, therefore, there will
be no impact on the earnings of Randgold until commercial production commences.
Although Randgold Shareholder approval is only being sought in relation to the 10 per cent. of Kibali Goldmines
which Randgold proposes to acquire from OKIMO, in consideration of the recent indirect acquisition of 50 per cent.
of Moto by Randgold, pro forma financial information showing the hypothetical effect on the Group if the Moto
Acquisition and the Kibali Acquisition had taken place on 30 September 2009 has been included within this
document in order to give Shareholders a more complete understanding of the combination of the two acquisitions.
A pro forma unaudited net assets statement of Randgold as at 30 September 2009 and unaudited pro forma earnings
statements of Randgold for the year ended 31 December 2008 and the six months ended 30 June 2009 are set out in
Part IV of this document.
Shareholders should be aware that the Company’s results for the nine months ended 30 September 2009, published
on 10 November 2009, do not include the impact of the Moto Acquisition which closed on 15 October 2009.
10.
Risk factors
Shareholders should consider fully the risk factors associated with the Group, Kibali Goldmines and the Kibali
Acquisition. Shareholders’ attention is drawn to the risk factors set out in Part II of this document.
11.
Extraordinary General Meeting
A notice convening an extraordinary general meeting of the Company to be held at 8:30 a.m. on 16 December 2009
at La Motte Chambers, La Motte Street, St Helier, Jersey JE1 1BJ, Channel Islands is set out at the end of this
document. The Form of Proxy to be used in connection with the Extraordinary General Meeting is enclosed. The
purpose of this meeting is to seek Shareholders’ approval for the Kibali Acquisition. This approval is required by the
Listing Rules as a result of its size when taken together with the Moto Acquisition.
12.
Action to be taken
Shareholders will find enclosed the Form of Proxy for use at the Extraordinary General Meeting. Whether or not
Shareholders intend to be present at that meeting, Shareholders are requested to complete the Form of Proxy (in
accordance with the instructions printed thereon) and return it to the Company’s registrars, Computershare Investor
Services (Jersey) Limited, as soon as possible and, in any event, so as to arrive by 8:30 a.m. on 14 December 2009.
Completion and return of a Form of Proxy will not preclude Shareholders from attending that meeting and voting in
person if they so wish.
13.
Further information
Your attention is drawn to the further information contained in Parts II to VII of this document.
Shareholders are advised to read the whole of this document and not to rely solely on the information contained in
this letter.
14.
Financial advice
Your Board has received financial advice from HSBC in relation to the Kibali Acquisition. In providing this advice
to the Board, HSBC has relied on the Board’s commercial assessment of the Kibali Acquisition.
13
15.
Recommendation
Your Board considers the terms of the Kibali Acquisition to be in the best interests of the Company and its
Shareholders taken as a whole. Accordingly, your Board unanimously recommends that Shareholders vote in
favour of the Resolution to be proposed at the Extraordinary General Meeting, as the members of the Board
intend to do in respect of their own beneficial holdings amounting to an aggregate of 780,280 Ordinary
Shares, representing approximately 0.87 per cent. of the Company’s current issued share capital.
Yours faithfully
Philippe Liétard
Chairman
14
PART II
Risk Factors
In addition to the other information included in this document, Shareholders should carefully consider the following
factors (which are set out in no particular order), which individually or in combination could have a material adverse
effect on the Group’s and/or the Enlarged Group’s business, financial condition and results of operations. There may
be additional risks and uncertainties not presently known to the Company, or that the Company currently sees as
immaterial, which may also harm the Group’s and/or the Enlarged Group’s business. If any of the risks or
uncertainties described below or any such additional risks and uncertainties actually occur, the Group’s and/or the
Enlarged Group’s business, results of operations and financial condition could be materially and adversely affected.
In this case, the trading price of the Ordinary Shares and American Depositary Shares could decline and investors
might lose all or part of their investment.
1.
Risks Relating to the Group’s Operations
1.1
The profitability of the Group’s operations, and the cash flows generated by the Group’s operations,
are affected by changes in the market price for gold which in the past has fluctuated widely.
Substantially all of the Group’s revenues and cash flows have come from the sale of gold. Historically, the market
price for gold has fluctuated widely and has been affected by numerous factors, over which the Group has no
control, including:
•
the demand for gold for investment purposes, industrial uses and for use in jewellery;
•
international or regional political and economic trends;
•
the strength of the US dollar, the currency in which gold prices generally are quoted, and of other currencies;
•
market expectations regarding inflation rates;
•
interest rates;
•
speculative activities;
•
actual or expected purchases and sales of gold bullion holdings by central banks, the International Monetary
Fund, or other large gold bullion holders or dealers;
•
hedging activities by gold producers; and
•
the production and cost levels for gold in major gold-producing nations.
If gold prices should fall below and remain below the Company’s cost of production for any sustained period the
Company may experience losses, and if gold prices should fall below the Company’s cash costs of production it may
be forced to curtail or suspend some or all of its mining operations. In addition, the Company would also have to
assess the economic impact of low gold prices on its ability to recover from any losses it may incur during that
period and on its ability to maintain adequate reserves. The Company’s total cash cost per ounce of gold sold was
US$467 in the year ended 31 December 2008, US$356 in the year ended 31 December 2007, and US$296 in the year
ended 31 December 2006. The Company expects that Morila’s cash costs per ounce will rise as the life of the mine
advances as a result of expected declining grade, which will adversely affect the Company’s profitability in the
absence of any mitigating factors. The high grades expected from the underground mining at Loulo will, in the
absence of any other increases, have a positive impact on unit costs.
1.2
The Company’s mining operations may yield less gold under actual production conditions than
indicated by its gold reserve figures, which are estimates based on a number of assumptions,
including assumptions as to mining and recovery factors, production costs and the price of gold.
The Company’s ore reserve estimates are estimates of the mill delivered quantity and grade of gold in the
Company’s deposits and stockpiles. They represent the amount of gold that the Company believes can be mined,
processed and sold at prices sufficient to recover its estimated total cash costs of production, remaining investment
and anticipated additional capital expenditures. The Company’s ore Reserves (including those in relation to Kibali)
are estimated based upon many factors, including:
•
the results of exploratory drilling and an ongoing sampling of the orebodies;
•
past experience with mining properties;
15
PART II - Risk Factors
•
gold price; and
•
operating costs.
Because the Company’s ore reserve estimates are calculated based on current estimates of future production costs
and gold prices, they should not be interpreted as assurances of the economic life of the Company’s gold deposits or
the profitability of its future operations.
Reserve estimates may require revisions based on actual production experience. Further, a sustained decline in the
market price of gold may render the recovery of ore reserves containing relatively lower grades of gold
mineralisation uneconomical and ultimately result in a restatement of Reserves. The failure of the Reserves to
meet the Company’s recovery expectations may have a material adverse effect on the Company’s business, financial
condition and results of operations.
1.3
The profitability of operations and the cash flows generated by these operations are significantly
affected by the fluctuations in the price, cost and supply of inputs.
Fuel, power and consumables, including diesel, steel, chemical reagents, explosives and tyres, form a relatively
large part of the Company’s operating costs. The cost of these consumables is impacted to varying degrees by
fluctuations in the price of oil, exchange rates and a shortage of supplies.
Such fluctuations have a significant impact upon the Company’s operating costs and capital expenditure estimates
and, in the absence of other economic fluctuations, could result in significant changes in the total expenditure
estimates for mining projects, new and existing, and could even render certain projects non-viable.
1.4
Any appreciation of the currencies in which the Company incurs costs against the US dollar could
adversely affect the Company’s results of operations.
While the Company’s revenue is derived from the sale of gold in US dollars, a significant portion of the Company’s
input costs are incurred in currencies other than the dollar, primarily Euro, South African Rand, Communauté
Financière Africaine franc and the Congolese franc. Accordingly, any appreciation in such other currencies could
adversely affect the Company’s results of operations.
1.5
The Company’s results of operations have been adversely affected by increases in fuel prices, and
the Company would be adversely affected by future increases in fuel prices or disruptions in the
supply of fuel.
The Company’s results are significantly affected by the price and availability of fuel, which are in turn affected by a
number of factors beyond the Company’s control. Fuel prices are volatile and increased significantly in 2008. While
prices have decreased significantly in 2009, they remain higher than historical standards. In the year ended
31 December 2008, the cost of fuel and other power generation costs comprised 35 per cent. of the Company’s
operating costs and the annual price increase of the Company’s landed fuel was 38 per cent.
Historically, fuel costs have been subject to wide price fluctuations based on geopolitical factors and supply and
demand. While the Company does not currently anticipate a significant reduction in fuel availability, factors beyond
the Company’s control make it impossible to predict the future availability of fuel. If there are additional outbreaks
of hostilities or other conflicts in oil producing areas or elsewhere, or a reduction in refining capacity (due to
weather events, for example), or governmental limits on the production or sale of fuel, or restrictions on the
transport of fuel, there could be reductions in the supply of fuel and significant increases in the cost of fuel.
The Company is not party to any agreements that protect it against price increases or guarantee the availability of
fuel. Major reductions in the availability of fuel or significant increases in its cost, or a continuation of current high
prices for a significant period of time, would have a material adverse impact on the Company.
1.6
The Company’s business may be adversely affected if the Government of Mali fails to repay Value
Added Tax, or TVA (“TVA”), owing to Morila and Loulo.
The Company’s mining companies operating in Mali are exonerated by their establishment conventions from
paying TVA for the three years following first commercial production. After that, TVA is payable and reimbursable.
TVA is only reclaimable insofar as it is expended in the production of income. A key aspect in TVA recovery is
managing the completion of the Government of Mali’s audit of the taxpayer’s payments, at which time the
Government of Mali recognises a liability.
16
By December 2007, Morila had successfully concluded a reimbursement protocol with the Government of Mali for
all TVA reimbursements it was owed up to June 2005. Morila was unable to conclude a second protocol subsequent
to December 2007, however, and pursuant to its establishment convention, began offsetting TVA reimbursements it
was owed against corporate and other taxes payable by Morila to the Government of Mali. As a result of the offsets,
the TVA owed by the Government of Mali to Morila declined by $8 million between 31 December 2008
($12.3 million) and 30 September 2009 ($4.3 million). Morila is in discussions with the Malian fiscal authorities
in order to ensure that the tax offsets are accurately recorded and recognised, although the Company cannot give
assurances that the Government of Mali will ultimately recognise the tax offsets.
At 31 December 2008, TVA owed by the Government of Mali to Loulo stood at $1.8 million. This amount has
increased by $25.3 million to $27.1 million at 30 September 2009 due to the end of the exoneration period on
8 November 2008.
If Morila and Loulo are unable to recover these funds, or if the tax offsets are not recognised, then their results of
operations and financial position would be adversely affected, as would their ability to pay dividends to their
shareholders. Accordingly, the Company’s business, cash flows and financial condition will be adversely affected if
anticipated dividends are not paid.
1.7
The Company’s business may be adversely affected if the Government of Mali fails to repay fuel
duties owing to Morila and Loulo.
Up to June 2005, Morila was responsible for paying to diesel suppliers the customs duties which were then paid to
the Government of Mali. The Company’s operations at Morila and Loulo could claim reimbursement of these duties
from the Government of Mali on presentation of a certificate from Société Générale de Surveillance. During the
third quarter of 2003, the Government of Mali began to reduce payments to all the mines in Mali due to irregularities
involving certain small exploration companies. The Government of Mali has since given full exoneration from fuel
duties to the mining industry so that fuel duties are no longer payable. However, a portion of previously paid duties
remain outstanding, principally the duties paid for the period June 2005 to December 2005. The Company’s share of
the amounts owing to Morila was $2.1 million on 31 December 2008 and $4 million on 31 December 2007.
Amounts owing to Loulo were $0.7 million on 31 December 2008 and $0.7 million on 31 December 2007. At
30 September 2009, amounts owing to Loulo were $0.7 million. At 30 September 2009, Morila’s outstanding fuel
duties were offset in full against corporate and other taxes payable by the mine.
If Morila and Loulo are unable to recover these amounts, or if the amounts offset are not recognised, then their
results of operations and financial position would be adversely affected, as would their ability to pay dividends to
their shareholders. Accordingly, the Company’s business, cash flows and financial condition will be adversely
affected if anticipated dividends are not paid.
1.8
Certain factors may affect the Company’s ability to support the carrying value of the Company’s
property, plant and equipment, and other assets on its balance sheet.
The Company reviews and tests the carrying amount of its assets on an annual basis when events or changes in
circumstances suggest that the net book value may not be recoverable. If there are indications that impairment may
have occurred, the Company prepares estimates of expected future discounted cash flows for each group of assets.
Assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units)
for purposes of assessing impairment. Expected future cash flows are inherently uncertain, and could materially
change over time. Such cash flows are significantly affected by reserve and production estimates, together with
economic factors such as spot and forward gold prices, discount rates, currency exchange rates, estimates of costs to
produce reserves and future capital expenditures.
During 2008, the Company recorded impairment charges against its auction rate securities, or ARS, which is
described in the following paragraph.
1.9
The Company has invested in debt instruments for which the market has become substantially
illiquid.
The Company has invested in debt instruments for which the market has become substantially illiquid. The
Company had cash and cash equivalents of $520.8 million as of 30 September 2009. In addition, the Company had
available-for-sale financial assets with a carrying value of approximately $32.7 million as of 30 September 2009.
The available-for-sale financial assets consist of auction rate securities. In the third quarter of fiscal year 2007, ARS
17
with a cost value of $49 million failed at auctions due to the sudden and unusual deterioration in the global credit
and capital markets, and have since experienced multiple failed auctions. Consequently, the funds associated with
these investments will not be accessible until a successful auction occurs, a buyer is found outside of the auction
process or the underlying securities have matured.
The Company made provisions against these ARS of $10.35 million in the second half of 2008 and an additional
$5.9 million in the first nine months of 2009, in each case following the deterioration of the underlying credit ratings
of the collateral of certain of the ARS. The trading market for these instruments has become substantially illiquid as
a result of unusual conditions in the credit markets. As these investments have been illiquid for more than twelve
months and there is no certainty that they will become liquid within the next twelve months, the assets have been
reclassified into the non-current section of available-for-sale financial assets to more accurately reflect their nature.
Management estimates the fair value of these investments at each reporting period. Management applies a mark to
model valuation method. Continued uncertainties in the credit and capital markets may result in additional
impairment provisions, which could adversely impact the Company’s financial condition, current asset position and
reported earnings. Furthermore, there can be no assurance that the Company will be successful in its actions against
the investment bank or the individual brokers that it has commenced.
1.10
The Company may not be able to recover certain funds from MDM Ferroman (Pty) Limited.
In August 2004, the Company entered into a fixed lump sum turnkey contract for $63 million for the design, supply,
construction and commissioning of the Loulo processing plant and infrastructure with MDM Ferroman (Pty) Ltd.
At the end of 2005, after making advances and additional payments to MDM totalling $26 million in excess of the
contract, the Company determined that MDM was unable to perform its obligations under the MDM contract, at
which time the Company enforced a contractual remedy which allowed it to act as its own general contractor and to
complete the remaining work on the Loulo project that was required under the MDM contract.
The Company believes that it is entitled to recover certain amounts from MDM, including advances of $12.1 million
(31 December 2007: $12.1 million) included in receivables as at 31 December 2008. Of this latter amount,
$7.0 million is secured by performance bonds and the remainder is secured by various personal guarantees and other
assets. In January 2009, the liquidator declared and paid the first dividend of $0.1 million from the insolvent estate,
leaving an outstanding balance of $12.0 million as at 30 September 2009.
As part of the Company’s efforts to recoup the monies owed to it, MDM was put into liquidation on 1 February
2006. This resulted in a South African Companies Act Section 417 investigation into the business and financial
activities of MDM, its affiliated companies and their directors. The investigation was completed and summons has
been issued against those MDM creditors deemed as preferential creditors. These legal proceedings are continuing
with pleadings having been closed and court dates been set in the South African courts.
The Company’s ability to recover in full the $12.0 million included in receivables is dependent on the amounts
which can be recovered from the performance bonds, personal guarantees and other assets provided as security. Any
shortfall is expected to be recovered from any free residue accruing to the insolvent estate. The aggregate amount
which will ultimately be recovered cannot presently be determined. The financial statements do not reflect any
additional provision that may be required if the $12.0 million cannot be recovered in full. The Company’s results of
operations may be adversely affected if the Company is unable to recover the amounts advanced by it to MDM. Any
part of the $12.0 million included in accounts receivable which cannot in fact be recovered will need to be charged
as an expense. The ultimate outcome of this claim cannot presently be determined and there is significant
uncertainty surrounding the amount that will ultimately be recovered.
1.11
The Company may incur losses or lose opportunities for gains as a result of the Company’s use of
its derivative instruments to protect the Company against low gold prices.
The Company uses derivative instruments to protect the selling price of some of its anticipated gold production at
Loulo. The intended effect of the Company’s derivative transactions is to lock in a fixed sale price for some of the
Company’s future gold production to provide some protection against a subsequent fall in gold prices. No such
protection is in place for the Company’s production at Morila.
Derivative transactions can result in a reduction in revenue if the instrument price is less than the market price at the
time the hedged sales are recognised. Moreover, the Company’s decision to enter into a given instrument is based
upon market assumptions. If these assumptions are not met, significant losses or lost opportunities for significant
gains may result. In all, the use of these instruments may result in significant losses which will prevent the Company
18
from realising the positive impact of any subsequent increase in the price of gold on the portion of production
covered by the instrument.
1.12
The Company’s underground project at Loulo, developing two mines at Yalea and Gara, is subject to
all of the risks associated with underground mining.
Development of the underground mine at Yalea commenced in December 2006 and the first ore was mined in April
2008. These planned mines represent the Company’s entry into the business of underground mining. In connection
with the development of the underground mines, the Company must build the necessary infrastructure, the costs of
which are substantial. The underground mines may experience unexpected problems and delays during their
development and construction. Delays in the commencement of gold production could occur and the development
costs could be larger than expected, which could affect the Company’s results of operations and profitability. Since
the commencement of the underground operations at Yalea, the Company has experienced a number of technical
challenges, principally the availability of the underground fleet, the ability to drill and blast up holes, water control
and ventilation. The development and operation of the underground mine will be negatively impacted should these
issues continue.
The business of underground mining by its nature involves significant risks and hazards. In particular, as the
development commences the operation could be subject to:
•
rockbursts;
•
seismic events;
•
underground fires;
•
cave-ins or falls of ground;
•
discharges of gases or toxic chemicals;
•
flooding;
•
accidents; and
•
other conditions resulting from drilling, blasting and the removal of material from an underground mine.
The Company is at risk of experiencing any and all of these hazards. The occurrence of any of these hazards could
delay the development of the mine, production, increase cash operating costs and result in additional financial
liability for the Company.
1.13
The Company’s success may depend on its social and environmental performance.
The Company’s ability to operate successfully in communities will likely depend on its ability to develop, operate
and close mines in a manner that is consistent with the health, safety and well being of the Company’s employees,
the protection of the environment, and the creation of long-term economic and social opportunities in the
communities in which the Company operates. The Company seeks to promote improvements in health and safety,
environmental performance and community relations. However, the Company’s ability to operate could be
adversely impacted by accidents or events detrimental (or perceived to be detrimental) to the health, safety and
well being of the Company’s employees, the environment or the communities in which it operates.
In July 2009, the Loulo mine experienced some disruption, caused by a small group of disaffected people unable to
secure long term employment at the mine. The disruption resulted in some damage to the tailings pipeline as well as
to some accommodation units and other property. All operations were suspended for 36 hours, following which all
mining and processing operations were restored and operating back at normal capacity. The Company cannot give
assurances that similar events will not happen in the future, or that such events will not adversely affect the
Company’s results of operations and properties.
1.14
Actual cash costs of production, production results and economic returns may differ significantly
from those anticipated by the Company’s feasibility studies and scoping studies for new development
projects, including Tongon.
It can take a number of years from initial feasibility studies of a mining project until development is completed and,
during that time, the economic feasibility of production may change. The economic feasibility of development
projects is based on many factors, including the accuracy of estimated reserves, metallurgical recoveries, capital
19
and operating costs and future gold prices. The capital expenditures and time required to develop new mines or other
projects are considerable, and changes in costs or construction schedules can affect project economics. Thus it is
possible that actual costs and economic returns may differ materially from the Company’s estimates.
In addition, there are a number of uncertainties inherent in the development and construction of any new mine,
including:
•
the availability and timing of necessary environmental and governmental permits;
•
the timing and cost necessary to construct mining and processing facilities, which can be considerable;
•
the availability and cost of skilled labour, power, water and other materials;
•
the accessibility of transportation and other infrastructure, particularly in remote locations; and
•
the availability of funds required in the longer term to finance construction and development activities.
At the Company’s Tongon project in Côte d’Ivoire, the board approved the development of the new mine based on
the strength of a feasibility study. A final draft of the proposed mining convention has been submitted to Côte
d’Ivoire’s Ministry of Mines and Energy and the Company expects to sign the convention during the fourth quarter
of 2009. Construction of the mine commenced at the end of 2008 with first gold production scheduled for the fourth
quarter of 2010. The Company cannot provide any assurance that the project will ultimately result in a new
commercial mining operation, or that a new commercial mining operation will be successful.
1.15
The Company conducts mining, development and exploration activities in countries with developing
economies and are subject to the risks of political and economic instability associated with these
countries.
The Company currently conducts mining, development and exploration activities in countries with developing
economies. These countries and other emerging markets in which the Company may conduct operations have, from
time to time, experienced economic or political instability. It is difficult to predict the future political, social and
economic direction of the countries in which the Company operates, and the impact government decisions may have
on the Company’s business. Any political or economic instability in the countries in which the Company currently
operates could have a material and adverse effect on the Company’s business and results of operations.
The countries of Mali, Senegal, Burkina Faso, DRC and Côte d’Ivoire have, since independence, experienced some
form of political upheaval with varying forms of changes of government taking place. Côte d’Ivoire has experienced
several years of political chaos, including an attempted coup d’état. The political situation in that country is
normalising and national elections are anticipated in the fourth quarter of 2009.
Goods are supplied to the Company’s operations in Mali through Ghana, Burkina Faso and Senegal, which routings
have, to date, functioned satisfactorily. The Company’s operations at Morila have been adversely affected by the
higher transportation costs for diesel that now has to be delivered via Senegal. Any present or future policy changes
in the countries in which the Company operates may in some way have a significant effect on its operations and
interests.
The mining laws of Mali, Côte d’Ivoire, Senegal, Burkina Faso and DRC stipulate that, should an economic
orebody be discovered on a property subject to an exploration permit, a permit that allows processing operations to
be undertaken must be issued to the holder. Legislation in these countries currently provides for the relevant
government to acquire a free ownership interest in any mining project. The requirements of the various governments
as to the foreign ownership and control of mining companies may change in a manner which adversely affects the
Company.
1.16
The Company is subject to varying degrees of political and economic uncertainties associated with
operating in the DRC.
The Company is subject to risks associated with operating Kibali in the DRC. Kibali is located in the north-east
region of the DRC and is subject to various levels of political, economic and other risks and uncertainties associated
with operating in the DRC. Some of these risks include political and economic instability, high rates of inflation,
severely limited infrastructure, lack of law enforcement, labour unrest, and war and civil conflict. In addition, Kibali
is subject to the risks inherent in operating in any foreign jurisdiction including changes in government policy,
restrictions on foreign exchange, changes in taxation policies, and renegotiation or nullification of existing
concessions, licenses, permits and contracts.
20
The DRC is an impoverished country with physical and institutional infrastructure that is in a debilitated condition.
It is in transition from a largely state-controlled economy to one based on free market principles, and from a nondemocratic political system with a centralised ethnic power base to one based on more democratic principles. There
can be no assurance that these changes will be effected or that the achievement of these objectives will not have
material adverse consequences for Kibali.
Any changes in mining or investment policies or shifts in political attitude in the DRC may adversely affect
operations and/or profitability of Kibali. Operations may be affected in varying degrees by government regulations
with respect to, but not limited to, restrictions on production, price controls, export controls, currency remittance,
income taxes, foreign investment, maintenance of claims, environmental legislation, land use, land claims of local
people, water use and mine safety. These changes may impact the profitability and viability of Kibali.
Furthermore, Kibali is located in a remote area of the DRC, which lacks basic infrastructure, including sources of
power, water, housing, food and transport. In order to develop any of the mineral interests, facilities and material
necessary to support operations in the remote locations in which they are situated must be established. The
remoteness of the mineral interests would affect the potential viability of mining operations, as the Company would
also need to establish substantially greater sources of power, water, physical plant and transport infrastructure than
are currently present in the area.
Moreover, the north-east region of the DRC has undergone civil unrest and instability that could have an impact on
political, social or economic conditions in the DRC generally. The impact of unrest and instability on political,
social or economic conditions in the DRC could result in the impairment of the explorations, development and
operations at Kibali.
1.17
Failure to integrate the Moto Acquisition and the Kibali Acquisition (once completed) may adversely
affect the Group’s results of operations or financial condition.
The Moto Acquisition was completed on 15 October 2009, and the Company is currently integrating Moto into the
Group’s businesses. The integration of Moto involves a number of risks, including:
•
the attention of the Group’s management may be diverted away from other business concerns;
•
there may be outstanding or unforeseen legal, regulatory, contractual, labour or other issues arising from the
Moto Acquisition; and
•
the Group may find it difficult to effectively assimilate the respective business and management cultures of the
existing Group and Moto.
If the Group fails to integrate the Moto Acquisition and the Kibali Acquisition on a timely and cost-effective basis,
the higher than expected costs and other difficulties could have an adverse effect upon the results of operations or
financial condition of the Group.
1.18
Under the Company’s joint venture agreements with AngloGold, the Company jointly manages
Morila Limited and Kibali Goldmines and any disputes with AngloGold over the management of
Morila Limited or Kibali Goldmines could adversely affect the Company’s business.
The Company jointly controls Morila Limited and Kibali Goldmines with AngloGold under joint venture
agreements.
Since 15 February 2008, the Company has been responsible for the day-to-day operations of Morila, subject to the
overall management control of the Morila Limited board. Substantially all major management decisions, including
approval of a budget for Morila, must be approved by the Morila Limited board. The Company and AngloGold
retain equal control over the board, with neither party holding a deciding vote. If a dispute arises between the
Company and AngloGold with respect to the management of Morila Limited and the Company is unable to
amicably resolve the dispute, the Company may have to participate in arbitration or other proceeding to resolve the
dispute, which could materially and adversely affect its business.
Under the Technical Services Agreement, Kibali Services Limited, a subsidiary of Jersey JVCo (a company that is
jointly owned by Randgold and AngloGold), will be responsible for the day-to-day operations of Kibali. A number
of major management decisions, including approval of a budget for Kibali, must be approved by the Kibali board.
The Company and AngloGold retain equal control over the Kibali board, with neither party holding a deciding vote.
If a dispute arises between the Company and AngloGold with respect to the management of Kibali and the
21
Company is unable to amicably resolve the dispute, the Company may have to participate in arbitration or other
proceeding to resolve the dispute, which could materially and adversely affect its business.
1.19
The use of mining contractors at certain of the Company’s operations may expose it to delays or
suspensions in mining activities.
Mining contractors are used at Loulo and Morila to mine and deliver ore to processing plants. These mining
contractors rely on third-party vendors to supply them with required mining equipment, many of which have been
adversely affected by the global economic slowdown. Consequently, at these mines, the Company does not own all
of the mining equipment and may face disruption of operations and incur costs and liabilities in the event that any of
the mining contractors at these mines, or any of the vendors that supply them, has financial difficulties, or should
there be a dispute in renegotiating a mining contract, or a delay in replacing an existing contractor.
1.20
The Company may be required in the longer term to seek funding from the global credit and capital
markets to develop its properties, and the recent weaknesses in those markets could adversely affect
the Company’s ability to obtain financing and capital resources required by the business.
The Company requires substantial funding to develop its properties, and may be required to seek funding from the
credit and capital markets to finance these activities. The Company’s ability to obtain outside financing will depend
upon the price of gold and the market’s perception of its future price, and other factors outside of the Company’s
control. The Company may not be able to obtain funding in the longer term on acceptable terms when required, or at
all.
The credit and capital markets experienced significant deterioration in 2008 and 2009, including the failure of
significant and established financial institutions in the US and abroad, and may continue to deteriorate in the future,
all of which may, in the longer term, have an impact on the availability and terms of credit and capital required by
the business. If uncertainties in these markets continue, or these markets deteriorate further, it could have a material
adverse effect on the Company’s ability to raise capital required in the longer term. Failure to raise capital in the
longer term when needed or on reasonable terms may have a material adverse effect on the Company’s business,
financial condition and results of operations.
1.21
The Company may not pay dividends to shareholders in the near future.
The Company paid its third dividend since 2007 to ordinary Shareholders in March 2009. It is the Company’s policy
to pay dividends if profits and funds are available for that purpose. Whether or not funds are available depends on a
variety of factors, including capital expenditures. The Company cannot guarantee that dividends will be paid in the
future.
1.22
If the Company is unable to attract and retain key personnel its business may be harmed.
The Company’s ability to bring additional mineral properties into production and explore its extensive portfolio of
mineral rights will depend, in large part, upon the skills and efforts of a small group of management and technical
personnel, including Mark Bristow, the Company’s Chief Executive Officer. If the Company is not successful in
retaining or attracting highly qualified individuals in key management positions its business may be harmed. The
loss of any of the Company’s key personnel could adversely impact the Company’s ability to execute its business
plan.
1.23
The Company’s insurance coverage may prove inadequate to satisfy future claims against it.
The Company may become subject to liabilities, including liabilities for pollution or other hazards, against which
the Company has not insured adequately or at all, or cannot insure. The Company’s insurance policies contain
exclusions and limitations on coverage. The Company’s current insurance policies provide worldwide indemnity of
£50 million in relation to legal liability incurred as a result of death, injury, disease of persons and/or loss of or
damage to property. Main exclusions under this insurance policy, which relates to the Company’s industry, include
war, nuclear risks, silicosis, asbestosis or other fibrosis of the lungs or diseases of the respiratory system with regard
to employees, and gradual pollution. In addition, the Company’s insurance policies may not continue to be available
at economically acceptable premiums. As a result, in the future the Company’s insurance coverage may not cover
the extent of claims against it.
22
1.24
It may be difficult to affect service of process and enforce legal judgments against the Company or
its affiliates.
The Company is incorporated in Jersey, Channel Islands and a majority of its directors and senior executives are not
residents of the United States. Virtually all of the Company’s assets and the assets of those persons are located
outside the United States. As a result, it may not be possible to effect service of process within the United States
upon those persons or the Company. Furthermore, the United States and Jersey currently do not have a treaty
providing for the reciprocal recognition and enforcement of judgments (other than arbitration awards) in civil and
commercial matters. Consequently, it may not be possible to enforce a final judgment for payment rendered by any
federal or state court in the United States based on civil liability, whether or not predicated solely upon United States
federal securities laws against those persons or the Company.
In order to enforce any judgment rendered by any federal or state court in the United States in Jersey, proceedings
must be initiated by way of common law action before a court of competent jurisdiction in Jersey. The entry of an
enforcement order by a court in Jersey is conditional upon the following:
•
that the court which pronounced the judgment has jurisdiction to entertain the case according to the principles
recognised by Jersey law with reference to the jurisdiction of the foreign courts;
•
that the judgment is final and conclusive — it cannot be altered by the courts which pronounced it;
•
that there is payable pursuant to a judgment a sum of money, not being a sum payable in respect of tax or other
charges of a like nature or in respect of a fine or other penalty;
•
that the judgment has not been prescribed;
•
that the courts of the foreign country have jurisdiction in the circumstances of the case;
•
that the judgment was not obtained by fraud; and
•
that the recognition and enforcement of the judgment is not contrary to public policy in Jersey, including
observance of the rules of natural justice which require that documents in the United States proceeding were
properly served on the defendant and that the defendant was given the right to be heard and represented by
counsel in a free and fair trial before an impartial tribunal.
Furthermore, it is doubtful whether an original action based on United States federal securities laws could be
brought in a Jersey court.
2.
Risks Relating to the Company’s Industry
2.1
The exploration of mineral properties is highly speculative in nature, involves substantial
expenditures, and is frequently unproductive.
The Company must continually seek to replenish its ore reserves depleted by production to maintain production
levels over the long term. Ore reserves can be replaced by expanding known ore bodies or exploring for new
deposits. Exploration for gold is highly speculative in nature. The Company’s future growth and profitability will
depend, in part, on its ability to identify and acquire additional mineral rights, and on the costs and results of its
continued exploration and development programs. Many exploration programs, including some of the Company’s,
do not result in the discovery of mineralisation and any mineralisation discovered may not be of sufficient quantity
or quality to be profitably mined. The Company’s mineral exploration rights may not contain commercially
exploitable reserves of gold. Uncertainties as to the metallurgical recovery of any gold discovered may not warrant
mining on the basis of available technology. The Company’s operations are subject to all of the operating hazards
and risks normally incident to exploring for and developing mineral properties, such as:
•
encountering unusual or unexpected formations;
•
environmental pollution;
•
personal injury and flooding; and
•
decrease in reserves due to a lower gold price.
If the Company discovers a viable deposit, it usually takes several years from the initial phases of exploration until
production is possible. During this time, the economic feasibility of production may change.
23
Moreover, the Company will use the evaluation work of professional geologists, geophysicists, and engineers for
estimates in determining whether to commence or continue mining. These estimates generally rely on scientific and
economic assumptions, which in some instances may not be correct, and could result in the expenditure of
substantial amounts of money on a deposit before it can be determined whether or not the deposit contains
economically recoverable mineralisation. As a result of these uncertainties, the Company may not successfully
acquire additional mineral rights, or identify new proven and probable reserves in sufficient quantities to justify
commercial operations in any of its properties.
If management determines that capitalised costs associated with any of the Company’s gold interests are not likely
to be recovered, the Company would recognise an impairment provision against the amounts capitalised for that
interest. All of these factors may result in losses in relation to amounts spent which are found not to be recoverable.
2.2
Title to the Company’s mineral properties may be challenged, which may prevent or severely curtail
its use of the affected properties.
Title to the Company’s properties may be challenged or impugned, and title insurance is generally not available.
Each sovereign state is the sole authority able to grant mineral property rights, and the Company’s ability to ensure
that it has obtained secure title to individual mineral properties or mining concessions may be severely constrained.
The Company’s mineral properties may be subject to prior unregistered agreements, transfers or claims, and title
may be affected by, among other things, undetected defects. In addition, the Company may be unable to operate its
properties as permitted or to enforce its rights with respect to its properties.
2.3
The Company’s ability to obtain desirable mineral exploration projects in the future may be
adversely affected by competition from other exploration companies.
The Company competes with other mining companies in connection with the search for and acquisition of
properties producing or possessing the potential to produce gold. Existing or future competition in the mining
industry could materially and adversely affect the Company’s prospects for mineral exploration and success in the
future.
2.4
The Company’s operations are subject to extensive governmental and environmental regulations,
which could cause it to incur costs that adversely affect its results of operations.
The Company’s mining facilities and operations are subject to substantial government laws and regulations,
concerning mine safety, land use and environmental protection. The Company must comply with requirements
regarding exploration operations, public safety, employee health and safety, use of explosives, air quality, water
pollution, noxious odour, noise and dust controls, reclamation, solid waste, hazardous waste and wildlife as well as
laws protecting the rights of other property owners and the public.
Any failure on the Company’s part to be in compliance with these laws, regulations, and requirements with respect
to its properties could result in the Company being subject to substantial penalties, fees and expenses, significant
delays in its operations or even the complete shutdown of its operations. The Company provides for estimated
environmental rehabilitation costs when the related environmental disturbance takes place. Estimates of
rehabilitation costs are subject to revision as a result of future changes in regulations and cost estimates. The
costs associated with compliance with government regulations may ultimately be material and adversely affect the
Company’s results of operations and financial condition.
2.5
If the Company’s environmental and other governmental permits are not renewed or additional
conditions are imposed on the Company’s permits, its financial condition and results of operations
may be adversely affected.
Generally, compliance with environmental and other government regulations requires the Company to obtain
permits issued by governmental agencies. Some permits require periodic renewal or review of their conditions. The
Company cannot predict whether it will be able to renew these permits or whether material changes in permit
conditions will be imposed. Non-renewal of a permit may cause the Company to discontinue the operations
requiring the permit, and the imposition of additional conditions on a permit may cause the Company to incur
additional compliance costs, either of which could have a material adverse effect on the Company’s financial
condition and results of operations.
24
2.6
Labour disruptions could have an adverse effect on the Company’s operating results and financial
condition.
The Company’s operations in West Africa are highly unionised, and strikes are legal in the countries in which the
Company operates. Therefore, the Company’s operations are at risk of having work interrupted for indefinite
periods due to industrial action, such as strikes by employee collectives. Should long disruptions take place on the
Company’s operations, the results from its operations and their financial condition could be materially and
adversely affected.
2.7
AIDS poses risks to the Company in terms of productivity and costs.
The incidence of AIDS in Mali, Côte d’Ivoire and DRC, which has been forecast to increase over the next decade,
poses risks to the Company in terms of potentially reduced productivity and increased medical and insurance costs.
The exact extent to which the Company’s workforce is infected is not known at present. The prevalence of AIDS in
the countries in which the Company operates and among its workforce could become significant. Significant
increases in the incidence of AIDS infection and AIDS-related diseases among members of the Company’s
workforce in the future could adversely impact the Company’s operations and financial condition.
3.
Risks Relating to Kibali and the Kibali Acquisition
3.1
Risk factors in common with the Group’s business
In view of the fact that the Company in conjunction with AngloGold already controls Kibali, the Company is
already subject to the risks associated with Kibali and the DRC as disclosed in paragraphs 1 and 2 of this Part II.
3.2
Reduced stake in Kibali held by the Government
On completion of the Kibali Acquisition, the Government stake in Kibali held through OKIMO will reduce from 30
per cent. to 10 per cent. The Government’s support is important in developing Kibali. With a reduced stake in Kibali
there is a risk that OKIMO and the Government will have a reduced interest in developing Kibali.
3.3
Kibali may not perform in line with the Group’s expectations
If the Kibali Acquisition completes and the results and cash flows generated by Kibali are not in line with the
Group’s expectations, a write-down may be required against the increased carrying value of its investment in Kibali.
25
PART III
Financial Information on Moto
Section A — Audited financial information for the three years ended 31 December 2008
Consolidated Balance Sheets
(Expressed in Australian dollars)
Notes
ASSETS
Current Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . .
Accounts receivables . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Joint Venture Receivable . . . . . . . . . . . . . . . . . . . . . .
Capital assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mineral properties . . . . . . . . . . . . . . . . . . . . . . . . . . .
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities . . . . . . . . . .
Loan due to former joint venture partner . . . . . . . . . .
Consolidation payment due to Okimo . . . . . . . . . . . .
Non Current Liabilities
Loan due to former joint venture partner . . . . . . . . . .
SHAREHOLDERS’ EQUITY
Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contributed surplus . . . . . . . . . . . . . . . . . . . . . . . . . .
Deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
3
6
4
5
7
5
7
8
10
9
Dec 31, 2006
Dec 31, 2007
Dec 31, 2008
62,336,081
229,263
—
—
26,122,662
8,913,126
—
98,072
54,689,744
265,714
201,040
194,619
62,565,344
35,133,860
55,351,117
26,667,085
1,003,859
66,511,552
94,182,496
—
1,585,417
137,495,934
139,081,351
—
1,596,624
203,081,577
204,678,201
156,747,840
174,215,211
260,029,318
1,788,052
12,669,454
6,334,727
6,713,288
19,946,260
4,562,564
12,457,863
12,715,021
5,432,657
20,792,233
31,222,112
30,605,541
24,668,446
24,357,644
36,191,518
45,460,679
55,579,756
66,797,059
135,479,418
2,053,152
12,043,193
(38,288,602)
111,287,161
148,128,445
—
20,143,699
(49,636,689)
118,635,455
233,895,395
—
23,112,412
(63,775,548)
193,232,259
156,747,840
174,215,211
260,029,318
PART III - Financial Information on Moto
Consolidated Statements of Operations, Comprehensive Loss and Deficit
Dec 31, 2006
Dec 31, 2007
Dec 31, 2008
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,821,931
2,371,071
1,324,385
Operating Expenses
Employees and consultants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholder and listing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketing and promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange loss/(gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write off of mineral properties and capital assets. . . . . . . . . . . . . . .
1,677,718
393,650
255,840
588,988
881,098
3,407,406
8,377,507
405,036
263,508
—
3,350,351
707,008
298,550
386,974
798,165
(2,022,565)
6,583,228
2,974,833
347,548
298,065
6,636,527
812,191
277,807
513,685
788,293
(3,216,704)
2,968,713
3,075,140
602,434
3,005,158
16,250,751
Loss and comprehensive loss for the period . . . . . . . . . . . . . . . . . 13,428,820
13,722,158
11,351,087
15,463,244
14,138,859
Deficit beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,859,782
Deficit — end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,288,602
Cents
Basic loss per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23.71
Weighted number of shares outstanding . . . . . . . . . . . . . . . . . . . . . . 56,649,524
38,285,602
49,636,689
Cents
18.14
62,574,386
49,636,689
63,775,548
Cents
16.97
83,303,673
27
Consolidated Statements of Cash flows
Cash flows used in operating activities
Loss for the year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Items not affecting cash:
Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchanges variances . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-off of mineral properties . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-off of capital assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest accrued on loan to former joint venture partner . . . . . . . .
Changes in non-cash working capital balances
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sundry receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . .
Dec 31, 2006
Dec 31, 2007
Dec 31, 2008
(13,428,820)
(11,351,087)
(14,138,859)
393,650
8,377,507
—
—
—
405,036
707,008
6,583,228
(5,893,185)
255,488
42,577
2,974,833
812,191
2,968,713
6,328,513
3,005,158
—
2,968,337
—
—
(92,564)
112,405
—
—
(6,457)
42,908
(4,232,786)
(6,644,687)
9,629,457
(23,732,532)
(845,831)
(24,578,363)
(31,575,261)
(1,331,142)
(32,906,403)
(47,424,424)
(972,888)
(48,397,312)
69,798,927
(3,125,995)
3,337,671
—
66,995,976
(3,467,627)
66,672,932
3,337,671
63,528,349
Net increase in cash and cash equivalents. . . . . . . . . . . . . . . . .
Exchange gain on holding foreign currencies . . . . . . . . . . . . . . . .
37,861,783
—
(36,213,419)
—
24,760,494
3,806,588
Cash and cash equivalents — beginning of period . . . . . . . . . .
24,474,298
62,336,081
26,122,662
Cash and cash equivalents — end of period . . . . . . . . . . . . . . .
62,336,081
26,122,662
54,689,744
Cash flows used in investing activities
Expenditures on mineral properties . . . . . . . . . . . . . . . . . . . . . . .
Purchases of capital assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows provided by financing activities
Proceeds from issuances of shares and warrants . . . . . . . . . . . . . .
Share issue cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The accompanying notes are an integral part of these consolidated financial statements.
28
(166,111)
(151,130)
(42,975)
8,027,620
Notes to Consolidated Financial Statements
(Expressed in Australian dollars, unless otherwise stated)
1.
Nature of Operations
Moto and its subsidiaries are engaged in the acquisition, exploration and development of mineral properties located
in the Democratic Republic of Congo. The Company focuses its activities on Kibali located in the north-east of the
DRC.
The business of mining and exploring for minerals involves a high degree of risk and there can be no assurance that
exploration and development programs will result in profitable mining operations. The recoverability of the
carrying value of mineral properties and the Company’s continued existence is dependent upon the preservation of
its interest in the underlying properties, the existence of economically recoverable mineralisation, the ability of the
Company to raise additional financing to complete the exploration and the development of the mineral properties,
the achievement of profitable operations or alternatively upon the Company’s ability to dispose of its interest on an
advantageous basis.
These financial statements have been prepared in accordance with Canadian generally accepted accounting
principles (“GAAP”) applicable to a going concern, which assume continuity of operations and realisation of
assets and settlement of liabilities in the normal course of business. However, the Company is in the exploration and
early development stage and is subject to risks and challenges similar to companies in a comparable stage of
development. As a result of these circumstances, there is substantial doubt as to the appropriateness of the going
concern assumption. There is no assurance that the Company’s funding initiatives will continue to be successful and
these financial statements do not reflect the adjustments to the carrying values that would be necessary were the
going concern assumption inappropriate. These adjustments could be material.
2.
Summary of Significant Accounting Policies
These consolidated financial statements have been prepared in accordance with Canadian GAAP. Summarised
below are the significant accounting policies used in the preparation of these consolidated financial statements.
(a)
Basis of consolidation
The consolidated financial statements incorporate the assets and liabilities of all entities controlled by the Company
and their results for the period since the acquisition date. The effects of all transactions between entities in the
consolidated group are eliminated in full (see note 13 for a list of subsidiaries and their domiciles).
(b)
Use of estimates
The preparation of consolidated financial statements in conformity with Canadian GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the consolidated financial statements and report amounts of revenues
and expenses during the reported period. Such estimates and assumptions affect the carrying value of assets, impact
decisions as to when exploration and development costs should be capitalised or expensed, estimates for asset
retirement obligations and reclamation costs and the methods and rates of amortisation and depletion. Other
significant estimates made by the Company include factors affecting valuations of stock based compensation,
warrants, inventory, mineral properties (including estimated reserves) and income tax accounts. The Company
regularly reviews its estimates and assumptions, however, actual results could differ from these estimates and these
differences could be material.
(c)
Reporting currency
The functional currency of the Group is the Australian Dollar (“$” or “A$”). The Company’s senior management
and principal office operates in Australia. Accordingly, the Company has adopted the Australian Dollar as its
reporting currency.
(d)
Foreign Currency Translation
The monetary assets and liabilities of the Company that are denominated in foreign currencies are translated at the
rate of exchange at the balance sheet date and non-monetary items are translated at historical rates. Revenues and
29
expenses are translated at the average exchange rate for the year. Exchange gains and losses arising on translation
are included in the statement of operations.
The financial statements of the Company’s subsidiaries outside Australia are translated using the temporal method.
Under this method, monetary items are translated at the rate of exchange in effect at the balance sheet date, nonmonetary items are translated at historical rates and revenue and expense items are translated at the exchange rates
prevailing when such items are recognised and are included in operations. Exchange gains and losses arising on
translation are included in the statement of operations.
(e)
Revenue Recognition
Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset.
(f)
Mineral Properties
The Company defers the costs of exploration on existing projects and carries them as assets until production
commences. The amount at which mineral properties and deferred exploration costs are recorded do not necessarily
reflect present or future values. If a project is successful, the related mineral properties and deferred exploration
costs will be amortised over the estimated economic life of the project. If a project is unsuccessful, or if exploration
has ceased because continuation is not economically feasible, the mineral properties and deferred exploration costs
are written off.
(g)
Capital Assets
Equipment is recorded at cost less accumulated amortisation. Amortisation is provided using the straight-line
method, at annual rates varying from 3 to 5 years.
(h)
Income Taxes
The Company follows the liability method of accounting for income taxes. Under this method future tax liabilities
and assets are recognised for the estimated tax consequences attributable to differences between the financial
statement carrying amounts of assets and liabilities and their respective tax bases. Future tax liabilities and assets
are measured using enacted or substantively enacted tax rates. The effect on future tax liabilities and assets of a
change in tax rates is recognised in the period that the change occurs.
(i)
Stock-Based Compensation and Other Stock-Based Payments
The Company records director and employee stock-based compensation and warrant issuances using the fair value
method. Under the fair value method, stock-based payments are measured at the fair value of the equity instruments
issued and are amortised over the vesting period. The offset to stock-based compensation is recorded to contributed
surplus. Contributed surplus is relieved of the fair value of these instruments and transferred to share capital when
exercised by the holders.
The Company uses the Black-Scholes option pricing model to determine the value of all issued options and
warrants. Note 7(f) details the weighted average assumptions used with the Black-Scholes model for determining
the value of the stock-based costs for the stock options and warrants issued in 2008 and 2007.
(j)
Cash and Cash Equivalents
Cash and cash equivalents are comprised of cash on hand and interest bearing deposits that mature within 90 days
from the date of acquisition.
(k)
Inventories
Inventories, which are comprised of fuel for Kibali site equipment, is carried at its laid-down cost.
(l)
Asset Retirement Obligation
As the Group currently has no projects under construction, there is no legal obligation requiring remediation.
However, as the development of any project commences, senior management will assess whether an asset
retirement obligation (“ARO”) liability will arise. At the point where such liability arises, the financial statement
adjustment required will be to increase the project’s property value and related ARO liability by the discounted
30
value of the total liability. Once a property enters production, the Company will be required to record a charge to
earnings each year to accrete the discounted ARO obligation amount to the final expected liability.
(m)
Impairment of Long-lived Assets
Senior management periodically reviews the carrying value of mineral properties and deferred exploration costs to
consider whether there are any conditions that may indicate impairment. Where estimates of future cash flows are
available, a reduction in the carrying value is recorded to the extent the net book value of the investment exceeds the
estimated fair value which is normally the discounted value of future cash flows. Where estimates of future cash
flows are not available and where other conditions suggest impairment, management assesses if carrying value can
be recovered and provides for impairment if so indicated, by reducing the carrying value of the property to its
estimated fair value.
(n)
Loss per Share
Basic loss per share has been calculated using the weighted average number of common shares outstanding during
the year. Diluted loss per share has been calculated reflecting the issuances of warrants and assuming the full
exercise of stock options. Diluted loss per share has not been presented as the factors referred to above are antidilutive.
(o)
Comprehensive Loss
Section 1530 — “Comprehensive Income” introduces the concept of comprehensive income to Canadian GAAP.
Comprehensive income is the change in equity (net assets) of the Company during a reporting period from
transactions and other events and circumstances from non-owner sources. It includes all changes to equity during a
period except those resulting from investments by owners and distributions to owners. Comprehensive income is
comprised of net income for the period and other comprehensive income.
(p)
Financial Instruments — Recognition and Measurement
The Company classifies all financial instruments as either held-to maturity, available-for-sale, held for trading or
loans and receivables. Financial assets held to maturity, loans and receivables and financial liabilities over than
those held for trading, are measured at amortised cost. Available-for-sale instruments are measured at fair value
with unrealised gains and losses recognised in other comprehensive income. Instruments classified as held for
trading are measured at fair value with unrealised gains and losses recognised in the statement of loss. The Company
has classified its cash equivalents and other short-term investments as held for trading which are carried at fair value
with unrealised gains and losses recorded in income.
(q)
Fair Value of Financial Instruments
Canadian generally accepted accounting principles require that the Company disclose information about the fair
value of its financial assets and liabilities. Fair value estimates are made at the balance sheet date, based on relevant
market information and information about the financial instrument. These estimates are subjective in nature and
involve uncertainties in significant matters of judgment and therefore cannot be determined with precision. Changes
in assumptions could significantly affect these estimates. The carrying amounts of cash and cash equivalents,
amounts receivable, and accounts payable and accrued liabilities approximate their fair values since these
instruments have short term maturity dates.
(r)
Hedging
Section 3865 of the CICA Handbook specifies the circumstances under which hedge accounting is permissible and
how hedge accounting may be performed. As at and for the year ended December 31, 2008, the Company had no
hedges in place.
(s)
Changes in Accounting Policies
Effective January 1, 2008, the Company adopted the following standards of the Canadian Institute of Chartered
Accountants’ Handbook (“CICA”):
(i)
Section 1535 — Capital disclosures
31
This section establishes standards for disclosing information about an entity’s capital and how it is managed.
Under this standard, the Company is required to disclose quantitative and qualitative information about its
objectives, policies and processes for managing capital. The Company has included disclosures
recommended by the new Handbook section in note 16 to these consolidated financial statements.
(ii)
Section 3862 — Financial instruments — Disclosures and Section 3863 — Financial Instruments
Presentation
These sections require entities to disclose quantitative and qualitative information that enables users to
evaluate (i) the significance of financial instruments for the Company’s financial performance, and (ii) the
nature and extent of risks arising from financial instruments to which the Company is exposed during the
period and at the balance sheet date, and management’s objectives, policies and procedures for managing
such risks. The Company is required to disclose the measurement bases used, and the criteria used to
determine classification of financial instruments. The Company has included disclosures recommended by
the new Handbook section in note 17 to these consolidated financial statements.
(iii)
Section 1400 — General Standards on Financial Statement Presentation
Effective January 1, 2008, the Company adopted CICA Section 1400, “General Standards on Financial
Statement Presentation”, which was amended to include requirements to assess and disclose a company’s
ability to continue as a going concern.
(t)
Future Changes in Accounting Policies
The CICA has issued new standards, which may affect the financial disclosures and results of operations of future
reporting periods. A summary of these standards is as follows:
(i)
Goodwill and Intangible Assets
Section 3064, Goodwill and intangible assets, establishes revised standards for recognition, measurement,
presentation and disclosure of goodwill and intangible assets. Concurrent with the introduction of this
standard, the CICAwithdrew EIC 27, Revenues and Expenses during the pre-operating period. As a result of
the withdrawal of EIC 27, the Company will no longer be able to defer costs and revenues incurred prior to
commercial production at new mine operations.
The Company is required to adopt these changes effective for interim and annual periods beginning
January 1, 2009 and will adopt the requirements commencing in the quarter ended March 31, 2009. The
Company is considering the impact, if any; these changes will have on its consolidated financial statements.
(ii)
International Financial Reporting Standards (“IFRS”)
In January 2006, the CICA’s Accounting Standards Board (“AcSB”) formally adopted the strategy of
replacing Canadian GAAP with IFRS for Canadian enterprises with public accountability (“PAEs”). The
current conversion timetable calls for financial reporting under IFRS for accounting periods commencing on
or after January 1, 2011. The use of IFRS will be required in 2011 for publicly accountable profit-oriented
enterprises. For these entities, IFRS will be required for interim and annual financial statements relating to
fiscal years beginning on or after January 1, 2011. The Company will be required to have prepared, in time
for its first quarter 2011 filing, comparative financial statements in accordance with IFRS for the three
months ended September 30, 2010.
3.
Accounts receivables
Current Receivables:
GST recoverable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued interest receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share subscription receivable from Company’s Chairman . . . . . . . . .
Sundry receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32
Dec 31, 2006
Dec 31, 2007
Dec 31, 2008
$
$
$
99,145
84,821
—
45,297
47,337
47,555
8,775,481
42,753
23,352
76,805
—
165,557
229,263
8,913,126
265,714
4.
Capital assets
Cost
$
Dec 31, 2006
Dec 31, 2007
Dec 31, 2008
Accumulated
Amortisation
$
Accumulated
Amortisation
$
Accumulated
Amortisation
$
Cost
$
Cost
$
Field equipment . . . . . . . . .
Motor vehicles . . . . . . . . . . 1,013,702
Office equipment . . . . . . . .
67,468
Furniture and fixtures . . . . .
270,777
Buildings . . . . . . . . . . . . . .
144,888
Capital works in progress . .
264,732
(601,728)
(9,506)
(74,178)
(62,142)
(10,154)
1,417,825
510,631
298,394
183,424
489,281
—
(922,413)
(108,854)
(98,013)
(35,588)
(149,270)
—
1,505,214
852,953
378,709
324,992
489,281
234,431
(1,214,484)
(337,584)
(206,692)
(118,438)
(311,758)
—
1,761,567
(757,708)
2,899,555
(1,314,138)
3,785,580
(2,188,956)
Net book value. . . . . . . . . . 1,003,859
5.
1,585,417
1,596,624
Mineral properties
Dec 31, 2006
$
Dec 31, 2007
$
Dec 31, 2008
$
Mineral Properties
Cost — beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,210,024
—
3,210,024
—
3,210,024
—
Cost — end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,210,024
3,210,024
3,210,024
License Consolidation & Renegotiation
Cost — beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenditure incurred during the year . . . . . . . . . . . . . . . . . . . . . .
—
17,574,134
17,574,134
26,320,187
43,894,321
34,291,153
Cost — end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Exploration Expenditures
Cost — beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenditure incurred during the year . . . . . . . . . . . . . . . . . . . . . .
Write-down of Deferred Exploration Expenditure . . . . . . . . . . . . .
17,574,134
43,894,321
78,185,474
22,961,697
22,765,697
—
45,727,394
44,919,682
(255,487)
90,391,589
34,299,648
(3,005,158)
Cost — end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total — end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
45,727,394
66,511,552
90,391,589
137,495,934
121,686,079
203,081,577
66,256,065
255,487
66,511,552
137,495,934
—
137,495,934
203,081,577
—
203,081,577
Represented by:
Kibali . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Since the signing of the November 2006 Protocol, Moto has completed the purchase of Orgaman’s 10 per cent.
interest in Kibali. In July 2008, Moto announced that its wholly owned subsidiary, Kibali Goldmines, had entered
into the Consolidated Lease with Okimo. The Consolidated Lease was registered with the DRC Mining Registry in
early January 2009.
On January 7, 2009 Moto announced that Kibali Goldmines had successfully concluded a series of meetings with
Okimo, which were conducted in the presence of experts appointed by the DRC Minister of Mines. These meetings
led to the partners entering into amendment agreements to reflect the agreed terms and to the registration of the
Consolidated Lease with the DRC Mining Registry. The amendment agreements became effective following
approval by the Okimo board and notification to the Umbrella Authorities.
On March 13, 2009 Moto, its wholly owned subsidiary Border Energy Pty Ltd, Okimo and Kibali Goldmines
entered into the Original JV Contact to regulate the conduct of the joint venture. The Original JV Contact was
effective immediately as Okimo received the requisite approvals from its Umbrella Authorities prior to signing the
agreements. The parties have also agreed to a transfer of the Exploitation Permits covering the Consolidated
Perimeter to Kibali Goldmines. The transfer deeds required to transfer the Exploitation Permits to Kibali Goldmines
have been signed and the parties are awaiting registration with the DRC Mining Registry.
33
The signing of the amendment agreements and the Original JV Contract confirmed that Kibali Goldmines will be
the joint venture company and that Moto had a 70 per cent. equity interest in Kibali and Okimo had a 30 per cent.
non-dilutable equity interest.
The Consolidated Lease, the amendment agreements and the Original JV Contract provide that:
•
The Consolidated Lease amalgamates the various existing leases in respect of Kibali in favour of the
Consolidated Lease issued to Kibali Goldmines. The Consolidated Lease confirms the area of Kibali at
1,836 km2. All the exploration work carried out by the Moto Group falls within the Consolidated Perimeter;
•
The Consolidated Lease has the same term as the Exploitation Permits. The Exploitation Permits have an initial
term that expires in 2014/15 and are then subject to renewal in accordance with the DRC Mining Code, which
permits multiple renewals for a duration of fifteen years;
•
Pursuant to the Original JV Contract, until the commencement of commercial production at Kibali, Kibali
Goldmines will continue paying Okimo a rent of US$350,000 per month. Kibali Goldmines is responsible for
paying the surface rents payable by Okimo under the Exploitation Permits in respect of the Consolidated
Perimeter of approximately US$1.1 million per year;
•
Okimo has agreed that its contribution to the joint venture will include the transfer of those parts of the Exploitation
Permits which relate to the Consolidated Perimeter to Kibali Goldmines for no additional payment. Upon completion
of the transfer, Kibali Goldmines will hold title to the Consolidated Perimeter, and all resources within the
Consolidated Perimeter, directly from the DRC State, rather than as currently by way of lease from Okimo.
6.
Joint Venture Receivable
Dec 31, 2006
Dec 31, 2007
$
$
Dec 31, 2008
$
Non-Current Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,667,085
—
—
Joint Venture Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,667,085
—
—
As noted in Note 5, Mineral Properties, under the November 2006 Protocol the Group assumed the OKIMO Loan.
This transaction was initially accounted for at December 31, 2006, however, due to the uncertainties that existed at
the time the transaction assumed that the principal amount of the loan, US$21,048,330, would remain a receivable
due by Okimo. This resulted in the Joint Venture Receivable of $26,667,085 (US$21,048,330) being recorded as a
non-current asset at December 31, 2006.
Moto agreed to purchase Orgaman’s 10 per cent. interest in Kibali on December 31, 2007 (which completed on
January 31, 2008), and as part of that transaction formalised and signed a Loan Assumption Agreement for the
OKIMO Loan. Under the assumption agreement the liability for the OKIMO Loan was to be transferred in due
course to Moto, with the joint venture then responsible for the repayment of the principal amount (US$21,048,330).
Upon consolidation with effect from 31 December 2009, the joint venture receivable payable to the parent entity,
Moto Goldmines Limited, was eliminated as the joint venture entities (or the DRC entities) were then directly
controlled by the group and are thus consolidated into the accounts of the consolidated group (see note 14).
7.
Loan due to joint venture partner
Dec 31, 2006
Dec 31, 2007
Dec 31, 2008
$
$
$
Current Liability:
Loan due to joint venture partner (Okimo Loan)(i) . . . . . . . . . . . . . . 12,669,454
Loan due to joint venture partner (Borgakim Loan) . . . . . . . . . . . . .
—
12,669,454
11,406,411
8,539,849
19,946,260
12,715,021
—
12,715,021
Non current liability:
Loan due to joint venture partner (Okimo Loan)(i) . . . . . . . . . . . . . . 24,668,446
24,357,644
36,191,518
24,668,446
24,357,644
36,191,518
(i) The Okimo Loan is a mixed currency loan including capitalised interest, incurs interest at 8 per cent. per annum and totals US$31,452,743
plus Euro 1,636,228 at December 31, 2008 (US$29,122,910 and Euro 1,515,026 at December 31, 2007; US$27,675,218 and Euro 1,402,802
at December 31, 2006).
34
This arrangement has been formalised with Orgaman with the signing of the Loan Assumption Agreement as part of
Moto’s purchase of Orgaman’s 10 per cent. interest in Kibali and its DRC subsidiaries. Payments to Orgaman in
respect of the Okimo Loan will be in three tranches:
(i)
US$9.7 million and Euro 0.5 million within seven business days of the Tripartite Agreement becoming
effective;
(ii)
US$9.7 million and Euro 0.5 million on the first anniversary of the Tripartite Agreement becoming
effective; and
(iii)
the balance (including accrued interest) on the second anniversary of the Tripartite Agreement becoming
effective.
The Company has the ability to pay up to 50 per cent of each tranche in Common Shares, subject to receiving
regulatory approval.
The Company pledged 10 per cent. of its shares of Kibali Goldmines as security for this loan. The Company granted
Orgaman the right to purchase, for no additional consideration, 100 per cent. of this subsidiary should Moto
abandon all of its equity in Kibali.
8.
Share capital
(a)
Authorised capital
The Company is authorised to issue an unlimited number of Common Shares.
(b)
Movements in common share capital
The following table shows movements in the share capital of the Company during the year:
Number of shares
$
......................
61,902,587
135,479,418
......................
......................
......................
......................
2,717,874
974,228
21,455
—
8,775,482
3,314,071
23,599
535,875
Balance at December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65,616,144
148,128,445
Issued for cash:
Issue of Common Shares to Orgaman(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issue of Common Shares — Short Form Prospectus (“SFP”)(iii) . . . . . . . . .
Issue of Common Shares — SFP Over Allotment Option(iv) . . . . . . . . . . . .
Costs of Short Form Prospectus & Over Allotment(iii) & (iv) . . . . . . . . . . . .
Costs of Share Form Prospectus & Over Allotment(iii) & (iv) . . . . . . . . . . . .
9,319,211
11,000,000
1,650,000
—
—
Balance at December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
87,585,355
Balance at December 31, 2006 . . . . . . . . . . . . .
Issued for cash:
Placement of 2,717,874 shares at C$2.78(i) . .
Exercise of warrants . . . . . . . . . . . . . . . . . . .
Exercise of stock option . . . . . . . . . . . . . . . .
Value of warrants and options exercised . . . . . .
30,669,762
50,925,926
7,638,889
(3,445,018)
(22,609)
233,895,395
(i)
On December 31, 2007, a Placement of 2,717,874 shares was made to Moto’s chairman, Sir Sam Jonah, at a
price of C$2.78 per share.
(ii)
On January 30, 2008, the Company issued Orgaman 9,319,211 Common Shares in the Company to
complete the purchase agreement for Orgaman’s 10 per cent. interest in Kibali (see note 5).
(iii)
On April 9, 2008, the Company issued 11,000,000 Common Shares in the Company at C$4.35 per share.
The shares were offered in Canada by way of a short-form prospectus and were part of a ’bought’ deal lead
by a syndicate of underwriters.
(iv)
On April 17, 2008, the Company issued 1,650,000 Common Shares in the Company at C$4.35 per share. The
shares were issued pursuant to an ’Over Allotment Option’ granted to the syndicate of underwriters.
35
(c)
Future issues of common shares
On December 31, 2007 (as amended by a letter dated December 4, 2008), the Company entered into a consultancy
agreement with GICC, a DRC-based consultancy group, under which GICC agreed to assist the Group in obtaining
the Consolidated Lease and negotiating government approvals and consents to enable the development of Kibali. If
such agreements and approvals are obtained by March 31, 2009, the Company will pay to GICC US$2 million
within seven business days of successful completion of the agreed upon services plus issue to GICC 1,886,948
Common Shares less such number of Common Share as have a value equal to US$2 million. The value of these
shares shall be based on the volume weighted average price of the Company’s Common Shares on the TSX for the
previous five trading days converted to United States dollars at the noon rate of exchange published by the Bank of
Canada on the last day of the five-day period. If GICC achieves the objectives set out in the agreement and in the
period prior to November 30, 2009 the price of the Company’s Common Shares on the TSX exceeds C$11.92 or
C$15.90, a further 628,982 Common Shares will be issued to GICC on each such share price level being exceeded
as deferred compensation. If there is a change of control of Moto, certain of the shares will be required to be issued
even if the conditions and thresholds have not been met, but the obligation to issue further shares shall lapse. It is
expected that the relevant approvals will be obtained prior to March 31, 2009 and therefore the appropriate number
of Common Shares to be issued on completion will be issued prior to the end of the month.
The Company must issue a further 100,000 Common Shares for every 250,000 ounces of gold identified within the
Agbarabo licence area, to a maximum of a further 800,000 Common Shares.
(d)
Warrants
The following table summarises the movements in warrants.
Dec 31, 2006
Weighted
average
Number of
exercise
warrants
price
Balance at beginning of period
Transactions during the period:
Issued . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . .
Expired. . . . . . . . . . . . . . . .
Balance at end of period . . . . .
Exercisable at end of period . . .
Dec 31, 2007
Weighted
average
Number of
exercise
warrants
price
Dec 31, 2008
Number
of
warrants
Weighted
average
exercise
price
. . . . . . . . . . 13,253,348
A$2.24
3,730,976
A$4.08
500,000
A$8.74
.
.
.
.
.
A$8.31
A$1.78
A$1.40
A$4.08
A$4.08
—
(974,228)
(2,256,748)
500,000
500,000
—
A$3.39
A$3.62
A$8.74
A$8.74
—
—
—
500,000
500,000
—
—
—
A$9.07
A$9.07
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
500,000
(9,928,974)
(93,398)
3,730,976
3,730,976
At December 31, 2008 and December 31, 2007 a total of 500,000 warrants with an exercise price of C$7.65 and
expiring on May 2, 2010 remained outstanding.
(e)
Stock Options
The Company established a stock option plan to provide additional incentive to its directors, officers, employees
and consultants in their effort on behalf of the Company in the conduct of its affairs. The maximum number of
shares which may be issuable pursuant to options granted under the plan shall be a number equal to 15 per cent. of
the number of issued and outstanding Common Shares from time to time. Under the terms of the plan, options vest
as determined by the board of directors, are non-assignable and may be granted for a term not exceeding six years.
The Company has also agreed to issue further stock options to Sam Jonah KBE on the basis that if the Company
makes a material further issuance of shares, the Company will grant stock options at the prevailing market price
expiring 6 years after grant such that the total number of stock options granted to Sam Jonah KBE from the date of
his appointment is 5 per cent. of the total number of Common Shares issued by the Company.
36
The following table summarises the movements in stock options:
Dec 31, 2006
WeightedAverage
Number of
Exercise
Options
Price
Balance at beginning of period . .
Exercised . . . . . . . . . . . . . . . .
Expired/ Cancelled . . . . . . . . .
Granted . . . . . . . . . . . . . . . . .
Balance at end of period. . . . . . .
Exercisable at end of period . . . .
Dec 31, 2007
Dec 31, 2008
Number of
Options
WeightedAverage
Exercise
Price
Number of
Options
WeightedAverage
Exercise
Price
5,240,000
AS$2.73
7,181,455
AS$4.89
9,428,639
AS$4.77
(1,268,545)
3,210,000
7,181,455
5,406,455
AS$1.15
AS$7.21
AS$4.89
AS$4.15
(21,455)
—
2,268,639
9,428,639
8,678,639
AS$1.10
—
AS$3.32
AS$4.77
AS$4.11
—
(50,000)
1,233,461
10,612,100
9,644,792
—
AS$8.97
AS$5.70
AS$4.97
AS$4.92
The following table provides a summary of the weighted average exercise price and weighted average remaining
contractual life for all outstanding options:
At December 31, 2008
Price Ranges
C$2.60 — C$3.90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C$3.91 — C$5.90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C$5.91 — C$8.75 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(f)
Weighted Ave.
Exercise Price
No. Options
Weighted Ave.
Remaining Contractual
Life (years)
C$2.93
C$5.29
C$7.65
6,638,639
2,048,461
1,925,000
3.61
4.41
3.40
C$4.24
10,612,100
3.73
Stock — Based Compensation Costs
The following table summarises the weighted average assumptions used with the Black-Scholes valuation model
for the determination of the stock-based compensation costs for the year ended December 31, 2008, 2007 and 2006:
Dec 31, 2006
Number of options granted. . . . . . . . . . . . . .
Exercise price . . . . . . . . . . . . . . . . . . . . . . .
Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected life (years) . . . . . . . . . . . . . . . . . .
Risk free interest rate. . . . . . . . . . . . . . . . . .
Dividend yield . . . . . . . . . . . . . . . . . . . . . . .
Weighted average grant-date fair value . . . . .
9.
..................
..................
..................
..................
..................
..................
..................
3,210,000
C$6.64
60%
3.3
4.2%
Nil
C$1.90
Dec 31, 2007
2,268,639
C$3.12
67%
6
4.04%
Nil
C$1.69
Dec 31, 2008
1,233,461
C$4.86
68%
6
3.28%
Nil
C$3.02
Contributed surplus
Change in Contributed Surplus results from the following:
Balance — beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfer from warrant reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Warrants and options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dec 31, 2006
Dec 31, 2007
Dec 31, 2008
$
$
$
5,823,781
—
(2,158,095)
8,377,507
Balance — end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,043,193
37
12,043,193
1,530,687
(13,409)
6,583,228
20,143,699
—
—
2,968,713
20,143,699
23,112,412
10.
Warrants
Dec 31, 2006
Dec 31, 2007
Dec 31, 2008
$
$
$
Change in Warrants results from the following:
Balance — beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfer to share capital on exercise of warrants . . . . . . . . . . . . . . . .
Transfer to contributed surplus (expired warrants) . . . . . . . . . . . . . . .
3,043,065
(989,913)
—
Balance — end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,053,152
11.
2,053,152
(522,465)
(1,530,687)
—
—
—
—
—
Segment reporting
During the period the Company operated predominantly in the mining and exploration sector in the Democratic
Republic of Congo. Financial information by geographic area is as follows:
Dec 31, 2006
Dec 31, 2007
Dec 31, 2008
$
$
$
—
—
2,821,931
—
—
2,371,071
817,324
14,191
492,870
2,821,931
2,371,071
1,324,385
. . . . . . . . . . . . . . . . . 10,379,592
.................
2,384,103
.................
460,287
.................
204,838
8,667,654
1,997,617
514,475
171,341
(2,287,190)
8,974,056
7,325,581
126,412
13,428,820
11,351,087
14,138,859
39,819
900,557
63,483
252,183
1,333,234
—
149,188
1,447,436
—
1,003,859
1,585,417
1,596,624
—
—
—
—
255,488
—
—
42,588
—
3,005,158
—
—
Revenues:
Canada. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss (profit)
Canada. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Australia . . . . . . . . . . . . . . . . . . . . . . . . . . .
DRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Africa. . . . . . . . . . . . . . . . . . . . . . . . .
Capital Assets written down value
Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Africa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash items, other than amortisation, charged to net loss in the
year:
Write-off of mineral properties
Australia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-off capital assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Africa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.
Related party transactions
During the year, the Company entered into the following transactions with related parties:
(a)
Paid or accrued $1,421,329 (2007: $1,649,271, 2006: $504,244) for administrative expenses and $288,756
(2007: $369,635, 2006: $678,862) for deferred exploration expenditures in consulting fees & salaries to
directors or companies controlled by directors and officers of the Company.
(b)
Paid or accrued $nil (2007: $6,250, 2006: $60,000) for accounting and general administrative services and
$nil (2007:$28,340, 2006: $23,829) for office rental to companies in which directors and officers of the
Company had beneficial interests.
38
(c)
On December 31, 2007, a placement of 2,717,874 shares was made to the Company’s Chairman. The shares
were issued at a price of C$2.78
As at December 31, 2008 there were related party balances in the amount of $nil (2007: $nil, 2006: $13,530)
included in accounts payable, and $nil (2007:$8,775,481, 2006: $nil) in accounts receivable. The accounts
receivable balance relates to the subscription receivable from the Company’s Chairman.
13.
Income taxes
Dec 31, 2006
$
Dec 31, 2007
$
Dec 31, 2008
$
(4,743,620)
(3,870,721)
(4,821,351)
1,685,830
3,057,790
1,625,840
2,244,881
3,809,020
1,012,331
Income tax benefit attributable to loss for the year . . . . . . . . . . . . . .
—
—
—
(b) Future income tax assets
The potential future income tax benefits arising from tax losses and
temporary differences have not been recognised as an asset . . . . .
7,281,830
8,907,670
12,716,690
(a) Income tax benefit
Prima facie income tax benefit calculated at statutory rates on the
loss for the year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease in income tax benefit due to:
Future income benefit not brought to account . . . . . . . . . . . . . . . . . .
Non-deductible stock based compensation . . . . . . . . . . . . . . . . . . . .
14.
Subsidiary companies
Particulars in relation to subsidiary companies are as follows:
Interest
%
Name (Country of Incorporation)
Parent Entity:
Moto Goldmines Limited (Canada)
Subsidiary companies:
Moto Goldmines Australia Limited (Australia) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Westmount Resources NL (Australia) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Border Energy Pty Ltd (Australia) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Border Energy East Africa Pty Ltd (Uganda) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borgakim Mining s.p.r.l. (DRC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rambi Mining s.p.r.l. (DRC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amani Gold s.p.r.l. (DRC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kibali Gold s.p.r.l. (DRC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gorumbwa Mining s.p.r.l. (DRC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blue Rose s.p.r.l. (DRC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tangold s.p.r.l. (DRC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
..
..
..
..
..
..
..
..
..
..
..
100
100
100
100
100
100
100
100
100
100
100
On December 31, 2007 the Company finalised an agreement with Orgaman, which held shares in each of the DRC
subsidiaries, to purchase these shares. This transaction was completed on January 31, 2008 and as a result on that
date the shareholding of the Company increased from 80 per cent. to 100 per cent.. Refer to note 15 below for further
details of the transaction.
15.
Contingent asset
The Company has an indirect and non-controlling contingent interest in Kilo Goldmines Inc. (“Kilo”), a private
Ontario company with exploration interests in the DRC. The Company’s contingent interest in Kilo arose from an
agreement entered into in November 2006 to transfer the Company’s rights and obligations to several mineral
projects in the north east of the DRC (the “West Kilo Project”) to Kilo. These projects were for properties outside of
Kibali and were previously written off from the Company’s books. The agreement provides that
•
The Company will receive common shares of Kilo upon Kilo completing a “Going Public Transaction” on the
TSX Venture Exchange, whether by an initial public offering, reverse takeover or other similar transaction. The
percentage to be received is currently being negotiated with Kilo.
39
•
The Company has the right to obtain 10 per cent. of the West Kilo Project upon paying US$5 million upon
completion of a bankable feasibility study and if there are measured resources on the West Kilo Project of at
least two million ounces.
•
The Company has the right to nominate one person for appointment or election to the Board of Directors of Kilo.
At the date of this report, the Company is unable to determine a suitable value for its contingent interest in Kilo.
16.
Events subsequent to balance sheet date
The partners have recently signed the Original JV Contract which reflects the agreements that had been previously
reached.
Moto will capitalise approximately US$10 million of existing shareholder loans made to Kibali Goldmines by Moto
through an issue of shares to the shareholders pro-rata to their proposed shareholdings of 70 per cent. and 30 per
cent. in favour of Moto and Okimo, respectively. The balance of the existing shareholder loans to Kibali Goldmines
as well as future shareholder loans will be retained on the books of Kibali Goldmines and shall carry market rate
interest. The market rate will be set at the rate charged on external financings to Kibali Goldmines during the period
when such loans are in place or otherwise 8 per cent. per annum. These loans will be repayable in preference to the
payment of dividends to shareholders, but after paying to Okimo the monthly cash flow referred to below.
As agreed during the review meetings, the Original JV Contract provides for confirmation of the social and
community benefits of Kibali and effective participation of Okimo in the management of Kibali Goldmines. The
board of directors of Kibali Goldmines will consist of five members, two of whom will be appointed by Okimo and
three by Moto, and the chairman of the board will be appointed annually on a rotating basis, with Okimo appointing
the first chairman. Daily management of Kibali Goldmines will be delegated to the executive management. There
will be an executive committee composed of a maximum of five members. Moto shall recommend persons for the
positions of general manager/chief executive officer, chief financial officers and chief operating officer. Okimo
shall recommend persons for the positions of deputy chief executive officer, corporate and social responsibility
officer.
Certain matters (principally amendments to the articles, issues of shares, entering into contracts otherwise than on
an arms’ length basis and changing the description of social projects to be performed in respect of local
communities) require the approval of both shareholders.
Once the transfer of the Exploitation Permits covering the Consolidated Perimeter is registered in the name of
Kibali Goldmines with the DRC Mining Registry the Consolidated Lease will terminate and the pas de porte of
US$4.5 million will be payable, in part to Okimo and in part to the DRC State.
Pursuant to the Restated JV Contract, until the commencement of commercial production at Kibali, Kibali
Goldmines will continue paying Okimo a rent of US$350,000 per month.
Kibali Goldmines has also agreed to make the following additional loans to Okimo to assist it financially:
(a)
Loans totalling some US$7.0 million in accordance with the Revised ATF Contract (described below), to
assist Okimo to redevelop its mining production, which are expected to be advanced over a two year period;
and
(b)
A loan of up to US$3.0 million (of which an advance of US$200,000 has already been paid) to help Okimo
pay arrears due to Okimo employees, including termination payments due to former employees, following
independent review to verify the applicable amounts.
Funding for Kibali Goldmines will be provided by Moto or one of its subsidiary companies to the extent third party
financing is not directly available to Kibali Goldmines. Okimo is not obliged to pledge its shares to secure any
financing nor will Kibali Goldmines be permitted to allow a charge of the Exploitation Permits.
Unless terminated by mutual agreement, the Restated JV Contract will continue for so long as the Exploitation
Permits are held by Kibali Goldmines and shall only be terminable on the non-payment of the rentals or advances
due to Okimo, royalties, surface rights and other amounts due under the DRC Mining Code and certain limited
insolvency events..
40
17.
Capital Management
The Company’s current structure is comprised of shareholder’s equity, short and long-term debt and working
capital. The Company’s objectives when managing its capital is to maintain a conservative capital structure which
will allow the Company to both fund its exploration and development programs and provide financial flexibility to
execute on any strategic opportunities. Achieving this objective requires management to consider the underlying
nature of exploration and development activities, availability of capital, the cost of various capital alternatives and
other factors.
The Company manages its capital structure and makes adjustments according to market conditions to maintain
flexibility while achieving the objectives stated above. To manage the capital structures, the Company may adjust
capital spending, issue new shares, issue new debt or repay existing debt.
There was no change to the Company’s approach to capital management during the period.
The Company’s capital under management includes share capital of $233,895,395 (December 31, 2007:
$148,128,445). Changes in the capital components of shareholders’ equity resulted from the issue of common
shares through a private placement and by way of a short-form prospectus that was part of a ’bought’ deal lead by a
syndicate of underwriters.
In addition, the Company has a short-term loan due to its former joint venture partner, Orgaman, of $12,715,021
(December 31, 2007: $19,946,260) and a long-term loan due to Orgaman of $36,191,518 (December 31, 2007:
$24,357,644). Changes in the short-term loan to Orgaman are the result of the repayment of US$7,486,886
($8,539,849) in January 2008. Other changes to the short-term loan reflect foreign exchange movements resulting
from the translation of the loan that is denominated in a mixture of US dollar and the Euro to the Australian dollar.
Changes in the long-term loan to Orgaman are the result of the accrual of interest at 8 per cent. per annum and the
foreign exchange movements as previously mentioned.
18.
Financial Risk Factors
The Company’s risk exposures and the impact on the Company’s financial instruments are summarised below:
(a)
Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as
they become due. The Company actively manages its liquidity risk through cash, debt and equity
management strategies. Such strategies include continuously monitoring forecasted and actual cash flows
from operating, financing and investing activities, and opportunities to issue additional Company shares or
other forms of equity.
(b)
Credit Risk
Credit risk is the risk of financial loss to the Company is a partner or counterparty to a financial instrument
fails to meet its contractual obligations. Financial instruments which potentially subject the Company to
concentrations of credit risk consist only of cash equivalents. The cash equivalents consist mainly of shortterm money market deposits. The Company has deposited the cash equivalents with reputable financial
institutions, from which management believes the risk of loss to be remote.
(c)
Interest Rate Risk
The Company is not exposed to interest rate risk on its debt as interest on the loans its former joint venture
partner, Orgaman is fixed at a rate of 8.0 per cent. per annum. As such it does not currently hold any financial
instruments that mitigate this risk.
The Company maintains its cash equivalents in short-term money market deposits that are highly liquid and
short-term in nature. As such the Company is subject to fluctuations in variable market interest rates,
however these fluctuations do not have a significant impact on estimated fair values as of December 31,
2008. Future cash flows from interest income on cash and cash equivalents will be affected by interest rate
fluctuations. The Company manages interest rate risk by focusing primarily on the preservation of capital
and liquidity.
For the twelve month period to December 31, 2008, the Company recorded interest revenue of $1,324,385
(2007: $2,371,071).
41
(d)
Foreign Currency Risk
The Company operates internationally and is exposed to risks from changes in foreign currency rates. The
functional currency of the Company is Australian dollars, consequently fluctuations of the Australian dollar
against other currencies, primarily the US dollar, Canadian dollar and the Euro impact the fair value of
financial assets and liabilities and on operating results. Financial assets and liabilities subject to currency
translation risk primarily include US dollar and Canadian dollar denominated cash and cash equivalents,
accrued liabilities in US dollars and the short-term and long-term loans due to its former joint venture
partner, Orgaman that has a mixed currency denomination of the US dollar and Euro.
For the twelve month period to December 31, 2008, the Company had recorded foreign exchange gains on
the translation of cash and cash equivalents of $3,806,588, and foreign exchange losses on the translation of
the short-term and long-term loans due to Orgaman of $2,502,620.
(e)
Commodity Price Risk
The Company’s future profitability and viability of development depends upon the world market price for
gold. Gold has fluctuated widely in recent years. There is no assurance that, even as commercial quantities
of gold may be produced in the future, a profitable market will exist for them. A decline in the market price
of gold may also require the Company to reduce the carrying values of its mineral properties, which could
have a material and adverse effect on the Company’s value. As of December 31, 2008, the Company is not a
gold producer. As a result, commodity price risk may affect the completion of future equity transactions
such as equity offerings and the exercise of stock options and warrants. This may also affect the Company’s
liquidity and its ability to meet its ongoing obligations.
(f)
Mineral Property Risk
The business of mining and exploring for minerals involves a high degree of risk and there can be no
assurance that planned exploration and development programs will result in profitable mining operations.
The recoverability of amounts shown for mineral exploration properties is dependant upon completion of
the acquisition of the mineral property interests, the discovery of economically recoverable reserves,
confirmation of the Company’s interest in the underlying mineral claims, the ability of the Company to
obtain necessary financing to complete the development and future profitable production. Changes in future
conditions could require material write downs of the carrying values of a mineral property. Although the
Company has taken steps to verify title to the properties on which it is conducting exploration and in which it
is acquiring an interest, in accordance with industry standards for the current stage of exploration of such
properties, these procedures do not guarantee the Company’s title. Property title may be subject to
unregistered prior agreements, non-compliance with regulatory requirements, the risk of foreign investment,
increases in taxes and royalties, renegotiation of contracts, currency exchange fluctuations and political
uncertainty.
(g)
Sensitivity Analysis
The sensitivity analysis shown in the notes below may differ materially from actual results.
(i)
Interest rate risk on cash equivalents is minimal as these have fixed interest rates.
(ii)
The Company’s short-term investments consist of short-term guaranteed deposits and equity investments
listed on Canadian exchanges. All amounts are denominated in Canadian dollars. Interest rate risk on shortterm guaranteed deposits is minimal as these have fixed interest rates.
(iii)
Financial instruments denominated in US and Canadian dollars are subject to foreign currency risk. As at
December 31, 2008, had the US and Canadian dollar weakened/strengthened by 10 per cent. against the
Australian dollar with all other variables held constant, the Company’s loss for the year ended December 31,
2008 would have been approximately $979,406 higher/lower as a result of foreign exchange losses/gains on
translation of non-Australian dollar denominated financial instruments. Shareholders’ equity would have
been approximately $979,406 lower/higher had the US and Canadian dollar weakened/strengthened by
10 per cent. as a result of foreign exchange losses/gains on translation of non-Australian dollar denominated
financial instruments.
42
Section B — Unaudited financial information for the six months ended 30 June 2009
Consolidated Balance Sheets (Unaudited)
Jun 30
2009
Dec 31,
2008
55,320,690
379,896
127,205
54,689,744
460,333
201,040
55,827,791
3,292,279
3,603,130
1,290,886
233,316,986
$ 297,331,072
55,351,117
—
—
1,596,624
203,081,577
$260,029,318
3,561,338
12,457,863
12,430,000
—
12,715,021
5,432,657
15,991,338
30,605,541
18,747,835
52,458,472
71,206,307
39,191,518
—
36,191,518
306,042,379
24,517,912
(120,667,339)
240,475
210,133,427
233,895,395
23,112,412
(63,775,548)
—
193,232,259
Assets
Current Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sundry receivables & prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in Kilo Goldmines Limited (note 4) . . . . . . . . . . . . . .
Loan receivable from Okimo (note 5) . . . . . . . . . . . . . . . . . . . . .
Capital assets (note 6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mineral properties (note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.......
.......
.......
.......
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loan due to Orgaman under Assignment Agreement with Orgaman
(note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidation payment due to Okimo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non Current Liabilities
Loan due to Orgaman under Assignment Agreement with Orgaman
(note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-controlling interests (note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholders’ Equity
Share capital (note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contributed surplus (note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated comprehensive income . . . . . . . . . . . . . . . . . . . . . . .
.......
.......
.......
.......
$ 297,331,072
$260,029,318
43
Consolidated Statement of Operations and Deficit (Unaudited)
(Expressed in Australian Dollars)
Jun 30
2009
Jun 30,
2008
Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
303,626
603,562
Other Income (note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,155,043
—
Operating Expenses
Employees and consultants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholder and listing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketing and promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange loss/ (gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss before non-controlling interest, dilution loss and taxes . . .
Non-controlling interest (note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dilution loss (note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Future income tax recoveries (note 4) . . . . . . . . . . . . . . . . . . . . . . . .
Net loss for the period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deficit — beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
5,810,186
555,383
160,027
155,145
676,160
1,460,740
1,889,524
1,399,595
254,080
8,902,171
(1,353,864)
49,456,648
57,004,955
(113,164)
56,891,791
63,775,548
1,806,053
364,217
127,013
385,608
433,305
1,126,205
1,459,830
(387,904)
227,418
4,938,183
—
—
4,938,183
—
4,938,183
49,636,688
Deficit — end of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $120,667,339
$54,574,871
Basic loss per share
— Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— Comprehensive Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
$
$
(0.5941)
(0.5916)
44
(0.0625)
(0.0625)
Consolidated Statement of Comprehensive Income (Loss) and Accumulated Comprehensive Income
(Unaudited)
Jun 30,
2009
Jun 30,
2008
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive (income):
Unrealised gain on available-for-sale Securities . . . . . . . . . . . . . . . . . . . . . . . .
56,891,791
4,938,183
Total comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
56,651,316
4,938,183
Jun 30
2009
Jun 30,
2008
(240,475)
—
Accumulated unrealised gain on available-for-sale Securities (note 4) . . . . . . . . .
(240,475)
—
Accumulated comprehensive (income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(240,475)
—
45
Consolidated Statement of Cash flows (unaudited)
Jun 30
2009
Cash flows in operating activities
Loss for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Items not affecting cash:
Stock based compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-off mineral properties and capital assets . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange variances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest accrued on joint venture loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-controlling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dilution loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Initial gain on investment in Kilo Goldmines . . . . . . . . . . . . . . . . . . . . . . . .
Future income tax recoveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in non-cash working capital balances
(Decrease) in inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Increase)/decrease in sundry receivables . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase/(decrease) in accounts payable and accrued liabilities . . . . . . . . . . .
Cash flows used in investing activities
Expenditures on mineral properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of capital assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidation payment to Okimo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advances made to Okimo under revised Technical and Financial Assistance
Contract and other arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from financing activities
Issue of common shares and warrants for cash (net of issue costs) . . . . . . . . . .
Proceeds from exercise of unlisted Moto stock option . . . . . . . . . . . . . . . . . . .
Repayments to Orgaman under Assignment Agreement . . . . . . . . . . . . . . . . . .
Exchange loss on holding foreign currencies . . . . . . . . . . . . . . . . . . . . . . . . . .
Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents — beginning of period . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents — end of period. . . . . . . . . . . . . . . . . . . . . . . . .
Jun 30,
2008
(56,891,791)
(4,938,183)
1,460,740
555,383
2,988
(2,097,621)
1,889,524
(1,353,864)
49,456,648
(3,155,043)
(113,164)
1,126,205
364,217
—
(3,038,803)
1,360,766
—
—
—
—
(73,835)
17,544
680,411
(9,622,080)
—
(130,666)
(128,106)
(5,384,570)
(31,786,413)
(249,645)
(5,432,657)
(443,097)
(24,374,820)
—
(4,789,256)
—
(42,257,971)
(24,817,917)
62,662,757
161,238
(6,214,963)
56,609,032
63,895,279
—
—
63,895,279
(4,098,035)
630,946
54,689,744
—
33,692,792
26,122,662
$ 55,320,690
$ 59,815,454
46
Notes to Consolidated Financial Statements (unaudited)
(Expressed in Australian Dollars, unless otherwise stated)
Six months ended June 30, 2009
1.
Basis of presentation of interim financial report
Moto and its subsidiaries are engaged in the acquisition, exploration and development of mineral properties in the
Democratic Republic of Congo. Moto focuses its activities on Kibali located in the north-east of the DRC.
The unaudited interim consolidated financial statements have been prepared by the Company in accordance with
Canadian generally accepted accounting principles (“GAAP”). The preparation of financial data is based on
accounting policies and practices consistent with those used in the preparation of the audited annual consolidated
financial statements. The accompanying unaudited consolidated financial statements should be read in conjunction
with the Notes to the Company’s audited consolidated financial statements for the year ended December 31, 2008,
since they do not contain all disclosures required by the Canadian GAAP for annual financial statements. These
unaudited interim consolidated financial statements relect all normal recurring adjustments, which are in the
opinion of management necessary for a fair presentation of the respective interim periods presented.
exploration and development programs will result in profitable mining operations. The recoverability of the
carrying value of mineral properties and the Company’s continued existence is dependant upon the preservation of
its interests in the underlying properties, the existence of economically recoverable mineralisation, the ability of the
Company to raise additional financing to complete the exploration and the development of the mineral properties,
the achievement of profitable operations or alternatively upon the Company’s ability to dispose of its interest on an
advantageous basis.
The financial statements have been prepared using Canadian GAAP applicable to a going concern, which assumes
continuity of operations and realisation of assets and settlement of liabilities in the normal course of business.
However, the Company is in the exploration and early development stage and is subject to risks and challenges
similar to companies in a comparable stage of development. As a result of these circumstances there is substantial
doubt as to the appropriateness of the going concern assumption. There is no assurance that the Company’s funding
initiatives will continue to be successful and these financial statements do not reflect the adjustments to the carrying
value of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary
were the going concern assumption inappropriate. These adjustments could be material.
2.
Summary of Significant Accounting Policies
These consolidated financial statements have been prepared in accordance with Canadian GAAP. Summarised
below are the significant accounting policies used in the preparation of these consolidated financial statements.
(a)
Basis of consolidation
The consolidated financial statements incorporate the assets and liabilities of all entities controlled by the Company
and their results for the period since the acquisition date. The effects of all transactions between entities in the
consolidated group are eliminated in full.
(b)
Use of Estimates
The preparation of consolidated financial statements in conformity with Canadian GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the consolidated financial statements and report amounts of revenues
and expenses during the reported period.
Such estimates and assumptions affect the carrying value of assets, impact decisions as to when exploration and
development costs should be capitalised or expensed, estimates for asset retirement obligations and reclamation
costs and the methods and rates of amortisation and depletion. Other significant estimates made by the Company
include factors affecting valuations of stock based compensation, warrants, inventory, mineral properties (including
estimated reserves) and income tax accounts. The Company regularly reviews its estimates and assumptions,
however, actual results could differ from these estimates and these differences could be material.
47
(c)
Reporting currency
The functional currency of the Group is the Australian Dollar (“$” or “A$”). The Company’s senior management
and principal office operates in Australia. Accordingly, the company has adopted the Australian Dollar as its
reporting currency.
(d)
Foreign Currency Translation
The monetary assets and liabilities of the Company that are denominated in foreign currencies are translated at the
rate of exchange at the balance sheet date and non-monetary items are translated at historical rates. Revenues and
expenses are translated at the average exchange rate for the year. Exchange gains and losses arising on translation
are included in the statement of operations.
The financial statements of the Company’s subsidiaries outside of Australia are translated using the temporal
method. Under this method, monetary items are translated at the rate of exchange in effect at the balance sheet date,
non-monetary items are translated at historical rates and revenue and expense items are translated at the exchange
rates prevailing when such items are recognised and are included in operations. Exchange gains and losses arising
on translation are included in the statement of operations.
(e)
Revenue Recognition
Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset.
(f)
Mineral Properties
The Company defers the costs of exploration on existing projects and carries them as assets until production
commences. The amount at which mineral properties and deferred exploration costs are recorded do not necessarily
reflect present or future values. If a project is successful, the related mineral properties and deferred exploration
costs will be amortised over the estimated economic life of the project. If a project is unsuccessful, or if explorations
has ceased because continuation is not economically feasible, the mineral properties and deferred exploration costs
are written off.
(g)
Capital Assets
Equipment is recorded at cost less accumulated amortisation. Amortisation is provided using the straight-line
method, at annual rates varying from 3 to 5 years.
(h)
Income tax
The Company follows the liability method of accounting for income taxes. Under this method future tax liabilities
and assets are recognised for the estimated tax consequences attributable to differences between the financial
statement carrying amounts of assets and liabilities and their respective tax bases. Future tax liabilities and assets
are measured using enacted or substantively enacted tax rates. The effect on future tax liabilities and assets of a
change in tax rates is recognised in the period that the change occurs.
(i)
Stock-Based Compensation and Other Stock-Based Payments
The Company records director and employee stock-based compensation and warrant issuances using the fair value
method. Under the fair value method, stock-based payments are measured at the fair value of the equity instruments
and are amortised over the vesting period. The offset to stock-based compensation is recorded to contributed
surplus. Contributed surplus is relieved of the fair value of these instruments and transferred to share capital when
exercised by the holders.
The Company uses the Black-Scholes option pricing model to determine the value of all issued options and
warrants.
(j)
Cash and Cash Equivalents
Cash and cash equivalents are comprised of cash on hand and interest bearing deposits that mature within 90 days
from the date of acquisition.
48
(k)
Inventories
Inventories, which are comprised of fuel for Kibali site equipment, is carried at its laid-down cost.
(l)
Asset Retirement Obligation
As the Group currently has no projects under construction, there is no legal obligation requiring remediation.
However, as the development of any project commences, senior management will assess whether an asset
retirement obligation (“ARO”) liability will arise. At the point where such liability arises, the financial statement
adjustment required will be to increase the project’s property value and related ARO liability by the discounted
value of the total liability. Once a property enters production, the Company will be required to record a charge to
earnings each year to accrete the discounted ARO obligation amount to the final expected liability.
(m)
Impairment of Long-Lived Assets
Senior management periodically reviews the carrying value of mineral properties and deferred exploration costs to
consider whether there are any conditions that may indicate impairment. Where estimates of future cash flows are
available, a reduction in the carrying value is recorded to the extent the net book value of the investment exceeds the
estimated fair value which is normally the discounted value of future cash flows. Where estimates of future cash
flows are not available and where other conditions suggest impairment, management assesses if carrying value can
be recovered and provides for impairment if so indicated, by reducing the carrying value of the property to its
estimated fair value.
(n)
Loss per share
Basic loss per share has been calculated using the weighted average number of common shares outstanding during
the year. Diluted loss per share has been calculated reflecting the issuances of warrants and assuming the full
exercise of stock options. Diluted loss per share has not been presented as the factors referred to above are antidilutive.
(o)
Comprehensive Loss
Section 1530 — “Comprehensive Income” introduces the concept of comprehensive income to Canadian GAAP.
Comprehensive income is the change in equity (net assets) of the Company during a reporting period from
transactions and other events and circumstances from non-owner sources. It includes all changes to equity during a
period except those resulting from investments by owners and distributions to owners. Comprehensive income is
comprised of net income for the period and other comprehensive income.
(p)
Financial Instruments
All financial instruments are classified into one of the following five categories: held-for-trading, held-to-maturity,
loans and receivables, available for sale financial assets or other financial liabilities. All financial instruments,
including derivatives, are measured in the balance sheet at fair value except for loans and receivables, held to
maturity investments and other financial liabilities which are measured at amortised cost using the effective interest
method. Subsequent measurement and changes in fair value will depend on their initial classification, as follows:
held-for-trading financial assets are measured at fair value and changes in fair value are recognised in the statement
of operations in the period in which they arise; available-for-sale financial instruments are measured at fair value
with changes in fair value recorded in other comprehensive income until the investment is de-recognised or
impaired at which time the amounts would be recorded in the statement of operations.
Fair value estimates are made at the balance sheet date, based on relevant market information and information about
the financial instrument. These estimates are subjective in nature and involve uncertainties in significant matters of
judgment and therefore cannot be determined with precision. Changes in assumption could significantly affect
these estimates.
49
The Company has made the following classifications:
Cash
Sundry receivables
Investment in Kilo Goldmines Limited
Loan receivable from Okimo
Accounts payable and accrued liabilities
Loan due to Orgaman
Held for trading
Loans and Receivables
Available-for-sale
Loans and receivables
Other liabilities
Other liabilities
Transaction costs are expensed as incurred for financial instruments classified as held for trading. For other
financial instruments, transaction costs are expensed on initial recognition. The Company accounts for regular
purchases and sales of financial assets using trade date accounting.
The investment in Kilo Goldmines Limited is marked-to-market at each reporting period date. Movements in the
market value are recognised in the Statement of Comprehensive Income, net of future income taxes, whilst
exchange gains and losses resulting from the investment are recognised within the Statement of Operations.
(q)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. They arise when the Group provides money, goods or services directly to a debtor with no
intention of selling the receivable. They are included in current assets except for those with maturities greater than
12 months after the balance sheet date which are classified as non-current assets. They are initially recognised at fair
value and subsequently measured at amortised cost less allowance for uncollectible amounts. Collectability and
impairment are assessed on a regular basis.
The loan receivable from Okimo is recorded at its fair value, the calculation of which includes a discount to present
value based upon the expected date of repayment of the loan, estimated to be within year 2016 and the effective
interest rate used to discount, being 12 per cent.. The difference between actual cash payments and fair value of the
Okimo receivable are recognised in mineral properties. Over time, as the expected repayment date is approached the
discount applied unwinds in the form of a finance accretion revenue (which is included within revenue in the
statement of operations). The loan receivables from Okimo are denominated in United States dollars, being the
currency in which the funds were lent and the currency in which the lender, Kibali Goldmines, reports in. As a
result, quarterly foreign exchange movements are recorded on translation to Australian dollars for the purpose of
preparing these financial statements. These foreign exchange movements are reflected in the Statement of
Operations.
(r)
Hedging
Section 3865 of the CICA Handbook specifies the circumstances under which hedge accounting is permissible and
how hedge accounting may be performed. As at and for the quarter ended June 30, 2009, the Company had no
hedges in place.
(s)
General Standards on Financial Statement Presentation
The Canadian Accounting Standards Board (“AcSB”) amended the section 1400, to include requirements for
management to assess an entity’s ability to continue as a going concern and to disclose material uncertainties related
to events or conditions that may cause doubt upon the entity’s ability to continue as a going concern.
(t)
Changes in Accounting Policies
Effective January 1, 2009, the Company adopted the following standards of the Canadian Institute of Chartered
Accountants’ Handbook (“CICA”):
(i)
Goodwill and Intangible Assets
The Canadian Institute of Chartered Accountants (“CICA”) issued a new accounting standard, Handbook
Section 3064, Goodwill and Intangible Assets, which clarifies that costs can be deferred only when they
relate to an item that meets the definition of an asset, and as a result, start-up costs must be expensed as
incurred. The CICA’s Emerging Issues Committee (“EIC”) Abstract No. 27, Revenues and Expenditures
During the Pre-operating Period, is no longer applicable once the Handbook Section 3064 was adopted. This
new standard has no impact on the Company’s financial statements.
50
(u)
Future Changes in Accounting Policies
The CICA has issued new standards, which may affect the financial disclosures and results of operations of
future reporting periods. A summary of these standards is as follows:
(i)
International Financial Reporting Standards (“IFRS”)
In January 2006, the CICA’s Accounting Standards Board (“AcSB”) formally adopted the strategy of
replacing Canadian GAAP with IFRS for Canadian enterprises with public accountability (“PAEs”). The
current conversion timetable calls for financial reporting under IFRS for accounting periods commencing on
or after January 1, 2011. The use of IFRS will be required in 2011 for publicly accountable profit-oriented
enterprises. For these entities, IFRS will be required for interim and annual financial statements relating to
fiscal years beginning on or after January 1, 2011. The Company will be required to have prepared, in time
for its first quarter 2011 filing, comparative financial statements in accordance with IFRS for the three
months ended September 30, 2010.
(ii)
Business Combinations
In January 2009, the CICA issued new accounting standards concerning Business Combinations
(“Section 1582”), Non-controlling Interests (“Section 1602”) and Consolidated Financial Statements
(“Section 1601”), which is based on the IASB’s International Financial Reporting Standard 3, “Business
Combinations”. The new standards replace the existing guidance on business combinations and
consolidated financial statements. The objective of the new standards is to harmonise Canadian accounting
for business combinations with the international and U.S. accounting standards. The new standards are to be
applied prospectively to business combinations for which the acquisition date is on or after the beginning of
the first annual reporting period beginning on or after January 1, 2011, with earlier application permitted.
Assets and liabilities that arose from business combinations whose acquisition dates preceded the
application of the new standards shall not be adjusted upon application of these new standards. The
Non-controlling Interest standard should be applied retrospectively except for certain items.
3.
Other Income
Jun 30, 2009
Initial gain on recognition of investment in Kilo Goldmines Limited
(i)
Jun 30, 2008
..........
3,155,043
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,155,043
—
(i) The issue of common shares of Kilo Goldmines Limited (“Kilo Goldmines”), to the Company, is the result of an agreement entered into in
November 2006 to transfer Moto’s rights and obligations to several mineral projects in the north-east of the DRC to Kilo Goldmines. Pursuant
to this agreement the Company would receive common shares upon Kilo Goldmines completing a “going public transaction” on the TSX
Venture Exchange, in order to maintain a prescribed ownership interest at the time of the transaction. This agreement was revised to include
warrants upon the Issuer determining to include the issuance of warrants in the going public transaction. Pursuant to the Transaction, the
Company acquired ownership of and control over 7,853,353 common shares of the Issuer, making up approximately 20 per cent. of the
39,266,766 common shares of the Issuer that are currently issued and outstanding, on a non-diluted basis, based on information received from
Kilo Goldmines.
4.
Opening Balance
Dec 31, 2008
Initial gain on
recognition of
Investment in Kilo
Goldmines(i)
Mark to market of
available for sale
Financial Assets(ii)
Investment in Kilo
Goldmines . . . . .
—
3,155,043
353,639
(216,403)
3,292,279
Total . . . . . . . . . . .
—
3,155,043
353,639
(216,403)
3,292,279
Foreign exchange
movements(iii)
Closing balance
Jun 30, 2009
(i)
Refer to note 3(i) for details of this transaction.
(ii)
Movements in the market value of Kilo Goldmines’ shares held by the Company. These movements represent unrealised gains, and actual
gains realised should the Company sell it’s shares, may differ due to market volume and volatility. The amount included in the table above
represents the mark to market gain prior to any future income taxes, which the company has determined to be $112,164 based on a
corporate tax rate of 32 per cent. As the Company has available tax losses or pools to offset any future taxes, the income tax liability on the
51
mark to market adjustment of $112,164 has been reduced to zero with a corresponding future income tax recovery recorded in the current
periods net loss.
(iii) As shares held in Kilo Goldmines are denominated in CAD, movements in the Canadian Dollar against the Australia Dollar result in foreign
exchange gains or losses affecting the mark to market value of the investment in Kilo Goldmines.
5.
Loan receivable from Okimo
Opening
Balance
Dec 31, 2008
Expenditure/
Transfers
Present value
discount
recorded
in Mineral
Properties
Finance
accretion/
interest
charge
Foreign
Exchange
Movements
Closing
Balance
Jun 30, 2009
Revised ATF Contract
Payments(i) . . . . . . . . . .
Okimo Employee
Provisions(ii) . . . . . . . . .
Surface Rentals(iii) . . . . . . .
—
1,558,061
(146,209)
36,961
(198,103)
1,250,710
—
—
292,742(iv)
2,938,453
(51,208)
(510,601)
9,893
115,748
(50,951)
(391,656)
200,476
2,151,944
Total . . . . . . . . . . . . . . . . .
—
$(708,018)
$162,602
$(640,710)
$3,603,130
$4,789,256
(i)
All expenditure incurred by Kibali Goldmines (formerly Borgakim Mining s.p.r.l.) under its obligations of the Revised Technical and
Financial Assistance Contract (“Revised ATF Contract”) are provided to Okimo by way of loans. These loans will be reimbursed from
30 percent of the profits generated by Okimo’s own exploration activities and, if such profits should be insufficient, from the dividends that
Okimo will receive from Kibali Goldmines in respect of Kibali. Interest is accrued at the rate of 8 per cent. per annum, until financing is in
place for Kibali at which time the interest rate applicable to Kibali financing will be applied.
(ii)
Kibali Goldmines is obligated to provide a loan to Okimo to fund arrears due to Okimo employees, including termination costs, up to
US$3.0 million. This loan will be repaid by Okimo through its share of dividends from the joint venture for Kibali. The initial advance of
US$200,000 (see note 5(iv) below) will not begin to accrue interest until March 9, 2010 at which point it will accrue interest at the rate of 8
per cent. per annum, until financing is in place for Kibali. At this point Kibali financing rate will be applied to this receivable.
(iii) Kibali Goldmines has advanced US$2.0 million to Okimo to cover Okimo’s share of the outstanding historical surface rentals owing on the
exploitation permits that cover part of Kibali. This advance is expected to be repaid by Okimo through its share of dividends from the joint
venture for Kibali. This advance will not begin to accrue interest until March 9, 2010 at which point it will accrue interest at the rate of 9 per
cent. per annum, until financing is in place for Kibali. At this point Kibali financing rate will be applied to this receivable
(iv)
6.
During the 2008 financial year Okimo was advanced US$200,000 by Kibali Goldmines for the Okimo Employee Provisions Obligation as
noted above at point (ii). This amount was initially treated as an investment cost and capitalised as part of deferred exploration
expenditures (see note 7). Subsequent to the year end, this amount has been re-classified as a receivable due by Okimo.
Capital Assets
June 30, 2009
Field Equipment . . . . . . . . . . . . .
Motor Vehicles . . . . . . . . . . . . . .
Office Equipment . . . . . . . . . . . .
Furniture and fixtures . . . . . . . . .
Lab equipment(i) . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . .
Capital works in progress . . . . . .
Cost
........................
........................
........................
........................
........................
........................
........................
December 31, 2008
Field Equipment . . . . . . . . . . . . .
Motor Vehicles . . . . . . . . . . . . . .
Office Equipment . . . . . . . . . . . .
Furniture and fixtures . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . .
Capital works in progress(i) . . . . .
52
Net book value
1,493,028
941,337
413,471
326,274
246,617
489,281
70,838
(1,317,357)
(493,317)
(266,025)
(171,931)
(49,142)
(392,188)
—
175,671
448,020
147,446
154,343
197,475
97,093
70,838
$3,980,846
$(2,689,960)
$1,290,886
Cost
........................
........................
........................
........................
........................
........................
Accumulated
depreciation
Accumulated
depreciation
Net book value
1,505,214
852,953
378,709
324,992
489,281
234,431
(1,214,484)
(337,584)
(206,692)
(118,438)
(311,758)
—
290,730
515,369
172,017
206,554
177,523
234,431
$3,785,580
$(2,188,956)
$1,596,624
(i) Items held in capital works in progress as at 31 December 2008 were completed during the March quarter and were transferred to Lab
Equipment. These assets are now being depreciated over their useful lives
7.
Mineral properties
Jun 30, 2009
Dec 31, 2008
3,210,024
—
3,210,024
3,210,024
—
$ 3,210,024
78,185,474
9,993,829
43,894,321
34,291,153
Costs — end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Exploration of period
Cost — beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenditure incurred during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-down of deferred exploration expenditures . . . . . . . . . . . . . . . . . . . . . .
Transfer(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 88,179,303
$ 78,185,474
Cost — end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total — end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$141,927,659
$233,316,986
Mineral Properties
Acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost — end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
License Consolidation & Renegotiation
Expenditure incurred during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
121,686,079
20,534,322
—
(292,742)
90,391,589
34,299,648
(3,005,158)
—
$121,686,079
$203,081,577
(i) Transfer of an advance of US$200,000 made on the obligation of Kibali Goldmines to provide loans to Okimo for the payment of employee
provisions during the 2008 financial year, previously recorded as an investment cost in deferred exploration expenditures. Refer to Note 5.
Kibali
The ultimate recoupment of the above deferred expenditures is dependent on the successful development and
commercial exploitation or sale of the respective areas. On January 7, 2009 Moto announced the successful
completion of a series of meetings with Okimo, which were conducted in the presence of experts appointed by the
DRC Minister of Mines to conclude the work of the DRC Mining Contracts Review in relation to Kibali. These
meetings led to the partners entering into amendment agreements to reflect the agreed terms and to the registration
of the Consolidated Lease with the DRC Mining Registry. The Amendment Agreements became effective following
approval by the Okimo Board, notification to the Umbrella Authorities and specific approval from the Minister of
Mines. Separately, the DRC Prime Minster has also confirmed that the Council of Ministers has examined the report
of the Minister of Mines on the DRC Mining Contracts Review and has approved the continuance of the Okimo/
Moto/Kibali Goldmines partnership.
On March 13, 2009 Moto announced the signing of the Original JV Contract between Moto, Border Energy Pty Ltd,
Okimo and Kibali Goldmines. The Original JV Contract was effective immediately as Okimo had previously
received the requisite approvals from its Umbrella Authorities.
The Original JV Contract confirms Kibali Goldmines as the joint venture company carrying out Kibali, owned as to
a 70 per cent. equity interest by Moto and as to a 30 per cent. non-dilutable equity interest by Okimo. The issuance to
Okimo of its 30 per cent. equity interest in Kibali Goldmines is, in part, as consideration for the transfer of the ten
Exploitation Permits to the joint venture company for no additional payment and the shares have now been officially
issued to Okimo.
On May 28, 2009, the Company announced that the transfer of the Exploitation Permits from Okimo to Kibali
Goldmines had been completed. During the registration process, the project area was revised from 2,143 carrés to
2,161 carrés (approximately 1,836 km2) to take into account the requirement for the transfer of whole carrés as
required by the DRC Mining Code. The Exploitation Permits are now held directly by and for the benefit of Kibali
Goldmines. Resulting from the transfer of the Exploitation Permits, the payment of the US$4.5 million pas de porte
was made, in part to the DRC Government and in part to Okimo.
53
The pas de porte of US$4.5 million was payable on the registration of the Exploitation Permits covering the
Consolidated Perimeter in the name of Kibali Goldmines with the DRC Mining Registry which occurred in
May 2009. This was paid in part to Okimo and in part to the DRC state.
Pursuant to the Original JV Contract, until the commencement of commercial production at Kibali, Kibali
Goldmines will continue paying Okimo a rent of US$350,000 per month.
Funding for Kibali Goldmines will be provided by Moto or one of its subsidiary companies to the extent third party
financing is not directly available to Kibali Goldmines. Okimo is not obliged to pledge its shares to secure any
financing nor will Kibali Goldmines be permitted to allow a charge of the Exploitation Permits.
Unless terminated by mutual agreement, the Original JV Contract will continue for so long as the Exploitation
Permits are held by Kibali Goldmines and shall only be terminable on the non-payment of the rentals or advances
due to Okimo, royalties, surface rights and other amounts due under the DRC Mining Code and certain limited
insolvency events.
8.
Loan Due under Assignment Agreement with Orgaman
Jun 30, 2009
Current Liability:
Loan due under Assignment Agreement with Orgaman(i) . . . . . . . . . . . . . . . . . .
Non Current Liability:
Loan due under Assignment Agreement with Orgaman(i) . . . . . . . . . . . . . . . . . .
Dec 31, 2008
12,430,000
12,715,021
$12,430,000
$12,715,021
18,747,835
36,191,518
$18,747,835
$36,191,518
(i) The loan incurs interest at 8 percent per annum and totals US$25,083,116 at June 30, 2009 (US$31,452,743 and Euro 1,636,228 at
December 31, 2008).
The final assignment of the loan (formerly referred to as the Okimo Loan) was formalised between Moto, Orgaman,
Kibali Goldmines and Okimo with the signing of the Tripartite Agreement on June 26, 2009. The Tripartite
agreement agreed to convert the Euro portion of the loan to United States dollars based on an agreed rate of
exchange.
The agreements set out the instalment terms for the loan, which are to be in three tranches, each comprising
100 percent in cash or at the Company’s election up to 50 percent in Common Shares. The first tranche was paid
upon signing of the Tripartite Agreement and the Company elected to pay 50 per cent. in Common Shares. The
remaining two tranches are to be paid as set out below:
(i)
US$10 million on the first anniversary of the effective date of the assignment, being 29 June 2010;
(ii)
the balance (including accrued interest) on the second anniversary of the effective date of the assignment,
being 29 June 2011.
Moto pledged 10 per cent. of its shares of the Company’s subsidiary, Border Energy Pty Ltd, as security for this loan.
The Company granted Orgaman the right to purchase, for no additional consideration, 100 percent of this subsidiary
should Moto abandon all of its equity in Kibali. As a consequence of the Tripartite Agreement being executed, the
charge granted by Moto to Orgaman over 10 per cent. of Moto’s shares in Kibali Goldmines has been discharged.
54
9.
Share capital
(a)
Authorised:
The Company is authorised to issue an unlimited number of common shares without par value.
(b)
Issued and outstanding
Number of
Shares
Amount
.......
87,585,355
233,895,395
.......
981,193
3,298,566
.......
.......
.......
.......
20,539,000
1,300,539
50,000
—
62,662,757
5,971,790
158,631
55,240
Balance, June 30, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,456,087
$306,042,379
Balance, December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issued during the March 2009 quarter:
Issue of Common Shares to Consultant (GICC)(i) . . . . . . . . . . . .
Issued during the June 2009 Quarter:
Issue of Common Shares bought deal(ii) . . . . . . . . . . . . . . . . . . .
Issue of Common Shares to Orgaman(iii) . . . . . . . . . . . . . . . . . . .
Exercise of unlisted Moto stock options(iv) . . . . . . . . . . . . . . . . .
Transfer of fair value of common share options exercised(v) . . . .
Shares on exercise for warrants and stock options:
(i)
On March 31, 2009 the Company issued Generale Industrielle et Commerciale au Congo (“GICC”) 981,193
Common Shares in the Company as detailed in the news release of March 31, 2009. This was a non-cash
transaction and resulted in a corresponding charge to mineral properties. The transaction was in accordance
with the terms of a consultancy agreement entered into between Moto and GICC on December 31, 2007 (as
amended), following the successful negotiation of documentation relating to Kibali and obtaining of
relevant government approvals and consents for Kibali. Refer note 9(e).
(ii)
On April 27, 2009 the Company issued 17,860,000 common shares for cash proceeds at C$2.80 per share on
a bought deal basis through a syndicate of underwriters, co-led by GMP Securities L.P. and BMO Capital
Markets and including RBC Capital Markets and Haywood Securities Inc. (collectively, the
“Underwriters”). On May 15, 2009 the ’Over-Allotment Option’ was exercised in full by the Underwriters
resulting in an additional 2,679,000 common shares being issued at C$2.80 per share. Costs incurred in
relation to the share issue were made up of C$2.9 million in underwriter’s fees and C$0.2 million in legal and
other related fees.
(iii)
On June 29, 2009 the Company issued 1,300,539 (at C$4.452 per common share) common shares to
Orgaman upon the Tripartite agreement becoming effective. The issue was at the Company’s election in
order to settle 50 per cent. of the US$10 million payable as the first of three tranches payable to Orgaman.
Refer note 8.
(iv)
On June 9, 2009 the Company issued 50,000 common shares for cash proceeds to an option holder who
exercised their right to purchase shares in the Company at C$3.00 per share.
(v)
This represents the fair value at grant date of the options issued, as described above in (iv) and as disclosed in
note 10, Contributed Surplus.
(c)
Stock options
The Company established a stock option plan to provide additional incentive to its directors, officers, employees
and consultants in their efforts on behalf of the Company in the conduct of its affairs. The maximum number of
shares that may be issuable pursuant to options granted under the plan shall be a number equal to 15 percent of the
number of issued and outstanding Common Shares from time to time. The total number of options exercisable under
the plan as at 30 June 2009 is 11,889,050. Under the terms of the plan, options vest as determined by the board of
directors, are priced based on the volume weighted average price for the 5 days prior to grant date and may be
granted for a term not exceeding 6 years. The Company has also agreed to issue further stock options to Sam Jonah
KBE on the basis that if the Company makes a material further issuance of shares, the Company will grant stock
options at the prevailing market price expiring 6 years after grant such that the total number of stock options granted
to Sam Jonah KBE from the date of his appointment is 5 percent of the total number of Common Shares issued by
the Company.
55
The Stock Option Plan was renewed for a further three years and amended by shareholder approval at the
Company’s 2008 Annual and Special Meeting held on May 30, 2008. The amended Stock Option Plan is available
on the Company’s website, www.motogoldmines.com and under the Company’s SEDAR profile at
www.sedar.com.
The following table summarises the movements in stock options during the six months ended June 30, 2009:
Six Months
Jun 30, 2009
Balance at beginning of period . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . .
Expired/Cancelled . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . .
Balance at end of period . . . . . . . . . .
Exercisable at end of period . . . . . . . . .
Number of
Options
WeightedAverage
Exercise
Price
..................................
10,612,100
A$4.77
..................................
..................................
..................................
..................................
..................................
(50,000)
(200,000)
1,326,950
11,689,050
9,820,443
A$3.40
A$8.92
A$3.30
A$4.03
A$4.08
The following table provides a summary of the weighted average exercise price and weighted average remaining
contractual life for all outstanding options:
Price Ranges
Weighted Ave.
Exercised Price
No. Options
C$2.91
C$5.29
C$7.65
C$4.03
7,915,589
2,048,461
1,725,000
11,689,050
Weighted Ave.
Remaining
Contractual Life
(years)
C$2.60 — C$3.90. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C$3.91 — C$5.90. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C$5.91 — C$8.75. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d)
3.57
3.91
2.91
3.53
Share purchase warrants
The following table summarises the movements in warrants during the six months ended June 30, 2009:
Exercise
Prices
Balance
Dec 31, 2008
Granted
May 2, 2010 . . . . . . . . . . . . . . . . . . . . . C$7.65
Weighted average. . . . . . . . . . . . . . . . . .
500,000
A$8.74
—
—
Expiry dates
(e)
Exercised
Expired/
Cancelled
Balance
June 30,
2009
—
—
—
—
500,000
A$8.97
Future issues of common shares
On December 31, 2007 (as amended by a letter dated December 4, 2008), the Company entered into a consultancy
agreement with GICC, a DRC-based consultancy group, under which GICC agreed to assist the Group in obtaining
the Consolidated Lease and negotiating government approvals and consents to enable the development of Kibali.
Pursuant to the consultancy agreement, if by November 30, 2009, the price of the Company’s Common Shares on
the TSX exceeds C$11.92 or C$15.90, a further 628,982 Common Shares will be issued to GICC on each such share
price level being exceeded as deferred compensation. Under a change of control the Company is required to,
regardless of the closing price of the Company’s shares on the TSX prior to the change of control, issue 628,982
Common Shares to GICC immediately prior to (but conditional upon) completion of the change of control. In
addition, if the share prices is at least C$11.92 just prior to the change of control, a further 628,982 Common Shares
must be issued to GICC immediately prior to (but conditional upon) completion of the change of control.
56
(f)
Stock-Based Compensation Costs
The following table summarises the weighted average assumptions used with the Black-Scholes valuation model
for the determination of the stock-based compensation costs for the six months ended June 30, 2009 and the year
ended December 31, 2008:
Six months,
Jun 30, 2009
Number of options granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted Ave Exercise price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected life (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average grant-date fair value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.
1,326,950
C$2.85
84%
6
2.11%
Nil
C$2.02
Year ended
Dec 31, 2008
1,233,461
C$4.86
68%
6
3.28%
Nil
C$3.02
Contributed Surplus
Change in Contributed Surplus results from the following:
Jun 30,
2009
Balance — beginning of period . . . . . . . . . . . . . . . . . . . .
Transfer of fair value of common share options exercised
Stock based compensation. . . . . . . . . . . . . . . . . . . . . . . .
Transfer from Warrant Reserve . . . . . . . . . . . . . . . . . . . .
.................
.................
.................
.................
23,112,412
(55,240)
1,460,740
—
Balance — end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $24,517,912
11.
Dec 31,
2008
20,143,699
—
2,968,713
—
$23,112,412
Non-controlling Interest
Initial recognition of non-controlling interest in Kibali Goldmines recognised
upon issue of shares in Kibali . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goldmines to Okimo
Non-controlling interest in results of Kibali Goldmines . . . . . . . . . . . . . . . . . . .
53,812,335
—
(1,353,864)
—
$52,458,472
—
The non-controlling interest represents the interest Okimo has in Kibali Goldmines. On April 1, 2009, Okimo was
issued shares in Kibali Goldmines representing 30 percent of Kibali Goldmines’ total outstanding issued capital.
The initial recognition of the non-controlling interest has resulted in a ‘dilution loss’ of $49,456,648 being recorded
in the income statement, which represents the difference between the value of the shares issued to Okimo
(US$3 million) and the net identifiable assets of Kibali Goldmines. The non-controlling interest in results of Kibali
Goldmines represents Okimo’s 30 per cent. share of Kibali Goldmines’ net loss resulting from operations from the
date upon which Okimo acquired their 30 per cent. interest in Kibali Goldmines to June 30, 2009.
12.
Segment information
During the period the Company operated predominantly in the mining and exploration sector in the DRC. Financial
information by geographic area is as follows:
June 30, 2009
Australia
DRC
Canada
Other
Total
Revenues . . . . . . . . . . . . . . . . . . . . . . . .
89,582
Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . 38,632,260
Capital Assets . . . . . . . . . . . . . . . . . . . . .
100,840
163,044
5,354,368
1,145,312
51,000
12,668,933
—
—
236,230
44,734
$ 303,626
$56,891,791
$ 1,290,886
Australia
DRC
Canada
Other
Total
492,870
8,974,056
149,188
14,191
7,325,581
1,447,436
—
126,412
—
$ 1,324,385
$14,138,859
$ 1,596,624
December 31, 2008
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Loss (Profit) . . . . . . . . . . . . . . . . . . . .
Capital Assets . . . . . . . . . . . . . . . . . . . . . .
57
817,324
(2,287,190)
—
13.
Capital Management
The Company’s current structure is comprised of shareholder’s equity, short and long-term debt and working
capital. The Company’s objectives when managing its capital is to maintain a conservative capital structure which
will allow the Company to both fund its exploration and development programs and provide financial flexibility to
execute on any strategic opportunities. Achieving this objective requires management to consider the underlying
nature of exploration and development activities, availability of capital, the cost of various capital alternatives and
other factors.
The Company manages its capital structure and makes adjustments according to market conditions to maintain
flexibility while achieving the objectives stated above. To manage the capital structures, the Company may adjust
capital spending, issue new shares, issue new debt or repay existing debt. There was no change to the Company’s
approach to capital management during the period.
The Company’s capital under management includes share capital of $306,042,379 (December 31, 2008:
$233,895,395). For details of movements in share capital during the six months ended June 30, 2009, refer to
note 9(b).
In addition, the Company has a short-term loan due to its former joint venture partner, Orgaman, of $12,430,000
(December 31, 2008: $12,715,021) and a long-term loan due to Orgaman of $18,747,835 (December 31, 2008:
$36,191,518). Changes in the short-term loan to Orgaman reflect foreign exchange movements resulting from the
translation of the loan that is denominated in US dollar to the Australian dollar and also the conversion of the
previously mixed currency loan to a US dollar loan (refer note 8). Changes in the long-term loan to Orgaman are the
result of the accrual of interest at 8 percent per annum, the repayment of US dollar $10 million on June 29, 2009
(refer note 8), the conversion of the previously mixed currency loan to a US dollar loan and foreign exchange
movements as previously mentioned.
14.
Financial Risk Factors
The Company’s risk exposures and the impact on the Company’s financial instruments are summarised below:
(a)
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The
Company actively manages its liquidity risk through cash, debt and equity management strategies. Such strategies
include continuously monitoring forecasted and actual cash flows from operating, financing and investing
activities, and opportunities to issue additional Company shares or other forms of equity.
(b)
Credit Risk
Credit risk is the risk of financial loss to the Company if a partner or counterparty to a financial instrument fails to
meet its contractual obligations. Financial instruments which potentially subject the Company to concentrations of
credit risk consist of cash equivalents and the Okimo loan (note 5). The cash equivalents consist mainly of shortterm money market deposits. The Company has deposited the cash equivalents with reputable financial institutions,
from which management believes the risk of loss to be remote. The Okimo loan is expected to be repaid out of
dividends paid out of Kibali Goldmines, which Okimo has a 30 per cent. ownership. Management has discounted
the value of the repayments to present value based on estimated timing of the repayments. The repayment of this
loan is dependent on the success of Kibali.
(c)
Interest Rate Risk
The Company is not exposed to interest rate risk on its debt as interest on the loans its former joint venture partner,
Orgaman is fixed at a rate of 8 percent per annum. As such it does not currently hold any financial instruments that
mitigate this risk.
The Company maintains its cash equivalents in short-term money market deposits that are highly liquid and shortterm in nature. As such the Company is subject to fluctuations in variable market interest rates, however these
fluctuations do not have a significant impact on estimated fair values as of June 30, 2009. Future cash flows from
interest income on cash and cash equivalents will be affected by interest rate fluctuations. The Company manages
interest rate risk by focusing primarily on the preservation of capital and liquidity.
58
For the six month period to June 30, 2009, the Company recorded bank interest revenue of $141,024 (2008:
$583,969) and interest revenue on the loan receivable with Okimo of $26,783 (2008: nil).
(d)
Foreign Currency Risk
The Company operates internationally and is exposed to risks from changes in foreign currency rates. The
functional currency of the Company is Australian dollars, consequently fluctuations of the Australian dollar against
other currencies, primarily the US dollar, Canadian dollar and the Euro impact the fair value of financial assets and
liabilities and operating results. Financial assets and liabilities subject to currency translation risk primarily include
US dollar and Canadian dollar denominated cash and cash equivalents, accrued liabilities in United States dollars
and the short-term and long-term loans due to its former joint venture partner, Orgaman, which has a United States
dollar denominated loan.
For the six month period to June 30, 2009, the Company had recorded foreign exchange losses on the translation of
cash and cash equivalents of $4,098,035, and foreign exchange gains on the translation of the short-term and longterm loans due to Orgaman of $3,270,649.
(e)
Commodity Price Risk
The Company’s future profitability and viability of development depends upon the world market price for gold.
Gold has fluctuated widely in recent years. There is no assurance that, even as commercial quantities of gold may be
produced in the future, a profitable market will exist for them. A decline in the market price of gold may also require
the Company to reduce the carrying values of its mineral properties, which could have a material and adverse effect
on the Company’s value. As of June 30, 2009, the Company is not a gold producer. As a result, commodity price risk
may affect the completion of future equity transactions such as equity offerings and the exercise of stock options and
warrants. This may also affect the Company’s liquidity and its ability to meet its ongoing obligations.
(f)
Mineral Property Risk
planned exploration and development programs will result in profitable mining operations. The recoverability of
amounts shown for mineral exploration properties is dependant upon completion of the acquisition of the mineral
property interests, the discovery of economically recoverable reserves, confirmation of the Company’s interest in
the underlying mineral claims, the ability of the Company to obtain necessary financing to complete the
development and future profitable production. Changes in future conditions could require material write downs
of the carrying values of a mineral property. Although the Company has taken steps to verify title to the properties
on which it is conducting exploration and in which it is acquiring an interest, in accordance with industry standards
for the current stage of exploration of such properties, these procedures do not guarantee the Company’s title.
Property title may be subject to unregistered prior agreements, noncompliance with regulatory requirements, the
risk of foreign investment, increases in taxes and royalties, renegotiation of contracts, currency exchange
fluctuations and political uncertainty.
(g)
The sensitivity analysis shown in the notes below may differ materially from actual results.
(i)
Interest rate risk on cash equivalents is minimal as these have fixed interest rates.
(ii)
The Company’s short-term investments consist of short-term guaranteed deposits and equity investments
listed on Canadian exchanges. All amounts are denominated in Canadian, United States and Australian
dollars. Interest rate risk on short-term guaranteed deposits is minimal as these have fixed interest rates.
(iii)
Financial instruments denominated in United States and Canadian dollars are subject to foreign currency
risk. As at June 30, 2009, had the US and Canadian dollar weakened/strengthened by 10 per cent. against the
Australian dollar with all other variables held constant, the Company’s loss for the period ended June 30,
2009 would have been approximately $1,389,940 higher/lower as a result of foreign exchange losses/gains
on translation of non-Australian dollar denominated financial instruments. Shareholders’ equity would have
been approximately $1,389,940 lower/higher had the United States and Canadian dollar weakened/
strengthened by 10 per cent. as a result of foreign exchange losses/gains on translation of non-Australian
dollar denominated financial instruments.
59
15.
Subsequent events
Randgold Resources Limited Arrangement Agreement
On June 1, 2009 the Company and Red Back Mining Inc. (“Red Back”) entered into an arrangement agreement
providing for the exchange of each common share of the Company for 0.45 of a common share of Red Back.
Subsequently, the Company received a second un-solicited offer from Randgold Resources Limited (“Randgold”)
which was deemed to be superior to the Red Back proposal.
On August 5, 2009 the Company and Randgold entered into the Arrangement Agreement which provides for the
exchange of each outstanding common share of Moto for the equivalent of C$4.84 per share (as at August 4,
2009) on the basis of each Moto common share being exchanged for 0.07061 of a Randgold ordinary share or
Randgold American Depositary Share (“ADS”).
Under the Randgold Transaction, Moto shareholders will receive 0.07061 of an ordinary share of Randgold (or,
where applicable, 0.07061 of an ADS of Randgold) per Moto common share. In addition, Moto shareholders will
have the option to elect to receive (in lieu of Randgold shares or ADSs) cash consideration of US$4.47 per Moto
share in respect of all or some of their Moto shares, subject to proration based on an aggregate maximum cash
amount payable to all Moto shareholders under the Randgold Transaction of US$244 million (the “Cash Election”).
Assuming full take-up of the Cash Election, Randgold expects to issue a total of approximately 3.9 million shares
(including shares represented by ADSs) , representing approximately 4.6 per cent. of Randgold’s shares in issue
following closing, and pay a total cash amount of approximately US$244 million to Moto shareholders. If no Moto
shareholders make the Cash Election, Randgold expects to issue approximately 7.8 million shares (including shares
represented by ADSs), representing approximately 8.6 per cent. of Randgold’s shares in issue following closing.
Immediately prior to accepting the Randgold Transaction, the Company terminated the existing arrangement
agreement with Red Back in accordance with its terms and initiated payment to Red Back of the agreed termination
fee of C$15.25 million. This amount was paid on August 5, 2009 and will be recorded as a charge to the income
statement for the Company. The voting agreements of the Company’s directors and officers regarding the Red Back
transaction were also terminated.
The Company’s Board of Directors has unanimously recommended that the shareholders and optionholders of
Moto vote in favour of the Randgold Transaction. Concurrently with the Company entering into the Arrangement
Agreement with Randgold, the directors and officers of the Company have entered into voting agreements in respect
of the Randgold Transaction (representing an aggregate of 2,782,472 million shares (2.5 per cent.) of Moto).
Together with the support of shareholders of the Company representing an aggregate of 39.4 million shares, a total
of 42.2 million shares, or 38.2 per cent. of the issued and outstanding common shares of Moto, have agreed to
support the Randgold Transaction.
The Company has been advised by Randgold that Randgold and AngloGold Ashanti Limited (“AngloGold”) have
agreed to cooperate in respect of the Randgold Transaction, which includes an agreement by AngloGold to fully
fund the Cash Election in partial payment for an indirect 50 per cent. interest in Moto, which it will acquire upon
completion of the Randgold Transaction. The Company has been further advised by Randgold that, following
completion of the Randgold Transaction, AngloGold will be jointly responsible with Randgold for funding the
development of Kibali for the collective benefit of the shareholders of all three companies and that Randgold will be
appointed operator of Kibali.
Randgold has represented to the Company that Randgold and AngloGold have received the full support from their
respective boards of directors for the Randgold Transaction and that neither Randgold nor AngloGold requires
shareholder approval in order to proceed with the Randgold Transaction.
If Moto shareholders elect to receive, in aggregate, more than the maximum aggregate amount of cash offered under
the Randgold Transaction, (a) the amount of cash consideration available to Moto shareholders making the Cash
Election will be allocated pro rata among all Moto shareholders making valid Cash Elections; and (b) each Moto
shareholder making a valid Cash Election will instead receive Randgold ordinary shares (or ADSs, as applicable) in
exchange for the remainder of their Moto shares for which they did not receive cash due to proration.
Entitlements to fractions of a Randgold share (or ADS, as applicable), as well as the entitlements of any Moto
shareholders who are resident in any jurisdictions where it is or may be unlawful for them to receive Randgold
shares (or ADS, as applicable), will be paid in cash pro rata to entitlements, based on a whole Randgold share being
valued at US$63.26, and such cash payments, if any, will not reduce the amount available to pay the Cash Election.
60
The Arrangement Agreement includes a commitment by the Company not to solicit or initiate discussions
concerning alternative transactions, including the sale of material assets. The Company has agreed to pay a break
fee of US$14,627,300 to Randgold in certain circumstances and has granted Randgold the right to match competing
offers. Randgold has agreed to reimburse the Company for the Red Back termination fee in certain circumstances
where the Randgold Transaction does not close. Each party has also been provided with certain other rights,
representations and warranties and covenants customary for a transaction of this nature.
The Randgold Transaction, which will be effected by way of a statutory plan of arrangement of Moto’s shareholders
and optionholders under British Columbia corporate law, is subject to certain customary conditions, including the
receipt of all necessary court and regulatory approvals, third party consents and the approval of the Randgold
Transaction by not less than 662⁄3 per cent. of the outstanding shares and options of the Company, voting as a single
class and a simple majority of the votes cast in person or by proxy by Moto shareholders at the special meeting that
will be called to approve the Randgold Transaction.
It is anticipated that the meeting of Moto’s shareholders will be held in October, 2009, and subject to approval by
shareholders and optionholders and the British Columbia Supreme Court, the transaction will complete by midOctober, 2009.
Full details of the Randgold Transaction will be included in a Moto Management Information Circular to be filed
with applicable Canadian securities regulatory authorities and mailed to Moto shareholders in accordance with
applicable Canadian securities laws. The Company expects to mail the Management Information Circular by midSeptember 2009.
61
Section C — Reconciliation of financial information on Moto for the three years and six months ended
30 June 2009 to Randgold’s IFRS accounting policies
The following is a summary of the material adjustments to the loss before taxes and net assets of Moto as at and for
the three years ended 31 December 2008 and the interim six months ended 30 June 2009, which would have been
required to adjust for significant differences between Moto’s accounting policies and Randgold’s accounting
policies.
Loss before taxes for the period as
previously reported by Moto . . . . . . . . . . .
Change in recognition of exploration costs . .
Loss before income tax under Randgold
accounting policies . . . . . . . . . . . . . . . . .
Year ended
31 December
2006
Year ended
31 December
2007
Year ended
31 December
2008
Six months
ended 30 June
2009
Note
AUD’000
AUD’000
AUD’000
AUD’000
(i)
(13,429)
(40,340)
(11,351)
(70,984)
(14,139)
—
(57,005)
—
(53,769)
(82,335)
(14,139)
(57,005)
Note
Net assets as previously reported by
Moto . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in recognition of exploration costs . .
31 December
2006
AUD’000
(i)
Net assets under Randgold accounting
policies . . . . . . . . . . . . . . . . . . . . . . . . . .
31 December
2007
AUD’000
31 December
2008
AUD’000
30 June
2009
AUD’000
111,287
(66,512)
118,635
(137,496)
193,232
(137,496)
262,592
(137,496)
44,775
(18,861)
55,736
125,096
Notes to the unaudited reconciliation
(i)
Change in the recognition of exploration costs
This adjustment reflects differences in the accounting treatment of exploration costs between Moto and
Randgold. Under Moto accounting policies, all exploration costs are capitalised until production
commences. Once production has commenced exploration costs are amortised over the life of the mine.
If a project is unsuccessful or a project has ceased because it is not economically feasible, the exploration
costs previously capitalised are written off. Under Randgold accounting policies, all exploration costs are
expensed until such time as the directors have sufficient information to determine that future economic
benefits are probable.
The adjustment to the loss before taxes represents the amount that was capitalised in each year in Moto’s
consolidated financial statements. The adjustment to net assets represents the cumulative amount capitalised
to date.
62
Section D — Accountant’s report on the reconciliation of financial information on Moto
BDO LLP
55 Baker Street
London
W1U 7EU
The Directors
Randgold Resources Limited
La Motte Chambers
La Motte Street
St Helier
Jersey
JE1 1BJ
30 November 2009
HSBC Bank plc
8 Canada Square
London
E14 5HQ
Dear Sirs
Randgold Resources Limited (the “Company”) Class 1 circular dated 30 November 2009 (the
“Circular”)
Proposed acquisition of 10 per cent. of the issued share capital of Kibali Goldmines s.p.r.l.
We report on the unaudited reconciliation of net assets as at 31 December 2006, 31 December 2007, 31 December
2008 and 30 June 2009, and of the loss before taxes for the periods then ended (together, the “financial
information”), as previously reported in the financial statements of Moto Goldmines Limited (“Moto”), prepared
under Canadian Generally Accepted Accounting Principles, showing the adjustments necessary to restate it on the
basis of the Company’s accounting policies used in preparing its financial statements for the period ended 30 June
2009 (“the Reconciliation”), set out in Section C of Part III of the Circular.
This report is required by items 13.5.27R(2)(b) and 13.5.30R(2) of the listing rules made by the Financial Services
Authority for the purposes of part VI of the Financial Services and Markets Act 2000 (the “Listing Rules”) and is
given for the purpose of complying with those Listing Rules and for no other purpose.
Responsibilities
It is the responsibility of the directors of the Company (the “Directors”) to prepare the Reconciliation in accordance
with Listing Rules 13.5.27R(2)(a) and 13.5.30R(2).
It is our responsibility to form an opinion, as required by Listing Rules 13.5.27R(2)(b) and 13.5.30R(2), as to
whether:
(a)
the Reconciliation has been properly prepared on the basis stated; and
(b)
the adjustments are appropriate for the purpose of presenting the financial information (as adjusted) on a
basis consistent in all material respects with the Company’s accounting policies, and to report our opinion to
you.
Save for any responsibility which we may have to those persons to whom this report is expressly addressed and
which we may have to shareholders of the Company as a result of the inclusion of this report in the Circular, to the
fullest extent permitted by the law we do not assume any responsibility and will not accept any liability to any other
person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or
our statement, required by and given solely for the purposes of complying with item 13.4.1R(6) of the Listing Rules
consenting to its inclusion in the Circular.
The Reconciliation is based on the historical consolidated financial statements of Moto for the three years ended
31 December 2008 and the interim six month period ended 30 June 2009. The financial statements for the three
63
years ended 31 December 2008 were the responsibility of the directors of Moto and were audited by Parker Simone
LLP who gave unqualified reports thereon. The interim financial statements for the six months ended 30 June 2009
were the responsibility of the directors of Moto but were unaudited. We do not accept responsibility for any of the
historical financial statements of Moto, nor do we express an opinion on those financial statements.
Basis of opinion
We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices
Board in the United Kingdom. The work that we performed for the purpose of making this report, which involved no
independent examination of any of the underlying financial information, consisted primarily of checking whether
the unadjusted financial information of Moto has been accurately extracted from an appropriate source, assessing
whether all adjustments necessary for the purpose of presenting the financial information on a basis consistent in all
material respects with the Company’s accounting policies have been made, examination of evidence supporting the
adjustments in the Reconciliation and checking the arithmetical accuracy of the calculations within the
Reconciliation.
We planned and performed our work so as to obtain the information and explanations we considered necessary in
order to provide us with reasonable assurance that the Reconciliation has been properly compiled on the basis stated
and that the adjustments are appropriate for the purpose of presenting the financial information (as adjusted) on a
basis consistent in all material respects with the Company’s accounting policies.
Our work has not been carried out in accordance with auditing or other standards and practices generally accepted in
the United States of America or other jurisdictions and accordingly should not be relied upon as if it had been
carried out in accordance with those standards and practices.
Opinion
In our opinion:
(a)
the Reconciliation has been properly compiled on the basis stated; and
(b)
the adjustments made are appropriate for the purpose of presenting the financial information (as adjusted) on
a basis consistent in all material respects with the Company’s accounting policies.
Yours faithfully
BDO LLP
64
PART IV
Section A — Unaudited pro forma financial information of Randgold
The following unaudited pro forma balance sheet and statements of income of Randgold (the “pro forma financial
information”) are based on the consolidated balance sheet as at 30 September 2009, the consolidated statement of
income for the 6 months ended 30 June 2009 and the consolidated statement of income for the year ended
31 December 2008 of the Group and have been prepared to illustrate the effect on the Group of:
1.
the 15 October 2009 acquisition of 50 per cent. of Moto through a joint venture with Anglogold; and
2.
the potential acquisition of an additional 10 per cent. stake in Kibali Goldmines,
as if these transactions had occurred at 30 September 2009 for the balance sheet and as at 1 January 2008 for the
statements of income.
The pro forma financial information has been prepared for illustrative purposes only and, because of its nature,
addresses a hypothetical situation and does not, therefore, represent the Group’s actual financial position or results.
The pro forma financial information has been prepared on the basis of the accounting policies adopted in the interim
financial statements of the Company for the period ended 30 September 2009, under International Financial
Reporting Standards as adopted by the EU, and on the basis set out in the notes set out below.
65
PART IV - Section A — Unaudited pro forma financial information of Randgold
Unaudited pro forma balance sheet as at 30 September 2009
Adjustments
Adjustments
Randgold as 50% of Moto’s
to reflect
at 30 balance sheet as acquisition of
September 2009 at 30 June 2009 50% of Moto
(note 1)
$000
(note 2a)
$000
438,790
—
519
46,680
—
306,420
.
.
.
.
594
43,833
6,651
32,690
—
—
1,449
1,324
—
—
14,958
—
TOTAL NON-CURRENT
ASSETS . . . . . . . . . . . . . . . . .
522,558
49,972
Inventories and ore stockpiles . . . . .
Receivables . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . .
91,921
79,650
520,765
51
153
22,253
TOTAL CURRENT ASSETS . . . .
692,336
22,457
TOTAL ASSETS . . . . . . . . . . . . .
1,214,894
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment . . . .
Mineral properties . . . . . . . . . . . . .
Deferred tax . . . . . . . . . . . . . . .
Long term ore stockpiles . . . . . .
Receivables . . . . . . . . . . . . . . .
Available for sale financial assets
EQUITY
Ordinary shares. . . . . . .
Share premium . . . . . . .
Accumulated profit . . . .
Other reserves . . . . . . .
Non-controlling interest .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Note 3
Pro forma
Adjustments
net assets
to reflect
of the
acquisition of
Group as at
10% of Kibali 30 September
Goldmines
2009
(note 4)
$000
$000
—
45,732
439,309
398,832
—
—
(4,700)
—
594
43,833
18,358
34,014
321,378
41,032
934,940
—
—
140,674
—
—
(55,100)
91,972
79,803
628,592
140,674
(55,100)
800,367
72,429
462,052
(14,068)
1,735,307
—
—
—
—
14,068
(4,560)
(1,284,672)
(270,247)
(23,533)
(29,043)
14,068
(1,612,055)
—
(516)
.
.
.
.
.
(4,148)
(800,093)
(273,335)
6,512
(22,009)
(123,106)
—
95,615
(9,863)
(21,102)
122,694
(484,579)
(92,527)
(20,182)
—
TOTAL EQUITY . . . . . . . . . . . .
(1,093,073)
(58,456)
(474,594)
(516)
(7,542)
(a)(i)(ii)(iii)
(iv)(v)(d)(e)
(a)(ii)
(a)(i)(ii)(iii)(iv)
(b)(c)(d)
(a)(i)(e)
(a)(i)(e)
(b)
(a)(ii)
NON-CURRENT LIABILITIES
Long term borrowings . . . . . . . . . .
Loans from minority shareholders
in subsidiaries . . . . . . . . . . . . . .
Deferred tax . . . . . . . . . . . . . . . . .
Financial liabilities — forward gold
sales . . . . . . . . . . . . . . . . . . . .
Provision for rehabilitation . . . . . . .
(2,990)
(3,016)
—
—
—
—
—
(2,990)
(3,016)
(4,169)
(14,174)
—
—
—
—
—
—
(4,169)
(14,174)
TOTAL NON-CURRENT
LIABILITIES . . . . . . . . . . . . .
(24,865)
(7,542)
7,542
—
(24,865)
(27,176)
(65,962)
(2,844)
—
(1,431)
—
—
—
—
—
—
—
(27,176)
(67,393)
(2,844)
—
(974)
—
(98,387)
14,068
(1,735,307)
CURRENT LIABILITIES
sales . . . . . . . . . . . . . . . . . . . .
Trade and other payables . . . . . . . .
Current tax payable . . . . . . . . . . . .
Current portion of long term
borrowings . . . . . . . . . . . . . . . .
7,542
(974)
(5,000)
5,000
TOTAL CURRENT
LIABILITIES . . . . . . . . . . . . .
(96,956)
(6,431)
5,000
TOTAL EQUITY AND
LIABILITIES . . . . . . . . . . . . .
(1,214,894)
(72,429)
Explanatory notes are provided below.
66
(462,052)
(c)
(c)
Unaudited proforma statement of income for the six months ended 30 June 2009
Randgold as
at 30
June
2009
REVENUE
Gold sales on spot . . . . . . . . . . .
Profit/(loss) on hedging
contracts . . . . . . . . . . . . . . . .
Adjustments
50% of Moto’s
statement of income
Adjustments to
Pro forma
for the six
Adjustments to reflect acquisition
for the six
months ended reflect acquisition of 10% of Kibali months ended
30 June 2009
of 50% of Moto
Goldmines 30 June 2009
(note 1)
$000
(note 2b)
$000
(note 3)
$000
(note 4)
$000
$000
212,216
—
—
—
212,216
(21,386)
—
—
—
(21,386)
TOTAL REVENUE . . . . . . . . .
OTHER INCOME
Other income . . . . . . . . . . . . . .
190,830
—
—
—
190,830
2,714
1,117
—
—
3,831
TOTAL INCOME . . . . . . . . . .
193,544
1,117
—
—
194,661
—
—
—
—
—
—
—
—
—
(109,532)
(778)
(11,171)
COST AND EXPENSES
Mining and processing costs . . .
Transport and refining costs . . . .
Royalties. . . . . . . . . . . . . . . . . .
Exploration and corporate
expenditure . . . . . . . . . . . . . .
Other expenses . . . . . . . . . . . . .
TOTAL COSTS . . . . . . . . . . . .
(23,823)
—
(145,304)
(3,122)
(17,805)
(20,927)
—
—
—
—
—
—
(26,945)
(17,805)
(166,231)
Finance income . . . . . . . . . . . . .
Finance costs . . . . . . . . . . . . . .
Provision for financial assets . . .
Finance (costs)/income — net . .
979
(1,549)
(4,975)
(5,545)
107
(962)
—
(855)
—
—
—
—
—
—
—
—
1,086
(2,511)
(4,975)
(6,400)
PROFIT/(LOSS) BEFORE
INCOME TAX . . . . . . . . . . .
Income tax expense . . . . . . . . . .
42,695
(10,679)
(20,665)
40
—
—
—
—
22,030
(10,639)
NET PROFIT/(LOSS) . . . . . . .
32,016
(20,625)
—
—
11,391
Profit/(loss) attributable to:
Owners of the parent . . . . . . . . .
Non-controlling interests . . . . . .
25,998
6,018
(20,145)
(480)
—
—
—
—
5,853
5,538
32,016
(20,625)
—
—
11,391
(109,532)
(778)
(11,171)
Explanatory notes are provided below
67
Unaudited proforma statement of income for the year ended 31 December 2008
Adjustments
REVENUE
Gold sales on spot . . . . . . .
Profit/(loss) on hedging
contracts . . . . . . . . . . . .
Randgold for
the year
ended 31
December 2008
50% of Moto’s
statement of
income for the
year ended 31
December 2008
(note 1)
$000
(note 2c)
$000
374,110
—
Adjustments
to reflect
acquisition of
10% of Kibali
Goldmines
Pro forma
for the year
ended 31
December
2008
$000
(note 4)
$000
$000
—
—
374,110
Adjustments
to reflect
acquisition of
50% of Moto Note 3
(35,538)
—
—
—
(35,538)
TOTAL REVENUE . . . . .
OTHER INCOME
Other income . . . . . . . . . .
338,572
—
—
—
338,572
4,194
799
—
—
4,993
TOTAL INCOME . . . . . .
342,766
799
—
—
343,565
(199,520)
—
—
—
(199,520)
(2,053)
(19,730)
—
—
—
—
—
—
(2,053)
(19,730)
COST AND EXPENSES
Mining and processing
costs . . . . . . . . . . . . . . .
Transport and refining
costs . . . . . . . . . . . . . . .
Royalties . . . . . . . . . . . . . .
expenditure . . . . . . . . . .
Other expenses . . . . . . . . .
(45,163)
(363)
(6,266)
(252)
—
(3,088) (b)
—
—
(51,429)
(3,703)
TOTAL COSTS . . . . . . . .
(266,829)
(6,518)
(3,088)
—
(276,435)
Finance income . . . . . . . . .
Finance costs . . . . . . . . . .
Provision for financial
assets . . . . . . . . . . . . . .
Finance (costs)/income —
net . . . . . . . . . . . . . . . .
9,335
(3,338)
1,098
(1,285)
—
—
—
—
10,433
(4,623)
(10,350)
—
—
—
(10,350)
(4,353)
(187)
—
—
(4,540)
PROFIT/(LOSS)
BEFORE INCOME
TAX . . . . . . . . . . . . . . .
71,584
(5,906)
(3,088)
—
62,590
Income tax expense . . . . . .
NET PROFIT/(LOSS) . . .
(24,564)
47,020
—
(5,906)
—
(3,088)
—
—
(24,564)
38,026
41,569
5,451
47,020
(5,906)
—
(5,906)
(3,088)
—
(3,088)
—
—
—
32,575
5,451
38,026
Profit/(loss) attributable to:
Owners of the parent . . . . .
Non-controlling interests . .
Explanatory notes are provided below
68
Notes to the unaudited proforma financial information
1.
The balance sheet of the Group as at 30 September 2009 has been extracted without material adjustment
from the published unaudited interim financial statements of the Group for the period ended 30 September
2009. The statement of income of the Group for the six months ended 30 June 2009 has been extracted
without material adjustment from the published unaudited financial statements of the Group for the six
months ended 30 June 2009. The statement of income of the Group for the year ended 31 December 2008
has been extracted without material adjustment from the statutory financial statements on the Group for the
year ended 31 December 2008.
2.
The statements of income for the year ending 31 December 2008 and the six month period ending 30 June
2009 and the balance sheet at 30 June 2009, as published by Moto, require the following adjustments in
order to combine them with the consolidated financial statements of Randgold:
•
Translation from Australian dollars (“AUD”) to US$;
•
Adjustment (where applicable) to Randgold’s accounting policies, following a review undertaken by
Randgold management to identify any differences between Canadian GAAP and IFRS and any
accounting policy differences between Randgold and Moto, where the impact was potentially
material and could be reasonably estimated;
•
Reclassification to a presentation that is consistent with the Randgold IFRS financial statements; and
•
Calculation of 50 per cent. of the adjusted figures of each of the periods presented to reflect the fact
that Randgold’s 50 per cent. share of Moto will be proportionately consolidated into Randgold’s
financial statements.
These adjustments are set out in the tables below in respect of each of the periods presented.
69
2a.
Moto balance sheet as at 30 June 2009
Accounting
Moto
policy
Other
(conversion to adjustments into
reclassification
USD using spot
Randgold’s adjustments into
Proportionate
exchange rate
accounting
Randgold
Moto consolidation of
Moto
of 1.243)
policies
presentation (adjusted)
50% of Moto
NON-CURRENT ASSETS . . . . . . .
Loan receivable from Okimo . . . . . .
Capital Assets . . . . . . . . . . . . . . .
Mineral properties . . . . . . . . . . . . .
Property, plant and equipment . . . . .
Deferred tax . . . . . . . . . . . . . . . .
Long term ore stockpiles . . . . . . . . .
Receivables . . . . . . . . . . . . . . . . .
Available-for-sale financial assets . . .
CURRENT ASSETS . . . . . . . . . . .
Inventories and ore stockpiles . . . . . .
Receivables . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
AUD’000
(note A)
$000
(note B)
$000
(note C)
$000
(note D)
241,503
3,292
3,603
1,291
233,317
—
—
—
—
—
55,828
127
380
55,321
194,290
2,648
2,899
1,038
187,705
—
—
—
—
—
44,914
102
306
44,506
(94,346)
—
—
—
(94,346)
—
—
—
—
—
—
—
—
—
—
(2,648)
(2,899)
(1,038)
—
1,038
—
—
2,899
2,648
—
—
—
—
$000
(note E)
$000
(note F)
99,944
—
—
—
93,359
1,038
—
—
2,899
2,648
44,914
102
306
44,506
49,972
—
—
—
46,680
519
—
—
1,449
1,324
22,457
51
153
22,253
TOTAL ASSETS . . . . . . . . . . . . . . . .
297,331
239,204
(94,346)
—
144,858
72,429
Ordinary shares . . . . . . . . . . . . .
Share premium . . . . . . . . . . . . . .
Accumulated loss (profit) . . . . . . .
Other reserves . . . . . . . . . . . . . .
Non-controlling interest . . . . . . . .
Contributed surplus . . . . . . . . . . .
Deficit . . . . . . . . . . . . . . . . . . .
Accumulated comprehensive income
.
.
.
.
.
.
.
.
(306,042)
—
—
—
—
(24,518)
120,667
(240)
(246,213)
—
—
—
—
(19,725)
97,077
(193)
—
—
94,346
—
—
—
—
—
—
—
96,884
(19,725)
(42,203)
19,725
(97,077)
193
(246,213)
—
191,230
(19,725)
(42,203)
—
—
—
(123,106)
—
95,615
(9,863)
(21,102)
—
—
—
TOTAL EQUITY. . . . . . . . . . . . . . . .
(210,133)
(169,054)
94,346
(42,203)
(116,911)
(58,456)
NON-CURRENT LIABILITIES . . . . .
Long term borrowings . . . . . . . . . . . .
Loans from minority shareholders in
subsidiaries . . . . . . . . . . . . . . . . .
Deferred tax . . . . . . . . . . . . . . . . . .
sales . . . . . . . . . . . . . . . . . . . . . .
Provision for rehabilitation . . . . . . . . .
Loan due to Orgaman under Assignment
Agreement with Orgaman . . . . . . . .
Non-controlling interests . . . . . . . . . . .
.
.
(71,206)
—
(57,286)
—
—
—
42,203
(15,083)
(15,083)
(15,083)
(7,542)
(7,542)
.
.
—
—
—
—
—
—
—
—
—
—
—
—
.
.
—
—
—
—
—
—
—
—
—
—
—
—
.
.
(18,748)
(52,458)
(15,083)
(42,203)
—
—
15,083
42,203
—
—
—
—
.
(15,992)
(12,864)
—
—
(12,864)
(6,431)
.
.
.
.
—
(3,562)
—
—
—
(2,864)
—
—
—
—
—
—
—
—
—
(10,000)
—
(2,864)
—
(10,000)
—
(1,431)
—
(5,000)
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
CURRENT LIABILITIES . . . . . . . . .
sales . . . . . . . . . . . . . . . . . . . . . .
Trade and other payables . . . . . . . . . .
Current tax payable . . . . . . . . . . . . . .
Current portion of long term borrowings .
Loan due to Orgaman under Assignment
Agreement with Orgaman . . . . . . . .
.
(12,430)
(10,000)
—
10,000
—
—
TOTAL EQUITY AND LIABILITIES . .
(297,331)
(239,204)
94,346
—
(144,858)
(72,429)
Notes:
A — These figures have been extracted without material adjustment from Moto’s June 30, 2009 unaudited interim financial statements.
B — Converted at the spot exchange rate of 1.243 prevailing at 30 June 2009.
C — Historical exploration costs of $94,346,299 were charged to accumulated loss (profit) to bring the historical treatment of exploration costs
in Moto into line with Randgold’s accounting policy of expensing all exploration costs until such time as the Directors have sufficient
information to determine that future economic benefits are probable.
70
D — The presentation of various line items were amended to bring the presentation of Moto’s assets and liabilities into line with those of
Randgold:
•
Moto’s investment in Kilo Goldmines was reclassified to Randgold’s available-for-sale financial assets.
•
Moto’s loan receivable from Okimo was reclassified to Randgold’s long term receivables.
•
Moto’s capital assets were reclassified to Randgold’s property, plant and equipment.
•
Moto’s deficit and accumulated comprehensive income was reclassified to Randgold’s accumulated profit.
•
Moto’s contributed surplus was reclassified to Randgold’s total equity.
•
Moto’s long and short term portion of the loan due to Orgaman was reclassified to Randgold’s long and short term borrowings respectively.
E — Being Moto’s financial information in US$ adjusted for accounting policy differences and reclassifications.
F — 50 per cent. of Moto’s balance sheet to be proportionally consolidated into the statement of financial position of Randgold.
71
2b. Moto income statement for the six months ended 30 June 2009
Moto
(conversion to
USD using Reclassification
average adjustments into
Proportionate
exchange rate
Randgold
Moto consolidation of
Moto
of 1.41213)
presentation (adjusted)
50% of Moto
AUD’000
$000
$000
$000
$000
(note A)
(note B)
(note C)
(note D)
(note E)
REVENUE
Gold sales on spot . . . .
Loss on matured hedges
Revenue . . . . . . . . . . .
Total revenue . . . . . . .
OTHER INCOME
Other income . . . . . . . .
TOTAL INCOME . . . .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
—
—
303
303
—
—
215
215
—
—
(215)
(215)
—
—
—
—
—
—
—
—
....................
....................
3,155
3,458
2,234
2,449
—
(215)
2,234
2,234
1,117
1,117
COST AND EXPENSES
Mining and processing costs . . . . . . . . . . . . . . .
Transport and refining costs. . . . . . . . . . . . . . . .
Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exploration and corporate expenditure . . . . . . . .
Other expenses. . . . . . . . . . . . . . . . . . . . . . . . .
Employees and consultants . . . . . . . . . . . . . . . .
Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . .
Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholder and listing costs . . . . . . . . . . . . . . .
Marketing and promotion . . . . . . . . . . . . . . . . .
Foreign exchange (loss)/gain — operational . . . .
Foreign exchange (loss)/gain — finance . . . . . . .
Stock based compensation . . . . . . . . . . . . . . . . .
Write off of mineral properties and capital assets .
Dilution loss . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL COSTS . . . . . . . . . . . . . . . . . . . . . . .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
—
—
—
—
(256)
(5,810)
(555)
(160)
(155)
(676)
(572)
(828)
(1,460)
—
(49,456)
(59,928)
—
—
—
—
(181)
(4,114)
(393)
(113)
(110)
(479)
(405)
(586)
(1,034)
—
(35,023)
(42,438)
—
—
—
(6,244)
(35,427)
4,114
393
113
110
479
405
586
1,034
—
35,023
586
—
—
—
(6,244)
(35,608)
—
—
—
—
—
—
—
—
—
—
(41,852)
—
—
—
(3,122)
(17,805)
—
—
—
—
—
—
—
—
—
—
(20,927)
Finance income . . . . . . . . . . . . . . . . . . . . .
Finance costs . . . . . . . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for financial assets . . . . . . . . . . . .
Finance (costs)/income — net . . . . . . . . . . .
PROFIT/(LOSS) BEFORE INCOME TAX
Income tax recovery . . . . . . . . . . . . . . . . . .
NET PROFIT/(LOSS) . . . . . . . . . . . . . . . .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
—
—
(1,889)
—
(1,889)
(58,359)
113
(58,246)
—
—
(1,338)
—
(1,338)
(41,327)
80
(41,247)
215
(1,924)
1,338
—
(371)
—
—
—
215
(1,924)
—
—
(1,709)
(41,327)
80
(41,247)
107
(962)
—
—
(855)
(20,665)
40
(20,625)
(56,892)
(1,354)
(58,246)
(40,288)
(959)
(41,247)
(40,288)
(959)
(41,247)
(20,145)
(480)
(20,625)
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Profit/(loss) attributed to:
Owners of the parent . . . . . . . . . . . . . . . . . . . . . .
Non-controlling interests . . . . . . . . . . . . . . . . . . . .
—
—
—
Notes:
A — These figures have been extracted without material adjustment from Moto’s June 30, 2009 unaudited interim financial statements
B — Converted at the six-month average exchange rate of 1.41213.
C —The presentation of various expenses was amended to bring the presentation of Moto’s expenses and income into line with those of
Randgold:
•
Moto’s revenue was reclassified to Randgold’s finance income.
•
Moto’s foreign exchange gain on financing activities was reclassified to Randgold’s finance income.
•
Moto’s interest expense was reclassified to Randgold’s finance cost.
•
Moto’s dilution loss was reclassified to Randgold’s other expenditure.
•
The remainder of the adjustments reclassified Moto’s other expense items to Randgold’s corporate and exploration expenditure
D — Being Moto’s financial information in US$ adjusted for reclassifications.
E — 50% of Moto’s income statement to be proportionally consolidated into the income statement of Randgold.
72
2c.
Income statement for the year ended 31 December 2008
Moto (conversion to Reclassification
USD using average adjustments into
Proportionate
exchange rate of
Randgold’s
consolidation of
Moto
1.197)
presentation Moto (adjusted)
50% of Moto
AUD’000
$000
$000
$000
$000
(note A)
(note B)
(note C)
(note D)
(note E)
REVENUE
Gold sales on spot . . . . .
Loss on matured hedges .
Revenue . . . . . . . . . . . .
Total revenue . . . . . . . .
OTHER INCOME
Other income . . . . . . . .
TOTAL INCOME . . . .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
—
—
1,324
1,324
—
—
1,106
1,106
—
—
(1,106)
(1,106)
..........
..........
—
1,324
—
1,106
—
—
—
—
—
—
COST AND EXPENSES
Mining and processing costs . . . . . .
Transport and refining costs . . . . . .
Royalties. . . . . . . . . . . . . . . . . . . .
expenditure . . . . . . . . . . . . . . . .
Other expenses . . . . . . . . . . . . . . .
Employees and consultants . . . . . . .
Amortisation . . . . . . . . . . . . . . . . .
Occupancy . . . . . . . . . . . . . . . . . .
Shareholder and listing costs . . . . .
Marketing and promotion . . . . . . . .
Foreign exchange (loss)/gain
— operational . . . . . . . . . . . . . .
Foreign exchange (loss)/gain
— finance . . . . . . . . . . . . . . . . .
Stock based compensation . . . . . . .
Write off of mineral properties and
capital assets . . . . . . . . . . . . . . .
TOTAL COSTS . . . . . . . . . . . . . .
.
.
.
.
..
..
..
—
—
—
—
—
1,598
492
1,598
1,598
799
799
—
—
—
—
—
—
—
—
—
.
.
.
.
.
.
.
—
(602)
(6,636)
(812)
(278)
(514)
(788)
—
(503)
(5,544)
(679)
(232)
(429)
(658)
(12,534)
—
5,544
679
232
429
658
..
1,913
1,598
(1,598)
—
—
..
..
1,303
(2,969)
1,089
(2,480)
(1,089)
2,480
—
—
—
—
. . (3,005)
. . (12,388)
(2,511)
(10,349)
2,511
(2,688)
—
(13,037)
—
(6,518)
—
—
(3,075)
—
(3,075)
—
—
(2,569)
—
(2,569)
2,196
(2,569)
2,569
—
2,196
2,196
(2,569)
—
—
(373)
1,098
(1,285)
. . . . . . (14,139)
......
—
. . . . . . (14,139)
(11,812)
—
(11,812)
—
—
—
(11,812)
—
(11,812)
(5,906)
—
(5,906)
Profit/(loss) attributed to:
Owners of the parent . . . . . . . . . . . . . (14,139)
Non-controlling interests . . . . . . . . . .
—
(14,139)
(11,812)
—
(11,812)
—
—
—
(11,812)
—
(11,812)
(5,906)
—
(5,906)
Finance income . . . . . . . . . . .
Finance costs. . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . .
Provision for financial assets .
Finance costs/(income) — net.
PROFIT/(LOSS) BEFORE
INCOME TAX . . . . . . . . .
Income tax expense . . . . . . . .
NET PROFIT/(LOSS) . . . . .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
—
—
.
.
.
.
.
.
.
.
.
.
(12,534)
(503)
—
—
—
—
—
(6,266)
(252)
—
—
—
—
—
(187)
Notes:
A — These figures have been extracted without material adjustment from Moto’s December 31, 2008 audited financial statements.
B — Converted at annual average exchange rate of 1.197.
C — The presentation of various expenses was amended to bring the presentation of Moto’s expenses and income into line with those of
Randgold:
•
Moto’s revenue was reclassified to Randgold’s finance income as it represents interest received.
•
Moto’s foreign exchange gain on financing activities was reclassified to Randgold’s finance income.
•
Moto’s interest expense was reclassified to Randgold’s finance cost.
•
The remainder of the adjustments reclassified Moto’s other expense items to Randgold’s corporate and exploration expenditure
D — Being Moto’s financial information in US$ adjusted for reclassifications.
E — 50% of Moto’s income statement to be proportionally consolidated into the income statement of Randgold.
73
3.
These adjustments reflect the acquisition of 50% of the issued share capital of Moto:
The table below summarises the adjustments to the Moto balance sheet as at 30 June 2009 in relation to the
acquisition of 50% of Moto:
Note
Description
3(a)(i)
Share
consideration . .
Cash
consideration . .
3(a)(i)
483,370
(331) (483,039)
76,864
(76,864)
3(a)(i)
Cash from
AngloGold . . . (248,162)
3(a)(ii)
Moto options . .
3(a)(ii)
Moto
warrants . . . . .
Cash for Moto
options . . . . . .
640
(640)
3(a)(iii)
Transaction
costs . . . . . . .
5,134
(5,134)
3(a)(iv)
Red Back
termination
fee . . . . . . . .
Elimination on
consolidation . .
6,970
(6,970)
3(a)(ii)
3(a)(v)
3(b)
3(c)
BMO fee . . . .
Orgaman
loan . . . . . . . .
3(d)
Protocol
payment . . . . .
GICC shares . .
3(e)
Total
adjustment
(a)
Current
Portion of
Cash and
Mineral
Cash
Ordinary Share Accumulated Other Long Term Long Term
Properties Receivables Equivalents Shares Premium
Profit
Reserves Borrowings Borrowings
14,958
248,162
14,958
(29,916)
130
(130)
(37,354)
123,106
(95,615)
(3,088)
9,863
3,088
(12,542)
2,250
1,621
306,420
7,542
5,000
7,542
5,000
(2,250)
(81)
14,958
140,674
(1,540)
122,694 (484,579)
(92,527)
(20,182)
The calculations required to calculate and allocate the excess of the fair value of the consideration paid over
the book value of the net assets acquired, which comprise: (i) the fair value of the consideration paid to
acquire Moto on 15 October 2009; (ii) the fair value of Moto options and warrants; (iii) the Group’s
transaction expenses; (iv) the termination fee incurred in terminating Moto’s agreement with Red Back; and
(v) the elimination of the net assets acquired and equity of Moto.
(i)
(ii)
The cost of the acquisition paid to Moto Shareholders comprised $76.9m paid pursuant to a cash
election and a total of 6,628,769 Ordinary Shares valued at $72.92 per share as at 15 October 2009
(total $483.4m), the date of completion of the acquisition, net of cash received from AngloGold
of $248.2m. In the pro forma balance sheet:
•
The $76.9m cash payment pursuant to the cash election is capitalised to mineral properties and
deducted from cash.
•
The $483.4m fair value of the shares issued in consideration for the acquisition is capitalised to
mineral properties. $0.3m is credited to share capital and represents the nominal value of the
6,628,769 shares issued and the remaining $483.1m is credited to share premium.
•
The $248.2m cash received from AngloGold increases the cash balance and reduces the amount
capitalised to mineral properties.
Additional grants to Moto option and warrant holders were as follows:
•
774,163 Ordinary Shares are issuable in relation to Moto options, valued at a weighted average
exercise price of $56.39 per option as at 15 October 2009, the date of completion of the Moto
Acquisition. The fair value of these share options has been calculated as $29.9m. The BlackScholes valuation model was used to determine the fair value of these options. The full fair value
of the share options is reflected in Randgold’s other reserves; AngloGold are liable for 50% of
the difference between the closing price of Randgold ADSs on the date of exercise and the strike
74
price of the share options. Therefore, in the pro forma balance sheet this has been recorded as a
credit to share based payment reserves for the full fair value of $29.2m, the recognition of a
receivable from AngloGold of $14.96m and capitalisation of $14.96m to mineral properties.
•
35,305 Ordinary Shares will be issued for Moto warrants, valued at $3.68 per warrant as at
15 October 2009, the date of completion of the Moto Acquisition. The fair value of these
warrants has been calculated as $0.1m. In the pro forma balance sheet this has been capitalised to
mineral properties and credited to share based payment reserves.
•
Cash of $1.2m was paid to “in the money” Moto share option holders, Randgold’s share of this
being $0.6m. A cash payment of $0.05m was also made to Moto shareholders in respect of
fractional Rangold shares. In the pro forma balance sheet this has been capitalised to mineral
properties and has reduced cash balances.
(iii)
Transaction costs are estimated at $5.1m, being Randgold’s share of the total estimated costs of
$10.2m. These fees are payble to lawyers, bankers and accountants who assisted in completion of the
Moto Acquisition. In the pro forma balance sheet this has been capitalised to mineral properties and
has reduced the cash balance.
(iv)
A termination fee of C$15,250,000 was payable to Red Back Mining Inc when Moto terminated its
agreement with Red Back Mining Inc and entered into arrangements with Randgold. The fee was
paid on 12 August 2009. The total fee was translated at the rate of 0.9141 to $13.9m, and Randgold’s
share of this is therefore $6.97m. In the pro forma balance sheet this has been capitalised to mineral
properties and has reduced the cash balance.
(v)
Eliminate net assets acquired of $37.4m (net of $21.1m non-controlling interest acquired) in order to
give effect to the fair value adjustment of $302.5m as set out in the table below. In the pro forma
balance sheet share capital of $123.1m, accumulated losses of $95.6m and other reserves of $9.9m
are also eliminated to give effect to the proportional consolidation of 50% of Moto.
The excess of the fair value of the net consideration paid by Randgold to acquire 50% of Moto over the book
value of the 50% of Moto’s assets and liabilities acquired by Randgold is attributable to the mineral
resources of the Kibali Gold Project and therefore the excess is fully attributed to mineral properties.
These adjustments are summarised in the table below:
(b)
Consideration payable in Ordinary Shares(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consideration payable in cash(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less cash received from AngloGold(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
774,163 Randgold share options issued for Moto options(ii) . . . . . . . . . . . . . . . . . . . . . . . . .
35,305 Randgold share options issued for Moto warrants(ii) . . . . . . . . . . . . . . . . . . . . . . . . .
Cash granted to “in the money” Moto share option holders including fractions(ii) . . . . . . . . .
Transaction costs of the Company that may be capitalised(iii) . . . . . . . . . . . . . . . . . . . . . . . .
Termination fee paid to Red Back Mining Inc(iv) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$000
483,370
76,864
(248,162)
14,958
130
640
5,134
6,970
Net consideration paid by Randgold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less Randgold share of the book value of Moto assets and liabilities acquired(v) . . . . . . . . .
339,904
(37,354)
Excess of fair value of consideration paid over book value of net assets acquired
(attributable to mineral properties) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
302,550
A fee which Moto agreed with BMO Nesbitt Inc. (“BMO”) to pay to BMO on completion of the Moto
Acquisition. The actual fee paid was $6.2m (Randgold’s share of this being $3.1m) calculated using the
formula set out below with the following inputs: Moto share price of C$5.31 at 15 October 2009, total
outstanding shares in Moto (including in-the-money options) of 119,000,598 and an exchange rate of 0.972.
In the pro forma income statement for the year ending 31 December 2008 this fee was charged as a
consultant’s fee. In the pro forma balance sheet this amount is shown as an adjustment to accumulated profit
and a reduction in the cash balance. The formula used to calculate the completion fee was:
•
up to $4.25 per Moto share: 0.75% of the transaction value: plus
•
2% of any incremental transaction value from C$4.26 to C$5.25 (inclusive)
•
3% of any incremental transaction value above C$5.25 per Moto share
75
(c)
Change in contol of Moto required the immediate repayment of the loan due to Orgaman. The total balance
of the loan as per the Moto 30 June 2009 financial statements was AUS$31.2 million which has been
translated to $25.1m as at 30 June 2009 at an exchange rate of 1.243. Randgold’s 50% share of the loan
repayment was $12.5m. in the pro forma balance sheet this is shown as a reduction of $7.5m in long term
borrowings, a reduction of $5m in the short term portion of long term borrowings and a reduction of $12.5m
in cash balances.
(d)
The $4.5 million protocol payment is a payment to the DRC government in order to secure the extension of
Moto’s exploitation licences in the DRC. Randgold’s share of this payment was $2.25 million. In the pro
forma balance sheet this has been capitalised to mineral properties and has reduced cash balances.
(e)
628,982 Moto shares were issued to Moto’s advisors GICC as a result of the change of control arising from
completion of the Moto Acquisition. The closing share price of Moto at 15 October, 2009 was C$5.31 and
was used to calculate the fair value of C$3.4m translated to $3.2m at a rate of 0.972. Randgold’s share of this
cost was $1.6m. In the pro forma balance sheet this has been capitalised to mineral properties, $0.08m has
been credited to share capital and represents the nominal value of the 628,982 shares issued and the $1.5m is
credited to share premium.
4.
These adjustments reflect the acquisition of 10% of Kibali Goldmines:
(a)
An adjustment has been made to reflect the cash consideration of $56.8m payable for the acquisition of 10%
of Kibali Goldmines. 50% of the total acquisition cost of $113.6m is to be funded by AngloGold. The
estimated transaction expenses of $3m are based on the Directors’ latest estimate of the Company’s
transaction expenses that may be capitalised as part of the total expenses of the transaction.
Consideration payable in cash . . . . . . . . . . . . . . . . . . . . . . . . . .
Transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less the book value of net assets acquired . . . . . . . . . . . . . . . . .
$m
. . . . . . . . . . . . . . . . . . . . . . . 56.8
.......................
3.0
. . . . . . . . . . . . . . . . . . . . . . . 59.8
. . . . . . . . . . . . . . . . . . . . . . . (14.1)
Excess of fair value of consideration paid over book value of net assets acquired
(attributable to mineral properties) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
45.7
The consideration of $59.8m was paid to acquire 10% of the net assets of Kibali Goldmines with a
corresponding reduction in the non-controlling interest from 15% to 5%. The excess of the consideration
paid over the book value of net assets acquired represents the value of the mineral resources acquired and is,
therefore, fully attributed to mineral properties. In the pro forma balance sheet the net amount of $45.7m is
capitalised to mineral properties, non-controlling interests are reduced by $14.1m and cash is reduced by
$59.8m.
(b)
An adjustment of $4.7m was made to reflect OKIMO’s intention to discharge certain debts owed to Kibali
Goldmines. In the pro forma balance sheet this is shown as a reduction in receivables and an increase in cash.
The adjustments to cash in respect of note 4(a) and (b) are therefore:
$m
Consideration payable in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (56.8)
Transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3.0)
Cash received from OKIMO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.7
Net adjustment to cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (55.1)
5.
No account has been taken of (i) the financial performance of the Group since 30 June 2009 in the pro forma
income statement or since 30 September 2009 in the pro forma balance sheet; (ii) the financial performance
of Moto or Kibali Goldmines since 30 June 2009; or (iii) any other event, save as disclosed above.
6.
The calculations of the excess of the fair value of the consideration paid over the book value of the net assets
acquired set out in the tables in notes 3(a) and 4(a) above are provisional, being based on the net assets at 30
June 2009, and the net assets acquired will be subject to a fair value restatement as at the effective dates of,
respectively, the Moto Acquisition and the Kibali Acquisition. As a result, the adjustment to mineral
properties in the Group’s consolidated balance sheet may change from that shown in the pro forma balance
sheet.
76
PART IV
Section B — Accountants’ report on the pro forma financial information
BDO LLP
55 Baker Street
London
W1U 7EU
The Directors
La Motte Chambers
La Motte Street
St Helier
Jersey
JE1 1BJ
30 November 2009
HSBC Bank plc
8 Canada Square
London E14 5HQ
Dear Sirs
Randgold Resources Limited (the “Company”)
Pro forma financial information
We report on the unaudited pro forma balance sheet and the unaudited proforma statements of income (the “Pro
Forma Financial Information”) set out in Section A of Part IV of the class 1 circular dated 30 November 2009 (the
“Circular”), which has been prepared on the basis described, for illustrative purposes only, to provide information
about how the 50% acquisition of Moto Goldmines Limited on 15 October 2009 and the proposed acquisition of
10% of the issued share capital of Kibali Goldmines s.p.r.l. might have affected the financial information presented,
on the basis of accounting policies adopted by the Company in preparing its consolidated interim financial
statements for the period ended 30 September 2009.
This report is required by paragraph 13.3.3R of the listing rules made by the Financial Services Authority for the
purposes of part VI of the Financial Services and Markets Act 2000 (the “Listing Rules”) and is given for the
purpose of complying with that item and for no other purpose.
Responsibilities
It is the responsibility of the directors of the Company (the “Directors”) to prepare the Pro Forma Financial
Information in accordance with item 13.3.3R of the Listing Rules.
It is our responsibility to form an opinion, as required by item 7 of Annex II of the PD Regulation as to the proper
compilation of the Pro Forma Financial Information and to report that opinion to you.
Save for any responsibility arising under which we may have to those persons to whom this report is expressly
addressed and which we may have to shareholders of the Company as a result of the inclusion of this report in the
Circular, to the fullest extent permitted by the law we do not assume any responsibility and will not accept any
liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in
connection with this report or our statement, required by and given solely for the purposes of complying with
item 13.4.1R(6) of the Listing Rules consenting to its inclusion in the Circular.
In providing this opinion we are not updating or refreshing any reports or opinions previously made by us on any
financial information used in the compilation of the Pro Forma Financial Information, nor do we accept
responsibility for such reports or opinions beyond that owed to those to whom those reports or opinions were
addressed by us at the dates of their issue.
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PART IV - Section B — Accountants’ report on the pro forma financial information
Basis of opinion
We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices
Board in the United Kingdom. The work that we performed for the purpose of making this report, which involved no
independent examination of any of the underlying financial information, consisted primarily of comparing the
unadjusted financial information with the source documents, considering the evidence supporting the adjustments
and discussing the Pro Forma Financial Information with the Directors.
We planned and performed our work so as to obtain the information and explanations which we considered
necessary in order to provide us with reasonable assurance that the Pro Forma Financial Information has been
properly compiled on the basis stated and that such basis is consistent with the accounting policies of the Company.
Our work has not been carried out in accordance with auditing or other standards and practices generally accepted in
the United States of America or other jurisdictions and accordingly should not be relied upon as if it had been
carried out in accordance with those standards and practices.
Opinion
In our opinion:
(a)
the Pro Forma Financial Information has been properly compiled on the basis stated; and
(b)
such basis is consistent with the accounting policies of the Company.
Yours faithfully
BDO LLP
78
PART V
Section A — Principal terms of the Kibali Acquisition Agreement
1.
Introduction
Under the terms of the Kibali Acquisition Agreement Jersey JVCo has agreed to acquire shares in the capital of
Kibali Goldmines (representing 20 per cent. of the issued share capital of Kibali Goldmines) from OKIMO for an
aggregate consideration of US$113.6 million payable in immediately available cash funds as set more fully at
paragraph 4 below.
2.
Conditions
2.1
The Kibali Acquisition Agreement is conditional on:
(a)
the Company obtaining shareholder approval for the Kibali Acquisition;
(b)
the South African Reserve Bank granting approval for AngloGold to enter into the Kibali
Acquisition Agreement and for the Kibali Acquisition;
(c)
OKIMO obtaining shareholder and board approval for:
(i)
the sale of the Sale Shares;
(ii)
the signature of the Restated JV Contract;
(iii)
the adoption of the Restated Articles;
(iv)
voting in favour of the Kibali Resolution;
(d)
delivery of duly executed copies of the Declaration and the Protocol to Jersey JVCo, Randgold and
AngloGold along with the Notification Letter;
(e)
the passing of the Kibali Resolution;
(f)
delivery of duly executed copies of the Restated JV Contract to Jersey JVCo, Randgold and
AngloGold; and
(g)
the renewal of those Exploitation Permits expiring in 2014 due for renewal under the Protocol.
(h)
the representations and warranties given by the Seller being authentic and accurate at Completion.
2.2
Jersey JVCo may waive the conditions set out in paragraph 2.1 above although the conditions set out in
paragraph (c), (e), (f) and (h) above are also given for the benefit of OKIMO.
2.3
If the conditions set out in paragraph 2.1 above are not satisfied (or waived) by 31 January 2010 or such other
date as may be agreed between Jersey JVCo and OKIMO, the Kibali Acquisition Agreement shall lapse with
effect from that date.
3.
Waiver
Moto, OKIMO, Kibali Goldmines and Border have each agreed to waive their applicable rights (including preemption) under the Original JV Contract in respect of the Kibali Acquisition Agreement.
4.
Completion Payments
At Completion, Jersey JVCo will pay in cash:
(a)
the Sale Price less an amount equal to the aggregate of (i) the Debt Adjustment and (ii) the Balancing
Retirement Amount and (iii) the Kibali Retirement Amount and (iv) the Social Fund Amount to accounts
specified by OKIMO and approved by the Minister of Mines and the Minister of Portfolio;
(b)
the Debt Adjustment amount to such persons as are notified to it prior to Completion so that the amount of
Debt owed by OKIMO to Kibali Goldmines, Moto and/or Border (if any) shall be entirely repaid in full;
(c)
the Balancing Retirement Amount to a bank account notified to Jersey JVCo by OKIMO. Following the
payment of the Balancing Retirement Amount, OKIMO shall as soon as practicable make payment of the
Balancing Retirement Amount to such employees or former employees of OKIMO as have been recognised
as having amounts due to them;
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PART V - Section A — Principal terms of the Kibali Acquisition Agreement
(d)
the Kibali Retirement Amount to a bank account notified to Jersey JVCo by Kibali Goldmines following
which Kibali Goldmines has agreed to, as soon as practicable, make payment of the Kibali Retirement
Amount to OKIMO to enable it to make payment to various employees or former employees of OKIMO;
and
(e)
the Social Fund Amount in cash to a bank account notified to Jersey JVCo by OKIMO following which
OKIMO undertakes to Jersey JVCo to use the Social Fund Amount for the purposes of building roads, an
airfield, hospitals and other social and infrastructure works in the Doko region in the vicinity of Kibali.
5.
Representations, Warranties and Indemnity
5.1
OKIMO has agreed to provide limited representations and warranties to Jersey JVCo, Randgold and
AngloGold in relation to Kibali Goldmines.
5.2
OKIMO has agreed to indemnify Jersey JVCo against all losses, costs, liabilities (including any liability to
tax) and expenses (including legal and other professional fees and expenses) suffered arising directly from a
breach by OKIMO of the warranties contained in the Kibali Acquisition Agreement provided that such
amount is in excess of US$100,000. The total amount of the indemnity is capped at the sale price.
5.3
Jersey JVCo has agreed to provide limited representations and warranties to OKIMO in relation to its
authority to enter into the Kibali Acquisition Agreement and other matters.
5.4
Jersey JVCo has agreed to indemnify OKIMO against all losses, costs, liabilities (including any liability to
tax) and expenses (including legal and other professional fees and expenses) suffered arising directly from a
breach by Jersey JVCo of the warranties contained in the Kibali Acquisition Agreement provided that such
amount is in excess of US$100,000. The total amount of the indemnity is capped at the Sale Price.
6.
Termination
The Kibali Acquisition Agreement may be terminated:
(a)
at any time by agreement in writing signed by all the parties; or
(b)
on five days written notice if a party is in default of any material obligation and has not remedied its default
within twenty days of receipt of a notice from a non-defaulting party advising the defaulting party of such
default.
7.
Guarantee
Each of Randgold and AngloGold have agreed to (acting severally) irrevocably and unconditionally guarantee to
OKIMO the payment by Jersey JVCo of half of the Sale Price due under the Kibali Acquisition Agreement and the
performance by Jersey JVCo of its obligation and undertakings set out in the Kibali Acquisition Agreement.
8.
Governing Law
The Kibali Acquisition Agreement is governed by the laws of the Democratic Republic of Congo.
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PART V
Section B — Principal terms of the Restated JV Contract
1.
Introduction
In connection with the Kibali Acquisition, OKIMO has agreed that the joint venture agreement governing the
operation of Kibali Goldmines shall be amended to reflect certain matters in relation to the operation of Kibali
Goldmines, and to reflect OKIMO’s reduced shareholding in Kibali Goldmines.
The Restated JV Contract was entered into between OKIMO, Moto, Border, Kibali Goldmines and Jersey JVCo on
31 October 2009 to take effect from Completion.
2.
Transformation and Capitalisation of Kibali Goldmines
2.1
The parties have agreed that Kibali Goldmines will continue to hold the exploitation permits for the
Consolidation Perimeter and other assets relating to Kibali and the business of Kibali Goldmines shall be
conducted by the board together with the Executive Committee (both with the assistance of the Technical
Services Provider).
2.2
Moto and Border have agree to procure that a general meeting and a meeting of the Kibali Board be held in
order to approve: the transfer of 2,000,000 shares in Kibali Goldmines from OKIMO to Jersey JVCo; the
adoption of revised articles of association of Kibali Goldmines; and the appointment of three further
directors of Kibali Goldmines by Border such that the board of directors of Kibali Goldmines will comprise
eight directors of which two are appointed by OKIMO and six by Border;
2.3
Following the transfer described in 2.2 above the share capital of Kibali Goldmines will be held as follows:
Number of
Shares
Name
Border . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jersey JVCo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OKIMO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,000,000
2,000,000
1,000,000
Percentage
shareholding
70%
20%
10%
2.4
The Parties agree that the 10 per cent. participation by OKIMO in Kibali Goldmines is non-dilutable and
such participation shall in no event be lower than 10 per cent., except in case of a voluntary sale or other
transfer by OKIMO of its holding. The parties to the Restated JV Contract have agreed that OKIMO will not
be required to contribute to the financing of the Business.
3.
Contributions and Undertakings of Moto
3.1
Moto has agreed to finance Kibali Goldmines’ business to the extent not covered by internally generated
cashflow, either by capital contributions, shareholder loans or external financing.
3.2
Moto has represented that it has now transferred to Kibali Goldmines the benefit of the 2007 Feasibility
Study, all geological information, and any other relevant technical data (including drilling samples and
interpretation of such data) relating to exploration carried out by the Moto Group on the Consolidated
Perimeter prior to the execution of the Restated JV Agreement.
4.
OKIMO Declarations and Warranties
4.1
OKIMO has agreed to indemnify Moto, Border and their affiliated companies against all damages that any
one of them could have incurred, and from any liabilities, losses or claims against any one of them, resulting
from the inaccuracy or the falseness of any declaration or warranty at the time such declaration or warranty
was given that is set forth under the Original JV Contract and the Restated JV Agreement.
5.
Undertakings
5.1
OKIMO has agreed to make available to Kibali Goldmines certain rights relating to the zones outside the
Consolidated Perimeter insofar as OKIMO, has or will have the exclusive use of those zones and to the
extent that these rights are reasonably necessary for Kibali Goldmines to carry to completion Kibali in as
cost efficient a manner as possible. These rights are: rights of way, servitudes, easements, water rights,
existing air infrastructure, and all the supplementary rights that can facilitate access to or use of the
Consolidated Perimeter and the facilities located thereon.
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PART V - Section B — Principal terms of the Restated JV Contract
5.2
OKIMO has agreed to provide assistance to Kibali Goldmines in obtaining all the visas, residency and work
permits and other documents required for the persons working on Kibali, its shareholders and its contractors
in connection with formalities required in the DRC for the import of equipment and the export of necessary
materials.
5.3
OKIMO has agreed to provide Kibali Goldmines with assistance in negotiations with the competent
authorities in relation to the construction of a new N’Zoro hydro-electrical plant and in dealing with small
scale and artisanal miners.
5.4
Kibali Goldmines has agreed to take all reasonable actions in a reasonable time in order to assist OKIMO
with identifying one or more deposits or tailings sites outside the Consolidated Perimeter for development.
Once Kibali Goldmines and OKIMO have identified deposits or tailings sites which individually is expected
to permit OKIMO to maintain a level of production and profitability equivalent to that resulting from the
Existing Tailings, OKIMO shall transfer its activities, operations, offices and people and the processing
plant to such sites. Once this has been effected OKIMO shall no longer have any rights to retreat the Existing
Tailings within the Consolidated Perimeter and Kibali Goldmines’ obligations under the Revised ATF
Agreement shall cease.
5.5
OKIMO has agreed to provide assistance to obtain, all necessary approvals, permits and consents required
by the DRC (and in due course for the renewal of the Exploitation Permits) and local authorities with regards
to the planning for the construction of the infrastructure of Kibali and the commencement of commercial
production as well as for the social development projects including the delocalisation and the relocation of
the population affected by Kibali.
6.
Payment of the pas de porte, rent and other payments in favour of OKIMO and the DRC
6.1
OKIMO has confirmed, as concerns the Consolidated Perimeter, that neither Moto, Border, Kibali
Goldmines nor any other entity of the Moto Group is held to pay to any third party whomsoever any
other payment at any time whatsoever, as a pas de porte.
6.2
The Parties have confirmed that lease rent on the Consolidated Perimeter has been transformed into a
monthly rent of US$350,000 payable by Kibali Goldmines to OKIMO until the beginning of commercial
production of gold at Kibali.
7.
Royalties
Kibali Goldmines will pay royalties to the DRC, in accordance with applicable law and regulations and other than
those royalties, the other amounts provided for under the Restated JV Contract and all taxes payable to the DRC in
connection with the Restated JV Contract, the parties to the Restated JV Contract have agreed that no other royalty
shall be payable to the DRC.
8.
Business of Kibali Goldmines
Unless the shareholders of Kibali Goldmines unanimously decide otherwise, the shareholders shall procure that the
only business of Kibali Goldmines shall be the Business and that the shareholders shall co-operate with each other in
the running and operation of Kibali Goldmines in accordance with the recommendations of the Executive
Committee (with the assistance of the Technical Services Provider).
9.
Budget and Business Plan
The Business will be conducted and exclusively in compliance with the approved budget and business plan to be
prepared by the Executive Committee (with the assistance of the Technical Service Provider) for approval or
modification by the Kibali Goldmines Board. The prior approval of the Board of Directors is required for any
significant variance in relation to an adopted budget and business plan.
10.
The Kibali Board
10.1
The administration of Kibali Goldmines will be provided for by the Kibali Board composed of eight
members of which two members will be appointed by OKIMO and six members appointed by Border. The
Chairman of the Board of Directors will be appointed by Border from amongst the members of the Kibali
82
Board. The deputy Chairman of the Kibali Board will be appointed by OKIMO from amongst the members
of the Kibali Board.
10.2
A quorum for Kibali Board meetings will require at least five of its members to be present or represented,
including at least four directors appointed by Border and at least one director appointed by OKIMO save that
at a second meeting convened for lack of a quorum the quorum shall be met if at least four directors
appointed by Border are present or represented.
11.
Executive Committee
11.1
The Kibali Board will appoint an Executive Committee of Kibali Goldmines, accountable to the Kibali
Board, to comprise such posts as the Kibali Board shall determine and which will be composed of a
maximum of five members save for the chairman of the Executive Committee (who shall be the chairman of
Kibali Goldmines). All members will be full-time employees of Kibali Goldmines and all (save as set out at
11.2 below) shall be recruited by the Technical Services Provider. In addition, and as an additional member,
the Chairman of the Board may act as chairman of the Executive Committee with the approval of the Kibali
Board.
11.2
For five years from Completion, OKIMO will have the right to nominate a person to become a member of
the Executive Committee.
12.
General Meetings
12.1
An annual general meeting must be held within three (3) months of the end of each financial year.
12.2
Any shareholder representing at least one tenth of the authorised shares, the Chairman of the Kibali Board,
two Kibali Board members or the auditors may request that an extraordinary general meeting be held.
12.3
A quorum for a general meeting will be constituted if all shareholders are present save that at a second
meeting convened for a lack of a quorum the quorum shall be met if holders of at least 50 per cent. of the
shares are present or represented.
12.4
Subject to paragraph 13 below, decisions are made on a simple majority of the votes. Each share gives
entitlement to one vote.
13.
Decisions submitted to the blocking minority and other important decisions
13.1
Any business which relates to a decision submitted to minority (set out below) blocking will not be
transacted without approval of OKIMO.
13.2
Decisions submitted to the blocking majority are:
(a)
any amendment to the Restated Articles or the adoption of new articles of association of Kibali
Goldmines;
(b)
any increase or decrease in the authorised share capital of Kibali Goldmines;
(c)
the creation, allotment or issue of any shares or the grant or agreement to grant any option or interest
(in the form of obligations convertible) over any shares or any uncalled capital of Kibali Goldmines;
(d)
the consolidation, sub-division, conversion or cancellation of any share capital of Kibali Goldmines;
(e)
the relocation of Kibali Goldmines’ place of incorporation to a jurisdiction other than the DRC;
(f)
entering into any contract or agreement with any affiliate of Border otherwise than on arm’s length
terms, excluding the Technical Services Agreement and any transfer of shares to an affiliate of
Border;
(g)
any steps to be undertaken by Kibali Goldmines in the framework of a business or a project that is not
directly related to the Business; and
(h)
any change in the description of the social projects to be performed in relation with economic and
social development of local communities.
83
13.3
Moto and Border have acknowledged that the following matters, even though they are not decisions subject
to the blocking minority as set out above, are of great importance to OKIMO and have agreed to consult with
the latter on all decisions that are related to them:
(a)
any decision that relates to the approval and/or change in the budget or in the business plan;
(b)
any decision that relates to the powers, attributes, fees or compensation of the members of the Kibali
Board and the Executive Committee;
(c)
any decision that relates to a contract between Kibali Goldmines and any Shareholder in Kibali
Goldmines, (other than OKIMO) and any additional companies or such Shareholder; and
(d)
the terms of the Moto Financing Agreement can only be amended with the consent of OKIMO, such
consent not to be unreasonably withheld.
14.
Financing
14.1
Any further financing which may be required to meet the working capital requirements of Kibali Goldmines
will have to be determined by the Kibali Board and be subject to a budget or business plan. The intention of
the Parties is that all such financing be provided for, so far as possible, by loans made to Kibali Goldmines by
(i) Jersey JVCo or its affiliated companies (ii) Randgold or its affiliated companies or (iii) AngloGold or its
affiliated companies, or by third parties. Jersey JVCo and its affiliated companies will be in charge of
obtaining all external financing that may be required in relation to the Business.
14.2
Subject to the obligations of Moto as set out at paragraph 3.1 above, neither of the shareholders of Kibali
Goldmines shall be obliged to make any loans or to subscribe for any share capital of Kibali Goldmines.
14.3
All existing and future shareholder financing shall be on the terms of the Moto Financing Agreement.
14.4
OKIMO must be notified with regard to the terms and conditions of any external financing in favour of
Kibali Goldmines. OKIMO has agreed to co-operate with Jersey JVCo and its affiliated companies and
Kibali Goldmines in order to facilitate the obtaining of such financing but shall not be under any obligation
to pledge its Shares in Kibali Goldmines.
14.5
A shareholder of Kibali Goldmines may only encumber its shares by lien or pledge if the creditor agrees
expressly in writing that its rights arising out of its surety will be subject to the entering by said creditor into
an adherence deed to the Restated JV Contract in the agreed form.
14.6
As at the date of Completion all amounts owing from OKIMO to Kibali Goldmines or the Moto Group shall
have been repaid. Under the Revised ATF Agreement there will remain an obligation on Kibali Goldmines to
fund OKIMO with a maximum aggregate amount of approximately US$7 million. This funding and any
other funding to OKIMO shall be on the terms of the OKIMO Financing Agreement.
15.
Use of cash flows
Subject to the discretion of the Kibali Board consistent with applicable legal requirements, cash available to Kibali
Goldmines will be used as follows:
(a)
priority shall be given to payment of the financial obligations related to the Business;
(b)
available cash may also be reserved and thereafter utilised for anticipated operating costs over a reasonable
period of time, for taxes, for repair and replacement equipment and facilities, for contingencies, for
modifications, improvements, and expansions of equipment and facilities, and for the purchase and
construction of new equipment and facilities;
(c)
cash available after payments of the items set out above will be utilised to repay shareholder loans owed by
Kibali Goldmines to the Moto Group; and
(d)
the balance of cash remaining may be utilised for the payment of dividends to the shareholders of Kibali
Goldmines as determined by the Kibali Board. (The dividends paid to OKIMO shall be first used to repay
amounts owing under the OKIMO Financing Agreement.)
84
16.
Accounts and accounting information
The accounting records and financial statements of Kibali Goldmines will be drawn up by the Technical Services
Provider in accordance with the provisions of the DRC accounting legislation and practice and in accordance with
the Technical Services Agreement in accordance with the accounting standards used by Randgold and AngloGold
to the extent that these principles comply with the international norms for financial information.
17.
Dealings with and transfers of shares
17.1
Any Shareholder may, at any time, freely transfer one, several shares or all of its shares in Kibali Goldmines
to another party or to an affiliated company or, in the case of Border, any entity owned as to 50 per cent. or
more by Randgold or AngloGold, provided that (i) the shares shall be transferred back to the transferor if the
transferee ceases to be an affiliated company and that (ii) the act or the transfer agreement shall expressly
provide for such obligation to transfer back.
17.2
The Restated JV Contract contains pre-emption provision in respect of proposed transfers of shares by
OKIMO as well as tag-along rights in respect of offers for the entire shareholding of Jersey JVCo and
Border.
18.
Termination
18.1
The parties to the Restated JV Contract may at any time terminate the Restated JV Contract by agreement in
writing signed by all the parties.
18.2
OKIMO may terminate the Restated JV Contract on five days notice if Kibali Goldmines is in default of
payment of any sums due to OKIMO and has not remedied such default within 30 days of receipt of notice of
the default.
19.
Governing law and Arbitration
19.1
The validity, interpretation and performance of the Restated JV Contract are governed by the laws in force in
the DRC with disputes to be submitted to arbitration in Paris under the rules of the International Court of
Arbitration of the International Chamber of Commerce.
85
PART V
Section C — Principal terms of the Protocol
1.
Payments
Moto agreed, pursuant to the Protocol, to pay a total amount of US$4.5 million to the Government of the DRC and
OKIMO within three business days of the fulfilment of certain conditions. These conditions have been satisfied.
The Protocol Consideration was paid by Moto on 13 November 2009 and was paid 50 per cent. to the Government
and 50 per cent. to OKIMO.
2.
Renewal of Exploitation Permits
2.1
The Government agrees to authorise the renewal of the Exploitation Permits held by Kibali Goldmines, for
additional periods of 15 years from their current expiry dates. The Protocol recognises that the applications
for renewal of those Exploitation Permits which expire in 2014 can be renewed as of the date of the Protocol,
while those expiring in June 2015 can, in accordance with the Mining Code only be renewed as of June 2010
and the DRC undertakes to effect the renewals of all Exploitation Permits as soon as possibly under the
Mining Code.
2.2
The Government further undertakes that, for such time as Kibali is in commercial production, all of the
Exploitation Permits held by Kibali Goldmines shall be renewed on their respective earliest permitted
renewal dates.
3.
General
3.1
Pursuant to the Protocol, the Government also agree that no approval or further payment for any reason is
currently or shall, after the date of the Protocol be required by the Government in connection with the Moto
Acquisition.
3.2
Moto Goldmines and Jersey JVCo undertake to observe their respective obligations arising out of the
Restated JV Contract or the Original JV Contract, as the case may be, as they may be amended from time to
time, including the process for approving and amending the budget and business plan of Kibali Goldmines
(as defined and set out in the Original JV Contract).
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PART V
Section D — Principal terms of the Declaration
1.
The Mining Code and the Mining Regulations
The Government has confirmed that the Mining Code and the Mining Regulations are in full force and effect and
constitute binding obligations on the DRC and that there are no current or planned proposals to amend or
supplement the Mining Code and the Mining Regulations
2.
Customs Duties, Charges, Royalties And Other Fees in DRC
The Government has confirmed that the only taxes, customs duties, charges, royalties and other fees due to the
Government applicable to Kibali Goldmines, Moto, Randgold or AngloGold or any other company associated with
them and involved in Kibali which apply to mining activities are those outlined in the Mining Code and guarantees
the stability of these provisions in accordance with Article 276 of the Mining Code.
3.
Exploitation Permits
3.1
The Government agreed (as per the Protocol) that any and all of the Exploitation Permits which have not
been renewed at the date of the Declaration will be renewed on the terms of the Protocol and thereby
extended for a fifteen year period and all other permits and licenses required for development and
exploitation shall be granted in a timely manner.
3.2
The Government agreed (as per the Protocol) that for as long as Kibali is in commercial production that
(provided that Kibali Goldmines complies with the Mining Code and the Mining Regulations), all of the
Exploitation Permits held by Kibali Goldmines shall be renewed on all relevant future renewal dates.
3.3
The Government agreed (provided that Kibali Goldmines complies with the Mining Code and the Mining
Regulations,) not to terminate or otherwise limit the scope or effect of the Exploitation Permits held by
Kibali Goldmines other than in accordance with their terms and the terms of the Mining Code or the
Restated JV Contract.
3.4
The Government has undertaken that it shall take no action to prevent, prohibit or frustrate any future
transfer of any shares in Kibali Goldmines by Moto, Jersey JVCo, Randgold or AngloGold or any other
company associated with them and involved in Kibali to any company associated with them and involved in
Kibali and that it will levy no charges on such transfer other than normally applicable share transfer taxes
and that it will not seek to acquire a further interest in Kibali Goldmines.
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PART V
Section E — Principal terms of the Technical Services Agreement
1.
Parties
The Technical Services Agreement was entered into between Kibali Goldmines and Kibali Services Limited on
20 November 2009, with a commencement date of 15 October 2009.
2.
Appointment
Kibali Goldmines has agreed to appoint Kibali Services Limited to provide technical services to Kibali and Kibali
Goldmines’ business, to make recommendations as to the members of the Executive Committee; to identify and
recruit employees and secondees for Kibali; and to provide assistance to the Kibali Board and the Executive
Committee in providing services requested under the Restated JV Agreement.
3.
Duration
Kibali Goldmines and Kibali Services Limited have agreed that the Technical Services Agreement will terminate on
the earliest of:
(a)
the final termination of the Exploitation Permits; or
(b)
the giving of 12 months notice by either Kibali Services Limited or Kibali Goldmines.
4.
Remuneration
Kibali Services Limited will receive reimbursement of its reasonably and necessarily incurred costs in connection
with the provision of both mining services and other services under the Technical Services Agreement and, in
addition:
(a)
during the period until the date on which the Kibali Board approves the commencement of construction of
the Kibali Gold Project, Kibali Services shall be paid a pre-construction exploration fee of US$1 million per
financial year, quarterly in arrears, pro-rated for part of a year (as escalated in accordance with the United
States Consumer Price Index); and
(b)
following such approval Kibali Services shall be paid a services fee of US$4 million per financial year,
quarterly in arrears, pro-rated for part of a year (as escalated in accordance with the United States Consumer
Price Index).
5.
Governing Law
The Technical Services Agreement is governed by English Law and disputes arising from it will be submitted to
arbitration in London under the Rules of Arbitration of the International Chamber of Commerce.
88
PART VI
Additional Information
1.
Responsibility
The Directors, whose names appear below, accept responsibility for the information contained in this document. To
the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the
case) the information contained in this document is in accordance with the facts and does not omit anything likely to
affect the import of such information.
2.
Company address
The registered office and the principal place of business of the Company is at La Motte Chambers, La Motte Street,
St. Helier, Jersey, JE1 1BJ, Channel Islands (telephone number 01534 735 333 or, if dialling from outside the United
Kingdom or the Channel Islands, +44 1534 735 333).
3.
Directors’ and others’ interests
3.1
As at 27 November 2009 (being the latest practicable date prior to the posting of this document), the
aggregate interests of each of the Directors in the share capital of the Company which have been notified by
each Director to the Company pursuant to DTRs 3.1.2R and 3.1.3R or the interests of persons connected
with them which would, if the connected person were a Director, be required to be disclosed under DTRs
3.1.2R and 3.1.3R and the existence of which is known to, or could with reasonable diligence be ascertained
by, that Director) were as follows:
Director
M. Bristow . . . . . . . . . . . . . . . . . . . . . . . .
G. Shuttleworth . . . . . . . . . . . . . . . . . . . . .
P. Liétard . . . . . . . . . . . . . . . . . . . . . . . . .
N. Cole . . . . . . . . . . . . . . . . . . . . . . . . . . .
C. Coleman . . . . . . . . . . . . . . . . . . . . . . . .
R. Israel . . . . . . . . . . . . . . . . . . . . . . . . . .
K. Voltaire . . . . . . . . . . . . . . . . . . . . . . . .
J. Walden . . . . . . . . . . . . . . . . . . . . . . . . .
................
................
................
................
................
................
................
................
Number of
Ordinary Shares
Percentage of existing
issued share capital
677,584
24,000
31,765
2,265
1,800
40,201
2,265
400
0.75
0.03
0.04
G0.01
G0.01
0.04
G0.01
G0.01
Save as disclosed in this paragraph 3, none of the Directors has any interest in the share capital of the
Company.
3.2
The Directors currently do not hold any options to acquire Ordinary Shares.
3.3
On 11 May 2005 the first US$30,000 award was allocated to each of the non-executive Directors at such
time for the purpose of acquiring restricted stock. The price of the restricted stock calculation was the
Nasdaq National Market closing price on 10 May 2005, being $12.78. In terms of the policy, 783 shares were
issued directly to each non-executive director and 1,565 shares were held as restricted stock. Non-executive
Directors were issued the second tranche of 782 Ordinary Shares on 13 February 2006 and the final balance
was issued 3 January 2007.
On 13 February 2006 the second US$30,000 award was allocated to each of the non-executive Directors for
the purpose of acquiring restricted stock. The price of the restricted stock calculation was the Nasdaq
National Market closing price on 10 February 2006 or US$17.11. In terms of the policy, 584 shares were
issued directly to each non-executive Director and 1,169 shares were held as restricted stock. Non-executive
Directors were issued the second tranche of 584 Ordinary Shares on 3 January 2007 and the final balance
was issued on 1 January 2008.
On 3 January 2007 the third US$30,000 award was allocated to each of the non-executive Directors for the
purpose of acquiring restricted stock. The price of the restricted stock calculation was the Nasdaq Global
Select Market closing price on 3 January 2007, or US$22.37. In terms of the policy 447 shares were issued
directly to each non-executive Director and 894 shares were held as restricted stock. Non-executive
Directors were issued the second and third tranches on 1 January 2008 and 1 January 2009 respectively.
On 3 January 2008, the fourth US$30,000 award was allocated to each of the non-executive Directors for the
purpose of acquiring restricted stock. The price of the restricted stock calculation was the Nasdaq Global
Select Market closing price on 2 January 2008, or US$38.15. In terms of the policy 262 shares were issued
89
PART VI - Additional Information
directly to each non-executive Director and 524 shares were held as restricted stock. Non-executive
directors were issued the second tranche on 1 January 2009 and subject to agreed conditions, the final
tranche will be issued on 1 January 2010.
On 1 January 2009, the first award of 1,200 restricted shares were allocated to the non-executive Directors as
approved by Shareholders at the Company’s 2008 annual general meeting. The price of the restricted stock
calculation was the Nasdaq Global Select Market closing price on 31 December 2008, or US$43.92. In
terms of the policy, 400 shares were issued directly to each non-executive Director and 800 shares were held
as restricted stock. Non-executive Directors will be issued the second and third tranches subject to agreed
conditions on 1 January 2010 and 1 January 2011 respectively.
In accordance with the Randgold Restricted Share Scheme, Dr M Bristow was awarded 40,000 restricted
shares in August 2008, subject to agreed performance criteria and with a one year vesting period. In order to
bring future awards of restricted shares in line with a three year vesting period, the Remuneration
Committee has proposed and the board agreed to the following recommendation:
•
40,000 restricted shares with an award date of 1 January 2009, two thirds vesting on 1 January 2010 and
the remaining third vesting 1 January 2011;
•
40,000 restricted shares with an award date of 1 January 2009, one third vesting on 1 January 2010, one
third vesting 1 January 2011 and the final third vesting 1 January 2012;
•
40,000 restricted shares with an award date of 1 January 2010, one third vesting on 1 January 2011, one
third vesting 1 January 2012 and the find third vesting 1 January 2013.
All the newly awarded restricted shares are subject to the achievement by the Group of a performance
bettering the HSBC Global Gold Mining Index.
In accordance with the Randgold Restricted Share Scheme, Mr G Shuttleworth was awarded 36,000
restricted shares on 1 July 2007. In accordance with the terms of the contract and having met the agreed
performance criteria, one third of the award of the restricted shares vested on 1 July 2008, the second third
vested on 1 July 2009 and the last third will vest on 1 July 2010.
Mr G Shuttleworth was further awarded another 54,000 restricted shares effective from 2 September 2009.
Subject to the achievement of agreed performance conditions being met for the one year period immediately
prior to each vesting, one third of the award will vest on 2 September 2011, one third on 3 September 2012
and the remaining third will vest on 2 September 2013. The price of the restricted stock was the Nasdaq
Global Select Market closing price on 1 September 2009 of US$56.99.
The vesting of any portion of the award is subject to Mr G Shuttleworth being employed and achieving a
satisfactory performance based on agreed criteria, including an overall “strategic output” achievement score
of 70 per cent. or greater, for a 12 month period preceding each vesting date.
3.4
So far as the Company is aware, as at 27 November 2009 (being the latest practicable date prior to the
publication of this document), the following persons (other than the Directors) had notifiable interests in
three per cent. or more of the issued share capital of the Company, including pursuant to financial
instruments:
Shareholder
BNY (Nominees) Limited(1) . . . . . . . . . . . . .
FMR LLC(2) . . . . . . . . . . . . . . . . . . . . . . . .
Wells Fargo & Company(3) . . . . . . . . . . . . . .
Blackrock Global Funds(4) . . . . . . . . . . . . . .
(1)
(2)
(3)
(4)
..............
..............
..............
..............
Number of
Ordinary Shares
Percentage of
existing issued
share capital
63,166,303
9,191,491
6,470,274
4,253,648
70.18
10.21
7.19
4.73
Shares held by BNY (Nominees) Limited are held for and on behalf of the Company’s ADS holders.
FMR LLC announced on 6 May 2009 that its ownership in the Company amounted to 9,191,491 Ordinary Shares on a consolidated
basis. These shares are believed to be included in the shares held by BNY (Nominees) Limited.
Wells Fargo & Company reported in its Schedule 13G filed with the Securities and Exchange Commission on 1 May 2009 that its
beneficial ownership in the Company amounted to 6,470,274 Ordinary Shares on a consolidated basis. These shares are included in
the shares held by BNY (Nominees) Limited.
Blackrock Global Funds announced on 4 November 2009 that its ownership in the Company amounted to 4,253,648 Ordinary
Shares. These shares are believed to be included in the shares held by BNY (Nominees) Limited.
90
3.5
The date of appointment, date of expiration and length of service for each of the Company’s Directors is set
out below :
Director
M. Bristow . . . . . . . . . . . . . . . . . .
G. Shuttleworth . . . . . . . . . . . . . .
P. Liétard . . . . . . . . . . . . . . . . . . .
N. Cole . . . . . . . . . . . . . . . . . . . .
C. Coleman . . . . . . . . . . . . . . . . .
R. Israel . . . . . . . . . . . . . . . . . . . .
K. Voltaire . . . . . . . . . . . . . . . . . .
J. Walden . . . . . . . . . . . . . . . . . . .
..............
..............
..............
..............
..............
..............
..............
..............
Date of
appointment
Date of expiration
of term
Number of years
served
11.08.95
01.07.07
11.02.98
03.05.06
03.11.08
12.06.97
13.05.06
03.11.08
28.04.12
28.04.11
05.05.10
05.05.10
05.05.13
05.05.10
05.05.10
05.05.13
14
2
11
3
1
12
3
1
3.6
The Company currently has service contracts with each of the executive Directors. The service contract with
Mr. M Bristow is terminable on one year’s notice by the Company and three months’ notice by
Mr. M Bristow, while the service contract with Mr. G Shuttleworth is terminable on six months’ notice
by either party. These do not provide for benefits on termination. The Company does not have written
contracts with its non-executive Directors, however each Director is subject to re-election by the Company’s
shareholders in accordance the Company’s Articles of Association.
4.
Related Party Transactions
The Company, its Directors and major shareholders have not entered into any related party transactions (as set out in
the Standards adopted according to Regulation (EC) No 1606/2002) since 1 January 2006 and up to the date of this
document save that:
4.1
Under the operator agreement between Morila SA and AngloGold Ashanti Services Mali SA, a management
fee calculated as 1 per cent. of the total revenue of Morila, is payable to AngloGold Ashanti Services Mali
SA quarterly in arrears. The attributable management fees for the year ended 31 December 2008 amounted
to US$0.2 million (2007: US$1.3 million). With effect from 15 February 2008 Randgold Resources Limited
(through Mining Investments Jersey Limited) assumed responsibility for the operatorship of Morila SA and
accordingly receives payment of the management fees. The total management fee received for the year
amounted to US$2 million and the amount outstanding at the year end was US$1 million.
4.2
Randgold Resources (through Randgold Resources (Somilo) Ltd) is the operator of Somilo. Total
management fees received for the year ended 31 December 2008 amounted to US$5.7 million
(2007: US$5.1 million). Total interest earned on shareholder loans advanced to Somilo amounted to
US$8.8 million (2007: US$5.8 million) for the year ending 31 December 2008.
4.3
Seven Bridges Trading 14 (Pty) Limited provided administration services to Rockwell Resources RSA (Pty)
Limited (“Rockwell”). Total fees received during the year amounted to US$0.06 million
(2007: US$0.08 million). Total balances outstanding at 31 December 2008 from Rockwell amounted to
US$6,000 (2007: US$11,000).
5.
Material Contracts
5.1
In addition to the Acquisition Documents described in Part Vof this document, the following contracts (not
being contracts entered into in the ordinary course of business) have been entered into by members of the
Group (a) in the two years immediately preceding the date of this document and are, or may be, material or
(b) contain provisions under which any member of the Group has any obligation or entitlement which is
material to the Group as at the date of this document:
(a)
Underwriting agreement dated 28 November 2007 between the Company, HSBC Bank plc and
Citigroup Global Markets Limited for the global offering of 6,000,000 new Ordinary Shares in the
form of Ordinary Shares or American Depositary Shares together with an over-allotment option to
purchase up to 900,000 additional Ordinary Shares in the form of new Ordinary Shares or American
Depositary Shares.
(b)
Arrangement Agreement dated 5 August 2009 between Moto, Subco and the Company which
provided for the exchange of each Moto Share for, at the option of the holder, 0.07061 of an Ordinary
91
Share or ADS of the Company or US$4.47 in cash. The elections by the holders of Moto Shares and
the completion of the Moto Acquisition meant that a total of 6,628,769 ADSs of the Company were
issued and US$76.9 million in cash were paid to holders of Moto Shares.
(c)
Bid Agreement dated 16 July 2009 between the Company and AngloGold (as amended on 27 July
2009) pursuant to which AngloGold has paid a total of approximately US$248.8 million to the
Company, Subco and Moto in return for an indirect 50 per cent. stake in Subco (and an indirect 50
per cent. interest in Moto) which it acquired upon completion of the Moto Acquisition. The funds
raised were used for the purposes of the Moto Acquisition.
(d)
Joint Venture Agreement dated 16 July 2009 between the Company and AngloGold where the
parties have agreed to regulate their relationship as equal shareholders of Jersey JVCo which
indirectly owns 100 per cent. of the issued and outstanding shares of Moto and 70 per cent. of the
issued share capital of Kibali Goldmines. The Joint Venture Agreement provides for, among other
things:
(e)
(i)
representation on the board of directors of Jersey JVCo pro rata to the percentage interests in
Jersey JVCo held by the Company and AngloGold from time to time (initially three directors
each);
(ii)
all decisions with respect to Jersey JVCo and Kibali Goldmines are to be taken on a
consensual basis for so long as neither the Company nor AngloGold holds less than a 45 per
cent. interest in Jersey JVCo. The Joint Venture Agreement also contemplates that the
Company shall be the initial operator of Jersey JVCo and, if agreed by the board of directors
of Kibali Goldmines, of Kibali Goldmines, under the terms of an operatorship agreement
providing for compensation to the operator on a basis consistent with that charged generally
within the international mining industry;
(iii)
pro rata funding of Jersey JVCo and Kibali Goldmines and provision for dilution in the event
of a failure to meet a funding obligation; and
(iv)
a right of first refusal in the event that either the Company or AngloGold wishes to sell its
interest in Jersey JVCo and a “call” option at a price based on fair value in the event that the
interest of either party in Jersey JVCo is diluted below 35 per cent. as a result of a failure to
meet funding commitments (subject, in the case of the Company, to certain limits on its right
to receive payment if the purchase price would exceed 24.9 per cent. of the Company’s
market capitalisation).
Underwriting agreement dated 29 July 2009 between the Company, HSBC Bank plc and Merrill
Lynch International (together the “Representatives”) in relation to the Global Offer (including
ordinary shares in the form of ADSs) in respect of 5,000,000 new Ordinary Shares. Key terms of the
agreement include:
(i)
the Company granted the Representatives an over-allotment option to purchase (severally
and not jointly) up to an additional 750,000 Ordinary Shares, at the offering price less
underwriting discounts and commissions. This option was exercisable within 30 days from
the closing date of the Global Offer to cover over-allotments in the Global Offer, if any, and
was exercised; and
(ii)
the Company indemnified the underwriters and others against specified liabilities, including
liabilities under the US Securities Act and other applicable securities laws, and to contribute
to payments the underwriters may be required to make in respect of those liabilities, losses
and expenses.
The Company completed the Global Offer of 5,750,000 new Ordinary Shares in August 2009,
raising approximately US$331 million after underwriting commissions and before expenses.
5.2
The following contracts (not being contracts entered into in the ordinary course of business) have been
entered into by Kibali Goldmines (a) in the two years immediately preceding the date of this document and
are, or may be, material to Kibali Goldmines or (b) contain provisions under which Kibali Goldmines has
any obligation or entitlement which is material to Kibali Goldmines as at the date of this document:
(a)
The Kibali Acquisition Agreement.
92
6.
(b)
The Declaration.
(c)
The Original JV Contract as proposed to be amended by the Restated JV Contract.
(d)
The Technical Services Agreement.
(e)
Moto Financing Agreement dated 10 March 2009 between Moto Goldmines Australia PTY Limited
(a subsidiary of Moto) and Kibali Goldmines pursuant to which certain sums were agreed to be
advanced to Kibali Goldmines. At the date of signature, US$125 million had been loaned, with
further amounts available for loan. Interest was payable on all loans at market rate.
(f)
OKIMO Financing Agreement dated 10 March 2009 between OKIMO and Kibali Goldmines
pursuant to which certain sums were agreed to be advanced to OKIMO by Kibali Goldmines. At the
date of signature, US$2.2 had been loaned, with further amounts available for loan. Interest was
payable on all loans at market rate.
(g)
A tripartite agreement relating to debt financing dated 12 June 2009 between Kibali Goldmines,
Moto, Société d’Organisation, de Participation et de Management, SPRL and OKIMO pursuant to
which debt totalling US$34,860,739 (including interest) as at 31 May 2009 originally due by
OKIMO to Société d’Organisation, de Participation et de Management, SPRL was assumed by
Kibali Goldmines and under which OKIMO will be exempt from having to make payment of such
debt.
(h)
The Revised ATF Agreement as amended by the provisions of the Restated JV Contract pursuant to
which Kibali Goldmines provided technical services and financial assistance in respect of the Kibali
Gold Project in order to develop the Kibali Gold Project (including the obligation to provide a loan
facility to OKIMO of up to US$7 million) in return for payment from OKIMO and a 70 per cent.
Working capital of the Enlarged Group
The Company is of the opinion that the Enlarged Group has sufficient working capital for its present requirements,
that is, for at least the next twelve months from the date of this document.
7.
Litigation
7.1
Save as set out below neither the Company nor any other member of the Group is or has been engaged in any
legal or arbitration proceedings (including any such proceedings which are pending or threatened of which
the Company is aware) which may have or have had during the 12 months prior to the date of this document
a significant effect on the financial position of the Group:
(a)
In August 2004, Randgold entered into a fixed lump sum turnkey contract for US$63 million for the
design, supply, construction and commissioning of the Loulo processing plant and infrastructure
with MDM Ferroman (Pty) Ltd. At the end of 2005, after making advances and additional payments
to MDM totalling $26 million in excess of the contract, Randgold determined that MDM was unable
to perform its obligations under this contract, at which time Randgold enforced a contractual remedy
which allowed it to act as its own general contractor and to complete the remaining work on the
Loulo project that was required under the contract with MDM. The Group believes that it is entitled
to recover US$59.3 million from MDM, comprising payments totalling US$32 million which have
been capitalised as part of the cost of the project, US$15.2 million in respect of damages arising from
delayed completion of the project, and advances of US$12.0 million included in receivables. Of this
latter amount US$7 million is secured by performance bonds and the remainder is secured by various
personal guarantees and other assets.
As part of the Group’s efforts to recoup these monies, MDM was put into liquidation on 1 February
2006. This resulted in a South African Companies Act Section 417 investigation into the business
and financial activities of MDM, its affiliated companies and their directors. This investigation was
completed in the last quarter of 2007 and legal proceedings have been instituted by the liquidators
against numerous creditors who had received preferential payments in the six months prior to
MDM’s liquidation. Proceedings are ongoing and it is expected that some of these claims will be
heard by the South African courts during 2009. In January 2009, the liquidator declared and paid the
93
first dividend of US$0.1 million from the insolvent estate, leaving an outstanding balance of
US$12 million as at September 30, 2009.
The Group believes that it will be able to recover in full the US$12 million included in receivables.
However, this is dependent on the amounts which can be recovered from the performance bonds,
personal guarantees and other assets provided as security. Any shortfall is expected to be recovered
from any free residue accruing to the insolvent estate. The aggregate amount which will ultimately
be recovered cannot presently be determined. The Company’s financial statements do not reflect any
additional provision that may be required if the US$12 million cannot be recovered in full.
Recovery of the other $47.1 million is dependent on the extent to which there is any amount in the
free residue. The ultimate outcome of this claim cannot presently be determined and there is
significant uncertainty surrounding the amount that will ultimately be recovered. The Company’s
financial statements do not reflect any adjustment to the cost of the Loulo development that may
arise from this claim, or any additional income that may arise from the claim for damages, or any
charge that may arise from MDM’s inability to settle amounts that are determined to be payable by
MDM to Randgold in respect of the Loulo development.
(b)
As at 31 December 2008 and 30 September 2009, the Group had approximately US$257.6 million
and US$520.8 million of cash and cash equivalents, respectively. In addition, the Group had
available-for-sale financial assets with a carrying value of US$32.7 million as of September 30,
2009. The available-for-sale financial assets consist of ARS. In the third quarter of 2007, certain
ARS with a cost value of US$49 million failed at auctions due to the sudden and unusual
deterioration in the global credit and capital markets, and have since experienced multiple failed
auctions. The Directors believe that the Group has been the subject of a fraud committed by brokers
working for a large investment bank through material misrepresentations of the nature of the ARS in
which the Group was invested. Consequently, the Group has engaged lawyers and in October 2008
the Group commenced arbitration proceedings for US$49 million against the relevant bank and the
brokers for their misconduct. These individuals are the subject of criminal proceedings instigated by
the US Government, in which the Group has cooperated with the Department of Justice, and
regulatory proceedings instigated by the SEC. In July 2009, one of the two brokers pleaded guilty in
the criminal proceeding, and in August 2009, a jury returned a guilty verdict against the other broker.
The Group believes the criminal and regulatory proceedings reinforce its position.
7.2
Kibali Goldmines has not been engaged in any legal or arbitration proceedings (including any such
proceedings which are pending or threatened of which the Company is aware) which may have or have had
during the 12 months prior to the date of this document a significant effect on the financial position of Kibali
Goldmines.
8.
Significant change
8.1
Save for the Moto Acquisition (further described in paragraph 1 of Part I and paragraphs 5.1(b) and 5.1(c) of
this Part VI) and the sale of Randgold’s entire interest in the Kiaka gold project in Burkina Faso (further
described in paragraph 3 of Part I) there has been no significant change in the financial or trading position of
the Group since 30 September 2009, being the date of the last unaudited interim financial information of the
Company.
8.2
There has been no significant change in the financial or trading position of Kibali Goldmines since 30 June
2009, being the date of the last unaudited financial statements of Moto.
9.
Consents
9.1
HSBC has given and not withdrawn its written consent to the issue of this document with the inclusion in it
of references to its name in the form and context in which it appears.
9.2
BDO LLP (a member firm of the Institute of Chartered Accountants in England and Wales) has given and
has not withdrawn its written consent to the inclusion in this document of its report on the reconciliation of
financial information on Moto and its report on the pro forma financial information set out in Parts III and IV
respectively, in the form and context in which they appear.
94
9.3
Cube Consulting Pty Ltd has given and has not withdrawn its written consent to the inclusion in this
document of the Expert’s Report set out in Appendix 1 and the references to its name in the form and context
in which they respectively appear.
9.4
Lycopodium Minerals Pty Ltd has given and has not withdrawn its written consent to the inclusion in this
9.5
SRK Consulting Pty Ltd has given and has not withdrawn its written consent to the inclusion in this
10.
Documents available for inspection and available information
Copies of the following documents will be available for inspection at the offices of Ashurst LLP, Broadwalk House,
5 Appold Street, London EC2A 2HA and at the registered office of the Company during normal business hours on
any weekday (Saturdays, Sundays and public holidays excepted) until the conclusion of the Extraordinary General
Meeting:
(a)
the memorandum and articles of association of the Company;
(b)
the Expert’s Report;
(c)
the published audited consolidated accounts of the Group for the two financial years ended 31 December
2008;
(d)
the opinions by BDO set out in Parts III and IV of this document;
(e)
the Kibali Acquisition Agreement (in the final form in French with an English translation);
(f)
the Restated JV Contract (in the final form in French with an English translation);
(g)
the Protocol (in the final form in French with an English translation);
(h)
the Declaration (in the final form in French with an English translation);
(i)
the Technical Services Agreement;
(j)
all other documents described in paragraph 5 of this Part VI
(k)
this document.
95
PART VII
Definitions
The following definitions apply throughout this document and the accompanying Form of Proxy, unless the context
otherwise requires:
“2007 Feasibility Study”
the feasibility study in relation to Kibali completed in September 2007
“Acquisition Documents”
the Kibali Acquisition Agreement, the Protocol, the Restated JV
Contract and the Declaration
“ADRs” or “American Depositary
Receipts”
the American Depositary Receipts of the Company which evidence
ADSs
“ADSs” or “American Depositary Shares”
the American Depositary Shares of the Company, each of which
represents one Ordinary Share
“AngloGold”
AngloGold Ashanti Limited
“Arrangement Agreement”
the arrangement agreement dated 5 August 2009 between Moto,
Subco and the Company relating to the Moto Acquisition
“ARS”
auction rate securities
“AUS$”
Australian Dollars
“Balancing Retirement Amount”
the amount of approximately US$10.8 million being due to OKIMO
employees less an amount currently expected to be US$2.8 million
which shall be funded by Kibali Goldmines, being a net amount of
approximately US$8 million
“Bid Agreement”
the bid agreement dated 16 July 2009 between the Company and
AngloGold, pursuant to which the parties agreed to cooperate in
respect of the Moto Acquisition (as amended by those parties on
27 July 2009)
“Board” or “Directors”
the Board of Directors of the Company
“Border”
Border Energy PTY Limited, a wholly-owned indirect subsidiary of
Moto
“Burkina Faso”
the Republic of Burkina Faso
“Business”
to conduct exploration, exploitation, development and construction of
Kibali, including any exploitation of waste materials
“Cameroon”
the Republic of Cameroon
“Canadian National Instrument 43-101”
National Instrument 43-101 — Standards of Disclosure for Mineral
Projects of the Canadian Securities Administrators
“Cash Election”
the cash election that Moto Shareholders could elect to receive in lieu
of Ordinary Shares or ADSs pursuant to the Moto Acquisition
“Central African Republic”
the state of the Central African Republic
“Completion”
completion of the Kibali Acquisition Agreement
“Consideration ADSs”
new ADSs issued to the holders of Moto Shares, pursuant to the Moto
Acquisition
“Consideration Shares”
new Ordinary Shares issued to the holders of Moto Shares, pursuant to
the Moto Acquisition which includes where the context requires,
Consideration ADSs
“Consolidated Lease”
a lease agreement signed in July 2008 between OKIMO and Kibali
Goldmines in respect of the Kibali area
“Consolidated Perimeter”
the surface area covered by the Exploitation Permits held by Kibali
Goldmines
96
PART VII - Definitions
“Côte d’Ivoire”
the Republic of Côte d’Ivoire
“C$”
Canadian Dollars
“Debt”
all amounts characterised as debt including loans or indebtedness
owed to Moto, Border and/or Kibali Goldmines from OKIMO
together with interest accrued thereon at completion of the Kibali
Acquisition
“Debt Adjustment”
the amount notified by Kibali Goldmines prior to Completion to the
parties to the Kibali Acquisition Agreement equal to the Debt
“Declaration”
the declaration given by the Government in favor of Randgold,
AngloGold, Moto and Kibali Goldmines details of which are set
out in Part V of this document
“Directors” or “Board”
the directors of the Company as at the date of this document whose
names are set out on page 89 of this document
“DRC”
the Democratic Republic of the Congo
“DTRs” or “ Disclosure Rules and
Transparency Rules”
the disclosure rules and the transparency rules as made by the FSA
under Part VI of FSMA as amended from time to time
“Enlarged Group”
the Group as enlarged by the Kibali Acquisition
“Executive Committee”
the executive committee of Kibali Goldmines to be established
pursuant to the Restated JV Contract
“Existing Tailings”
the tailings already existing on the Consolidated Perimeter resulting
from the previous exploitation by OKIMO
“Expert’s Report”
the mineral expert’s report produced by Cube Consulting Pty Ltd,
Lycopodium Minerals Pty Ltd and SRK Consulting Pty Ltd set out in
Appendix 1 of this circular
“Exploitation Permits”
exploitation permits numbered 5052, 5073, 5088, 11447, 11467,
11468, 11469, 11470, 11471 and 11472 relating to Kibali
“Extraordinary General Meeting” or
“EGM”
the extraordinary general meeting of the Company convened for
16 December 2009 (or any adjournment of it), notice of which is
set out at the end of this document
“Feasibility Study”
the feasibility study in relation to Kibali completed in March 2009
“Financial Services Authority” or “FSA”
the Financial Services Authority of the UK in its capacity as the
competent authority for the purposes of Part VI of FSMA and in the
exercise of its functions in respect of admission to the Official List
otherwise than in accordance with Part VI of FSMA
“Form of Proxy”
the form of proxy relating to the EGM being sent to Shareholders with
this document
“FSMA”
the Financial Services and Markets Act 2000 of England and Wales, as
amended
“GAAP”
generally accepted accounting principles
“Gara”
one of the two underground mines at Loulo
“Global Offer”
the global offer of shares announced by the Company in August 2009
“Gounkoto”
the Company’s mining project in Mali
“Government”
the Government of the DRC
“Group”
the Company and its existing subsidiary undertakings;
“HSBC”
HSBC Bank plc
97
“IFRS”
International Financial Reporting Standards
“Jersey JVCo”
Kibali (Jersey) Limited which is owned indirectly, 50 per cent. by
Randgold and 50 per cent. by AngloGold and which indirectly owns
100% of Subco
“Joint Venture Agreement” or “Jersey
JVCo Joint Venture Agreement”
the joint venture agreement between Randgold and AngloGold dated
16 July 2009 regulating their relationship in relation to Jersey JVCo
“KCD”
Karagba-Chauffeur-Durba and Seessenge Deeps
“Kibali” or “Kibali Gold Project”
means the gold project located in the north-east of the DRC,
approximately 560 kilometres northeast of the city of Kisangari
and 150 kilometres west of the Ugandan border town of Arua owned
by Kibali Goldmines, formerly known as the Moto gold project
“Kibali Acquisition”
the proposed acquisition of 20 per cent. of the issued share capital of
Kibali Goldmines pursuant to the Kibali Acquisition Agreement
“Kibali Acquisition Agreement”
the agreement dated 31 October 2009 between OKIMO, Randgold,
AngloGold, Moto, Border, Jersey JVCo, Kibali Goldmines and the
Government for the acquisition of the Sale Shares
“Kibali Board”
the management board of Kibali Goldmines
“Kibali Goldmines”
“Kibali Resolution”
a resolution of the shareholders of Kibali Goldmines approving the
sale and purchase contemplated in the OKIMO Acquisition
Agreement, the appointment of new directors as contemplated in
the Restated JV Contract and the adoption of the Restated Articles,
conditional only on the Kibali Acquisition Agreement becoming
unconditional
“Kibali Retirement Amount”
the amount of US$2,800,000 being owed to OKIMO employees which
shall be funded by Kibali Goldmines
“Listing Rules”
the listing rules made by the FSA under Part VI of FSMA (as amended
from time to time)
“Loulo”
the Company’s mine located at Loulo in Mali
“Mali”
the Republic of Mali
“Massawa” or “Massawa project”
the Company’s mining project in Senegal
“MDM”
MDM Ferroman (Pty) Limited
“Mining Code”
Law No. 007/2002 of 11 July 2002 relating to the Mining Code of the
DRC as amended from time to time
“Mining Regulations”
the decree no. 038/2003 of 26 March 2003 establishing the Mining
Regulations, as amended from time to time
“Morila” or “Morila mine”
the Company’s mine located at Morila in Mali
“Moto”
Moto Goldmines Limited
“Moto Acquisition”
the acquisition of the entire issued share capital of Moto by Subco
which completed on 15 October 2009
“Moto Financing Agreement”
the agreement dated 10 March 2009 between Moto Goldmines
Australia PTY Limited (a subsidiary of Moto) and Kibali Goldmines
pursuant to which certain sums were advanced to Kibali Goldmines.
“Moto Group”
Moto and its subsidiary undertakings
98
“Moto Incentive Stock Option Plan”
the former Moto stock option plan for directors and senior executives
of Moto
“Moto Share Options”
options to receive Moto Shares granted under the Moto Incentive
Stock Option Plan
“Moto Shareholders”
former holders of Moto Shares and where the context requires holders
of Moto Share Options
“Moto Shares”
common shares of Moto, including shares represented by depositary
interests
“Nasdaq”
the National Association of Securities Dealers Automated Quotations,
an American stock exchange
“Nasdaq Global Select Market”
a market on the Nasdaq
“Nasdaq National Market”
a market on the Nasdaq
“Notification Letter”
means a notification letter from the Government regarding a meeting
of the cabinet of the Government, confirming that it has considered the
Kibali Acquisition and its terms and confirming that the Kibali
Acquisition is in accordance with DRC law
“Official List”
the Official List of the Financial Services Authority
“OKIMO”
Office des Mines d’Or de Kilo-Moto, a Congolese para-statal entity
“OKIMO Financing Agreement”
the agreement dated 10 March 2009 between OKIMO and Kibali
Goldmines pursuant to which certain sums were advanced to OKIMO.
“Ordinary Shares”
ordinary shares of US$0.05 each in the capital of the Company
“Original JV Contract”
the contract of association executed by OKIMO, Moto, Border and
Kibali Goldmines on 10 March 2009
“Prospectus Rules”
the prospectus rules as made by the FSA under Part VI of FSMA as
amended from time to time
“Protocol”
the protocol given by the Government to Moto and Jersey JVCo,
details of which are set out in Part V of this document
“Protocol Consideration”
the sum of US$4.5 million, paid by Moto pursuant to the Protocol
“Randgold” or the “Company”
“Resolution”
the resolution set out in the notice of EGM
“Restated Articles”
the articles of association of Kibali Goldmines as proposed to be
restated with effect from Completion
“Restated JV Contract”
the joint venture agreement between OKIMO, Moto, Border and
Kibali Goldmines in relation to Kibali Goldmines and Kibali as
proposed to be restated with effect from Completion, and as described
in Part V of this document
“Revised ATF Agreement”
the revised financial and technical assistance contract entered into
between OKIMO and Kibali Goldmines dated 3 July 2008 and as
amended on 30 September 2008
“Sale Price”
the consideration payable on completion of the Kibali Acquisition
Agreement as set out in that agreement
“Sale Shares”
the 2,000,000 shares in Kibali Goldmines to be acquired pursuant to
the Kibali Acquisition Agreement
“SEC”
U.S. Securities and Exchange Commission
“Senegal”
the Republic of Senegal
99
“Shareholders” or “Randgold
Shareholders”
holders of Ordinary Shares
“Social Fund Amount”
means the amount of US$8 million coming out of the Sale Price to be
used for the purposes of building roads, an airfield, hospitals and other
social and infrastructure works in the Doko region in the vicinity of
Kibali
“Somilo”
Société des Mines de Loulo SA, a subsidiary of the Company
“Subco”
0858065 B.C. Ltd., a corporation incorporated under the laws of
British Columbia, which is indirectly wholly-owned by Jersey JVCo,
(which in turn is owned indirectly 50 per cent. by Randgold and
indirectly 50 per cent. by AngloGold,) and which acquired Moto
“Tanzania”
the United Republic of Tanzania
“Technical Services Agreement”
an agreement dated 20 November 2009 between the Technical
Services Provider and Kibali Goldmines, details of which are set
out in Part V of this document
“Technical Services Provider” or “Kibali
Services”
Kibali Services Limited, being a wholly-owned subsidiary of Jersey
JVCo
“Tongon” or “Tongon project”
the Company’s mining project at Tongon in Côte d’Ivoire
“UK” or “United Kingdom”
the United Kingdom of Great Britain and Northern Ireland
“Umbrella Authorities”
the DRC Minister of Mines and Minister of Portfolio
“U.S. Securities Act”
the United States Securities Act of 1933 as amended
“USD” or “US$” or “$”
United States Dollars
“Volta”
Volta Resources Inc
“Yalea”
one of the two underground mines at Loulo
100
Glossary
Part A — Technical terms used in this document
“aeromagnetic”
airborne geophysical programme which measures the magnetic
properties of the different lithologies at the surface
“Au”
the chemical symbol for the element gold
“CIL”
carbon in leach — a series of tanks containing activated carbon onto
which gold in cyanide solution is absorbed
“cut-off”
the minimum concentration (grade) of the valuable component in a
mass of rock that will produce sufficient revenue to pay for the cost of
mining, processing and product sale
“disseminated”
ore carrying fine particles, usually sulphides scattered throughout the
rock
“dyke”
a sheet-like intrusion which cuts across bedding or the main structural
fabric in a rock
“elution”
a process to remove gold in solution from carbon by passing caustic
solution through the carbon at high temperature and pressure
“facies”
the features of a sedimentary rock which defines its original
sedimentary environment
“felsic”
a compositional term which indicates a dominance of silicates
“g/t”
grams per tonne
“JORC Code”
an acronym for Joint Ore Reserve Committee, an Australian
committee formed by the Australian Stock Exchange and Australasian
Institute of Mining and Metallurgy, the purpose of which is to set the
regulatory enforceable standards for the Code of Practice for the
reporting of Mineral Resources and Mineral Reserves
“km”
kilometres
2
“km ”
square kilometres
“Life of Mine”
the time in which, given the available capital, the ore reserves of a
mine will be extracted
“M”
metre
“mafic”
a compositional term which indicates a dominance of ferromagnesian
minerals
“Moz”
million ounces
“Mtpa”
million tonnes per annum
“MW”
megawatt (one million watts), a measure of energy
“paste fill”
backfill material for underground support produced from sand or slime
product and usually mixed with cement prior to placement
“protolith”
original lithology
“pyrite”
iron sulphide (fools gold) which is often associated directly with gold
in ore deposits but has no intrinsic value
“pyroclastic”
fragmental volcanic material which has been blown from volcanoes
“sill”
a sheet-like intrusion which conforms with bedding or the main
structural fabric in a rock
“stocks”
a network of intense veining, usually relating to hydrothermal activity,
or a medium sized plug of intrusive rock
“volcaniclastic”
clastic rocks derived from the ejecta from volcanoes
101
Part B — Reserves and Resources definitions
Mineral Resource
Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and
Measured categories. An Inferred Mineral Resource has a lower level of confidence than that applied to an Indicated
Mineral Resource. An Indicated Mineral Resource has a higher level of confidence than an Inferred Mineral
Resource but has a lower level of confidence than a Measured Mineral Resource.
A Mineral Resource is a concentration or occurrence of natural, solid, inorganic or fossilised organic material in or
on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for
economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource
are known, estimated or interpreted from specific geological evidence and knowledge.
The term Mineral Resource covers mineralisation and natural material of intrinsic economic interest which has been
identified and estimated through exploration and sampling and within which Mineral Reserves may subsequently
be defined by the consideration and application of technical, economic, legal, environmental, socio-economic and
governmental factors. A Mineral Resource is an inventory of mineralisation that under realistically assumed and
justifiable technical and economic conditions might become economically extractable.
Inferred Mineral Resource
An “Inferred Mineral Resource” is that part of a Mineral Resource for which quantity and grade or quality can be
estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified,
geological and grade continuity. The estimate is based on limited information and sampling gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.
Due to the uncertainty which may attach to Inferred Mineral Resources, it cannot be assumed that all or any part of
an Inferred Mineral Resource will be upgraded to an Indicated or Measured Mineral Resource as a result of
continued exploration. Confidence in the estimate is insufficient to allow the meaningful application of technical
and economic parameters or to enable an evaluation of economic viability worthy of public disclosure. Inferred
Mineral Resources must be excluded from estimates forming the basis of feasibility or other economic studies.
Indicated Mineral Resource
An “Indicated Mineral Resource” is that part of a Mineral Resource for which quantity, grade or quality, densities,
shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate
application of technical and economic parameters, to support mine planning and evaluation of the economic
viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered
through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are
spaced closely enough for geological and grade continuity to be reasonably assumed.
Mineralisation may be classified as an Indicated Mineral Resource when the nature, quality, quantity and
distribution of data are such as to allow confident interpretation of the geological framework and to reasonably
assume the continuity of mineralisation. An Indicated Mineral Resource estimate is of sufficient quality to support a
preliminary feasibility study which can serve as the basis for major development decisions.
Measured Mineral Resource
A “Measured Mineral Resource” is that part of a Mineral Resource for which quantity, grade or quality, densities,
shape, physical characteristics are so well established that they can be estimated with confidence sufficient to allow
the appropriate application of technical and economic parameters, to support production planning and evaluation of
the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and
testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits,
workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.
Mineralisation or other natural material of economic interest may be classified as a Measured Mineral Resource
when the nature, quality, quantity and distribution of data are such that the tonnage and grade of the mineralisation
can be estimated to within close limits and that variation from the estimate would not significantly affect potential
economic viability. This category requires a high level of confidence in, and understanding of, the geology and
controls of the mineral deposit.
102
Part B - Reserves and Resources definitions
Mineral Reserve
Mineral Reserves are sub-divided in order of increasing confidence into Probable Mineral Reserves and Proven
Mineral Reserves. A Probable Mineral Reserve has a lower level of confidence than a Proven Mineral Reserve.
A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated
by at least a preliminary feasibility study. This Study must include adequate information on mining, processing,
metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic
extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur
when the material is mined.
Mineral Reserves are those parts of Mineral Resources which, after the application of all mining factors, result in an
estimated tonnage and grade which is the basis of an economically viable project after taking account of all relevant
processing, metallurgical, economic, marketing, legal, environment, socio-economic and government factors.
Mineral Reserves are inclusive of diluting material that will be mined in conjunction with the Mineral Reserves and
delivered to the treatment plant or equivalent facility. The term “Mineral Reserve” need not necessarily signify that
extraction facilities are in place or operative or that all governmental approvals have been received. It does signify
that there are reasonable expectations of such approvals.
Probable Mineral Reserve
A “Probable Mineral Reserve” is the economically mineable part of an Indicated Mineral Resource, and in some
circumstances a Measured Mineral Resource demonstrated by at least a preliminary feasibility study. This study
must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that
demonstrate, at the time of reporting, that economic extraction can be justified.
Proven Mineral Reserve
A “Proven Mineral Reserve” is the economically mineable part of a Measured Mineral Resource demonstrated by at
least a preliminary feasibility study. This study must include adequate information on mining, processing,
metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic
extraction is justified.
Application of the Proven Mineral Reserve category implies the highest degree of confidence in the estimate. The
term should be restricted to that part of the deposit where production planning is taking place and for which any
variation in the estimate would not significantly affect potential economic viability.
103
NOTICE is hereby given that an extraordinary general meeting of Randgold Resources Limited (the “Company”)
will be held at 8:30 a.m. on 16 December 2009 at La Motte Chambers, La Motte Street, St Helier, Jersey JE1 1BJ,
Channel Islands for the purpose of considering and, if thought fit, passing the following resolution of the Company
which will be proposed as an ordinary resolution:
ORDINARY RESOLUTION
THAT the proposed acquisition by Kibali (Jersey) Limited of shares in Kibali Goldmines s.p.r.l. be and is hereby
approved on the terms and conditions contained in the acquisition agreement dated 31 October 2009 between the
Company, L’Office des Mines d’Or de Kilo-Moto, AngloGold Ashanti Limited, Moto Goldmines Limited, Border
Energy PTY Limited, Kibali (Jersey) Limited, Kibali Goldmines s.p.r.l and the Government of the Democratic
Republic of the Congo and described in the circular to the Company’s shareholders dated 30 November 2009 and
with such non-material amendments thereto as the directors of the Company (or any duly constituted committee
thereof) may consider appropriate.
BY ORDER OF THE BOARD OF THE COMPANY
David Haddon
Company Secretary
Dated: 30 November 2009
Registered Office: La Motte Chambers, La Motte Street, St. Helier, Jersey JE1 1BJ, Channel Islands Incorporated in
Jersey with limited liability under the Companies (Jersey) Law 1991 with registered number 62686
Notes:
1.
Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that in
order to have the right to attend and vote at the Extraordinary General Meeting (and also for the purpose of
determining how many votes a person entitled to attend and vote may cast), a person must be entered on the
register of members of the Company at 8:30 a.m. on 14 December 2009 or, in the event of any adjournment,
at 8:30 a.m. on the date which is two days before the day of the adjourned meeting. Changes to entries on the
register of members after this time shall be disregarded in determining the rights of any person to attend or
vote at the meeting.
2.
Only holders of ordinary shares are entitled to attend and vote at this meeting.
A member is entitled to appoint another person as his proxy to exercise all or any of his rights to attend, to
speak and to vote at the Extraordinary General Meeting. A member may appoint more than one proxy in
relation to the meeting, provided that each proxy is appointed to exercise the rights attached to a different
share or shares held by him. A proxy need not be a member of the Company. A form of proxy for the meeting
is enclosed.
To be valid any proxy form or other instrument appointing a proxy must be received by post or by hand
(during normal business hours only) to our registrar Computershare Investor Services (Jersey) Limited at PO
Box 83, Ordnance House, 31 Pier Road, St Helier, Jersey, JE4 8PW, in each case no later than 8:30 a.m. on
14 December 2009. If you are a CREST member, see note 3 below. Completion of a form of proxy, or other
instrument appointing a proxy or any CREST Proxy Instruction will not preclude a member attending and
voting in person at the meeting if he/she wishes to do so.
3.
Alternatively, if you are a member of CREST, you may register the appointment of a proxy by using the
CREST electronic proxy appointment service. Further details are contained below.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment
service may do so for the Extraordinary General Meeting and any adjournment(s) thereof by using the
procedures, and to the address, described in the CREST Manual subject to the provisions of the Company’s
articles of association. CREST personal members or other CREST sponsored members, and those CREST
members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting
service provider(s), who will be able to take the appropriate action on their behalf.
104
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate
CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with
Euroclear UK and Ireland (formerly CRESTCo) specifications and must contain the information required
for such instructions, as described in the CREST Manual (available via www.euroclear.com/CREST). The
message, regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction
given to a previously appointed proxy, must, in order to be valid, be transmitted so as to be received by the
issuer’s agent (ID3RA50) by the latest time(s) for receipt of proxy appointments specified in the notice of
the Extraordinary General Meeting. For this purpose, the time of receipt will be taken to be the time (as
determined by the time stamp applied to the message by the CREST Applications Host) from which the
issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.
After this time any change of instructions to proxies appointed through CREST should be communicated to
the appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service provider(s) should note
that Euroclear UK and Ireland (formerly CRESTCo) does not make available special procedures in CREST
for any particular messages. Normal system timings and limitations will therefore apply in relation to the
input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if
the CREST member is a CREST personal member or sponsored member or has appointed a voting service
provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be
necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In
this connection, CREST members and, where applicable, their CREST sponsors or voting service
provider(s) are referred, in particular, to those sections of the CREST Manual concerning practical
limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in
Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
4.
Any corporation which is a member can appoint one or more corporate representatives who may exercise on
its behalf all of its powers as a member provided that they do not do so in relation to the same shares.
105
APPENDIX 1
Mineral Expert’s Report
30 November 2009
The Directors
La Motte Chambers
La Motte Street
St Helier
Jersey
JE1 1BJ
Channel Islands
Dear Sirs
Re: Independent Technical Report on the Kibali Gold Project, Moto Goldfields, DRC
Purpose of Report
Cube Consulting Pty Ltd (Cube) was requested in August 2009, by Moto Goldmines Ltd (Moto) to compile an
updated resource estimate of the combined Karagba-Chauffeur-Durba and Sessenge Deeps (KCD) deposit which
forms a part of the Kibali Gold Project. Randgold Resources Limited (Randgold) and Moto subsequently agreed the
terms of a recommended transaction pursuant to which Kibali (Jersey) Limited, a company jointly owned by
Randgold and AngloGold Ashanti Limited (AngloGold), would indirectly acquire all of the common shares of
Moto. The Moto Acquisition was completed on 15 October 2009. On 31 October 2009 Randgold agreed to
indirectly acquire, jointly with AngloGold, a further 20 per cent. interest in the issued share capital of Kibali
Goldmines s.p.r.l. of which Randgold’s attributable interest will be 10 per cent.. Completion of the Kibali
Acquisition is conditional, inter alia, on the approval of shareholders of Randgold. Randgold requested Cube
to complete the updated resource estimate for the KCD deposits as originally requested by Moto and to report the
total Kibali Gold Project Resources within criteria laid out by the JORC Code. The Kibali Project open pit
Resources have been classified as the insitu resources falling within the $US1,000 per oz Whittle pit shell at a 0.5g/t
gold cut-off. In the case of the KCD deposits the underground resources are reported as those insitu resources below
the underground interface (5685mRL) and reported at a 2g/t gold cut-off.
This report, inter alia, details the updated reporting of the total Mineral Resources for the Kibali Gold Project and
the re-estimation of the KCD deposit. It should be noted that only the KCD deposit is a re-estimated Mineral
Resource and the changes to the Mineral Resource inventories in all other deposits is a function of the reporting
methodology.
As a consequence of the ongoing nature of the Kibali Gold Project this report also includes information and
conclusions directly from the previous technical report for the Kibali Gold Project. In particular, sections of this
report detailing Mineral Reserve Estimates, Mineral Processing and Metallurgical Testing, Environmental
Considerations and Economic Analysis are taken directly from the Amended and Restated Technical Report
prepared by Cube Consulting Pty Ltd, Lycopodium Minerals Pty Ltd, SRK Consulting Pty Ltd and Moto Goldmines
Ltd, 20th April 2009.
This independent technical report is intended to comply with disclosure and reporting requirements set forth by the
United Kingdom Financial Services Authority’s requirement for a Mineral Expert’s Report.
Capability and Independence
Cube is an Australian owned company providing geological and mining consulting services and software systems to
the resources and industrial sectors. The organisation is well resourced with an established office in Perth, Western
Australia and has undertaken work for a number of substantial international mining houses. Cube Consulting
comprises a team of technical professionals dedicated to providing excellence of service in their field of expertise.
Neither Cube nor the authors of this report have or have had previously any material interest in Moto, Randgold or
related entities or interests. Cube’s relationship with Moto and now Randgold is solely a professional association
between client and independent consultant. The report has been prepared in return for fees based on agreed
commercial rates and the payment of these fees is in no way contingent on the results of this report.
Details of qualifications of the consultants who carried out the work are included in Table A, B and C below and
Section 18 of the Report.
Scope of Work, Materiality and Exclusions
The scope of Cube’s engagement was as follows:
•
Review and update the geological/mineralisation interpretations for KCD incorporating available information
as of 31st August 2009;
•
Undertake statistical and geostatistical analysis of the mineralised material;
•
Estimate and update the KCD deposit local recoverable open pit gold Mineral Resources;
•
Undertake a refined geological interpretation for all the KCD Lodes based on distinctive alteration
characteristics observed to be internal to the broader mineralised zone. The intention of this refined
interpretation was to provide an objective basis for the delineation and estimation of a higher grade subset
of mineralisation appropriate for reporting of underground gold Mineral Resource;
•
Undertake an interpretation of the halo mineralisation encompassing and adjacent to the most significant KCD
Acsa lodes, to provide dilution grades for an underground evaluation;
•
Estimate and update the KCD deposit global insitu underground gold Mineral Resources;
•
Independently classify the Mineral Resources for the total Kibali Gold Project in accordance with The 2004
Australasian Code for Reporting of Mineral Resources and Ore Reserves (2004 JORC Code) and the Canadian
Companion Policy 43-101CP.
•
Report the open pit Mineral resources for the total Kibali Gold Project based on the $US1,000 per oz Whittle pit
shell at a 0.5g/t gold cut-off;
•
Report the KCD underground Resources below the underground interface (5685mRL) and at a 2g/t gold cut-off.
The estimation work started in September 2009 and was completed during October 2009.
Reliance on Information
This report is based on data and information gathered by the authors and Moto since the Kibali Gold Project’s
commencement.
The components of this report addressing the September 2009 Mineral Resource update are based on drilling data
and other information gathered by Moto during the period February 2004 to August 2009.
Specifically, Moto provided Cube with the following digital information prior to or during the Mineral Resource
estimation project:
•
Separate validated drilling data for each deposit;
•
Summary details of drilling data quality including age of data, drilling method, location and survey accuracy,
sampling procedures, and analytical methods;
•
Description of mineralisation characteristics and geology; and
•
Mineralisation interpretations where available.
Other information concerning Mineral Reserve Estimates, Mineral Processing and Metallurgical Testing,
Environmental Considerations and Economic Analysis have been sourced from Moto’s Feasibility Study which
was completed in September 2007 and the Amended and Restated Technical Report prepared by Cube Consulting
Pty Ltd, Lycopodium Minerals Pty Ltd, SRK Consulting Pty Ltd and Moto Goldmines Ltd, 20th April 2009.
Comments on tenure, commercial arrangements and legal position are sourced from experts in these fields.
References for this report are included in Section 17 of the Report.
Declarations
Cube’s relationship with Moto and now Randgold is solely a professional association between client and
independent consultant. The report has been prepared in return for fees based on agreed commercial rates and
the payment of these fees is in no way contingent on the results of this report. Neither Cube nor the authors of this
report have or have had previously any material interest in Moto, Randgold or related entities or interests.
Glossary of Terms
Defined and technical terms used in this report are set out in Sections 1 and 2 of this report.
Inherent Mining Risk
The mineral resources data included in this document are estimates only and no assurance can be given that the
estimated quantities or grades of minerals will be available to extract, or that any particular level of recovery of
minerals will in fact be realised.
Statements regarding any plans with respect to developing the Kibali Gold Project are forward-looking. There can
be no assurance that any mineralisation will be proven to be economic, that anticipated metallurgical recoveries will
be achieved, that future evaluation work will confirm the viability of deposits identified with the project or that
future required regulatory approvals will be obtained.
Significant expenditure is required to develop the mining project and the infrastructure required. In addition, there
can be no assurance that the Kibali Gold Project will be fully developed in accordance with the current plans or
completed on time or to budget.
Feasibility studies derive estimates of cash operating costs based on anticipated tonnage and grades of ore to be
mined and processed, the configuration of the orebody, expected recovery rates, comparable facility and equipment
operating costs, anticipated climatic conditions and other factors. No assurance can be given that such estimates are
correct or that the operators will be able to extract minerals in sufficient quantities or of a sufficient grade to justify
the estimates in such studies. As a result, it is possible that the Kibali Gold Project’s actual operating costs and
economic returns may differ from those currently estimated.
Qualifications of Consultants
The individuals listed in Tables A, B and C have provided input into this Independent Technical Report and have
extensive experience in the mining industry and are members in good standing of appropriate professional
institutions.
Table A: Cube Consulting Pty Ltd
Patrick (Rick) Adams, BSc MAusIMM CPGeo
Terje (Ted) Hansen, BSc MAusIMM
Quinton de Klerk, NHD MAusIMM
David (Ted) Coupland, BSc DipGeoSc ASIA CFSG MAusIMM CPGeo MMICA
Table B: Lycopodium Minerals Pty Ltd
Rod Leonard, MSc (MetEng), BSc (MetHonEng) MAusIMM
Fred Kock, NHD MAusIMM
Table C: SRK Consulting Pty Ltd
Paul Kerr, P.Eng, BSc, MAusIMM
Yours truly
Cube Consulting Pty Ltd
Patrick Adams BSc. CPGeo
Director
INDEPENDENT TECHNICAL REPORT
KIBALI GOLD PROJECT
IN THE DEMOCRATIC REPUBLIC OF CONGO
Prepared by:
Patrick (Rick) Adams, BSc MAusIMM CPGeo
Terje (Ted) Hansen, BSc MAusIMM
Quinton de Klerk, NHD MAusIMM
Lycopodium Minerals Pty Ltd
Rod Leonard, MSc (MetEng), BSc (MetHonEng) MAusIMM
Fred Kock, NHD MAusIMM
SRK Consulting Pty Ltd
Paul Kerr, P.Eng, BSc, MAusIMM
30 November 2009
· Cube Consulting Pty Ltd Perth, Western Australia
Cube
Project:
2009_116
Table of Contents
1.0
2.0
3.0
GLOSSARY OF ABBREVIATIONS & TERMS . . . . . . . . . . . . . . . . . .
MINERAL RESOURCE AND RESERVE DEFINITIONS . . . . . . . . . .
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.1 PROPERTY DESCRIPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.2 PROPERTY LOCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.3 PROPERTY OWNERSHIP AND PERMITTING . . . . . . . . . . . . . . . . . . . . . . . .
3.4 GEOLOGY AND MINERALISATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.5 DRILLING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.6 STATUS OF EXPLORATION, DEVELOPMENT AND OPERATIONS . . . . . . . . . . .
3.7 COMPETENT PERSON’S CONCLUSIONS . . . . . . . . . . . . . . . . . . . . . . . . .
3.7.1
Open Pit Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.7.2
KCD Underground Resources . . . . . . . . . . . . . . . . . . . . .
3.7.3
Open Pit Mining. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.7.4
Underground Mining . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.7.5
Metallurgy, Processing and Infrastructure . . . . . . . . . . . .
3.7.6
Financial Performance . . . . . . . . . . . . . . . . . . . . . . . . . .
3.8 COMPETENT PERSON’S RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . .
3.8.1
Geology and Mineral Resources . . . . . . . . . . . . . . . . . . .
3.8.2
Open Pit Mining. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.8.3
Underground Mining . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.8.4
Metallurgy, Processing and Infrastructure . . . . . . . . . . . .
3.9 SOURCES OF INFORMATION AND DATA . . . . . . . . . . . . . . . . . . . . . . . . .
3.10 SCOPE OF PERSONAL INSPECTIONS OF THE PROPERTY . . . . . . . . . . . . . . .
4.0 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.1 PURPOSE OF TECHNICAL REPORT PREPARATION . . . . . . . . . . . . . . . . . . .
4.2 RELIANCE ON OTHER EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.0 PROPERTY DESCRIPTION AND LOCATION . . . . . . . . . . . . . . . . .
5.1 PROJECT LOCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.2 TENEMENT DETAILS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.3 LOCATION OF MINERALISED ZONES & EXISTING SURFACE FEATURES . . . .
6.0 GEOLOGICAL SETTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.1 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.2 MINERALISATION CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.2.1
Breccia Development . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.2.2
Structural Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.2.3
Stratigraphic Control . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.0 DEPOSIT TYPES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.0 MINERALISATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.1 KIBALI-DURBA-KARAGBA TREND . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.1.1
Kibali . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.1.2
Sessenge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.1.3
Durba-Chauffeur . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.1.4
Karagba . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.2 NDALA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.3 PAKAKA-MENGU TREND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.3.1
Pakaka-Pamao . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.3.2
Megi-Marakeke . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.3.3
Mengu — Mengu Hill . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.4 GORUMBWA-KOMBOKOLO TREND . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.4.1
Gorumbwa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.4.2
Kombokolo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.5 AGBARABO TREND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
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8
12
14
14
15
15
15
15
15
16
16
16
17
17
17
18
18
18
19
19
19
19
20
21
21
22
23
23
26
27
28
28
28
28
29
29
30
31
31
31
32
33
33
33
34
35
35
36
36
36
37
37
9.0
10.0
11.0
12.0
13.0
EXPLORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.1 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.2 PAKAKA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.3 GORUMBWA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.4 KIBALI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.5 MENGU HILL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.6 MENGU VILLAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.7 KARAGBA, CHAUFFEUR AND DURBA . . . . . . . . . . . . . . . . . . . . . . . . . .
9.8 MEGI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.9 MARAKEKE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.10 KOMBOKOLO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.11 SESSENGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.12 NDALA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.13 PAMAO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.14 OTHER PROSPECTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.15 EXPLORATION POTENTIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.16 EXPLORATION AND EVALUATION MODELS . . . . . . . . . . . . . . . . . . . . . . .
DRILLING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.1 DRILLING BY PREVIOUS OWNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.2 DRILLING BY CURRENT OWNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SAMPLING METHOD AND APPROACH. . . . . . . . . . . . . . . . . . . . . .
11.1 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.2 DIAMOND DRILLING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.3 REVERSE CIRCULATION DRILLING . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SAMPLE PREPARATION, ANALYSES & SECURITY. . . . . . . . . . . .
12.1 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.2 SAMPLE PREPARATION AREAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.3 SAMPLE PREPARATION EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.4 QUALITY CONTROL AND QUALITY ANALYSIS . . . . . . . . . . . . . . . . . . . . .
12.4.1
Gold “Blanks” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.4.2
Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.4.3
Duplicates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.5 SAMPLE SHIPMENTS TO THE ANALYTICAL LABORATORIES . . . . . . . . . . . .
12.6 DIAMOND DRILL SAMPLE PREPARATION . . . . . . . . . . . . . . . . . . . . . . . .
12.7 REVERSE CIRCULATION SAMPLE PREPARATION . . . . . . . . . . . . . . . . . . . .
12.8 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DATA VERIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13.1 PROJECT DATABASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13.2 DATABASE UPGRADE AND VALIDATION . . . . . . . . . . . . . . . . . . . . . . . . .
13.3 OVERVIEW OF DATA QUALITY ASPECTS . . . . . . . . . . . . . . . . . . . . . . . .
13.3.1
Data Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13.3.2
Liaison with Cube and offsite Database Validation . . . . .
13.3.3
Quality Control Data . . . . . . . . . . . . . . . . . . . . . . . . . . .
13.3.4
Bulk Density. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13.3.5
Downhole Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13.3.6
Collar Reduced Level Validation . . . . . . . . . . . . . . . . . . .
3
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38
38
38
39
39
39
39
40
40
40
40
40
41
41
41
41
42
42
42
43
43
43
43
44
44
44
44
45
45
45
46
46
47
48
48
49
49
49
50
51
52
52
54
54
54
14.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES . . . . . . . . . . . . . . . . . . . .
55
55
14.1 MINERAL RESOURCE ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14.1.1
Geological Interpretation and Modelling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
55
14.1.2
Statistical Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57
14.1.3
Variography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
58
14.1.4
Block Modelling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
61
14.1.5
Estimation Block Size, Search Strategies and Grade Interpolation . . . . . . . . . . . .
63
14.1.6
Density and Oxidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65
14.1.7
Model Validation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
66
14.1.8
Mineral Resource Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
67
14.2 MINERAL RESERVE ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69
14.2.1
Open Pit Mineral Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69
14.2.2
Underground Mineral Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
81
15.0 MINERAL PROCESSING & METALLURGICAL TESTING . . . . . . . . . . . . . . . . . . . . . . . . .
90
15.1 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
90
15.2 METALLURGICAL SAMPLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
90
15.3 TESTWORK REGIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
90
15.3.1
Head Assays. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
90
15.3.2
Comminution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
93
15.3.3
Oxide Ore Leach Testwork . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
93
15.3.4
Primary Ore Flotation Testwork . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
94
15.3.5
Primary Concentrate Leach Testwork . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
94
15.3.6
Oxidation Process Testwork . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
94
15.3.7
Variability Testwork . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
95
15.4 METALLURGICAL RECOVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
95
15.5 PROCESS PLANT AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
96
97
15.6 GOLD PRODUCTION FORECAST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16.0 OTHER RELEVANT DATA AND INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
98
16.1 INDEPENDENT STATUS OF AUTHORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
98
98
16.2 ENVIRONMENTAL CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16.2.1
Environmental Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
98
16.2.2
Environmental adjustment plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
98
16.2.3
Decommission, Closure and Security for Rehabilitation Works . . . . . . . . . . . . . . .
99
16.2.4
Ongoing Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
99
16.2.5
Resettlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
99
16.3 ECONOMIC ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
99
16.3.1
Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
99
16.3.2
Base Case Financial Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
99
16.3.3
Project Sensitivity Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
99
17.0 REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.0 REPORT AUTHOR LISTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
4
List of Tables
Table 3-1
Table 3-2
Table
Table
Table
Table
12-1
13-1
13-2
14-1
Table
Table
Table
Table
Table
Table
14-2
14-3
14-4
14-5
14-6
14-7
Table 14-8
Table 14-9
Table
Table
Table
Table
Table
Table
14-10
14-11
14-12
14-13
14-14
14-15
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
14-16
14-17
14-18
14-19
14-20
14-21
14-22
14-23
14-24
14-25
14-26
14-27
Table 14-28
Table 14-29
Table 14-30
Table
Table
Table
Table
Table
Table
Table
Table
Table
14-31
14-32
14-33
15-1
15-2
15-3
15-4
16-1
16-2
Kibali Gold Project Open Pit Mineral Resource Tabulation — All Deposits H 0.5 g/t
gold — September 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
KCD deposit — Kibali Gold Project Underground Mineral Resource Tabulation H 2.0 g/t
gold — September 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
Certified Reference Material List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46
Assays H20g/t Gold sample checking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50
List of Validated Boreholes January 2004 to April 2009 . . . . . . . . . . . . . . . . . . . . . . . . . .
51
Volume changes by Lode due to Re-interpretation of mineralised lodes — September
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57
KCD High Grade Composite Cuts — September 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . .
58
KCD Lodes Acsa and Halo High Grade Composite Cuts — September 2009. . . . . . . . . . .
58
Variogram Parameters — Open Pit Resource Methodology September 2009 . . . . . . . . . . .
60
Variogram Parameters — Underground Resource Methodology September 2009 . . . . . . . .
61
Block Model Field Names — Open Pit Resource Methodology September 2009 . . . . . . . .
62
Block Model Definition Co-ordinate Limits — Open Pit Resource Methodology
September 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
62
Block Model Field Names — Underground Resource Methodology September 2009 . . . . .
62
Block Model Definition Co-ordinate Limits — Underground Resource Methodology
September 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
63
Estimation Search Parameters — Open Pit Resource Methodology September 2009 . . . . . .
65
Underground Estimation Search Parameters — September 2009 . . . . . . . . . . . . . . . . . . . .
65
OPRM-LR Density Mean Values Assigned — September 2009 . . . . . . . . . . . . . . . . . . . . .
66
Density Mean Values for Simple Kriging — September 2009 . . . . . . . . . . . . . . . . . . . . . .
66
URM-GI Density Mean Values Assigned — September 2009 . . . . . . . . . . . . . . . . . . . . . .
66
Kibali Gold Project Open Pit Mineral Resource Tabulation — All Deposits H 0.5 g/t
gold — September 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68
KCD — Underground Mineral Resource Tabulation H 2.0 g/t gold — September 2009 . .
68
Open Pit Mineral Reserve Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69
First Pass Processing and G&A Costs for Pit Optimisations. . . . . . . . . . . . . . . . . . . . . . . .
70
Waste Mining Costs Used in Optimisations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
72
Waste Mining Costs Used in Optimisations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
73
Recommended Slope Angles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
75
Pit Cut-off Grades . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
78
Indicated Mineral Resource — Selected Optimisation Shells Evaluated at US$600/oz . . . .
80
Underground Mineral Reserve Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
81
1st Pass Underground Cut-off Grade Calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
81
Mineral Resource Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
82
Underground Mineral Resource Inventory with Planned Recovery Considerations
Applied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
82
Underground Mineral Resource Inventory with Planned Dilution Considerations Applied . .
83
Underground Unplanned Recovery Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84
Underground Mineral Resource Inventory with Unplanned Recovery Considerations
Applied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84
Unplanned Dilution Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
87
Final Underground Cut-off Grade Calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
87
Summary of Conversion of Underground Mineral Resources to Mineral Reserves . . . . . . .
88
Mineralogy Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
92
Comminution Parameters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
93
Predicted Gold Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
96
Gold Production Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
97
Project Net After-Tax Cashflows (US$M) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
99
Sensitivity Analysis — Project Net After-Tax Cashflows (US$) . . . . . . . . . . . . . . . . . . . . . 100
5
List of Figures
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
5-1
5-2
5-3
5-4
6-1
8-1
8-2
14-1
14-2
14-3
14-4
14-5
Kibali Goldmines area North East DRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Map of the DRC showing the location of Haut Uélé District (Province Orientale) . . . . . . . .
Kibali Gold Project Tenement Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kibali Gold Project Mineralised Zones and existing Facilities . . . . . . . . . . . . . . . . . . . . . . .
Kibali Gold Project — Prospect Geology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kibali-Durba-Karagba Mineralised Trend — Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pakaka-Mengu Mineralised Trend — Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pit Location Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Example of Planned Dilution Allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rock Dilution Envelope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Example of Estimate for Paste Fill Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in Tonnage and Contained Metal During conversion from Underground Mineral
Resource to Underground Mineral Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
24
25
26
27
28
32
34
77
83
85
86
89
List of Appendices
APPENDIX 1: PROJECT RESOURCE IMAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
APPENDIX 2: RESOURCE VALIDATION PLOTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
APPENDIX 3: GRADE TONNAGE CURVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
7
1.0
GLOSSARY OF ABBREVIATIONS & TERMS
/
Per
$
Dollars
.csv
Comma separated file extent convention
Cube
2007 Feasibility Study
Feasibility study of September 2007 reported in Independent
Technical Report, January 2008
2D
Two Dimensional
3D
Three Dimensional
3SD
Three standard deviations
$1000/oz shell
the pit shell that will result in the highest undiscounted net value at a
gold price of $1000 per ounce
AAC
Anglo American Corporation
Acsa
ankerite-carbonate-silica-albite-pyrite alteration
AngloGold
AngloGold Ashanti Limited
Ag
The chemical symbol for the element silver
Albite
A specific feldspar mineral — product of hydrothermal alteration
Ankerite
A specific carbonate mineral containing
Anticline
A description of folding of rocks which has produced a convex shape
Argillaceous
A group of fine grained sedimentary rocks, including clays, shales,
mudstones, siltstones and marls
Arsenopyrite
A mineral that is made up of arsenic, iron and sulphur
As
The chemical symbol for the element arsenic
ATF
Area of Technical and Financial Assistance
ATF Contract
legal agreement governing the conduct of the parties in the ATF
Au
The chemical symbol for the element gold
Azurite
A mineral that is made up of copper, up to 55% Cu, with carbonate and
water
BCM
Bank Cubic Metres, a measure of volume applied to unbroken rock
BFS
Bankable feasibility study
BGC
Barrick Gold Corporation
Bimodal
Statistical term for two peaks in a graph of values.
Brecciated
Describes rock made up of angularly broken or fractured rock
generally indicating a fault plane
o
Temperature measurement in degrees Celsius (also called Centigrade)
C
Carbonates
Rocks made up mainly of a metal, commonly calcium or magnesium
or copper, zinc and lead and carbon dioxide
Cell
A term applied to the three dimensional volume used in the
mathematical modelling by computer techniques of ore bodies
CIL
Carbon in Leach
cm
Centimetre
Co
The chemical symbol for the element cobalt
8
Conglomerate
A sedimentary rock made up of various size particles from small
pebbles to large boulders rounded other rock fragments cemented
together
Cut-off
The minimum concentration (grade) of the valuable component in a
mass of rock that will produce sufficient revenue to pay for the cost of
mining, processing and selling it
Dilution
A term used to describe the waste or non economic materials included
when mining ore
Disseminated
Ore carrying fine particles, usually sulphides scattered throughout the
rock
Dolomite
A mineral containing calcium, magnesium and carbonate
Domain
A term used mainly in ore resource estimation or geotechnical
calculations to describe a regions of a geological model with similar
physical or chemical characteristics
DBA
Database Administrator
DC
Diamond Core drilling
DRC
Democratic Republic of Congo
DTM
Digital Terrain Model
E
Easting Coordinate
Feasibility Study
Feasibility study of March 2009, reported in Amended and Restated
Technical Report, April 2009
Ferric
Iron in an ionic state of three missing electrons
Fluvial
A geological process in, or pertaining to, rivers
Fluvio
A description applied to moving material by streams of water
Flotation
A widely used process to concentrate valuable minerals after mining
that treats finely ground rock in a water based pulp with chemicals that
allow them to float to the surface where they are recovered in
preference to waste or gangue minerals which sink
g
Grammes
g/t
Grammes per tonne
Geosearch
Geosearch Limited
Geostatistics
A term used meaning a mathematical statistical method based on
geological spatial knowledge of grade distributions to estimate grades
in a systematic way
Graben
A downthrown block between two parallel faults
HMS
Heavy Media Separation. A process that uses high density fluids to
separate valuable minerals from waste or gangue by exploiting
differences in specific gravity
ID2
Inverse Distance Squared (method of estimating grades by
mathematically weighting samples based on their distance away from
the estimation point)
JORC/JORC Code
An acronym for Joint Ore Reserve Committee, an Australian
committee formed by the Australian Stock Exchange and Australasian
Institute of Mining and Metallurgy, the purpose of which is to set the
regulatory enforceable standards for the Code of Practice for the
reporting of mineral resources and reserves
9
Kibali Acquisition
The indirect acquisition of a 20 per cent. interest in the issued share
capital of Kibali Goldmines s.p.r.l. by Randgold and AngloGold
Kibali Goldmines
Kibali Gold Project/Kibali
The gold project located in the north east of the DRC, approximately
560km north east of the city of Kisangani and 150km west of the
Ugnadan border town of Arua owned by Kibali Goldmines, previously
known as the Moto gold project
KCD
Karagba-Chauffeur-Durba and Sessenge Deeps
kg
Kilogramme
km2
Square kilometres
km
Kilometres
Kt
Thousands of tonnes
Kurtosis
Statistical term for peaked graph shape (peakedness)
Lithology
General rock description based usually on hand specimen
Log
Natural logarithm to the base 10
Lycopodium
Lycopodium Engineering Pty Ltd
m
Metre
m3
Cubic metre
Massive
A term used to describe a large occurrence of a pure mineral species,
often with no structure
Mineralization
The presence of minerals of possible economic value or the
description of the process by which the concentration of valuable
minerals occurs
Mining Code
Law No. 007/2002 of July 11, 2002 relating to the DRC Mining Code
Mining Regulations
Decree No. 038/2003 of 26 March 2003
mm
Millimetre
MN
Magnetic North
Moto
Moto Goldmines Ltd
Moto Acquisition
The indirect acquisition all of all the common shares of Moto by
Randgold and AngloGold
Moz
Million ounces
Mt
Million tonnes
N
Northing Coordinate
Neoproterozoic
The term used in the geological time scale for the period from
545 million years ago to 1000 million years ago
National Instrument 43-101 / NI 43-101
National Instrument 43-101 Standards of Disclosure for Mineral
Projects of the Canadian Securities Administrators
OK
Ordinary Kriging — A mathematical method that uses linear weighted
combinations of the available data to estimate unbiased block grades
with the aim of minimizing the variance of the error
OKIMO
L’Office des Mines d’Or de Kilo-Moto
Ore
A natural aggregate of one or more minerals which, at a specified time
and place, may be mined and sold at a profit or from which some part
may be profitably separated
10
Orway
Orway Mineral Consultants (WA) Pty Ltd
OPRM-LR
Open Pit Resource Methodology — Local Recoverable
Pb
The chemical symbol for the element lead
Porphyry
An igneous rock with relatively large crystals set in a finer grained
background mass
ppm
Parts per million (same as grammes per tonne)
Protolith
Original lithology
QKNA
A Quantitative Kriging Neighbourhood Analysis
Randgold
RC
Reverse Circulation drilling
RL
Reduced Level (same as elevation coordinate)
S
South Coordinate
Sandstone
A sedimentary rock consisting of sand size grains, generally the
mineral quartz, which is in a consolidated mass
Sericite
a mica mineral — product of hydrothermal alteration
Silica
A compound of silicon and oxygen, generally occurring in the form of
a mineral called quartz.
SMU
Selective Mining Unit — The minimum likely volume for which ore
and waste will be discriminated under the assumed open pit mining
method
Stratiform
Describes a layered or tabular shaped body of mineralised rock within
a sedimentary rock and implies that the layering of the mineralisation
is parallel to the bedding planes in that sedimentary rock
Strings
A term used by SURPAC, applied to a line drawn within the
programme that outlines or describes a shape of an object or
interpretation
SURPAC
A proprietary computer programme developed to model, view, analyse
and report on geological and mining data
Tholeiitic
A particular type of basalt composed of basic plagioclase and
pigeonite with interstitial glass or quartz-alkali feldspar intergrowths
TN
True North
Tuff
General term for rocks that consist of fragmental material thrown into
the air by explosive volcanic activity
UC
Uniform Conditioning — A mathematical method that allows the
discrimination of ore and waste at a selective mining unit size within
an estimated panel of significantly larger size. In theory, this provides
a more accurate prediction of estimated resource grade above a cut off
URM-GI
Underground Resource Methodology — Global Insitu
US
United States of America
W
Westing Coordinate
Zn
chemical symbol for the element zinc
11
2.0
MINERAL RESOURCE AND RESERVE DEFINITIONS
Mineral Resource
Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and
Measured categories. An Inferred Mineral Resource has a lower level of confidence than that applied to an Indicated
Mineral Resource. An Indicated Mineral Resource has a higher level of confidence than an Inferred Mineral
Resource but has a lower level of confidence than a Measured Mineral Resource.
A Mineral Resource is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or
on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for
economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource
are known, estimated or interpreted from specific geological evidence and knowledge.
The term Mineral Resource covers mineralization and natural material of intrinsic economic interest which has
been identified and estimated through exploration and sampling and within which Mineral Reserves may
subsequently be defined by the consideration and application of technical, economic, legal, environmental,
socio-economic and governmental factors. The phrase ‘reasonable prospects for economic extraction’ implies a
judgment by the Qualified Person in respect of the technical and economic factors likely to influence the prospect of
economic extraction. A Mineral Resource is an inventory of mineralization that under realistically assumed and
justifiable technical and economic conditions might become economically extractable. These assumptions must be
presented explicitly in both public and technical reports.
Inferred Mineral Resource
An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which quantity and grade or quality can be
estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified,
geological and grade continuity. The estimate is based on limited information and sampling gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.
Due to the uncertainty which may attach to Inferred Mineral Resources, it cannot be assumed that all or any part of
an Inferred Mineral Resource will be upgraded to an Indicated or Measured Mineral Resource as a result of
continued exploration. Confidence in the estimate is insufficient to allow the meaningful application of technical
and economic parameters or to enable an evaluation of economic viability worthy of public disclosure. Inferred
Mineral Resources must be excluded from estimates forming the basis of feasibility or other economic studies.
Indicated Mineral Resource
An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or quality, densities,
shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate
application of technical and economic parameters, to support mine planning and evaluation of the economic
viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered
through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are
spaced closely enough for geological and grade continuity to be reasonably assumed.
Mineralization may be classified as an Indicated Mineral Resource by the Qualified Person when the nature, quality,
quantity and distribution of data are such as to allow confident interpretation of the geological framework and to
reasonably assume the continuity of mineralization. The Qualified Person must recognize the importance of the
Indicated Mineral Resource category to the advancement of the feasibility of the project. An Indicated Mineral
Resource estimate is of sufficient quality to support a Preliminary Feasibility Study which can serve as the basis for
major development decisions.
Measured Mineral Resource
A ‘Measured Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or quality, densities,
shape, physical characteristics are so well established that they can be estimated with confidence sufficient to allow
the appropriate application of technical and economic parameters, to support production planning and evaluation of
the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and
testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits,
workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.
Mineralization or other natural material of economic interest may be classified as a Measured Mineral Resource by
the Qualified Person when the nature, quality, quantity and distribution of data are such that the tonnage and grade
of the mineralization can be estimated to within close limits and that variation from the estimate would not
12
significantly affect potential economic viability. This category requires a high level of confidence in, and
understanding of, the geology and controls of the mineral deposit.
Mineral Reserve
Mineral Reserves are sub-divided in order of increasing confidence into Probable Mineral Reserves and Proven
Mineral Reserves. A Probable Mineral Reserve has a lower level of confidence than a Proven Mineral Reserve.
A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated
by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing,
metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic
extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur
when the material is mined.
Mineral Reserves are those parts of Mineral Resources which, after the application of all mining factors, result in an
estimated tonnage and grade which, in the opinion of the Qualified Person(s) making the estimates, is the basis of an
economically viable project after taking account of all relevant processing, metallurgical, economic, marketing,
legal, environment, socio-economic and government factors. Mineral Reserves are inclusive of diluting material
that will be mined in conjunction with the Mineral Reserves and delivered to the treatment plant or equivalent
facility. The term ’Mineral Reserve’ need not necessarily signify that extraction facilities are in place or operative or
that all governmental approvals have been received. It does signify that there are reasonable expectations of such
approvals.
Probable Mineral Reserve
A ‘Probable Mineral Reserve’ is the economically mineable part of an Indicated, and in some circumstances a
Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include
adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate,
at the time of reporting, that economic extraction can be justified.
Proven Mineral Reserve
A ‘Proven Mineral Reserve’ is the economically mineable part of a Measured Mineral Resource demonstrated by at
least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing,
metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic
extraction is justified.
Application of the Proven Mineral reserve category implies that the Qualified Person has the highest degree of
confidence in the estimate with the consequent expectation in the minds of the readers of the report. The term should
be restricted to that part of the deposit where production planning is taking place and for which any variation in the
estimate would not significantly affect potential economic viability.
Feasibility Study
“feasibility study” means a comprehensive study of a mineral deposit in which all geological, engineering, legal,
operating, economic, social, environmental and other relevant factors are considered in sufficient detail that it could
reasonably serve as the basis for a final decision by a financial institution to finance the development of the deposit
for mineral production;
Preliminary Feasibility Study
“preliminary feasibility study” and “pre-feasibility study” each mean a comprehensive study of the viability of a
mineral project that has advanced to a stage where the mining method, in the case of underground mining, or the pit
configuration, in the case of an open pit, has been established, and an effective method of mineral processing has
been determined and includes a financial analysis based on reasonable assumptions of technical, engineering, legal,
operating, economic, social and environmental factors and the evaluation of other relevant factors which are
sufficient for a qualified person, acting reasonably, to determine if all or part of the mineral resource may be
classified as a mineral reserve.
13
3.0
SUMMARY
United Kingdom Financial Services Authority’s requirement for a Mineral Expert’s Report.
Cube Consulting Pty Ltd was requested in August 2009, by Moto Goldmines Ltd to compile an updated resource
estimate of the combined Karagba-Chauffeur-Durba and Sessenge Deeps deposit which forms a part of the Kibali
Gold Project. Randgold Resources Limited and Moto subsequently agreed the terms of a recommended transaction
pursuant to which Kibali (Jersey) Limited, a company jointly owned by Randgold and AngloGold Ashanti Limited,
would indirectly acquire all of the common shares of Moto. The Moto Acquisition was completed on 15 October
2009. On 31 October 2009 Randgold agreed to indirectly acquire jointly with AngloGold a further 20 per cent.
interest in the issued share capital of Kibali Goldmines s.p.r.l. of which Randgold’s attributable interest will be 10
per cent. Completion of the Kibali Acquisition is conditional, inter alia, on the approval of shareholders of
Randgold. Randgold requested Cube to complete the updated resource estimate for the KCD deposits as originally
requested by Moto and to report the total Kibali Gold Project Resources within criteria laid out by the JORC Code.
Open pit resources have been classified as the insitu resources falling within the US$1,000 per oz Whittle pit shell at
a 0.5g/t gold cut-off. In the case of the KCD deposits the underground resources are classified as the insitu resources
below the pit to underground interface (5685mRL), reported at a 2g/t gold cutoff.
In order to meet the requirements of the Randgold reporting criteria, Cube has re-reported all the Mineral Resources
for the Kibali Gold Project and undertaken two resource estimates on the KCD deposits using all available data as at
31st August 2009. The first estimate was an updated independent estimation of local recoverable open pit gold
resources and the second estimate was based on a refined geological interpretation for the KCD lodes interpreted on
the distinctive alteration characteristics observed to be internal to the broader mineralised zone.
The intention of the first estimate was to yield a reportable open pit mineral resource inventory and to provide a
model suitable for a future open pit mining study. This first estimate is based on a 0.2g/t gold lower cut-off and has
been estimated using Ordinary Kriging and Uniform Conditioning methodology.
The intention of the refined geological interpretation, constrained by ankerite-carbonate-silica-albite-pyrite
alteration, was to provide an objective basis for the delineation and estimation of a possible higher grade subset
of the KCD mineralisation appropriate for reporting of an underground mineral resource inventory. This second
estimate has been completed using OK methodology.
These two estimates should be considered as two distinctly different representations of overlapping portions of the
same mineralisation. They are based on different interpretations of mineralisation and on different mining
assumptions. Although the models partially overlap, they are not mutually exclusive or directly additive. It is
the intention of Kibali Goldmines to use the two models and limits established with an open pit optimal shell to
report two mineral resource inventories, one for the open pit resources, from the first model and one for the
underground resources, from the second model. When reported these two mineral resource inventories will be
additive.
The previous Mineral Resource estimation for the KCD deposit was reported on 20th November 2008 using all data
available as at 10th July 2008. In the period since the last Resource estimate 90 diamond drill holes over a total of
47,277m have been completed within the KCD deposit area. This drilling has primarily been targeted at infilling the
previously Inferred Resources of the KCD mineralisation.
This report, inter alia, details the updated reporting of the total Mineral Resources for the Kibali Gold Project and
the re-estimation of the KCD deposit. It should be noted that only the KCD deposit is a re-estimated Mineral
Resource and the changes to the Mineral Resource inventories in all other deposits is a function of the reporting
methodology.
As a consequence of the ongoing nature of the Kibali Gold Project this report also includes information and
conclusions directly from previous technical reports for the Kibali Gold Project. In particular, Section 14.2 and
Section 15.0 of this report are directly taken from the Amended and Restated Technical Report by Adams et al,
April 2009. Apart from Cube, the major contributors to these sections were Lycopodium Engineering Pty Ltd and
Orway Mineral Consultants (WA) Pty Ltd.
3.1
Property Description
The Kibali Gold Project is a gold exploration property which covers an area of 1,836km2 in the north east of the
Democratic Republic of Congo. The area is situated in a rural setting and lacks substantial infrastructure
development. Remnants of historical mining activities (residential buildings, processing plant, underground mine
shafts and surface workings) are present in various states of repair.
14
3.2
Property Location
The Kibali Gold Project is located in the Moto greenstone belt in the north east of the Democratic Republic of
Congo, some 560km north east of the city of Kisangani and 150km west of the Ugandan border town of Arua. The
Kibali Gold Project area covers a 7km by 5km area near the towns of Doko and Durba.
3.3
Property Ownership and Permitting
Kibali is currently owned 70 per cent. by Moto and 30 per cent. by L’Office des Mines d’Or de Kilo-Moto. Moto is
indirectly owned by Randgold and AngloGold.
On 31 October 2009, Randgold and OKIMO announced that they had agreed terms pursuant to which subject to,
inter alia, the approval of Randgold shareholders, Randgold and AngloGold would indirectly acquire a 20 per cent.
interest in Kibali Goldmines from OKIMO. Kibali Goldmines has been issued with ten exploitation permits under
the DRC mining code in respect of the Kibali Gold Project, most of which are valid until 2014 and the balance of
which are valid until 2015. Under the terms of the Kibali Acquisition, it is a condition (unless otherwise waived) to
completion that the exploitation permits expiring in 2014 are renewed and extended until 2029 by the Government
of the DRC.
3.4
Geology and Mineralisation
The goldfields at the Kibali Gold Project are located within the Moto greenstone belt, which is comprised of the
Archean Kibalian (Upper and Lower) volcano-sedimentary rocks and ironstone-chert horizons that have been
metamorphosed to greenschist facies. The goldfields at Kibali are cut by regional-scale north, east, northeast and
northwest trending faults and are bounded to the north by the Middle Archaean West Nile granite-gneiss complex
and cut to the south by the Upper Zaire granitic complex. The stratigraphy consists of a volcano-sedimentary
sequence comprising fine-grained sedimentary rocks, several varieties of pyroclastic rocks, basaltic flow rocks,
mafic-intermediate intrusions (dykes and sills) and intermediate-felsic intrusive rocks (stocks, dykes and sills). The
sequence is variably altered from slight (texture benign) to intense (texture destructive) such that in some cases the
protolith rock is unrecognisable. In the Moto district the majority of gold mineralisation identified to date is
disseminated style, hosted within a sequence of coarse volcaniclastic and sedimentary rocks. The mineralisation is
generally stratigraphy sub parallel and associated with quartz-carbonate alteration and pyrite. Quartz and quartzcarbonate veins are present within the ore zones but are found to be generally barren with respect to mineralisation.
The majority of mineralisation areas currently being delineated occur within two broad mineralised trends. The first
group lie within a north east trending structural-alteration corridor from the Kibali prospect in the southwest to the
Ndala prospect in the northeast, called the Kibali-Durba-Karagba Trend. The second group lies within a north-west
trending zone that stretches from the Pakaka prospect in the southeast to the Mengu Hill prospect in the northwest
3.5
Drilling
Kibali Goldmines has primarily used the Barrick Gold Corporation/Anglo American Corporation aeromagnetic
interpretation and 1950’s OKIMO drill results to define drill targets in the project area. Mineral Resource estimates
have been completed for the Pakaka, Gorumbwa, Kibali, Mengu Hill, Mengu Village, Karagba, Chauffeur, Durba,
Megi, Marakeke, Kombokolo, Sessenge, Ndala and Pamao mineralisation. The Mineral Resource estimates are
based primarily on the post-2004 drilling by Moto, as very limited records are available to validate the pre-2004
drilling. The primary focus of the drilling strategy since June 2006 has been to target the KCD deposit with infill and
extension drilling focussed on defining the open pit as well as the underground potential of the system.
3.6
Status of Exploration, Development and Operations
The Kibali Gold Project is in an exploration phase which has focussed on a number of deposits within the property
boundary. Exploration activities are currently targeting mineralisation identified as having potential for extraction
by open pit and underground mining methods.
Development on site is limited to buildings, roads and minor service infrastructure to support exploration activities.
Operations are confined to small scale artisanal mining conducted in various locations throughout the property.
15
3.7
Competent Person’s Conclusions
3.7.1 Open Pit Resources
It is Cube’s opinion that the mineralised interpretations based on a nominal plus 0.2g/t gold cut-off, fully enclose
altered rock material and the resource estimates based on these interpretations are free of any potential bias due to
the incorrect connection of elevated grade intervals. The resource estimates (Open Pit Methodology — Local
Recoverable) have been undertaken using OK and UC methods.
There are material changes to the reported open pit resources for all deposits of the Kibali Gold Project compared to
the November 2008 reported figures. However, only the KCD deposit has undergone re-estimation based on
additional drilling and interpretation. There are two significant changes to the reporting criteria compared to the
November 2008 reported figures. Firstly, Kibali Goldmines have requested that all open pit resources be reported
above a 0.5g/t gold cut off and secondly, that all open pit resources be limited by open pit optimisation shells.
The input parameters for these open pit optimisation shells were sourced from the optimisation section of the
completed Feasibility Study published in the Amended and Restated Technical Report, April 2009. The shells
selected for the limiting of the resources correspond to the Whittle shell produced using a gold price of US$1,000
per oz. By definition of the optimisation process, this shell corresponds to the shell which will result in the highest
undiscounted net value at that gold price.
For the reporting of KCD open pit resources, an additional condition was required to differentiate the open pit
material from the potential underground resources. The open pit to underground interface was chosen by using a
blanket elevation to limit the open pit optimisation analysis. The elevation selected for this purpose was 5685mRL
which corresponds to the deepest portion of open pit design from the 2007 Feasibility Study. In summary, in the
running of the open pit optimisation process, all resources below the 5685mRL were excluded, in so doing
preventing the open pit optimisation accessing any of the deeper material.
A tabulation of the updated Kibali Gold Project Open Pit Mineral Resources at a nominal 0.5 g/t gold cut-off within
the interpreted mineralised lodes as of September 2009 is shown in Table 3-1
Table 3-1 Kibali Gold Project Open Pit Mineral Resource Tabulation — All Deposits ⬎ 0.5 g/t gold — September
2009
Deposit
Pakaka . . . . . . . . . . . . . . . . . . . . . .
Gorumbwa . . . . . . . . . . . . . . . . . . .
Kibali . . . . . . . . . . . . . . . . . . . . . . .
Mengu Hill . . . . . . . . . . . . . . . . . . .
Mengu Village. . . . . . . . . . . . . . . . .
KCD . . . . . . . . . . . . . . . . . . . . . . . .
Megi . . . . . . . . . . . . . . . . . . . . . . . .
Marakeke . . . . . . . . . . . . . . . . . . . .
Kombokolo . . . . . . . . . . . . . . . . . . .
Sessenge . . . . . . . . . . . . . . . . . . . . .
Ndala . . . . . . . . . . . . . . . . . . . . . . .
Pamao . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . .
..
..
..
..
..
..
..
..
..
..
..
..
..
Tonnes
(Mt)
Grade
g/t
Gold
kOz
*Attrib.
gold
kOz
16.73
2.1
1,122
505
8.92
1.30
37.18
2.6
1.5
2.5
735
61
2,957
331
27
1,331
2.22
14.09
2.1
1.6
150
729
68
328
11.78
92.23
1.3
2.1
499
6,253
225
2,814
Tonnes
(Mt)
Grade
g/t
Gold
kOz
*Attrib.
gold
kOz
7.57
16.77
6.9
2.0
1,687
1,068
759
481
1.78
4.19
1.25
1.8
1.9
1.6
102
260
64
46
117
29
0.27
0.99
32.82
3.7
1.3
3.1
32
43
3,256
14
19
1,465
3.7.2 KCD Underground Resources
The second estimate (Underground Resource Methodology — Global Insitu) undertaken by Cube was within a
geological interpretation that was constrained by Acsa. This alteration style is closely associated with significantly
higher tenor gold grades and appears to form reasonably continuous and robust mineralised lodes internal to the
broader mineralised envelope used for defining the Open Pit Mineral Resources. The infill drilling targeted at the
mineralised lodes has resulted in a substantial increase in the tonnage of the previously identified lodes and the
identification of additional significant tonnages in newly interpreted lodes.
16
It is Cube’s opinion that confidence in identifying this style of mineralisation and the demonstrated continuity of
Acsa mineralisation, allows reliable estimation of global in-situ resources using traditional 3D OK methodology. In
conjunction with this Acsa associated high grade interpretation some lower grade surrounding mineralisation (KCD
Halo and Karagba Halo) has been interpreted at a nominal plus 0.5g/t gold cut-off to provide dilution grades for an
underground evaluation.
Material changes since the November 2008 Report include the identification and modelling of Karagba
underground lodes and increases in the Chauffeur Acsa resource base. Table 3-2 summarises the Underground
Resources resulting from the Acsa alteration interpretation for the KCD project. The Resources detailed in
Table 3-2 are additional to the Open Pit Local Recoverable Mineral Resources reported for the KCD deposit in
Table 3-1. Ongoing work is presently being conducted to determine the appropriate modifying factors for
formulating reportable underground mining mineral reserves. These modifying factors will be significantly
different in nature to those applied to the open pit mineral resources reported in Table 3-1.
Table 3-2 KCD deposit — Kibali Gold Project Underground Mineral Resource Tabulation ⬎ 2.0 g/t gold —
September 2009
Tonnes
(Mt)
Grade
g/t
Gold
kOz
*Attrib.
gold
kOz
KCD . . . . . . . . . . . . . . . . . . . . . . . . . . 39.26
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . 39.26
6.1
6.1
7,674
7,674
3,453
3,453
Deposit
Tonnes
(Mt)
Grade
g/t
Gold
kOz
*Attrib.
gold
kOz
18.24
18.24
4.4
4.4
2,569
2,569
1,156
1,156
* Attributable gold (koz) refers to the quantity attributable to Randgold based on Randgold’s 45% (post completion of the Kibali Acquisition)
At this stage of the Kibali Gold Project, a significant proportion of the Mineral Resources remain in the Inferred
Mineral Resource category defined under the 2004 JORC Code (equivalent to the guidelines adopted for the
Canadian National Instrument 43-101) and are therefore not suitable for detailed Mineral Reserve estimation, mine
planning or financial evaluation purposes.
3.7.3 Open Pit Mining
The Feasibility Study assessment of open pit mining potential at the Kibali Gold Project has determined that the
Kibali Gold Project contains total open pit Probable Mineral Reserves of 30.7Mt at 3.2 g/t Au for 3.2Moz of gold,
based on the Mineral Resources of November 2008. These Mineral Reserves are included in the Indicated Mineral
Resources estimated for the Kibali Gold Project. The Feasibility Study assessment proposes that the Mineral
Reserves are mined from 6 separate pits over 8 years (including pre-strip period) with treatment of this material
concurrent with this mining period and extending for a further 9 years to give a total open pit mine life of 17 years. A
conventional excavator and truck mining system is proposed. Total material movements reach a steady state of
approximately 22Mtpa for 6 years before reducing to match treatment requirements (ranging between 1.6Mtpa and
2.9Mtpa). Life of mine unit mining operating costs (including stock reclaim) are estimated at US$2.52/ore tonne.
Total capital costs are estimated at US$98.7M for life of mine, comprised of US$19.0M capital development (prestripping), US$2.5M capital works and US$77.0M capital fleet.
3.7.4 Underground Mining
The Feasibility Study assessment of underground mining potential at the KCD deposit has determined that the
deposit contains underground Probable Mineral Reserves of 11.6Mt at 6.2 g/t Au for 2.3Moz of gold, based on the
Mineral Resources of November 2008. These Mineral Reserves are included in the Mineral Resources estimated for
the deposit. The designed underground mine has a mine life of 13 years (including development lead time) and
features a mechanised long hole open stopping method with paste fill to reach a steady state production level of
approximately 1.5Mtpa.
Unit operating cost estimates average US$29.33 /ore tonne over the life of mine. Capital expenditure estimates total
US$122.6M over life of mine consisting of US$49.7M capital development, US$71.7M capital fleet and US$1.1M
capital works. The underground mine designs and Mineral Reserve calculations used a gold price assumption of
US$600/oz.
3.7.5 Metallurgy, Processing and Infrastructure
The Feasibility Study assessment of metallurgy, processing operations and infrastructure requirements for the
Kibali Gold Project has concluded that a nominal 2.8Mtpa throughput plant processing oxide, transitional and fresh
17
material from open pit and underground mines of the Kibali Gold Project will produce 4.8Moz of gold over a life of
16 years. Metallurgical testwork of open pit and underground ores yielded predicted recoveries as follows:
Ore Source
KCD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pakaka . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mengu Hill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kombokolo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pamao . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sessenge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Underground . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oxide
% Recovery
Transition
% Recovery
Primary
% Recovery
85.5
88.7
NA
95.6
90.86
90.3
NA
90.1
81.7
89.3
95.9
85.0
75.9
NA
83.9
81.7
71.6
74.6
85.0
80.6
91.3
....
....
....
....
....
....
....
NOTE 2: Advice from geological consultant indicates limited transition ore for Pakaka and Pamao. Primary
recoveries were used for transition material predicted recovery.
NOTE 3: No oxide samples sourced from Mengu Hill. All ore logged as oxide from this deposit is assumed to be
treated as transition ore.
The processing plant incorporates conventional crushing and grinding circuits, an oxide CIL circuit, an ultra-fine
grinding and flotation circuit followed by a CIL circuit for transitional and fresh material types, and conventional
elution and gold room facilities. A 28Mt capacity tailings dam will be constructed progressively over the
operation’s life. A key feature of the Kibali Gold Project is the construction of a 2 stage hydro-electric power
station (ultimate generating capacity 20MW) on the Nzoro River with supplemental and back-up power being
sourced from diesel-fired generators installed at the plant site. The process plant and infrastructure requirements
have an estimated pre-commissioning capital cost of US$339M. This estimate excludes capital expenditure
associated with open pit and underground mining activities. Life of mine total capital expenditure for processing
and infrastructure activities is estimated to be US$396.6M. Life of mine operating costs for processing and general
and administration activities is estimated to be US$17.14/tonne. Unit processing costs for oxide and transition/fresh
material types vary over life of mine according to material hardness (throughput determining), power supply
(hydro-electric/diesel components) and labour compliment (expatriate/DRC national).
3.7.6 Financial Performance
Financial modelling of the exploitation of Probable Mineral Reserves of the Kibali Gold Project as part of the
Feasibility Study (using US$750/oz as the base case gold price) yielded the following results:
Initial Capital Payback Period 3.1 years
Mine Life (total operation life post processing plant commissioning)16 years
After-tax cashflows for the Kibali Gold Project are estimated to be:
Year
(1)
Cashflow (US$m) . . . . . . . . . . (438)
Year . . . . . . . . . . . . . . . . . . . .
9
(Cashflow (US$m) . . . . . . . . . 93.7
1
134.6
10
60.5
2
127.0
11
52.4
3
160.9
12
43.2
4
159.4
12
34.6
5
188.2
14
17.6
6
121.8
15
14.3
7
119.7
16
32.4
8
112.8
Sensitivity analysis conducted on the Kibali Gold Project’s financial performance for variation in gold price, capital
costs, operating costs and mined grade concluded that the project was most sensitive to gold price. Specific effects
on annual cashflows for all input variations are included in detail.
3.8
Competent Person’s Recommendations
3.8.1 Geology and Mineral Resources
Cube recommends the following resource drilling to progress the project towards value engineering and
development:
•
Continue infill drilling areas of underground potential and to increase Mineral Resources and Mineral Resource
confidence in the remaining Inferred Mineral Resource areas of the KCD deposits. Recent drilling of the KCD
trend has demonstrated the capability of this area to host very large gold Mineral Resources;
•
Continue testing of the potential of the underground mineralisation in the Karagba area of the KCD deposit.
18
In addition to drilling activities, it is recommended that the following technical work be undertaken:
•
continue to examine alteration/grade relationships to improve the understanding and definition of
mineralisation boundaries;
•
there are some areas within the Indicated Resource base that require additional infill drilling to increase
confidence within the feasibility open pit designs. In particular, in areas where strong geological continuity has
been confirmed but where drilling access is limited e.g., Mengu Hill and KCD;
•
undertake sensitivity analysis to quantify potential risks and uncertainties associated with volume controls and
grade distribution;
•
comprehensive bulk density determinations for all deposits and material types — ongoing;
•
undertake check downhole surveys using a non-magnetic tool such as a gyro on selected deep holes in KCD;
•
comprehensive review of weathering and oxidation surfaces — ongoing; and
•
continue to advance the structural understanding of mineralisation controls on a deposit and regional scale.
Undertake a geological modelling of the linkage features of KCD to Gorumbwa to assess the exploration
potential.
3.8.2 Open Pit Mining
Further work required, after the decision to progress the development of the Kibali Gold Project, includes:
•
additional infill drilling targeting high value Inferred Mineral Resources within the Kibali Gold Project area;
•
detailed mine design of the planned pits; and
•
an assessment of using mining contractors for all or part of the mining and maintenance activities.
These items of work are independent of each other and are continuous in nature.
3.8.3 Underground Mining
•
infill diamond drilling targeting high value Inferred Mineral Resource of the 5100 lode;
•
insitu stress measurements;
•
geotechnical site investigations for major development excavations connecting to surface. Additional backfill
geotechnical testing;
•
assessment of the cost/benefit of contractors for all or part of mining and maintenance activities;
•
development of effective training programmes for the national workforce;
•
recruitment of suitably skilled employees with previous African work experience; and
•
a study of mine design alternatives in the upper lode area of the mine.
These items of work are independent of each other and are continuous in nature.
3.8.4 Metallurgy, Processing and Infrastructure
•
additional metallurgical recovery variability testing during grade control/infill drilling campaigns;
•
development of a predictive grade control programme to refine process route selection during production; and
•
further examination of oxidation processes to enhance metallurgical recovery of transitional and fresh ores.
3.9
Sources of Information and Data
This report is based on data and information gathered by the authors and Kibali Goldmines since the Kibali Gold
Project’s commencement.
The components of this report addressing the September 2009 Mineral Resource update are based on drilling data
and other information gathered by Kibali Goldmines during the period February 2004 to August 2009.
19
Specifically, Kibali Goldmines provided Cube with the following digital information prior to or during the Mineral
Resource estimation project:
•
Separate validated drilling data for each deposit;
•
Summary details of drilling data quality including age of data, drilling method, location and survey accuracy,
sampling procedures, and analytical methods;
•
Description of mineralisation characteristics and geology; and
•
Mineralisation interpretations where available.
Other information concerning metallurgical testwork, Mineral Reserves, and capital and operating cost estimates
have been sourced from Moto’s 2007 Feasibility Study and from the Feasibility Study reported in Amended and
Restated Technical Report, April 2009.
Comments on tenure, commercial arrangements and legal position are sourced from experts in these fields.
References for this report are included in Section 17.0
3.10
Scope of Personal Inspections of the Property
The following visits to the property are considered relevant to the preparation of this technical report:
•
Mr Adams visited the Kibali Gold Project site in July 2005 for the purpose of independently verifying the
quality of Moto’s resource evaluation work;
•
Mr Ted Coupland and Mr Terje Hansen visited site in late March 2006 to review the controls on mineralization
and geological interpretation procedures and independently drill and sample some representative mineralised
material;
•
Mr Terje Hansen has also visited site in February 2007 and February 2008 to review the current controls on
mineralization and geological interpretation, review data collections and QAQC.
20
4.0
INTRODUCTION
4.1
Purpose of Technical Report Preparation
United Kingdom Financial Services Authority’s requirement for a Mineral Expert’s Report. The report specifically
details the results the Kibali Gold Project’s recently completed drilling campaign and the associated updated
Mineral Resource estimates as reported in the Randgold Resources Class 1 Circular to be published on
30 November 2009. This technical report includes information and conclusions on specific aspects of the project
from previous technical reports despite no additional information or work being conducted in respect of these
aspects.
The estimation project, which is the primary focus of this technical report, follows a Diamond Core drilling
programme that commenced in February 2004 and was ongoing at the time of this Mineral Resource estimation. An
additional 47,276m of DC has been drilled for which assay data is available since the last data cut-off at 31st July
2008. The additional DC drilling has been mostly confined to the KCD deposit areas.
The scope of Cube’s engagement was as follows:
•
Review and update the geological/mineralisation interpretations for KCD incorporating available information
as of 31st August 2009;
•
Undertake statistical and geostatistical analysis of the mineralised material;
•
Estimate and update the Kibali Gold Project local recoverable open pit gold Mineral Resources for the KCD
deposit;
•
Undertake a refined geological interpretation for all the KCD lodes based on distinctive alteration
characteristics observed to be internal to the broader mineralised zone. The intention of this refined
interpretation was to provide an objective basis for the delineation and estimation of a higher grade subset
of mineralisation appropriate for reporting of underground gold Mineral Resource;
•
Undertake an interpretation of the halo mineralisation encompassing and adjacent to the most significant KCD
Acsa lodes, to provide dilution grades for an underground evaluation;
•
Independently classify and report the Mineral Resources and Open Pit Mineral Reserves in accordance with The
2004 Australasian Code for Reporting of Mineral Resources and Ore Reserves (2004 JORC Code) and National
Instrument 43-101.
The estimation work started in September 2009 and was completed during October 2009.
21
4.2
Reliance on Other Experts
Cube, Lycopodium and Orway have based this Technical Review of the Kibali Gold Project on information
provided by Kibali Goldmines. The data includes third party technical reports and relevant published and
unpublished third party information. Cube, Lycopodium and Orway have made all reasonable endeavours,
including site visits and review of the Kibali Goldmines operations, to confirm the authenticity and completeness
of the technical data on which this report is based, however Cube, Lycopodium and Orway cannot guarantee the
authenticity or completeness of such third party information.
Neither Cube, Lycopodium, Orway, nor the authors of this report are qualified to provide comment on the legal
issues associated with the Kibali Gold Project, including any agreements, joint venture terms or the legal status of
the tenements included in the Kibali Gold Project.
Cube, Lycopodium and Orway have included and completely relied upon copies of the arêtes supplied by Kibali
Goldmines for statements in Sections 5.
Reference is made to Section 17.0 of this report which details all documents used in the preparation of this report.
22
5.0
PROPERTY DESCRIPTION AND LOCATION
5.1
Project Location
The concession areas are located in the north-eastern part of the Democratic Republic of Congo near the
international borders with Uganda and Sudan (refer Figure 5-1). The location of the Kibali Gold Project area
is shown in Figure 5-2.
The local office of Kibali Goldmines, is located in the village of Doko, which is centrally located within the project
area and approximately 180km by road from Arua on the Ugandan border and lies immediately north of the town of
Watsa. The project area is centred at approximately 3.13o North and 29.58o East in the administrative district of
Haut Uélé in Province Orientale (Figure 5-2).
Access is by charter flight from Entebbe/Kampala in Uganda (470km) or Mwanza (740km) in Tanzania to the
airstrip at Doko (1,000 metres in length), a flying time of approximately 1.5 and 2.2 hours, respectively. Entebbe is
an international airport with good commercial links to Nairobi, Johannesburg and London.
Access by road is from Kampala (approximately 650km); the capital and commercial centre of Uganda, via Arua on
the Uganda/DRC border (Figure 5-1). Larger trucks with heavy freight are presently using a route through the
Sudan from Kampala.
Durba Village with approximately 10,000 inhabitants lies immediately to the west of the project area and effectively
continues into the Karagba Village, situated on the western side of Lac Karagba and is located on the site of the
proposed Karagba and Chauffeur open pits.
The boundaries of the Kibali Gold Project have been taken from the maps at the Cadastre Minier relating to the
boundaries of OKIMO’s exploitation permits. Kibali has not as yet separately surveyed the area.
The district capital of Watsa lies about 9km to the south of the project, which is situated just north of the Kibali River
on the road to Faradje and the Sudan. The town of Bunia, which is the United Nations controlled entry point to north
eastern DRC, lies about 200km to the south of the project.
23
Figure 5-1 Kibali Goldmines area North East DRC
24
Figure 5-2 Map of the DRC showing the location of Haut Uélé District (Province Orientale)
25
5.2
Tenement Details
Kibali Goldmines has been issued with ten exploitation permits under the DRC mining code in respect of the Kibali
Gold Project, most of which are valid until 2014 and the balance of which are valid until 2015. Under the terms of
the Kibali Acquisition, it is a condition to completion that the exploitation permits expiring in 2014 are renewed and
extended until 2029 by the Government of the DRC. All Mineral Resources referred to in this report are contained
within the area consolidated within these permits.
Cube has reviewed copies of certificates granting the exploitation permits as well as the Ministerial Arretes which
transfer the permits into the name of Kibali Goldmines. Cube has sourced this information directly from Kibali
Goldmines.
Figure 5-3 Kibali Gold Project Tenement Holdings
Arrete #
0325
0326
0327
0328
0329
0330
0331
2870
2877
0312
.............................
.............................
.............................
.............................
.............................
.............................
.............................
.............................
.............................
.............................
.................
.................
.................
.................
.................
.................
.................
.................
.................
.................
Permit #
Surface Area (km2)
Expiry Year
11447
11467
11468
11469
11470
11471
11472
5052
5073
5088
226.8
248.9
45.9
91.8
30.6
113.0
85.0
302.4
399.3
292.2
2014
2014
2014
2014
2014
2014
2014
2014
2014
2015
Note: The certificates for exploitation permits 11470 and 11472 correctly indicate an expiry date of 3 June 2015,
however, the expiry dates on the corresponding decrees read 11 May 2014. These are to be changed to 3 June 2015
and then application made for renewal.
26
5.3
Location of Mineralised Zones & Existing Surface Features
The locations of mineralised zones and historic workings (including the shafts and open pit at Gorumbwa, an open
pit at Agbarabo, the Processing Plant and Tailings Dam) are shown in Figure 5-4.
Figure 5-4 Kibali Gold Project Mineralised Zones and existing Facilities
27
6.0
GEOLOGICAL SETTING
6.1
Introduction
The Moto Goldfields are located within the Moto greenstone belt, which is comprised of the Archean Kibalian
(Upper and Lower) volcano-sedimentary rocks and ironstone-chert horizons that have been metamorphosed to
greenschist facies. It is cut by regional-scale north, east, northeast and northwest trending faults and is bounded to
the north by the Middle Archaean West Nile granite-gneiss complex and cut to the south by the Upper Zaire granitic
complex. This is shown below in Figure 6-1.
Figure 6-1 Kibali Gold Project — Prospect Geology
The stratigraphy consists of a volcano-sedimentary sequence comprising fine-grained sedimentary rocks, several
varieties of pyroclastic rocks, basaltic flow rocks, mafic-intermediate intrusions (dykes and sills) and intermediatefelsic intrusive rocks (stocks, dykes and sills). The sequence is variably altered from slight (texture benign) to
intense (texture destructive) such that in some cases the protolith rock is unrecognisable.
Several major mineralised trends are outlined by the soil geochemistry data and by the distribution of known gold
mineralisation. The Kibali-Durba-Karagba Trend and the Gorumbwa-Kombokolo Splay are anomalous with
respect to gold endowment and together, define a mineralised, North East-striking ‘mineralised corridor’, 1.5km
wide and 8km long.
6.2
Mineralisation Controls
6.2.1 Breccia Development
Breccia development is an important feature of the higher grade mineralized zones with multiple types of breccias
being observed. Early-formed breccias characterized by an amorphous silica matrix, are generally barren with
respect to gold. In places, the silica matrix is accompanied by albite and ankerite-siderite P sulphides and can carry
anomalous gold values.
Late breccias are sealed with a matrix of secondary chlorite that is probably hydrothermal in origin. These breccias
can carry very high gold values with coarse gold being visible in hand specimen.
The presence of numerous generations of breccias suggests that brecciation is an important element of ground
preparation by hydraulic fracturing proceeding and/or accompanying mineralisation. These breccias may also mark
periods of fluid over-pressuring and rupturing of the rock column below the various aquitards (seismic
pump-and-seal model). The timing and sequence of the formation of these breccia bodies has not been adequately
determined. However, some of the early breccias are overprinted by the S1 foliation (as well as early quartz-feldspar
28
and silica veins) while some of the chlorite-filled breccias appear to be late with respect to S1, suggesting an
evolution of breccia development with time.
6.2.2 Structural Control
Structural control is apparent from the linear distribution of mineralised occurrences, the regular periodicity of the
emplacement of the mineralised lenses and the shape of the mineralised units. The largest zones of mineralisation
are aligned along north east trends such as the Kibali-Durba-Karagba Trend and the Gorumbwa Splay. The
mineralized lenses are ovoid-shaped with long axes that extend down plunge for considerable distances. The
orientation of the long axes of mineralisation approximates the orientation of F2 fold axes, the orientation of the
intersection of S1 and S2, as well as the orientation of stretching defined by stretched varioles at Pakaka and the
rodded lozenges developed at Durba and Kombokolo. It is clear that the dynamic interaction of D1 and D2 has had a
direct impact on the siting and shape of the mineralized bodies. The alteration-mineralisation event is texture
destructive such that the early structural fabrics (S1 and S2) are strongly overprinted or destroyed. This indicates
that main-stage gold mineralisation was synchronous with or post dates both D1 and D2. The gold associated
breccias appear to have utilized north east-trending D2 structures.
6.2.3 Stratigraphic Control
Stratigraphic control such as primary porosity/permeability features is inferred where the mineralisation is
sub-parallel to bedding contacts. The presence of iron-rich units such as ironstone, ferruginous chert, Fe-tholeiitic
basalt and pervasive early ankerite alteration, in the stratigraphy has enhanced the potential for deposition of gold.
Main-stage mineralizing fluids appear to have ponded or have been otherwise restricted in their movement (aquitard
control) by both the ironstone-chert unit (Mengu Hill) and the ’upper basalt unit’ (Pakaka-Pamao deposit).
29
7.0
DEPOSIT TYPES
The following description has been drawn from Moto Information Circular (February 2006).
Gold mineralisation within the Kilo-Moto Belt in the eastern part of the DRC is associated with epigenetic
mesothermal style mineralisation, consistent with the majority of Archaean and Proterozoic greenstone terranes
worldwide. This style of mineralisation is generally associated with regionally metamorphosed terranes that have
experienced a long history of thermal and deformational events. As such, the gold deposits are invariably
structurally controlled. The most common style of mineralisation in this setting is fracture and vein-type gold
mineralisation in zones of brittle fracture to ductile dislocation. Deposits of this type are best developed in the Kilo
sector of the Kilo-Moto district where AngloGold is currently exploring ’mylonite’ hosted vein-style
mineralisation.
In the Kibali district the majority of gold minerilaisation identified to date is disseminated style, hosted within a
sequence of coarse volcaniclastic and sedimentary rocks. The mineralisation is generally stratigraphy and
associated with quartz-carbonate alteration and pyrite. Quartz and quartz-carbonate veins are present within the
ore zones but are found to be generally barren with respect to mineralisation.
The mineralisation currently being drill defined in the Kibali Gold Project area is reminiscent of Archean deposits
like Geita (Tanzania). This analogy is based on the predominance of a volcaniclastic-sedimentary host, degree of
silica-iron metasomatism, disseminated style of mineralisation, stratiform geometry of mineralised zones,
intrusion-related doming, regional scale of significant mineralisation, and interpreted paragenesis.
For the Kibali Gold Project, diamond drilling is used extensively to test continuity of mineralisation in the fresh
profile, with only limited use of RC drilling to define the oxide mineralisation. The relationship between geology
and mineralisation is covered in more detail in Section 8.0
30
8.0
MINERALISATION
The following description has been drawn from Moto Information Circular (February 2006).
Gold mineralisation in the Kibali Gold Project area comprises a series of prospects that have been identified by a
variety of methods, including previous exploration and mining, the presence of artisanal diggings, soil
geochemistry, aeromagnetic anomalies and drilling using the current geological model for mineralisation.
The majority of prospects currently being delineated occur within two broad mineralised trends. The first group lie
within a north east trending structural-alteration corridor from the Kibali Prospect in the southwest to the Ndala
Prospect in the northeast, called the Kibali-Durba-Karagba Trend. The second group lies within a north-west
trending zone that stretches from the Pakaka Prospect in the southeast to the Mengu Hill Prospect in the northwest
8.1
Kibali-Durba-Karagba Trend
The 7km-long, north east-trending, Kibali-Durba-Karagba Trend includes, from south west to north east, the
Kibali, Sessenge, Durba, Chauffeur, Karagba, and Ndala prospects. Soil anomalies along strike of the above
projects suggest that gold anomalism may be in excess of 20km in length. The mineralised lenses at Sessenge,
Durba, Chauffeur and Karagba prospects are mainly north east-plunging (25-35o) bodies within the north east
mineralised trend, interpreted to represent an ancient fault corridor that controlled fluid movement and gold
emplacement. The mineralised lenses are generally elongate ellipse-shaped bodies with extensive down-plunge
extent. Mineralisation at the Kibali Prospect south of the Kibali River occurs as a series of tabular bodies with a
moderate north-west dip.
Figure 8-1 shows the identified prospects along the Kibali-Durba-Karagba Trend.
8.1.1 Kibali
The Kibali Prospect is located south of the Kibali River at the south west end of the 7km long, north east trending
Kibali-Durba-Karagba Trend.
The lowest unit at the Kibali Prospect is a mafic volcanic sequence called the Kibali River Basalt which forms the
footwall to the Kibali Prospect. The mafic unit is massive and variably altered and interpreted to be pillowed
tholeiitic basalt flows with minor interbedded interflow sedimentary horizons. This sequence is interpreted to be the
lowest formation in the stratigraphy of the Kibali Gold Project area to be established to date.
At the Kibali Prospect, the Kibali River Basalt is interpreted to strike to the north east, dip moderately to the north
west with an interpreted facing direction to the north-west. The mafic volcanic flows can be traced to the north and
northeast where they have been intersected at depth by RC and DDH drilling associated with the Sessenge Prospect.
It is postulated that the Kibali River Basalt may underlie mineralisation at the Memekasi and Renzi Prospects
further to the east. Thus, the strike of this unit is interpreted to swing from northeast into a more easterly strike as it
crosses the Kibali River going north.
Mineralisation at Kibali is spatially associated with shear zones that are hosted within a thick sequence of felsic
tuffs, fine-grained sedimentary rocks, a coarse fragmental rock, and ’chert’. Gold is associated with zones of
bleaching (sericite-albite-silica-alteration) with sulphide content (mainly pyrite and arsenopyrite) reaching 15%.
The mineralised zone is hosted in a “shear zone” that has a north-easterly strike and dips to the northwest at
approximately 40o over a strike length of approximately 1.6km, at an average width of 300 metres and has been
indentified to a depth of 250 metres below the topographical surface.
31
Figure 8-1 Kibali-Durba-Karagba Mineralised Trend — Plan
8.1.2 Sessenge
The Sessenge Prospect is located 1.5km to the north east of the Kibali Prospect along the Kibali-Durba-Karagba
Trend and north of the Kibali River.
The lowest stratigraphic unit consists of a thick sequence of ironstone and magnetite-rich basalt called the Sessenge
Footwall Formation. The ironstone units vary in thickness up to 50 metres and the basalt unit up to 15m. The basalt
flows within this formation are tentatively correlated with the Kibali River Basalt at the Kibali Prospect. Drilling to
date has indicated that the formation is in excess of 70 metres thick and strikes east-west. The base of the formation
has not yet been established by drilling in the Sessenge Prospect area.
Conformably overlying the Sessenge Footwall Formation is a thick sequence of volcanic agglomerate (Vag) that
appears to thicken in section from east to west. This thick agglomeratic unit is called the Sessenge Main-Lode-Vag
Formation and is correlated with the volcaniclastic and sedimentary units at the Kibali Prospect. The apparent
thickening in section of the volcanic agglomerate is the result of a relatively flat lying basal contact and an upper
contact with an apparent dip to the east of ⬃25o. Units associated with the Sessenge Footwall Formation can be
locally highly altered and have been logged as Acsa and undifferentiated silicified tuff. Lying conformably above
the Sessenge Main-Lode-Vag Formation, is a mixed sequence commencing with a basal ironstone unit that averages
about 20 metres in apparent thickness, followed by a volcanic agglomerate unit that averages about 20 metres in
thickness, followed by a second ironstone unit that is at least 10 metres in apparent thickness, which in turn is
followed by a very-fine-grained black, siliceous unit identified as a graphitic argillite. This agglomerate-ironstoneargillite sequence along the north east part of the Sessenge Prospect is called the Durba Mine Formation and appears
to be greater than 85m in thickness and dip to the east.
The basal contact of the Durba Mine Formation is correlated with the first appearance of ironstone at the top of the
Sessenge Main-Lode-Vag Formation with the contact being traceable along the southern side of Durba Hill. The top
of the sequence is located on the north east side of Durba Hill where it is overlain by the Karagba Deeps Formation.
Gold mineralisation is mainly confined to the Sessenge Main-Lode-Vag Formation and associated with
silica-albite-ankerite/siderite-pyrite alteration.
Mineralisation at Sessenge forms two shoots (Sessenge East and West) that plunge to the north east within the
Kibali-Durba-Karagba Trend. The mineralisation is approximately 850m in strike length at an average width of 200
metres and has been identified to a depth of 200 metres below the topographical surface.
32
8.1.3 Durba-Chauffeur
The Durba-Chauffeur Prospects are located to the north east of the Sessenge Prospect and on the north east side of
Durba hill. The prospects include the historic Durba Mine, as well as the East and West Chauffeur artisanal mine
workings.
The Durba and Chauffeur West prospects lie entirely within the Durba Mine Formation. This unit is comprised of a
thick sequence of altered fine-grained sedimentary rocks (argillite-mudstone-siltstone), felsic tuffs, and ironstonechert units. This formation underlies Durba Hill and possibly Kombokolo Hill directly to the north-north-west.
The top of the formation is defined by the first appearance of thick volcanic agglomerate units associated with the
overlying Karagba Deeps Formation. The base is defined by an ironstone-agglomerate-argillite sequence that lies
above the thick agglomeratic units of the Sessenge Main Lode Vag Formation in the Sessenge Prospect area to the
south west. The Durba Mine Formation appears to be greater than 220 metres in thickness.
Mineralisation at the Durba and Chauffeur Prospects consist of tabular to elliptical shaped mineralised bodies (East
and West zones) with shallow plunges to the north east. Exploration drilling is ongoing at the Durba Prospect and
infill drilling is in progress in the Chauffeur area. The mineralisation is approximately 1.6km in strike length at an
average width of 350 metres and has been identified to a depth of 850 metres below the topographical surface.
8.1.4 Karagba
The Karagba Prospect is located to the north east of the historic Durba Mine and represents the northeast extent of
known significant mineralisation along the Kibali-Durba-Karagba Trend.
The upper stratigraphy in the Karagba Prospect area is represented by the Durba Lake Formation. This stratigraphy
is dominated by a sequence of ash-lapilli tuff horizons and interbedded fine-grained sediments. The tuffaceous units
are generally coarse at the base and fine upward into mudstone-argillite units. The individual beds range in
thickness from 0.5 to 2.0 metres. Narrow volcanic agglomerate horizons are present within the formation. The
bottom of the formation is placed at the base of a distinctive basaltic sill — BIF pair (DDD018; 127.2 metres down
hole).
The top of the formation is not known, however it is suggested that a distinctive, thick sequence of ironstone-chert
that forms the summit of Kanga Sud hill represents the upper part of the formation.
The Durba Lake Formation conformably overlies the Karagba Deeps Formation. This formation is defined by a
distinctive, thick volcanic agglomerate unit that is characterized by intermediate-to-felsic fragments set within a
fine-grained chloritic matrix. The unit is generally matrix supported with fragments varying slightly in lithology.
Large sections of the unit appear dominantly monomictic with fragment size varying from several mm to several cm
in diameter. At depth, a different volcanic agglomerate is noted with polymictic fragments that include a distinctive
dark fragment interpreted as a silicified argillite. Alteration of the matrix in the agglomerate is dominated by
chlorite (greenschist facies), which in turn can be variably overprinted by sericite, ankerite, silica and albite.
The mineralisation at Karagba is represented by numerous mineralised zones with the lower Karagba lenses hosted
primarily in the agglomeratic units of the Karagba Deeps Formation, while the upper zones such as Chauffeur,
Upper Karagba West lens appear to be hosted both within the sedimentary and tuffaceous units of the Durba Mine
Formation and the Karagba Deeps agglomeratic units. The mineralised shoots are tabular to elliptical in shape and
plunge to the north east at ⬃30o.
Of note is the presence of a distinctive hydrothermal breccia body that underlies the main mineralized lens at
Karagba West. The breccia can be followed through the section as a sub-vertical body with subordinate,
moderately-dipping apophosies. This generation of breccia is distinguished by a black chloritic matrix and
occasional coarse gold content.
Infill drilling is ongoing in the Karagba area to upgrade the currently defined Mineral Resources to Indicated
Mineral Resource status. The mineralisation extends over a strike length of 850 metres at an average width of
250 metres and has been identified to a depth of 550 metres below the topographical surface.
8.2
Ndala
The Ndala Prospect area lies 2km to the east of the Pakaka Prospect and 5km to the north east of the Karagba
Prospect, along the Kibali-Durba-Karagba Trend.
33
The stratigraphic section at Ndala is relatively simple in that it is entirely massive basalt (with minor interflow
sedimentary rocks) that is cut by abundant quartz veins. The basalt was determined by BGC. to be iron-rich
tholeiites of subaqueous deposition based on the presence of pillow structures.
The basaltic rocks at Ndala are correlated with those in the hanging wall of the Pakaka Prospect to the west and
represent a thick sequence of mafic volcanic rocks and fine-grained interflow sedimentary rocks that belong to the
Pakaka-Pamao Hanging Wall Formation. The thickness of this formation is yet to be determined from the present
drilling.
The Ndala mineralisation is located entirely within the basalt unit and appears to be related to supergene enrichment
of the gold within the transition zone from weathered to fresh material. The mineralisation extends over a strike
length of 250 metres at an average width of 50 metres to a depth of 80 metres below the topographical surface.
Further drilling is planned for the Ndala North area.
8.3
Pakaka-Mengu Trend
The 7km-long, north west-trending Pakaka-Mengu Trend includes from south east to north west, the Pakaka,
Pamao, Megi, Marakeke, Mengu Village, and Mengu Hill prospects. Soil anomalies along strike within this trend
suggest that gold anomalism may extend for up to 13km. The mineralised lenses are highly elongate tabular or
ellipse-shaped bodies (100-400 metres in strike and 5-25 metres in average thickness) with an unknown downplunge extent. The lenses plunge consistently to the north east at 25-35o within a stratabound horizon below a major
basalt unit that is interpreted to have acted as an aquitard.
Mineralisation occurs in a number of rock types with the highest gold grades showing a strong spatial association
with zones of variably silicified, albitised and carbonate altered rock. These alteration-mineralisation zones appear
to be broadly conformable with the regional S1 fabric and sub-parallel to bedding. Figure 8-2 shows the identified
prospects along the Pakaka-Mengu Trend.
Figure 8-2 Pakaka-Mengu Mineralised Trend — Plan
34
8.3.1 Pakaka-Pamao
The Pakaka-Pamao Prospects are located at the south west end of the 7km-long, north west-trending Pakaka-Mengu
Trend. The stratigraphic section at Pakaka-Pamao is comprised of three formations:
•
An upper tholeiitic basalt flow sequence with interbedded argillite and graphitic argillite horizons called the
Pakaka-Pamao Hanging Wall Formation;
•
A middle formation composed of a volcanic agglomerate unit interbedded with abundant felsic crystal tuff,
undifferentiated tuff, as well as lesser horizons of argillite, mudstone (and at Pamao, ironstone) called the
Pakaka Main Lode Vag Formation;
•
A lower conformably underlying formation, called the Pakaka-Pamao Footwall Formation, being massive
mafic volcanic units presently interpreted as a sequence of basalt flows. The sequence could however be a
relatively thick sill- or dyke-like intrusion as there are no known interflow sediments noted in the sequence.
Gold mineralisation at Pakaka-Pamao is found predominantly within the coarse volcaniclastic rocks, minor
tuffaceous and fine-grained sedimentary rocks of the Pakaka Main Lode Vag Formation. The mineralised zones
are characterized by silica-albite-ankerite/siderite-pyrite alteration, mainly in well foliated siliceous rocks. The
mineralised zones are associated with pervasive silicification with local preservation of breccia textures that have
been overprinted by the dominant S1 fabric. Higher gold grades appear to correlate well with the presence and
abundance of pyrite.
A shallow open pit comprising a series of artisanal workings has been excavated over the south-western part of the
Pakaka Prospect where the mineralisation outcrops. These workings extend over a strike length of approximately
100 metres. Historic Belgian-era open pits are found at Bakangwe Aval and Tete Bakangwe, and artisanal pits are
scattered across the southern part of the Pamao area where mineralisation outcrops. This Pamao mineralisation
extends over a strike length of 1.4km at an average width of 300 metres and has been identified to a depth of 150
metres below the topographical surface.
The weathering profile at Pakaka is relatively deep, with oxidation extending to depths of approximately 50 metres
below surface.
At the Pakaka-Pamao Prospect there are six recognisable lenses, these being the Pakaka South Shoot, Pakaka North
Shoot, Tete Bakangwe, Bakangwe Aval, Pamao East Shoot and Pamao West Shoot. All the mineralised shoots
plunge shallowly and strike to the north east.
The largest and most persistent of these are the Pakaka South and North lenses, which have been modelled. The
individual shoots vary in width from 25 metres at Bakangwe Aval to over 200 metres at Pakaka North. The Pakaka
shoots continue down plunge beyond the limits of the drilling and represent underground potential. The Pakaka
mineralisation extends over a strike length of 1km at an average width of 500 metres and has been identified to a
depth of 350 metres below the topographical surface.
8.3.2
Megi-Marakeke
The Megi-Marakeke Prospects are located midway along the Pakaka-Mengu Trend.
The lowest stratigraphic unit in the Megi Section is interpreted to be a basalt flow unit, the Megi Footwall Basalt
Formation, which may correlate with the basalt units found in the lower stratigraphy at Pakaka-Pamao (PakakaPamao Footwall Formation). This unit ranges in colour from buff to dark grey, is generally fine-grained in texture
and is variably carbonate-sericite-silica altered. The basalt dips to the north east at approximately 30o and strikes to
the west-north-west.
The Megi Footwall Basalt is overlain by a thick sequence of ‘chert-tuff’ and ironstone called the Megi IronstoneChert Formation. In drill sections this unit is over 50 metres in thickness and is characterized by the interlayering of
iron-rich units (ironstone and ferruginous ‘chert’) and ‘bleached’ units (‘tuff’) with variable percentages of silica,
sericite and carbonate with minor horizons of albite, pyrite, and arsenopyrite. The interleaving of the ironstone with
the ’chert-tuff’ is ephemeral and cannot be traced with confidence through the sections as separate mappable
horizons; therefore, the ironstone-chert-tuff is considered together as a mappable unit.
The iron-silica-carbonate-potassium-flooding is interpreted to be the result of alteration processes. This alteration is
pervasive, widespread and it can be followed between drill holes and across sections. It is considered to be part of
the stratigraphic section in some parts of the project area. The iron-silica unit is resistant and forms the summits of
many of the hills and ridges within the area, stretching from the Memekasi Hills in the south to the Kalimva Hills in
the north, a distance of 25km.
35
It is noted that the Megi Ironstone-Chert Formation is best developed around the Megi Prospect. This observation
may have significance with relation to mineralisation-alteration processes and their possible relationship to a
fundamental structural control and the probability that the ironstone-chert alteration unit is best developed over
early growth faults. The Megi mineralisation extends over a strike length of 700 metres at an average width of 250
A lithology interpreted as a fine-grained sedimentary rock appears to the east and west of the Megi Prospect. Further
west in the Marakeke area, this unit dominates the stratigraphic section. This lithology is given the name ‘mudstone’
and is tentatively recognized as the Marakeke Mudstone Formation.
Narrow, fine-grained sedimentary units (mudstone) are recognized in the Megi sections but are minor in relation to
the more dominant ironstone-chert lithologies. The relationship of the mudstone to the spatially-associated
alteration units is still open to conjecture but it possible that much of the ironstone-chert is developed in the
fine-grained sedimentary units and that there is an alteration ‘facies’ change outward from the pervasively altered
zones around the mineralised zones, from ironstone-chert (proximal) to mudstone (distal). The Marakeke
mineralisation extends over a strike length of 1.1km at an average width of 100 metres and has been identified
to a depth of 90 metres below the topographical surface.
8.3.3 Mengu — Mengu Hill
The Mengu Village and Mengu Hill Prospects lie near the north west end of the north-west trending Pakaka-Mengu
Trend.
The stratigraphy in the vicinity of the Mengu Hill is dominated by a volcanic agglomerate unit that is interbedded
with fine-grained sediments, siliceous tuffaceous rocks and minor mafic volcanic rocks. These lithologies overlay a
massive magnetite and specular hematite ironstone-chert unit.
At Mengu Hill, mineralisation is associated with silica-albite-ankerite/siderite-pyrite alteration that is focused
within the ironstone unit and along its contact with the overlying volcanic agglomerate unit. The mineralised lens
plunges shallowly to the north east. The Mengu Hill mineralisation is approximately 700 metres in strike length at
an average width of 120 metres and has been identified to a depth of 250 metres below the topographical surface.
At Mengu Village the mineralisation the mineralisation is 600 metres in strike length at an average width of 150
8.4
Gorumbwa-Kombokolo Trend
Refer to Figure 8-1 and Figure 8-2 for the position of the Gorumbwa-Kombokolo Trend.
8.4.1
Gorumbwa
The Gorumbwa prospect containing the historic high-grade Gorumbwa Mine is located immediately to the north of
the Sessenge Prospect and to the west of the historic Durba Mine. The Gorumbwa Prospect lies along a mineralised
trend that appears to be a splay off the Kibali-Durba-Karagba Trend. The Kombokolo Prospect is interpreted to lie
along this splay to the north east of Gorumbwa.
The uppermost sequence recognized in the Gorumbwa drilling is referred to as the Gorumbwa Upper Vag
Formation. It is a volcaniclastic sequence dominated by a distinctive volcanic agglomeratic unit, containing felsic
fragments within a chloritic matrix, intermixed with a fine-grained ash tuff unit. The average thickness of this
formation is unknown as it is seen in the eroded top section of nearly every drill hole at the Gorumbwa Mine.
The Gorumbwa Upper Vag Formation is underlain by the Gorumbwa Middle Marker Formation. It is represented
by a mixed but distinctive sequence of fine-grained sediments (mudstone-siltstone) and crystal tuff. The
sedimentary units often have wispy magnetite bands at centimetre scale which formed within the layers. The
crystal tuff is dominated by subhedral to euhedral quartz phenocrysts set within a silica-sericite-carbonate matrix.
The stratigraphy below the Middle Marker Formation is not well known at this point in time. However, one
relatively deep hole (GDD009) appears to have penetrated through the Middle Marker at 178 metres down hole and
gone back into a thick volcanic agglomerate unit. This lower agglomeratic unit may be part of a larger volcaniclastic
sequence which conformably underlies the Gorumbwa Middle Marker Formation at Gorumbwa. Both the
Gorumbwa Upper Vag Formation and the Gorumbwa Middle Marker Formation may belong to the Sessenge
Main Lode Vag Formation as described for the Sessenge prospect.
36
A significant mafic intrusion, formally known as the ’Banc Vert’, is found within the Gorumbwa stratigraphy. For
most of its known extent it appears to lie sub-parallel to lithologic layering and is assumed to be sill-like in its
relationship to the stratigraphy.
The ‘Banc Vert’ is generally a medium grained mafic unit which becomes fine-grained at the contact with the host
rock. The main constituents appear to be chlorite, feldspar and ankerite-calcite, with the ankerite appearing as
porphyroblastic euhedral crystals up to 2 millimetres in diameter. Some parts of the mafic intrusion contain
magnetite.
The contacts of the ‘Banc Vert’ are difficult to distinguish as there appears to be a degree of mixing and assimilation
along the contacts suggestive of emplacement within an unconsolidated host (soft-sedimentary emplacement).
Mineralisation at the Gorumbwa Mine is hosted within a sequence of meta-tuffs and agglomerates. Silicification
and sericitisation is pervasive, with visible gold noted within late, strongly silicified structures. Three lodes or lenses
were present with historic mining focussed on the main (middle) lode located between the upper and the lower
lodes. The main lode is capped and divided from the upper lode by the ’Banc Vert’. The mineralisation extends over
a strike length of 1km at an average width of 150 metres and has been identified to a depth of 400 metres below the
topographical surface.
8.4.2 Kombokolo
The Kombokolo Prospect lies approximately 1km to the north east of the Gorumbwa Prospect along the north easttrending Gorumbwa-Kombokolo Splay.
The lowest stratigraphic unit at Kombokolo is a black to dark grey, very-fine-grained argillite. The Kombokolo
argillite is followed by a fine-grained, grey-coloured sedimentary unit identified as a mudstone or volcanic
agglomerate in KKRC002 and KKRC005.
The Kombokolo argillite-mudstone sequence is followed by an ironstone unit averaging 4-5 metres in thickness and
dipping to the north.
The sequence of fine-grained sedimentary and ironstone rocks at Kombokolo are correlated with units belonging to
the Durba Mine Formation described above for the Durba-Chauffeur area.
Mineralisation is located in a moderate to pervasively altered carbonate-sericite-silica unit underlying the ironstone
horizon. One main shallow north east plunging mineralised lens is present at Kombokolo. This mineralised lens
strikes over 300 metres at an average width of 120 metres and has been identified to a depth of 170 metres below the
topographical surface.
8.5
Agbarabo Trend
Figure 8-2 shows the identified prospects along the Agbarabo Trend.
The historic high-grade Agbarabo Mine is located immediately to the north west of the Kombokolo prospect and to
the north of the historic Gorumbwa Mine.
The stratigraphy at the Agbarabo Prospect consists of a thick sequence of undifferentiated tuffs, mudstone and
volcanic agglomerate. These units are variably altered (silica-albite-carbonate-sericite) with minor ironstone. The
volcaniclastic-sedimentary sequence is cut by a relatively thick and weakly carbonate altered mafic sill similar to
that found in the Gorumbwa stratigraphy. The lithologic units found at Agbarabo appear to belong to the lower part
of the Durba Mine Formation or the upper part of the Sessenge Main Lode Vag Formation.
Gold mineralisation in the volcaniclastic-sedimentary sequence is associated with silica-albite-carbonate-pyrite
alteration. No gold Mineral Resources have been established by drilling in the Agbarabo mine area.
37
9.0
EXPLORATION
9.1
Introduction
Moto has primarily used the BGC/AAC aeromagnetic interpretation and 1950’s OKIMO drill results to define drill
targets in the project area. The Mineral Resources estimates currently published by Kibali Goldmines are based
primarily on the post 2004 Moto Mineral Resource drilling as very limited records are available to validate the pre2004 drilling.
The primary focus of the Kibali Goldmines drilling strategy since July 2008 has been to target the KCD mineralised
trend with infill and extension drilling focussed on defining the open pit as well as the underground potential of the
KCD system.
9.2
Pakaka
OKIMO and Davy McKee drilled the Pakaka deposit on drill lines orientated north-south, which is along the strike
of the mineralisation and therefore sub-optimal. Kibali Goldmines is in possession of the drill hole data from the
Davy McKee holes, and drill hole collar positions, composited assay data and depths are available from the OKIMO
holes. These data are of low confidence due to grid conversion problems and associated sample location
uncertainties.
RC drilling by Moto has been completed to a nominal spacing of 40m by 40m over the majority of the shallower
western half of the deposit. This includes as small area of 20m by 20m spaced drilling. DC drilling by Moto has also
been completed to a nominal spacing of 40m by 40m over the majority of the deeper eastern half of the deposit. Only
a small proportion of the overall Pakaka deposit has not been drilled to 40m by 40m spacing. Maximum drill
spacing at Pakaka is no greater than 80m by 80m and these areas are internal to the 40m by 40m spaced drilling.
The drilling database for Pakaka consists of:
•
1956-1958: 101 surface diamond drill holes totalling 13,645m drilled by the Belgians;
•
1990: 10 surface diamond drill holes totalling 2,000 metres drilled by Davy McKee;
•
1996: 5 surface diamond drill holes totalling 467m drilled by Barrick Gold Corporation (BGC);
•
2004-2006: 226 reverse circulation drill holes totalling 15,310m drilled by Moto;
•
2004-2007: 140 surface diamond drill holes totalling 26,709m drilled by Moto;
•
2006: 5 surface diamond drill holes for geotechnical data totalling 692m drilled by Moto.
Only data drilled by Moto was included in the November 2008 Mineral Resource estimation. No material additional
drilling has taken place at Pakaka since the November 2008 Mineral Resource statement and so no update resource
estimate has been done.
9.3
Gorumbwa
The Gorumbwa deposit was mined by OKIMO commencing in 1955 from underground and via a small open pit.
Total production from this mine is estimated at approximately 2.8Mt at grades of approximately 12g/t gold to 15g/t
gold. The underground and open pit workings are now collapsed and flooded. Two old head frames remain.
Underground workings extend to 380m below surface.
In 2005, Moto carried out an RC infill drilling programme at the Gorumbwa Prospect to a nominal spacing of 20m
by 20m. Drilling logistics at Gorumbwa were difficult due to the presence of a historic open pit and extensive
underground workings. One aim of the close spaced RC drilling was to identify the extent and location of
underground workings of which many of the RC holes have intersected as expected. Moto have drilled three lines of
DC at a nominal drill spacing of 120m by 40m to test the down plunge extent of mineralisation as well as some holes
to test the shallower parts of the deposit.
A limited RC infill programme was carried out during March 2006 to better define the Mineral Resource along
south-east edge and immediately below the historic Gorumbwa open pit.
The drilling database for Gorumbwa consists of:
•
Pre-1960: 157 surface diamond drill holes totalling 25,203m drilled by the Belgians;
•
Post-1960: 63 underground diamond drill holes totalling 1,315m drilled by OKIMO;
•
1996: 3 surface diamond drill holes totalling 907m drilled by Barrick Gold Corporation (BGC);
38
•
2004-2006: 83 Reverse circulation drill holes totalling 9,570m drilled by Moto;
•
2004-2005: 27 surface diamond drill holes totalling 5,382m drilled by Moto.
•
2006: 1 surface diamond drill hole for geotechnical data totalling 150m drilled by Moto.
No material additional drilling has taken place at Gorumbwa since the November 2008 Mineral Resource statement
and so no update has been done.
9.4
Kibali
The drilling database for Kibali consists of:
•
1998: 55 surface diamond drill holes totalling 6,610 metres drilled by Barrick Gold Corporation (BGC);
•
2004-2006: 42 reverse circulation drill holes totalling 2,397 metres drilled by Moto.
Both the BGC and Moto data has been included in the Mineral Resource estimation as both data sets are considered
to be of high reliability.
The BGC drill holes were vertical DC holes drilled at a nominal spacing of 160m by 80m on drill fences orientated
at 135o.
Most of the Moto 2004-2006 RC holes were drilled vertically. Given that the mineralised zone dips at
approximately 40o to 45o to the west, inclined drill holes will be required, although the relatively steep topography
will create access difficulties in places. RC drilling by Moto was reportedly slow due to the hard ground, and drill
hole dips deviated significantly.
Unfortunately, the BGC diamond core was vandalised during previous unrest in the area, and cannot be used to
confirm the geology or to obtain bulk density readings.
No additional drilling has taken place at Kibali since the November 2008 Mineral Resource statement and so no
update has been done.
9.5
Mengu Hill
Moto have completed six 80m by 40m spaced section lines covering the extent of the Mengu Hill deposit. The
Mengu Hill Mineral Resource extents and continuity of mineralisation appear to be well defined with the current
drilling coverage.
The drilling database for Mengu Hill consists of:
•
2004-2005: 46 reverse circulation drill holes totalling 2,760 metres drilled by Moto;
•
2004-2006: 40 surface diamond drill holes totalling 6,329m drilled by Moto.
•
No material additional drilling has taken place at Mengu Hill since the November 2008 Mineral Resource statement
9.6
Mengu Village
The drilling database for Mengu Village consists of:
•
2004-2005: 51 reverse circulation drill holes totalling 3,702m drilled by Moto.
No additional drilling has taken place at Mengu Village since the November 2008 Mineral Resource statement and
so no update has been done.
9.7
Karagba, Chauffeur and Durba
The KCD mineralised trend is proving to be a very significant system capable of hosting large gold Mineral
Resources. Recent deep drilling at the KCD deposit prospect has confirmed the existence of a very large mineralised
system of stacked shoots. The up-dip extension of these mineralised shoots at Chauffeur and Karagba has been the
focus of the recent DC drilling with 80m spaced drill lines with 20m collar spacing. An infill programme with
nominal 40m x 40m spacing is in progress to increase confidence in the up dip Mineral Resources to Indicated
Mineral Resource. There is clearly excellent potential for significant additional near surface and down-dip
resources to be defined in the KCD deposit.
39
The drilling database for Karagba-Chauffeur-Durba consists of:
•
•
2004-2009: 350 surface diamond drill holes totalling 152,175m drilled by Moto;
•
2004-2009: 21 surface diamond drill holes for geotechnical data totalling 9,409m drilled by Moto.
•
2008: 3 surface diamond drill holes totalling 1,556m drilled by Barrick as part of a Due Diligence process
Moto drilling data and the three Barrick confirmatory holes data have been used in the Mineral Resource estimation.
9.8
Megi
The drilling database for Megi consists of:
•
2004-2005: 100 reverse circulation drill holes totalling 8,240 metres drilled by Moto.
No additional drilling has taken place at Megi since the November 2008 Mineral Resource statement and so no
9.9
Marakeke
The drilling database for Marakeke consists of:
•
No additional drilling has taken place at Marakeke since the November 2008 Mineral Resource statement and so no
9.10
Kombokolo
The drilling database for Kombokolo consists of:
•
Pre-1960:
•
2005: 30 reverse circulation drill holes totalling 3,382m drilled by Moto;
•
2006: 2 surface diamond drill holes totalling 248m drilled by Moto;
•
2007-2008: 4 surface diamond drill holes for geotechnical data totalling 488m drilled by Moto.
12 surface diamond drill holes totalling 1,814 drilled by OKIMO;
No material additional drilling has taken place at Kombokolo since the November 2008 Mineral Resource statement
9.11
Sessenge
The entire Sessenge deposit area has been drilled by RC to a nominal spacing of 40m by 40m. Additional DC
drilling was completed aimed at the down plunge continuation of the geological model.
The drilling database for Sessenge consists of:
•
1998: 26 surface diamond drill holes totalling 3,598m drilled by Barrick Gold Corporation (BGC);
•
•
2005-2006: 28 diamond drill holes totalling 5,620 metres drilled by Moto;
•
2008: 1 surface diamond drill hole totalling 266m drilled by Barrick as part of a Due Diligence process;
•
No material additional drilling has taken place at Sessenge since the November 2008 Mineral Resource statement
9.12
Ndala
RC drilling has been completed at the Ndala deposit, west of Pakaka. The Ndala deposit was pitted extensively by
OKIMO, however the grades obtained by OKIMO were not confirmed by the Davy McKee drilling. BGC/AAC
drilled some DC holes on the prospect and reported some significant results. Moto completed two fences of RC
holes orientated north-south and east-west across the area pitted by OKIMO at 40m spacings.
40
The drilling database for Ndala consists of:
•
1998: 6 surface diamond drill holes totalling 844m drilled by BGC;
•
No additional drilling has taken place at Ndala since the November 2008 Mineral Resource statement and so no
9.13
Pamao
Pamao lies 500m west of Pakaka on the Pakaka — Mengu gold in soil geochemical anomaly.
The drilling database for Pamao consists of:
•
•
2005: 27 surface diamond drill holes totalling 3,795m drilled by Moto;
•
No material additional drilling has taken place at Pamao since the November 2008 Mineral Resource statement and
so no update has been done.
9.14
Other Prospects
Other prospects investigated by Moto include Tete Bakangwe located northwest of Pakaka and Aindi which lies
west of Pamao.
Moto has also completed some RC drilling at Aerodrome, Kanga Moke and an area of extensive artisan workings
east of Gorumbwa and northwest of Durba.
A small high grade open pit was excavated by OKIMO at Bakangwe Aval, however drilling by BGC and Moto did
not obtain any significant results apart from a small zone to the northeast of the prospect.
9.15
Exploration Potential
It is considered that the exploration potential of the Moto area is extremely good with potential for the discovery of
high-grade mineralisation in the Sessenge-Durba-Karagba segment of the Kibali-Durba-Karagba Trend, the
Gorumbwa-Kombokolo Splay, and the Agbarabo Trend. A number of stacked high-grade ore shoots may be
defined in this ’corridor’ and drilling over the entire strike length is warranted.
There is potential to define additional mineralisation at all known occurrences, and it can reasonably be expected
that new deposits will be located within the main structural corridors as the geological and structural knowledge of
the area is improved.
In addition, there is potential for the discovery of mineralisation elsewhere in the district.
9.16
Exploration and Evaluation Models
Moto primarily used the BGC/AAC aeromagnetic interpretation and 1950’s OKIMO drill results to define initial
drill targets. Kibali Goldmines is also in possession of the BGC/AAC drilling data from Kibali.
Mineral Resource estimations were reported for the Kibali Gold Project, being Pakaka, Karagba, Sessenge,
Kombokolo, Marakeke, Gorumbwa, Megi, Mengu, Mengu Hill, Ndala, Pamao and Kibali deposits by Cube in
November 2005. Since November 2005, several Mineral Resource updates and extensive DC drilling has been
undertaken for the Kibali Gold Project using 3 drill rigs with the focus being the KCD mineralised trend.
Cube last undertook an update resource estimate in November 2008 using all data up to July 2008. Since then Moto
continued to target mineralisation extensions and infill in the KCD mineralised trend to better define the economic
base of open pitable material and refine the models for underground evaluation
41
10.0
DRILLING
10.1
Drilling by Previous Owners
Very little information is available regarding drilling by OKIMO, BGC or AAC. Inspection by RSG Global of the
vandalised BGC drill core suggests that the majority of the core is NQ diameter.
10.2
Drilling by Current Owners
Diamond Core and Reverse Circulation drilling have been undertaken on behalf of Kibali Goldmines by GeoSearch
Limited, an experienced drilling contract company based in South Africa.
The orientation of the DC drilling undertaken on the KCD mineralisation is where possible orthogonal to
mineralisation (stratigraphy) to avoid distorting the relationship between sample length and true width. DC assay
samples are 2 metres down hole composites.
DC core recovery is generally very good in the transition and fresh zones. Above the transition zone the core
recoveries are variable with the lithologies being colluvium, silt/clay and minor laterite material. In the shallow
intensely oxidised material, the oxidised and friable matrix surrounding remnant siliceous fragments are washed out
by the drilling fluids, thus resulting in limited core recovery. Core recovery improves markedly below the intensely
oxidised material in the zone of haematitic/limonitic puggy clay/silts that overlies a relatively thin (3-5 metres)
transition zone (SOX).
Most DC holes commence in HQ diameter, which is reduced to NQ when fresh rock is reached or when difficulties
are encountered (such as old stope voids). There has been a limited amount of DC drilling using PQ and BQ core
diameters.
42
11.0
SAMPLING METHOD AND APPROACH
11.1
Introduction
A set of standard procedures have been developed to ensure that there is consistency of all procedures including
sampling, geological logging etc across the project. A discussion of the relevance of the samples by prospect is
undertaken in Section 13.
11.2
Diamond Drilling
Drill core is marked up by the geologist responsible and cut in half lengthways using a diamond saw. The half core is
sampled in 2 metre composites, crushed and pulverised on site and the other half is retained for future reference. All
diamond core is geologically logged and photographed prior to sampling.
11.3
Reverse Circulation Drilling
RC samples are collected at the drill site via a cyclone for each metre drilled. Samples from each metre are sampled
using a 75/25 Jones riffle splitter, followed by a 50/50 riffle splitter to obtain a sample weight of approximately 2.5
kg/m. Two adjacent metre samples are combined at the rig to create a 2 metre composite of approximately 4kg to
5kg. Wet RC sampling can occur periodically when RC air volume and pressure is insufficient to maintain a dry
sample. Where wet sampling occurs, excess water in the wet RC samples is decanted by rolling the bag gradually
sideways and pouring off the excess water. The assay sample is then obtained by using a small scoop to cut a vertical
channel through the entire sample in the plastic bag whilst the bag is lying on its side. The decanting of excess water
will have implications for grade, which will be downgraded if the gold is fine, or upgraded if the gold is coarse.
Details of wet sample intervals are logged according to degree of dampness and entered into the database. This
ensures the assessment of the significance of wet RC drilling can be taken into account.
The RC sampling procedures were revised in August 2009 with all samples being taken back to the on site
processing facility and dried prior to splitting.
Historically the RC bulk rejects were stored on site in plastic bags and were exposed to the weather. Individual
samples can be located, however many bags were in poor condition and inter-sample contamination has occurred
with time. Whilst it is not practical to store all samples under cover, mineralised intervals are now being stored under
cover such that deterioration of the bags is minimised.
Chip boards are prepared for RC drilling prior to geological logging.
43
12.0
SAMPLE PREPARATION, ANALYSES & SECURITY
12.1
Introduction
A comprehensive audit report regarding sampling method, sample preparation, analysis and security was prepared
by Michel M. Mercier (Mercier, September 2005) at the request of Moto Gold Mines Ltd during September 2005.
This report represents the most detailed, up to date and accurate account of procedures, methods, quality assurance
and sample preparation facilities currently adopted for all forms of sampling at the Kibali Gold Project.
Descriptions contained in this report are consistent with Cube’s recent observations and understanding of the same.
12.2
Sample Preparation Areas
The following description has been drawn directly from the Mercier, September 2005 Audit Report.
The sample preparation areas are housed in a large building of 441m2 divided into various sections for the
processing and preparation of different types of samples. The building also has a small core storage area and an
office for the senior lab technician. The areas are clean and well laid out with activities separated from each other.
The various preparation sections of the laboratory are: crusher section, pulverizer section, core saw section,
chipboard section, core drying section and soil preparation section.
12.3
Sample Preparation Equipment
The main equipment in use at the Doko preparation laboratory consists of:
•
Jaw crushers;
•
Pulverizers (both saucer style puck and ring type);
•
Drying oven;
•
Diamond saws;
•
Riffle splitters;
•
Various stainless steel screens;
•
Ultrasonic sieve cleaners;
•
Compressed air connections;
•
Work stations equipped with dust exhausts;
•
Dust extractor system
Jaw Crushers: two TM Engineering jaw crushers are used in the Doko preparation laboratory. Each machine can
crush P 6kg of material (approximately 2m of core) in about 4 minutes, so that 90% of the sample is less than 2mm.
The jaws can be cleaned very easily with compressed air or, when necessary, with ‘barren’ granitoid rock material
(see section on Pulverisers below for details about the gold barren material). The jaw crushers are also used to
prepare the blank material to clean the LM2 and the TM Engineering pulverizer bowls.
Pulverizers: two types of pulverizers are used; the flying saucer style puck (LM2) and the ring type (TM
Engineering). The two TM Engineering pulverizers with a bowl capacity of approximately 250g (which were used
at the beginning of the project) have been replaced by three LM2 machines with a bowl capacity of approximately
1.5kg. Both models pulverize samples to the point that 85% of the material passes through a 75 micrometer mesh.
A crushed gold-barren material, obtained from fresh granitoid rock, is used to clean the bowls. Analyses carried out
on the ’barren’ granitoid material have consistently returned values of ⱕ 0.03ppb Au with the majority of samples
giving G 0.01ppb Au. This gold-barren granitoid material is collected from an area 14km north of Doko, at the
following UTM locations:
•
N395654/E785046;
•
N395620/E785240;
•
N359597/E785091;
•
N359641/E785181;
•
N359655/E785062;
44
•
N395644/E785190;
•
N359595/E785090.
Drying oven: a Marc ventilated electric drying oven (0™ to 300™C) is used in the Doko preparation laboratory.
This oven permits the control of the temperature to accommodate different types of sample material (drying of 48
core samples in about 1 hour at 120™C; drying of 24 RC samples in about 6 hours at 120™C; drying of 40 to 48 soil
samples in about 6 or 7 hours at 120™C).
Diamond saws: two types of diamond saw were used to split the diamond core, a Vancon core saw that can split
one meter of core in about 5 minutes and a Corstor core splitter that can split one meter of core in about 10 minutes.
A second Vancon saw was installed in August 2006 to enhance efficiency.
Riffle splitters: different types of stainless steel riffle splitters (Geneq and Controlab) are available on site. They
are used to prepare sub-samples.
Various stainless steel screens: different types of stainless steel screens (Controlab and Madison) are available on
site. They are used to test the quality of crushing and pulverization, and also to obtain the fine fraction from soil for
analysis.
Ultrasonic sieve cleaners: two Controlab ultrasonic sieve cleaners are used to clean the screens. They are very
efficient and after the cleaning no particles are left in the mesh.
Compressed air connections numerous compressed air connections are available in the preparation laboratory to do
the cleaning of the different apparatus and material used.
Work stations equipped with dust exhausts: four work stations are present in the laboratory and these are equipped
with dust exhausts that connect to a dust extraction system (Donaldson Torit Downflo Oval). The work stations are
used for sample splitting and for recuperation of the pulverized samples from pulverizer bowls.
12.4
Quality Control and Quality Analysis
A programme of external quality control (QC) and quality analysis (QA) is applied to check for contamination,
accuracy and precision. This consists of three types of check samples that are introduced into the sample stream,
which include gold “blanks”, standards and laboratory duplicates. In addition, for RC samples, field duplicates are
also introduced in the sample stream. For the Diamond drill programme, the check samples introduced into the
batch stream total 12% which is very high when compared to the 5-6% that is considered as adequate for most
exploration projects. For the RC programme, the check samples introduced into the batch stream total 15%. As a
test, for the Gorumbwa deposit, where coarse gold was observed, Screen Fire Assay is also performed for all RC
samples that return Au values over 1g/t. The preliminary results show that Screen Fire Assay results are higher than
the usual Au Fire Assay analyses.
12.4.1 Gold “Blanks”
Gold “blanks” are used to check the possibility of gold contamination during the analytical procedure. This blank
material had previously been prepared on site with reverse circulation cuttings of hole PMRC 089 (from 58m to
80m) that returned values ⱕ 5ppb Au. Since October 2006, Gannet certified blanks have been routinely used.
For Diamond drill samples, one ‘blank’ is introduced randomly into the sample stream for each group of 25 samples
(4%).
12.4.2 Standards
Various certified reference standards are used to verify the ability of the laboratory to accurately detect gold values.
For RC and diamond drill samples, one certified reference standard is nominally inserted every 25 samples in the
sample stream (approximately 3.3%).
Twenty eight (28) different certified standards have been used as control samples over the life of the project (2004 to
2009), and are detailed below in Table 0-1. The thirteen standards still currently in use are indicated in bold italics.
The AU prefixed series of standards (2005 to 2006) were obtained from Western Mineral Standards, 28 Irwin St,
Bellevue, WA 6056. The more recent ST prefixed series have been sourced from Gannet Holdings Pty Ltd., 43
Frederic St, Naval Base, WA, 6165. The standards with SE, SH SJ & SL prefixes have been sourced from Rocklabs
Australian X-Ray tubes Pty Ltd and were submitted with the Barrick due diligence samples in 2008.
45
Table 12-1 Certified Reference Material List
Standard_ID
blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ST154-blank . . . . . . . . . . . . . . . . . . . . . . . .
ST216-blank . . . . . . . . . . . . . . . . . . . . . . .
BBG-blank . . . . . . . . . . . . . . . . . . . . . . . . .
ST428-blank . . . . . . . . . . . . . . . . . . . . . . .
AUOH-1 . . . . . . . . . . . . . . . . . . . . . . . . . .
AUOI-1 . . . . . . . . . . . . . . . . . . . . . . . . . . .
AUOJ-1 . . . . . . . . . . . . . . . . . . . . . . . . . . .
AUSK-1 . . . . . . . . . . . . . . . . . . . . . . . . . . .
ST04/2264 . . . . . . . . . . . . . . . . . . . . . . . . .
ST10/0301 . . . . . . . . . . . . . . . . . . . . . . . . .
ST16/1291 . . . . . . . . . . . . . . . . . . . . . . . . .
ST17/8171 . . . . . . . . . . . . . . . . . . . . . . . . .
ST18/8239 . . . . . . . . . . . . . . . . . . . . . . . . .
ST249 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ST269 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ST302 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ST305 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ST326 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ST44/0294 . . . . . . . . . . . . . . . . . . . . . . . . .
ST44/0335 . . . . . . . . . . . . . . . . . . . . . . . . .
ST49/8242 . . . . . . . . . . . . . . . . . . . . . . . . .
ST73/1292 . . . . . . . . . . . . . . . . . . . . . . . . .
ST274/5358 . . . . . . . . . . . . . . . . . . . . . . . .
ST49/6403 . . . . . . . . . . . . . . . . . . . . . . . . .
SE19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SH24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SJ22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SL20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Analyte_ID
Expected Value
Std Deviation
Units
Last Used
Au
Au
Au
Au
Au
Au
Au
Au
Au
Au
Au
Au
Au
Au
Au
Au
Au
Au
Au
Au
Au
Au
Au
Au
Au
Au
Au
Au
Au
0.01
0.01
0.01
0.01
0.01
1.20
1.76
2.41
3.68
4.78
3.40
0.50
0.76
9.70
5.85
0.63
3.66
10.47
12.60
13.90
13.60
2.06
1.48
5.96
1.99
0.58
1.33
2.60
5.91
0.01
0.01
0.01
0.01
0.01
0.05
0.05
0.06
0.12
0.21
0.15
0.03
0.05
0.52
0.39
0.06
0.16
0.44
0.53
0.53
0.62
0.10
0.06
0.26
0.08
0.08
0.13
0.13
0.53
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
ppm
14-Jul-06
30-Jun-08
0l-Jul-09
05-Oct-08
01-Jul-09
05-Jul-06
24-Jul-06
24-Jul-06
24-Jul-06
29-Aug-05
09-Jul-08
24-Apr-06
16-Sep-04
07-Jul-05
11-Nov-08
13-Dec-08
01-Jul-09
27-Apr-07
01-Jul-09
14-Aug-08
31-Dec-08
11-Nov-08
22-Aug-08
01-Jul-09
01-Jul-09
05-Oct-08
05-Oct-08
05-Oct-08
05-Oct-08
12.4.3 Duplicates
Duplicates are used to verify the degree of precision of the analyses. They can also be used to verify the quality of
the preparation of samples in the preparation laboratory or to verify if mixing of samples occurred during batch
processing. For Diamond drill samples, one duplicate is introduced randomly into the sample stream for each 25
samples (4%). For RC samples one field duplicate and one laboratory duplicate are introduced into the sample
stream for each 20 samples (10%).
12.5
Sample Shipments to the Analytical Laboratories
Two analytical laboratories are used by Moto Goldmines Ltd.: Genalysis analytical laboratory in Perth (Australia —
ISO 17025, NATA 3244) for Diamond drill samples, and SGS analytical laboratory in Mwanza (Tanzania) for RC
and Soil samples.
The RC and Soil samples are sent to SGS laboratory in Mwanza. They are packed in new polyweave bags (between
50 and 90 RC samples) or in cardboard boxes inserted into new polyweave bags (approximately 50 to 60 Soil
samples), and sent from the Doko airport in the DRC to Mwanza, Tanzania on an airplane belonging to Kilwa Air (a
company associated with Geosearch that is engaged in the contract drilling for the Moto project). The parcels are
then picked up by SGS staff at the airport in Mwanza.
The Diamond drill samples, sent to Genalysis laboratory in Perth, are packed in cardboard boxes (100 to 110
samples per cardboard box) that are closed with packing tape. The boxes are sent from Doko airport with the Kilwa
Air plane to Entebbe airport in Uganda and then picked up by DHL staff at the airport and redirected by DHL (air
service) to the Genalysis laboratory in Perth.
To this point in time, it appears that ’best-practice’ security assurance of the samples during transport between Doko
and the various external laboratories has not been addressed. As a consequence, it is recommended that the samples
46
be packed in new polyweave bags protected by bag ’seals’ in order to ensure their security. The polyweave bags can
then be inserted into cardboard boxes where necessary. A receiving form would then be sent with the parcels and be
returned signed to Moto..
12.6
Diamond Drill Sample Preparation
The diamond drill samples are logged, photographed, split and pulverized on site by Moto employees and then
packed and sent to Genalysis laboratory in Australia for a Fire Assay gold analysis. The following flow sheet
summarizes the different stages of diamond drill sample processing.
47
12.7
Reverse Circulation Sample Preparation
In the field, Reverse Circulation (RC) samples were collected by Moto employees on a metre basis while the sample
collected at the drill for analysis represents a 2m sample. In the Doko preparation laboratory, only the splitting of
each two meter sample received from the field and the introduction of standards and duplicates are performed. The
rest of the preparation (drying, crushing and pulverization) is handled at the SGS laboratory in Mwanza. The RC
samples are analyzed by SGS in Mwanza for Au, Fire Assay, AAS finish. Chipboards are prepared on site. The
following flow sheet summarizes the different stages of RC sample processing.
12.8
Conclusion
In the opinion of the author the procedures for sample preparation, security and analytical procedures are adequate.
48
13.0
DATA VERIFICATION
13.1
Project Database
Data was initially compiled and validated on site by Moto geologists. Logging data are entered manually from the
drill logs. In January 2006 IPAQ was introduced to speed up the geological logging of the DC. The IPAQ is equipped
with Micromine Field Marshall and the logging codes were set up to reflect site specifications. The drill log is up
loaded to a dedicated desk top computer and data stored in Micromine. Assay data are received from SGS and
Genalysis in an electronic format and is imported directly into the site database. All data is validated by the Moto
Database Administrator prior to transmission to Cube.
Core recoveries are routinely entered into the digital database.
Cube is routinely supplied with site validated ASCII files representing collar, downhole survey, assay and geology
data together with original electronic lab assay files. Cube maintains the data in a SQL Server relational drill hole
database.
Cube considers the data management processes in place to be robust and adequate.
13.2
Database Upgrade and Validation
H S Lucas was contracted from January 2006 by Moto Goldmines Ltd to be the Database Administrator for the
Kibali Gold Project. A summary of the database procedures and issues are itemised below.
Data is held onsite as Micromine project databases.
Data is manipulated and used on site through Micromine with MapInfo being used as a GIS package.
Micromine is used by the DBA with all data transfers being made in Micromine DAT format.
Data is held offsite by Cube in a relational SQL Access database. Scripts are used to import Micromine DAT files
directly into Access.
Site visits by the DBA are made typically monthly, bi-monthly or as and when required.
From January to April 2006 an intensive database audit was completed. Aspects of this continue to date along with
normal database validation for on-site and off-site files.
Key aspects of the database audit included:
•
Compilation of all project specific drilling data into single collar, assay, geology and survey files. Site files
tended to comprise compiled files, individual files and various subsets of those which made evaluation of the
data difficult.
•
Complete validation of all drilling data from the start of MGL involvement, identifying, correcting and
documenting all data problems, sourcing all missing drilling data, laboratory files, sampling information etc.
•
End of hole (EOH) verified to hard copy sources where collar EOH, sampling EOH and geology EOH were in
disagreement. All corrections documented.
•
Data checked in 3D for obvious collar and survey discrepancies.
•
Verification and documenting of boreholes actually drilled on projects, removal of those planned but not drilled
from the drilling databases. This involved checking all hard copy data to fully verify whether a hole had or had
not been drilled.
•
Compilation of sample dispatch information, dates, batch ID, Laboratory references etc, prep and assay
techniques used, ongoing confirmation of hard copy certificates being supplied along with digital lab files.
•
Sourcing missing geological logging and oxidation logging. This has generally involved relogging of drill holes.
•
Validation involved identifying drilling intervals which had no sampling information present. All such intervals
were documented and hard copy sources investigated. In a minor number of cases additional sampling was
identified and captured. All missing intervals have now been captured digitally with Not Sampled or No
Recovery flags. This means that all boreholes have a complete sequence of ’From’ and ’To’ from top of hole to
bottom of hole. All corrections documented. This applied mostly to diamond drilling.
•
With particular reference to Gorumbwa, all logged stope intervals in RC or DC were rechecked against hard
copy sources for verification purposes. Corrections made where necessary and documented. A check was made
49
that such intervals were not assigned a zero grade. All hard copy drilling logs for Gorumbwa were checked to
ensure that all logged stope intervals had been digitally captured.
•
All DC sampling was “overview” checked to verify sampling to ensure that different phases of sampling had
been captured, i.e. top of the hole sampling, bottom of the hole sampling. This was not required for RC as the
entire hole is sampled. A number of instances were identified and fixed.
•
A check was made against hard copy records of Moto samples exceeding 4 m in sample length with associated
grade.
•
Intervals with a sample ID but no grade back checked against hard copy sources and hard copy lab files to verify.
Only a very small number actually had missing grade. The bulk of the occurrences are due to samples not being
received by the relevant lab or the lab losing/damaging the sample. Corrections / documentation were applied.
•
Data procedures and data handling procedures reviewed and modified where necessary.
•
Downhole survey information has been checked for significant deviations in dip and azimuth. This is part of the
standard procedure. Hard copy sources and drillers digital borehole files checked. Due to the presence of high
concentrations of magnetite present, a number of azimuth readings are highly erratic. In such instances, an
average reading has been calculated based on the surrounding good readings and a remark placed in the digital
file along with the original logged azimuth.
•
Borehole assigning to different prospects was thoroughly reviewed and corrections applied. This had most effect on
the Megi drilling which encompasses 4 known deposits — Mengu Hill, Mengu Village, Marakeke and Megi.
13.3
Overview of Data Quality Aspects
In conjunction with Cube and Michael Mercier (Senior Consulting Geologist / Geochemist) extensive evaluation of
the inserted QC samples (standards, blanks, field duplicates and lab duplicates) has been completed. All erroneous
data has been followed up by Moto and all occurrences, conclusions and corrections have been documented and
re-assaying of affected samples/batches completed where required. Outliers still remain in the dataset, though the
number is statistically very small and they do not affect the quality of the database. These outliers include:
Insertions where there is insufficient information or evidence to make an informed correction.
Presence of problematic Western Mineral Standards which failed to report within acceptable limits has now been
discontinued.
Standards for which there is insufficient material left for the laboratory to re-assay during pulp repeat exercises on
surrounding samples in the sequence.
A programme has been completed to verify all occurrences of +20 g/t assays in the digital database from 2004 to
April 2009 (Table 0-1). This equates to approximately 225 individual samples which have been back checked
against hard copy sources to firstly verify correct sampling information (Hole ID, From, To, Sample — ID etc.) and
then against the hard copy analytical certificate. The checking revealed no significant problem with the assays or
sampling information. A couple of samples could not be located on the certificates (from 2004, DRC* series) and a
couple of samples (from 2004, DRC* series) had the wrong Laboratory Reference assigned.
Table 13-1 Assays H20g/t Gold sample checking
Date
Period
July 2006 . . . . . . . . . . . . . . . . . . . . . .
January 2007 . . . . . . . . . . . . . . . . . . . .
April 2007 . . . . . . . . . . . . . . . . . . . . . .
June 2007 . . . . . . . . . . . . . . . . . . . . . .
November 2007 . . . . . . . . . . . . . . . . . .
March 2008 . . . . . . . . . . . . . . . . . . . . .
August 2008 . . . . . . . . . . . . . . . . . . . .
April 2009 . . . . . . . . . . . . . . . . . . . . . .
2004 to July 2006
July 2006 to Jan 2007
Jan 2007 to April 2007
April 2007 to June 2007
June 2007 to Nov 2007
Nov 2007 to March 2008
March 2008 to Aug 2008
Sept 2008 to Dec 2008
Number of Samples
H20ppm
Cumulative Total
150
150
175
325
10
51
40
47
31
335
386
426
473
504
A programme has been completed to verify a selection of significant intersections from 2004 - 2009 through the
main resource deposits back against original hard copy logs and hard copy analytical certificates. The following list
(Table 0-2) of the boreholes has been checked for problems with the analytical data were identified. Minor ‘From
and To’ errors were identified in the Mengu Hill diamond data and corrected.
50
Table 13-2 List of Validated Boreholes January 2004 to April 2009
Date
Deposit
RC Holes
DD Holes
2006
Sessenge
Mengu Hill
SRC034, 036, 073
MRC128, 129
SD003, 009, 014
MDD007, 011, 012, 019, 023,
035, MRCD136
Pakaka
PRC012, 017, 027, 062, 070,
165, 168, 221
PDD049, 063, 084
Gorumbwa
GRC016, 020, 026
GDD004, 010, 026
Megi
MRC010, 153, 174,278,290
Durba
DRC002, 013, 073
Jan
2007
KKDD002
Agbarabo
ADD009
SRC092
Meterage
Represents 2100
intervals in 51
Boreholes for 4000m
DDD011, 017, 020, 021, 028,
033, 067, 073, 077, 095, 121
Kombokolo
Sessenge
No. Of Holes
SDD024
Represents 1285
intervals in 10
Boreholes for 2500m
Pakaka
PDD122, 131
Durba
DDD129, 154, 165, 206
April
2007
Durba
DDD205, 209, 212, 213, 228
Represents 1570
intervals in 5
Boreholes for 3000m
Nov
2007
Ndala North
NNRC086, 111
Aerodrome
AERC091, 092, 097
AEDD002, 007, 034, 035
Represents 2480
intervals in 17
Boreholes for 5000m
Durba
DDD235, 240, 241, 243, 253,
262, 267, 292
Aug
2008
Durba
DDD067, 074, 079, 126, 295,
296, 297, 298, 300, 301, 307,
308, 313, 319
Represents 1825
intervals in 14
Boreholes for 3500m
April
2009
Durba
DDD051, 288, 290, 291, 310,
349, 360, 377, 379, 380,
381A, 387, 389, DGT010
Represents 996
intervals in 14
Boreholes for 2000m
A programme of pulp repeat determinations has been implemented since mid 2006 with the initial batch consisting
of approximately 650 — 700 pulps from each primary assay lab (SGS Mwanza and Genalysis Perth) sent for pulp
repeat determinations by ALS Chemex Perth and Ultratrace Perth respectively. This programme is ongoing with
approximately 100 pulps per month from each lab going for repeat determinations. As at August 31 2009, a total of
approximately 3,758 assay pairs were available for review. Due to logistical and customs problems, the umpire
laboratories insert additional Gannet certified reference material into the sample stream.
•
As part of the ongoing quality control programme for the Doko preparation lab, high grade samples (H25 g/t
Au) are selected and prepared by the lab followed by the normal barren granite flush followed by a barren blank
to assess any carry over after the flush. This exercise generally consists of 15 — 25 samples grading greater than
25 g/t Au. The exercise was completed in July and August 2006 and January and thereafter repeated every
4 months. The results indicate no evidence of sample contamination.
•
A programme was implemented to check a number of DC intersections, on the instruction of Cube, to assess
whether there was any down hole smearing (contamination tails) in the intersection caused by contamination at
the Doko preparation laboratory. Five intersections were identified as suitable (3 from Durba, 1 from Gorumbwa
and 1 from Pakaka). The remaining 1⁄2 core was used and therefore can be assessed as a field duplicate in addition
to the main testwork. A blank was inserted after the sample to assess any carry over. The results indicated no
carry over and good correlation between the primary and the field duplicate assay. The test was repeated in
March 2006 and thereafter every 4 months.
13.3.1 Data Transfer
•
Data capture and manipulation is completed in Micromine. Geological logging is completed digitally straight
onto handheld loggers.
51
•
Data is forwarded to the DBA either weekly or bi-weekly depending upon volumes.
•
All data is validated and checked for completeness before being forwarded onto Cube.
•
Significant errors identified by the DBA are rectified by site before any data reaches Cube.
•
Minor errors, such as misflagged standards, blanks, Not Sampled intervals are corrected immediately if it can be
confidently done so. Otherwise they are corrected during site visits when all hard copy sources are back checked
and a final informed decision made. All problems/corrections are documented.
•
Merged assay data is forwarded to Cube in conjunction with the digital lab files at all times.
•
Data is only transferred in Micromine DAT format between Site-DBA-Cube.
13.3.2 Liaison with Cube and offsite Database Validation
Cube maintains a relational Access database of the drilling data. It has been compiled from data supplied by Moto
when Cube became fully involved in the project.
With reference to the database audit conducted in 2006, when a significant amount of the validation work had been
completed, and a final set of drilling files generated for each prospect, the data was verified against the Cube held
data, to ensure conformity.
Full verification by the DBA against the Cube sample database was completed in February, April, June, September
and November 2006 and prior to the finalisation of the 2007 Feasibility Study. The procedure has been repeated
since 2007 at approximately 3 month intervals.
All corrections/modifications are passed onto Cube in digital format unless it’s a very minor change for updating in
the database. All corrections/modifications are logged in Excel tables (drilling data/QC data) which are regularly
supplied to Cube as an audit trail.
In broad terms, the following was found to require attention and subsequently corrected:
•
Planned holes in the database and holes which were not drilled
•
Modest amounts of sampling, assays, geology, collar and survey information missing
•
Project/Prospect nomenclature
The database also provided digital information on boreholes/sampling/assays that was known to exist but could not
be located on site.
Data was queried out of the supplied databases and validated as per normal through Micromine as previously
described.
It was cross-checked against final Micromine validated files for correctness and completeness. Special attention
was paid to:
•
Collars and Surveys — same number of holes present, hole sequences, EOH’s etc
•
Geology — confirmation of missing geology and oxidation, overview checking of logging.
•
Sampling/assays — Sample — ID’s and From and To were flagged which did not agree between the Micromine
files and the sample database. All problems were tracked down, in most cases eventually to hard copy sources.
Missing portions of holes and samples with no gold determinations checked.
To ensure record completeness, Moto sourced for Cube all analytical lab files from SGS and Genalysis from 2004 to
2007. This is to ensure that Cube have all information to hand and can update the database with the required
laboratory metadata fields as well as grade verification.
Cross-validation of the site databases and the Cube relational database continues to date, and was last carried out in
January/February 2009 once all analytical results had been received from the 2008 drilling.
13.3.3 Quality Control Data
A site visit was undertaken by independent sampling expert Michel M. Mercier in September 2005. The aim of the
visit was to audit the preparation laboratory of at Doko, Democratic Republic of Congo. During that visit, the entire
programmes of Quality Control (QC) and Quality Assurance (QA) were investigated. A report was presented at the
end of the visit (Mercier, September 2005,) that concluded that the preparation laboratory was well organized and
well managed, and that the different types of sample preparation observed were being performed to a high standard.
52
It was also decided that all results of controls (blanks, standards and duplicates), received before the end of August
2005, would be studied and the results presented in a different report (Mercier, January 2006) in order to evaluate
the efficiency of the various preparations and procedures on site and the quality of the analyses performed.
The QAQC report was updated in June 2006 to cover the period August 2005 to May 2006. In January 2007
following a site visit by M. Mercier, a February 2007 QAQC audit Report covering the period May 2006 to January
2007 was compiled to review the final Kibali Gold Project dataset being used for the FS Mineral Resource
modelling. Additional investigative studies have since been completed by Mercier in August 2007 and December
2008.
The December 2008 QAQC audit report covers the period between 24 June 2007 and 24 October 2008 and
concluded that with the exception of a relatively small number of samples, the values returned for certified blanks,
cross contamination study samples, certified reference material samples (standards), laboratory DD duplicates and
repeat samples sent to umpire laboratory are very acceptable.
In summary;
•
the standards assays show a very small fraction (only 3 certified reference standard samples out of the
1228) returned values out of the range of acceptable values.
•
the present study shows mixed results for RC samples for both laboratory and field duplicates. Good precision
obtained when the RC data is not filtered becomes a poor precision when data is filtered of low values; the two
populations (originals and duplicates) do not show a similar distribution. However, when the data is filtered of
low values, the RC duplicates group less than 41 pair assays. Therefore, the dataset could not be statistically
significant for these populations. The problems with the RC laboratory and field duplicates are probably more
related to the sample preparation than to the Au analysis.
•
the cross contamination samples shows that 3.77% (2 samples of 53) returned values higher than 20ppb (two
times the detection limit) and that no samples of the 53 (0%) returned a value higher than 30ppb (three times the
detection limit).
•
the study of the pulp repeat samples from Genalysis sent to ALS Chemex shows clearly that:
•
a)
the dataset returned a very acceptable precision;
b)
the two variables, originals and duplicates (or populations), follow a similar distribution;
c)
the analyses performed by both laboratories (Genalysis and ALS Chemex) must be considered as very
acceptable.
the results show clearly that the accuracy and precision for these analyses are the best obtained since the
beginning of the Kibali project.
In addition, Cube has undertaken routine QAQC monitoring since November 2005, on an annual basis or prior to a
resource update to evaluate the performance of the certified standards, “blanks” and laboratory duplicates with
results being distributed to Kibali Goldmines.
All available assay drilling data from the project start date of 30th April 2004 to the 10th July 2009 have been
reviewed with respect to QAQC performance.
From a total of 6,716 QAQC (standards and blanks) samples submitted, 104 samples were identified as exceeding
the sample variance limits (H3 standard deviations). The number of errors found (⬃1.5% of control samples) and
the small random deviations from the acceptable limit are not considered material. Some of the samples outside the
3SD acceptable limit can be explained by the incorrect placement/mixing of standard and blanks into the sample
stream.
Cube has also observed that certified reference standards show no material systematic bias with time over this
period. All erroneous samples identified are forwarded to the DBA for checking, and follow-up investigation if
necessary.
Overall, the certified standards have performed well and indicate the sample data is of a high standard.
Poor precision is reported for the SGS (Mwanza) laboratory for the RC field duplicates submitted in the period 2004
and 2005. Use of this laboratory has been discontinued, and the preparation and collection of RC samples has been
modified (larger sample sizes to be used) to address the precision issue for any future RC drilling.
53
13.3.4 Bulk Density
Bulk density determinations are measured at an interval frequency of approximately 5m to 10m, with each core
sample tested having a minimum length of approximately 10 centimetres.
The procedure for determining bulk density has changed over time, with the water displacement method being used
prior to 21st November 2006, then a change to the immersion weight method. This change was recommended by
Mercier in order to improve reproducibility of the measurements. As part of the implementation of this change in
procedure, a representative number of holes from KCD prefix DDD110 onwards were repeated using the immersion
method.
As a routine QAQC check, approximately 15% to 30% of the selected measurements are randomly repeated. In
addition, all samples with a measured density of greater than 3.2 gm/cc are systematically repeated to a maximum of
15 per hole. This work is undertaken under strict supervision with the results reported in a monthly QAQC report
held on site.
13.3.5 Downhole Survey
Historically down-hole measurements were undertaken every 30m downhole using an Eastman camera. No check
surveys using a non magnetic tool such as a gyro have been undertaken. All DC holes are now surveyed as the hole is
drilled (down-hole) using a Flexit single shot tool.
Since May 2009, drill holes have been additionally surveyed up-hole using a Flexit multi-shot tool at 6m intervals to
check the accuracy and reproducibility of the down hole cameras in measuring the inclination and azimuth of the
core holes. A magnetic susceptibility tool is also being utilised to define areas of magnetic wallrock which will
affect azimuth readings.
Comparison of the two survey methods indicates there is good correlation between down-hole and up-hole azimuth
and magnetic intensity measurements where the wall rock is not magnetic.
Up-hole multi-shot measurements at 6m intervals are used in preference to the downhole 30m single shot
measurements where available. Up-hole measurements within casing are replaced by downhole survey
measurements conducted during drilling.
Erratic azimuth values in areas of defined magnetic wallrock are removed and replaced with values averaged from
adjacent measurements in non-magnetic wallrock. Average curvature and deviation over the adjacent sections of the
hole are also used to infer a corrected reading. Any changes to the original survey data are documented in the
comments field in the survey table of the drillhole database.
A regular internal QC report is compiled to monitor the survey measurement process and involves;
•
graphing of up-hole and down-hole inclination, azimuth and magnetic intensity measurements to enable
comparison of the hole profile by different survey methods
•
tabulation for each hole of the raw survey data (down-hole and up-hole) including the presence of magnetic wall
rock at measurement depths
•
a brief description of the corrections proposed with reasons why they were proposed summarised in a table.
13.3.6 Collar Reduced Level Validation
All drill holes used in the Mineral Resource estimation have collar RLs checked on hardcopy sections to assess any
possible impact on the interpretation and wire-frames.
Any errors of greater than +/-1 metres in collar reduced level have been pressed onto the Photomap DTM, and may
have the minor effect of jogging the ore-body wire-frames locally in space.
Extensive validation of the data clearly shows that the known errors in the collar RL’s of the Mineral Resource drill
holes have no material effect on the Mineral Resource estimation.
54
14.0
MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES
14.1
Mineral Resource Estimates
Cube was requested in August 2009, by Moto to update the KCD resource inventory using the most recent available
data. Because the KCD deposit included both an open pit and underground component this update required two
separate estimates of the KCD deposit which forms a part of the Kibali Gold Project.
The first estimate was an updated independent estimation of local recoverable open pit gold resources and the
second estimate was based on a refined geological interpretation based on the distinctive alteration characteristics
observed to be internal to the broader mineralised zone.
The intention of the first estimate using Open Pit Resource Methodology — Local Recoverable (OPRM-LR) was to
yield a reportable open pit mineral resource inventory and to update the model suitable for future open pit mining
study. This first estimate was based on a 0.2g/t gold lower cut-off and has been estimated using OK and UC
methodology.
As discussed in previous Reports the review of interpretations of mineralisation at Pakaka and KCD in January and
again in August 2008 based on infill drilling led to the conclusion by Cube that an interpretation of mineralisation
for the purposes of local recoverable resource estimation (for exploitation by open pit mining) based on a low grade
cut off of 0.15g/t gold represented a significantly less complex mineralised interpretation and one that could be
confidently stated to be free from conditional bias. For the current estimate the mineralised lodes for KCD have
been re-interpreted at a slightly higher, 0.2g/t gold low grade cut off, with an emphasis on minimising the volumes
of waste grade material included in these interpretations.
As was done in November 2008, the local recoverable resource estimation used the Uniform Conditioning
methodology with allowance for an Information Effect incorporating important modifying factors such as likely
grade control drilling, mining selectivity and cut-off grade criteria. The application of the UC technique is based on
the premise that mining would be by open pit extraction. A Selective Mining Unit of 5m by 5m by 2.5m was
evaluated within Ordinary Kriged panels Y=20m X=20m Z=5m for the purposes of reporting local recoverable
open pit resources. An Information Effect has been applied to the SMU blocks with the assumption of grade control
drilling on a 7.5m by 7.5m by 2.5m sampling grid.
The intention of the second estimate using Underground Resource Methodology — Global Insitu (URM-GI) using a
refined geological interpretation, constrained by Acsa alteration, was to provide an objective basis for the
delineation and estimation of a possible higher grade subset of the KCD mineralisation appropriate for reporting
of an underground mineral resource inventory. The infill drilling has resulted in a substantial increase in the
confidence of the continuity of Acsa style mineralisation and allows reliable estimation of global in-situ resources
using traditional 3D Ordinary Block Kriging methodology.
The work involved review and update of the geological/mineralisation interpretations for the KCD deposit
incorporating available information as of August 31st, 2009. The previous Mineral Resource estimation results
for the total Kibali Gold Project were reported in Adams et al November 2008 as part of a Resource Update Study
and that estimate incorporated all drilling information up to July 10th 2008.
This current resource update follows a DC programme by Moto that commenced in late July 2008 targeted the upper
Chauffeur and Karagba areas and aimed at increasing the drilling density in the Inferred Mineral Resource areas of
the KCD deposit. The drill programme was ongoing at the time of this Mineral Resource estimation. An additional
47,277m of DC has been drilled for which assay data is available since the last data cut-off at 10th July 2008. The
estimation work started in September 2009 and was completed during October 2009.
The Mineral Resource estimates undertaken by Cube have been individually classified and reported in accordance
with The 2004 Australasian Code for Reporting of Mineral Resources and Ore Reserves (2004 JORC Code). The
2004 JORC reporting guidelines are equivalent to the guidelines adopted for the Canadian National Instrument
43-101
14.1.1
Geological Interpretation and Modelling
14.1.1.1 Open Pit Resource Methodology (Local Recoverable)
Mineralised outlines have been broadly defined using a combination of geological model, alteration characteristics
and low grade cut-off criteria based on available DC and RC drilling within each KCD lode. In all lodes a nominal
lower cut-off grade of 0.2g/t gold has been applied. A proportion of lower grade material is inevitably included as
internal dilution in order to preserve overall continuity of the mineralised lodes.
55
The interpretations for mineralisation are based on grade and geological continuity within generally stratigraphy
parallel mineralisation. The geological and mineralisation frame work is based on interpretations validated by Moto
onsite personnel. The interpretation is an attempt to encompass the complete mineralised distribution and produce a
model that reduces the risk of conditional bias often introduced where the constraining interpretation and data
selection is based on a significantly higher grade than the natural geological lower cut-off. This approach is
specifically suited to a proposed exploitation by open pit methods and estimation by OK and UC.
Criteria used in defining mineralised outlines can be summarised as follows:
•
Determine a nominal low grade ’geological’ cut-off to assist in defined mineralised outlines;
•
Utilise lithology, alteration, veining and mineralisation characteristics to define the mineralised outlines;
•
No minimum width or downhole length criteria was applied;
•
No internal dilution criteria was applied;
•
No additional dilution was applied.
Statistical and visual analysis of the data showed that a suitable ‘geological’ cut-off grade was approximately 0.2g/t
gold. The encompassing mineralised envelope incorporates minor amounts of internal sub-grade being less than
0.2g/t gold content. An effort was made during the interpretation to minimise the amount of sub-grade material
incorporated into each lode wireframe.
Geological interpretation was undertaken using north — east to south-west oriented 20 metre spaced long sections.
Wireframes were not snapped to drillhole traces in order to create a more consistently shaped representation of
mineralisation at the ‘geological’ cut-off grade (nominal 0.2g/t gold) and section spacing. The resulting
interpretation demonstrates consistent geometry and geological continuity of the plunging mineralised lodes.
Mineralisation at Karagba has been re-interpreted as three Lodes encompassing the previously interpreted Karagba
and Durba Lodes (November 2008: 3000 and 4000) which occur as stratigraphy parallel tabular shoots up to 350m
thick trending northwest and dipping gently to the northeast. The mineralised Lodes, coded 3000, 4000 and 4100 are
associated with albite-carbonate-silica-alteration of volcanic agglomerate interspersed with thin intrusive/volcanic
basalts. Lode 4100 represents a down dip extension of Lode 4000. The mineralised lodes tested by drilling extend up
to 700 metres down plunge and 400 metres vertically below the surface.
At Chauffeur the mineralisation has remained a pair of stratigraphy parallel lenses, coded 5000 and 5500 that trend
northwest and dip gently to the northeast. The mineralisation is hosted by volcanic agglomerate and is associated
with thick zones of albite-carbonate-silica-alteration. The zone of mineralisation at Chauffeur is capped by
graphitic sediment. Thin continuous barren intrusive/volcanic basalt units are interspersed within the volcanic
agglomerate and have been used as marker units for the interpretation.
The Sessenge Deeps mineralisation (coded 9000 in November 2008) has remained a single Lode coded 9000 that
consists of wide zones of strong Acsa with high grade mineralisation, above a laterally extensive sill like mafic
intrusive. Sessenge Deeps is located approximately 700 metres below surface in KCD.
The deepest part of the system so far identified is a single Lode coded 6000. It is situated below the mafic (IB/VB)
marker unit and is interpreted to be the down dip expression of the mineralisation at the Sessenge deposit. It has
remained virtually unchanged from November 2008.
Table 14-1 details the changes in volume by Lode at KCD for the September re-interpretations compared to the
November interpretations.
56
Table 14-1 Volume changes by Lode due to Re-interpretation of mineralised lodes — September 2009
KCD Lode
3000 . . . . .
4000 . . . . .
4100 . . . . .
5000 . . . . .
5500 . . . . .
9000 . . . . .
6000 . . . . .
Total. . . . .
...........................................
...........................................
...........................................
...........................................
...........................................
...........................................
...........................................
...........................................
Previous
Total
Volume
BCM
September
2009 Total
Volume
BCM
32,614,000
6,970,000
0
57,132,000
9,008,000
15,598,000
5,736,000
129,396,000
34,952,000
7,092,000
5,250,000
58,726,000
10,228,000
16,020,000
5,736,000
135,666,000
Variation
(7)%
+2%
+100%
+3%
+14%
+3%
+0%
+6%
14.1.1.2 Underground Resource Methodology (Global Insitu)
A refined geological interpretation based on continuous logged Acsa alteration was applied to the KCD mineralised
lodes. As previously stated the intention of this refined interpretation was to provide an objective basis for the
delineation and estimation of a higher grade subset of mineralisation appropriate for underground resources
reporting and evaluation.
Wireframes were interpreted on 20m spaced north — west to south-east cross sections, with the wireframes
approximately confined within the wireframes previously created for the local recoverable estimation methodology.
The process was to restrict these wireframes to the strongly altered logged Acsa rock type with high pyrite content,
using the geometry of the modelled basalts as the initial controlling surfaces. The refined wireframes were
constructed using the following hierarchical criteria as guidelines for their interpretation;
1.
Include logged Acsa material with visual logged pyrite content of H5%;
2.
Use visual logged pyrite % to determine the edge of the mineralised zones within Acsa dominant intervals;
3.
Exclude where possible non-Acsa material, even if mineralised;
4.
Minimise inclusion of any non Acsa material (G50% of mineralised interval) as the edges are approached
and narrow bands of waste increase, i.e. prioritise Acsa only criteria;
5.
Use a nominal lower grade of 1.0g/t gold to exclude barren Acsa intervals and to terminate mineralised
zones within Acsa material, where no distinction can be made based on alteration;
6.
Include up to a maximum of 6m of subgrade material (G1.0g/t gold), if required, to ensure the continuity of
interpreted zones.
The process of re-interpretation within the KCD Lodes resulted in the definition of ten continuous Acsa Lodes
(3002, 3702, 5052, 5102, 5202, 5502, 5602, 5802, 9102 and 9202). In addition to these high grade Acsa lodes, five
halo lodes surrounding and adjacent to some of the Acsa domains have been interpreted based on the six criteria
above (3101, 3201, 3701, 9101 and 9201). For the definition of the halo domain a nominal lower grade of 0.5g/t gold
was used to exclude barren Acsa intervals. These halo domains provide dilution grade information for use during
future underground evaluation.
14.1.2
Statistical Analysis
For both estimations (open pit and underground) all Moto drill holes (RC and Diamond) were flagged with a unique
database code corresponding to the interpreted mineralised lodes. This flagging was used to control the downhole
compositing process whereby an individual set of 2.5 metre downhole composites was generated from each Lode.
Residual composites (less than 1.25m in length) not meeting the 50% threshold were, where possible, length
weighted into the adjacent full composite. The remaining residuals not meeting the 50% threshold and not being
adjacent to an existing composite were discarded. The statistics of these discarded residuals were checked to ensure
no bias was present as a result of discarding.
Statistical analysis on a lode by lode basis was carried out on the 2.5 metre downhole composite data to identify
population characteristics and outliers that may need the application of high grade assay limits. High grade assay
limits were applied on a lode basis and were typically between 95th and 100th percentile of the composite
distribution.
57
The high grade cut composite data used for OPRM-LR estimation was declustered in Isatis by assigning a weight.
Declustering weights were calculated for Lodes 4000, 5000 and 5500 on a 50 by 50 by 10 metre grid and for Lodes
3000, 4100, 6000, and 9000 on a 75 by 75 by 10 metre grid.
The high grade cut composite data used for URM-GI estimation was also declustered by assigning a weight.
Declustering weights were calculated on a 75 by 75 by 10 metre grid for all lodes.
High grade assay cuts were determined and applied within individual mineralised lodes as detailed in Table 14.2.
Graphical representations of the KCD lodes are included in Appendix 1.
Table 14-2 KCD High Grade Composite Cuts — September 2009
Lode
Number of
Composite
Data
High
Grade
Cut
Number of
Composite
Data Cut
6712
2589
1167
13861
2769
676
3007
50
50
50
60
30
20
50
5
4
4
15
5
3
8
3000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5500 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Percentile
of Cut
Percent
Metal
reduction
+99th
+99th
+99%
+99th
+99th
+99th
+99th
11%
10%
4%
2%
5%
13%
2%
* Note: Approximate metal reduction based on the sum of grades, the presence of extreme outliers (H100g/t gold) accounts for any large
reduction in metal and a significant drop in mean cut grade.
Where required, a high grade assay cut was applied to the 2.5 metre downhole composites on a lode by lode basis,
generally representing a point above the 99th percentile of the mineralised gold population. Table 14.3 details the
high grade assay cut applied by Lode and the effects on populations of the cuts.
Table 14-3 KCD Lodes Acsa and Halo High Grade Composite Cuts — September 2009
Lode
Number of
Composite
Data
High
Grade
Cut
Number of
Composite
Data Cut
Percentile
of Cut
131
354
595
337
257
262
1141
204
502
28
416
294
357
570
752
40
NA
40
4040
50
50
NA
50
NA
50
20
50
20
50
4
0
2
3
1
2
10
0
1
0
1
6
1
3
6
+99th
NA
+99th
+99th
+99th
+99th
+99th
NA
+99th
NA
+99th
+99th
+99th
+99th
+99th
3002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3201 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3701 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3702 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5052 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5102 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5202 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5502 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5602 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5802 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9102 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9201 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9202 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Percent
Metal
reduction
9%
NA
1%
2%
2%
5%
3%
NA
2%
NA
1%
8%
0.1%
2%
2%
14.1.3 Variography
Variography has been used to analyse the spatial continuity within the individual mineralised lodes and to determine
appropriate estimation inputs to an interpolation process. The variogram modelling process followed by Cube
involves the following steps:
•
Calculate and model the omni-directional or down hole variogram to characterise the Nugget Effect;
•
Systematically calculate orientated variograms in 3 dimensions to identify the plane of greatest continuity;
58
•
Calculate a fan of variograms within the plane of greatest continuity to identify the direction of maximum
continuity within the plane. Model the variogram in the direction of maximum continuity and the orthogonal
directions;
Variography was undertaken on Gaussian transformed 2.5 metre downhole high cut composite data in all estimated
prospect areas, both for the Local Recoverable and Global In-situ Estimates. The Gaussian Transformation was
modelled in Isatis on declustered 2.5 metre composite data. The Gaussian variogram models were back transformed
and modelled to obtain the appropriate variogram models for interpolation of raw composite data.
Variogram parameters were derived for each individual mineralised lode within the KCD Project.
Variogram relative nugget effects were typically in the range of 30-50% indicating a moderate to high degree of
short scale grade variability as would be expected in gold deposits such as those in the Kibali Gold Project area.
Variogram ranges were typically significantly greater than the average drill hole spacing. Table 14.4 summarises the
variogram parameters used in the OK estimation of Open Pit Resources by Lode.
59
Table 14-4 Variogram Parameters — Open Pit Resource Methodology September 2009
Lode
KCD
3000
KCD
4000
KCD
4100
KCD
5000
KCD
5500
KCD
6000
KCD
9000
Structure
Sill
Relative
Variance
%
Nugget
S1
S2
Nugget
S1
S2
Nugget
S1
S2
Nugget
S1
S2
S3
Nugget
S1
S2
S3
Nugget
S1
S2
Nugget
S1
S2
3.5
4.1
2.0
5.9
5.5
1.7
10.1
16.6
9.2
4.80
7.7
3.6
1.2
3.7
3.6
1.2
0.9
2.5
2.2
1.8
7.7
12.3
8.7
36%
43%
21%
45%
42%
13%
28%
46%
26%
28%
44%
21%
7%
39%
39%
13%
9%
39%
34%
28%
27%
43%
30%
Major
Range
Semi-Major
Minor
Isatis Rotations
Az Ax Ay
Surpac Rotations
Azimuth Plunge Dip
25
190
25
55
12
35
40
40
25
25
0
0
50
50
(25)
(25)
0
0
45
170
45
80
12
45
40
40
22
22
0
0
50
50
(22)
(22)
0
0
45
230
45
80
20
45
40
40
22
22
0
0
50
50
(22)
(22)
0
0
35
200
380
35
75
85
12
55
60
40
40
40
25
25
25
0
0
0
50
50
50
(25)
(25)
(25)
0
0
0
15
150
430
15
75
280
15
75
100
40
40
40
22
22
22
0
0
0
50
50
50
(22)
(22)
(22)
0
0
0
75
120
35
55
12
35
40
40
27
27
0
0
50
50
(27)
(27)
0
0
35
150
25
75
15
32
40
40
22
22
0
0
50
50
(22)
(22)
0
0
Due to the relatively low composite numbers in individual mineralised lodes to be used for the underground
resource estimates, variogram modelling was undertaken on either grouped lodes or single most populous lodes for
each KCD deposit. Individual variography was undertaken on 2.5m composites for the combined high grade Acsa
9102 and 9202 lodes, for the combined halo Acsa 9101 and 9201 lodes and for all Karagba lodes (3002, 3101, 3201,
3701 and 3702) grouped together. Within the Chauffeur deposit variography was undertaken on Lode 5102 being
the most populous lode. For grade estimation by OK relative variogram models were used within individual lodes
adopted from the appropriate modelled lode variogram.
The variogram relative nugget effects in the deeper Asca and halo lodes were around 40 -50% indicating a moderate
to high degree of short scale grade variability as could be expected in higher grade gold lode style mineralisation.
The modelled relative nugget in the Chauffeur lodes was quite low at 27% which may be a reflection of the use of a
single lode for modelling. Within the Karagba lodes a relative nugget of 38% was modelled indicating a moderate
degree of short scale variability. Variogram ranges were around 100 to 200 metres which is significantly greater than
the current drill hole spacing. Table 14-5 summarises the variogram parameters used in the KCD Global In-situ
estimation for underground evaluation.
60
Table 14-5 Variogram Parameters — Underground Resource Methodology September 2009
Major
Range
Semi-Major
Isatis Rotations
Az Ax
Ay
Surpac Rotations
Azimuth Plunge
Dip
Lode
Structure
KCD - Halo
9101
Nugget
S1
S2
48%
18%
34%
60
130
60
100
8 45
8 45
0
0
0
0
45
45
0
0
0
0
KCD - Halo
9201
Nugget
S1
S2
48%
18%
34%
60
130
60
100
8 45
8 45
0
0
0
0
45
45
0
0
0
0
KCD - Acsa
9102
Nugget
S1
S2
44%
36%
20%
35
190
15
50
15 30
50 30
0
0
0
0
60
60
0
0
0
0
KCD -Acsa
9202
Nugget
S1
S2
44%
36%
20%
35
190
15
50
15 30
50 30
0
0
0
0
60
60
0
0
0
0
Nugget
38%
S1
43%
120
50
12 30
0 (40)
70
0
40
S2
19%
200
100
75 30
0 (40)
70
0
40
Nugget
27%
S1
32%
50
35
8 20
0
50
70
0 (50)
S2
19%
120
65
17 20
0
50
70
0 (50)
3002,
All Karagba 3101,
Acsa + Halo 3201,
Lodes
3701,
3702
Chauffeur
Acsa Lodes
14.1.4
5052,
5102,
5202,
5502,
5602,
5802
Sill
Relative
Variance
%
Minor
Block Modelling
A single 3D block model was generated for the KCD deposit area. An individual block model constraint was created
for each mineralised lode. A list of field names and descriptions in the block model are shown in Table 14-6. The
block model dimensions and extents are shown in Table 14-7.
61
Table 14-6 Block Model Field Names — Open Pit Resource Methodology September 2009
Field Name
x.......
y.......
z .......
au . . . . . .
density . . .
oxidat . . .
rescat . . . .
zonecode .
krg_var . .
ads. . . . . .
dns_au . . .
ns . . . . . .
q* . . . . . .
t*. . . . . . .
m* . . . . . .
q_noie . . .
t_noie . . .
m_noie. . .
slp_of_reg
Description
...................
...................
...................
...................
...................
...................
...................
...................
...................
...................
...................
...................
...................
...................
...................
...................
...................
...................
...................
Easting Block Centroid
Northing Block Centroid
Reduced Level Block Centroid
Gold Grade Estimate (top cut) — Ordinary Kriging
Density g/cm3
Oxidation State 1=Fresh 2=Transitional 3=Oxide
1=Measured 2=Indicated 3=Inferred 4=Undefined
Estimation Lode Flag
OK Kriging Variance
Average Distance to Composite
Distance to Nearest Composite
Number of Composites used to Estimate a Block
metal above cutoff E.g. q1p2 = Metal H 1.2 g/t gold
tonnes above cutoff E.g. q1p2 = Tonnage H 1.2 g/t gold
grade above cutoff E.g. q1p2 = Grade H 1.2 g/t gold
Metal above cutoff without Information Effect
Tonnes above cutoff without Information Effect
Grade above cutoff without Information Effect
Estimation Slope of Regression Z/Z*
Table 14-7 Block Model Definition Co-ordinate Limits — Open Pit Resource Methodology September 2009
Minimum
KCD
Easting
Northing
RL
Parent Cell
Parent Cell
Parent Cell
Parent Cell
786010
343610
5000
20
20
5
5
Xm
Ym
Zm
Zm
Maximum
788010
345610
6000
Min Sub-Cell
Min Sub-Cell
Min Sub-Cell
Min Sub-Cell
Model Extent
Xm
Ym
Zm
Zm
2000
2000
1000
20
20
5
5
A single 3D block model was generated for the KCD deposit. An individual block model constraint was created for
each mineralised lode. A list of field names and descriptions in the block model are shown in Table 14-8. All
estimations and geological constraints for KCD were based on a subset of the block model prototype definitions
shown in Table 14-9.
Table 14-8 Block Model Field Names — Underground Resource Methodology September 2009
Field Name
X. . . . . . .
Y. . . . . . .
Z.......
au_ok. . . .
density . . .
oxidat . . .
rescat . . . .
zonecode .
krg_var . .
Ads . . . . .
Ns . . . . . .
slp_reg . . .
Description
...................
...................
...................
...................
...................
...................
...................
...................
...................
...................
...................
...................
Easting Block Centroid
Northing Block Centroid
Reduced Level Block Centroid
Gold Grade Estimate (top cut) — Ordinary Kriging
Density g/cm3
Oxidation State 1=Fresh 2=Transitional 3=Oxide
1=Measured 2=Indicated 3=Inferred 4=Undefined
Estimation Lode Flag
Kriging Variance
Average Distance to Composite
Number of Composites used to Estimate a Block
Estimation Slope of Regression Z/Z*
62
Table 14-9 Block Model Definition Co-ordinate Limits — Underground Resource Methodology
September 2009
Minimum
Easting . . . . . . . . . . . . .
Northing . . . . . . . . . . . .
RL. . . . . . . . . . . . . . . . .
Parent Cell X m . . . . . . .
Parent Cell Y m . . . . . . .
Parent Cell Z m . . . . . . .
14.1.5
Maximum
786010
343610
5000
20
20
5
788010
345410
5900
Min Sub-Cell X m
Min Sub-Cell Y m
Min Sub-Cell Z m
Model Extent
2000
1800
900
2.5
2.5
0.625
Estimation Block Size, Search Strategies and Grade Interpolation
A number of issues have been taken into consideration when deciding on an appropriate search strategy and
estimation block size, including data spacing, variogram nugget effect and model ranges, estimation quality and
Mineral Resource classification.
Estimation Block Size
Data spacing was the primary consideration taken into account when selecting an appropriate estimation block size.
Data spacing within the mineralised zones is quite variable. Cube considers it good geostatistical practice to use an
estimation parent cell size that approaches the data spacing where possible while at the same time being mindful of
potential mine design and selectivity implications. Cube reviewed the ‘physical’ data spacing relative to the
mineralised zones to be estimated when deciding on the appropriate estimation block size. Cube concluded that an
estimation parent block size smaller than 20 (north) by 20 (east) by 5 metre (high) would result in excessive
smoothing of the estimates and could lead to a biased estimate.
Grade Interpolation and Search Strategies
Grade interpolation was carried out using OK for each mineralised lode using the uniquely coded 2.5 metre
downhole composite data specific to that lode. All block estimates were based on grade interpolation into parent
cells of 20 by 20 by 5 metres high.
Cube has attempted to characterise the spatial relationship of the data using variography and have sought to
implement search strategies aimed at producing a robust block estimate whilst at the same time minimising
estimation error and conditional biases. Cube routinely tests several search iterations before determining the most
appropriate search strategy. Fundamental to the search strategy is the determination of appropriate minimum and
maximum numbers of composites for estimation. The minimum number of composites has been considered by
Cube as a key component of the criteria applied in determining the Mineral Resource classification.
Cube initially bases search distances for the first search iteration on the analysis of theoretical kriging weight charts.
An examination of these kriging weight charts provides a good starting point for testing a search strategy as they
provide a guide as to the distribution of kriging weights for a given variogram with respect to distance along the
major axis of the search volume. Of particular interest is the approximate distance that kriging weights tend towards
zero. Cube believes that it good estimation practice to use a search volume that ensures that kriging weights
allocated to composites tend toward zero or slightly negative on the periphery of the search.
Cube generally extends the search where there are large positive weights at the periphery and reduces the search
where there are a large proportion of negative kriging weights involved. A limitation of these charts is that they are
based on an assumption that each block is directly informed by a composite at the block centroid and they will,
therefore generally understate the required search with respect to actual data spacing to achieve a robust block
estimate.
A Quantitative Kriging Neighbourhood Analysis of key lodes was undertaken to assist in optimising the search
parameters.
The procedure of search optimisation adopted by Cube involves selecting individual blocks representing data
configurations from well informed blocks. The aim of these tests is to optimise the kriging search neighbourhood
and maximise the quality of the kriging when dealing with a non-exhaustive data set. A number of key criteria were
captured for each selected block as follows:
•
Block coordinates and dimensions;
•
Estimated grade;
63
•
Kriging variance;
•
Block Dispersion variance;
•
Slope of Regression of estimated blocks z*(v) and theoretical true blocks z(v);
•
A listing of the actual informing composites within the search volume of the block including coordinates,
grades, distance from block and kriging weight;
Statistics of the informing composites including number of composites, minimum, maximum, mean, standard
deviation, variance and coefficient of variation.
An important feature of Ordinary Kriging is its inherent property to minimise estimation error. Estimation error will
increase substantially as the amount of informing data decreases.
Ordinary Kriging can calculate the estimation error on a block by block basis as a function of the variogram model
and the specific data configuration informing each block. A comparison can be made of actual block estimates and a
theoretically unbiased block estimate as a quantitative way of assessing the quality of a kriged block estimate. This
comparison is the basis for QKNA mentioned above and is expressed in terms of slope of regression of estimated
blocks z*(v) and theoretical true blocks z(v). The slope of regression provides a consistent and robust way of
comparing the relative quality of kriged estimates and should be considered as an input into decisions regarding
Mineral Resource classification. The closer the slope of regression is to 1 the more robust the block estimate.
Generally, in moderately to well-informed areas of all models, the slope of regression was close to 1.0 indicating
that the potential for conditional bias is minimal using the chosen search strategy. The slope of regression was often
considerably lower around the periphery of the model where data spacing is sparse and irregular.
Search strategies were optimised using quantitative kriging neighbourhood analysis and are summarised in
Table 14-10
Grade interpolation was carried out using OK into 20 by 20 by 5 metre (high) parent cells.
UC as implemented in Isatis V9 software [see Deraisme (2005) and Humpreys (1998) for an explanation of the
method] was applied to these estimates with an appropriate change of support to incorporate a SMU of 5 by 5 by 2.5
metres (high) and an information effect adjustment to take into account a likely grade control programme [see
Deraisme and Roth (2000)] to enable reporting of local recoverable Mineral Resources above a range of grade cutoffs. The cut-off range used in each deposit was 0.0; 0.25; 0.5; 0.6; 0.7; 0.8; 0.9; 1.0; 1.1; 1.2; 1.3; 1.4; 1.5; 2.0; 2.5;
3.0; 3.5; 4.0; 4.5; 5.0; 10.0; 15.0 g/t gold.
The UC process requires the calculation of a number of support correction coefficients to determine the likely
distribution of mining SMUs of a specified dimension within larger estimation grade panels. Cube has employed a
standardised methodology for all Lodes to determine the required parameters including panel variance, SMU
variance and covariance.
The OK estimated panel grades are generally more smoothed than the expected real panel grades due to the
smoothing effects of kriging. The amount of smoothing is influenced by a number of factors including the
variogram, the block dimensions and the data configuration.
The panel variance statistic describes the variability of panel grades within a lode. Ideally a panel support correction
would be calculated for each panel or groupings of panels with similar data configurations to accurately reflect
specific data configurations. The theoretical mean panel variances of each panel within a lode were grouped into
deciles and the bin average variance used to calculate the panel change of support. This provides a robust average
panel change of support to be calculated for a range of data configurations. The SMU variances and covariances
required for the SMU change of support were calculated automatically within the Isatis V9 implementation as they
are not influenced by data configuration.
The Information Effect adjustment was based on an assumption of grade control drilling on a 7.5 by 7.5 by 2.5 metre
grid and the SMU of 5 by 5 by 2.5 metres. Cube undertakes a test kriging of a grid of data and SMUs for each Lode to
determine the variance and covariance required for implementation of the information effect adjustment.
64
Table 14-10 Estimation Search Parameters — Open Pit Resource Methodology September 2009
Mineralised
Lode
Search
Type
3000 . . . .
4000 . . . .
4100 . . . .
5000 . . . .
5500 . . . .
6000 . . . .
9000 . . . .
Octant
Octant
Octant
Octant
Octant
Octant
Octant
Minimum
Number of
Composites
Maximum
Number of
Composites
Major
Semi-Major
Minor
Az
Ax
Ay
6
6
6
6
6
6
6
42
42
42
42
42
42
42
260
260
260
260
260
260
260
100
100
100
100
100
100
100
80
80
80
80
80
80
80
40
40
40
40
40
40
40
25
22*
22
25
22
27
22
0
0
0
0
0
0
0
Search Radius
Isatis Rotations
14.1.5.2 Underground Resource Methodology (Global In-Situ) — KCD Lodes
Search strategies were optimised using quantitative kriging neighbourhood analysis and are summarised in
Table 14-11.
Table 14-11 Underground Estimation Search Parameters — September 2009
Mineralised
Lode
Search
Type
9102 . . . .
9202 . . . .
9101 . . . .
9201 . . . .
3002 . . . .
3101 . . . .
3201 . . . .
3701 . . . .
3702 . . . .
5052 . . . .
5102 . . . .
5202 . . . .
5502 . . . .
5602 . . . .
5802 . . . .
Ellipsoid
Ellipsoid
Ellipsoid
Ellipsoid
Ellipsoid
Ellipsoid
Ellipsoid
Ellipsoid
Ellipsoid
Ellipsoid
Ellipsoid
Ellipsoid
Ellipsoid
Ellipsoid
Ellipsoid
Minimum
Number of
Composites
Maximum
Number of
Composites
Major
Semi-Major
Minor
Az
Ax
6
6
6
6
4
4
4
4
4
4
4
4
4
4
4
35
35
35
35
25
25
25
25
25
25
25
25
25
25
25
225
225
200
200
200
200
200
200
200
175
175
175
175
175
175
59
59
154
154
100
100
100
100
100
95
95
95
95
95
95
59
59
67
67
67
67
67
67
67
58
58
58
58
58
58
30
30
45
45
20
20
20
20
20
20
20
20
20
20
20
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Search Radius
Isatis Rotations
Ay
0
0
0
0
(40)
(40)
(40)
(40)
(40)
(50)
(50)
(50)
(50)
(50)
(50)
Grade interpolation was carried out using OK into 20 by 20 by 5 metre (high) parent cells.
14.1.6 Density and Oxidation
Depth of the weathering interfaces have been interpreted from drill logging. Weathering descriptions are based on a
classification system defined by likely mining parameters as follows:
•
Eluvium defined as the soil profile;
•
Oxide profile is defined as zone of red/orange coloured silt/clay fragments with no recognisable lithology —
generally clay rich and probably free dig;
•
Transitional is defined as the first appearance of recognisable chips of the underlying lithology — these chips
will be oxidised — probably drill and blast material — the transitional profile from logging can be thin;
Fresh defined as unweathered underlying lithology generally grey in colour.
Bulk density values were derived by Kibali Goldmines from DC core by Archimedean principles. For all
weathering domains except KCD fresh, block model bulk density values were assigned on the basis of the
weathering regimes and mineralisation as shown in Table 14-12
65
Table 14-12 OPRM-LR Density Mean Values Assigned — September 2009
Prospect Area
KCD — waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
KCD Ore-Oxide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
KCD-Ore-Trans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
# Observations
Oxide
Transitional
Fresh
10485
459
408
1.7
1.8
NA
2.2
NA
2.3
2.9
NA
NA
The fresh mineralised domain within KCD contains significant numbers of density data. For this reason Cube have
interpolated block bulk density values into individual lodes using the density data in each lode. A Simple Kriging
Methodology (Search Major: 260m; Semi-Major: 100 and Minor: 80 and Isatis Rotations as for Grade Estimation)
was used taking the required mean for each lode from the mean lode fresh density in Table 14-13.
Table 14-13 Density Mean Values for Simple Kriging — September 2009
Mean
Density t/m3
KCD Lode
3000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5500 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.01
2.77
3.07
2.97
3.00
2.92
3.03
The Simple Kriging estimation used a minimum of 6 and a maximum of 42 data for each block estimation.
A block bulk density value has been applied to all estimated KCD Acsa and Halo lodes. This value has been based
on rounded average values determined form data within each lode as detailed in Table 14-14.
Table 14-14 URM-GI Density Mean Values Assigned — September 2009
Mean
Density t/m3
KCD Lode
3002 . . . .
3101 . . . .
3201 . . . .
3701 . . . .
3702 . . . .
5052 . . . .
5102 . . . .
5202 . . . .
5502 . . . .
5602 . . . .
5802 . . . .
9101 . . . .
9102 . . . .
9201 . . . .
9202 . . . .
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
3.1
3.0
3.1
3.1
3.2
3.2
3.1
3.1
3.1
3.2
3.2
3.0
3.1
2.9
3.2
14.1.7 Model Validation
Modelled estimates have been visually validated and locally compared to downhole composite grades for each
mineralised lode. Plots by Northing, Easting and RL have been made showing composite number and grade,
estimated tonnes and grade. These plots for each lode are presented in Appendix 2. From Cube’s investigations
there appears to be no systematic bias evident in the estimated model outcomes.
66
14.1.8 Mineral Resource Reporting
All Mineral Resource estimates undertaken for the Kibali Gold Project, by Cube have been classified and reported in
accordance with The 2004 Australasian Code for Reporting of Mineral Resources and Ore Reserves (2004 JORC Code).
The 2004 JORC reporting guidelines are equivalent to the guidelines adopted for the Canadian National Instrument 43-101.
Cube’s approach to the classification of resources has been to examine the estimation quality of each block model
with reference to geological continuity and confidence and to design broad contiguous zones of well estimated
resources which may be considered as Indicated Resources. These zones are flagged into each block model for
reporting purposes. In previous work undertaken by Cube on the Kibali Gold Project the entire geological domain
has been reported as a classified Resource. There are material changes to the reported open pit resources for all
deposits of the Kibali Gold Project compared to the November 2008 reported figures. However, only KCD has
undergone re-estimation based on additional drilling and interpretation. There are two significant changes to the
reporting criteria compared to the November 2008 reported figures. Firstly, the new Project Managers have
requested that all open pit resources be reported above a 0.5g/t gold cut off and secondly, that all open pit resources
be limited by open pit optimisation shells.
The input parameters for these analyses were sourced from the optimisation section of the completed Feasibility
Study. The shells selected for the limiting of the resources correspond to the shell produced using a gold price of
US$1,000 per oz. By definition of the optimisation process, this shell corresponds to the shell which will result in
the highest undiscounted net value at that gold price.
For the reporting of KCD open pit resources, an additional condition was required to differentiate the open pit
material from the potential underground resources. The open pit to underground interface was chosen by using a
blanket elevation to limit the open pit optimisation analysis. The elevation selected for this purpose was 5685mRL
which corresponds to the deepest portion of open pit design from the 2007 Feasibility Study. In summary, in the
running of the open pit optimisation process, all resources below the 5685mRL were excluded, in so doing
preventing the open pit optimisation accessing any of the deeper material.
This also results in a clear demarcation of Underground Resources from any Open Pit Resources and allows the
reporting of both at KCD without any ambiguity.
The KCD deposit has been defined by an additional 90 DC holes and drilled on a variable grid where average drill
spacing is between 50 to 80 metres. Although the continuity of mineralised zones appears to be well established it is
Cube’s opinion that drill spacing greater than 40 by 40 metres is insufficient to estimate grade and volume to a level
of precision that would be considered appropriate for Indicated Mineral Resources. There are however a number of
specific lodes that have been drilled at a closer spacing than 40 by 40 metres.. These lodes are the upper most regions
of the Karagba, Chauffeur and Durba project areas and the recently targeted deeper KCD project area. The recent
drilling completed confirms the mineralised widths, grade tenor and continuity of mineralisation defined in
previous Mineral Resource estimates. There are some areas of the resource inventory that have been classified as
Indicated despite greater than 40 by 40 metre drill spacing. These areas are generally where successive drill
campaigns have confirmed a high degree of geological and grade continuity.
In general, drilling, surveying, sampling and analytical methods and controls currently employed are suitable and
adequate for the style of deposits under consideration. Cube considers that Ordinary Kriging is an appropriate
method of panel grade estimation. Kriging quality tests confirm that high quality block estimates were achieved
throughout the Indicated Mineral Resource area. The application of UC with an information effect to the kriged
panel grades has resulted in a more realistic grade and tonnage above a 0.5g/t gold cut-off with allowance for the
proposed mining selectivity. Grade tonnage curves for the KCD Lodes are presented in Appendix 3.
A tabulation of the updated Kibali Gold Project Open Pit Mineral Resources at a nominal 0.5 g/t gold cut-off as of
September 2009 is shown in Table 14-15.
67
Table 14-15 Kibali Gold Project Open Pit Mineral Resource Tabulation — All Deposits H 0.5 g/t gold —
September 2009
Deposit
Pakaka . . . . . . . . . . . . . .
Gorumbwa . . . . . . . . . . .
Kibali . . . . . . . . . . . . . . .
Mengu Hill. . . . . . . . . . .
Mengu Village . . . . . . . .
KCD . . . . . . . . . . . . . . .
Megi. . . . . . . . . . . . . . . .
Marakeke. . . . . . . . . . . .
Kombokolo . . . . . . . . . .
Sessenge . . . . . . . . . . . . .
Ndala . . . . . . . . . . . . . . .
Pamao . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . .
Tonnes
(Mt)
Grade
g/t
Gold
kOz
*Attrib gold
kOz
16.73
2.1
1,122
505
8.92
1.30
37.18
2.6
1.5
2.5
735
61
2,957
331
27
1,331
2.22
14.09
2.1
1.6
150
729
68
328
11.78
92.23
1.3
2.1
499
6,253
225
2,814
Tonnes
(Mt)
Grade
g/t
Gold kOz
*Attrib gold
kOz
7.57
16.77
6.9
2.0
1,687
1,068
759
481
1.78
4.19
1.25
1.8
1.9
1.6
102
260
64
46
117
29
0.27
0.99
32.82
3.7
1.3
3.1
32
43
3,256
14
19
1,465
The competent persons believe that the existence of the gold Resources of Table 14-15 is substaintiated by evidence
obtained from their site visits and observations, and is supported by the details of drilling results and analyses
presented in this report and takes account of all relevant information supplied to the competent person by Kibali
Goldmines.
A large proportion of the infill drilling undertaken since February 2007 was targeted at the higher grade areas of the
KCD deposit. This infill drilling has resulted in a substantial increase in the confidence of the style and continuity of
the mineralisation associated with Acsa alteration. The KCD volumes were specifically constrained by ankeritecarbonate-silica-albite-pyrite alteration. This alteration style is closely associated with significantly higher tenor
gold grades and appears to form reasonably continuous and robust mineralised zones within the broader mineralised
material. A combination of infill drilling and detailed interpretation has resulted in a significant proportion of the
KCD mineralisation being classified as Indicated in the context of global in-situ resources. Ongoing work is still
required to fully identify and quantify the various risks and uncertainties required to confirm appropriate modifying
factors for formulating underground mining reserves.
Although the current Indicated Resource provides a reasonable estimate of global contained metal, further drilling
and analysis will be required to improve the local precision of the Mineral Resource estimate. This has particular
relevance to underground mining where the degree of local grade and volume variation may have a critical impact
on project viability.
In general, drilling, surveying, sampling and analytical methods and controls currently employed are suitable and
adequate for the style of deposits under consideration. Cube considers that Ordinary Kriging is an appropriate
method of global in-situ grade estimation. Kriging quality tests confirm that high quality block estimates were
achieved throughout the Indicated Mineral Resource area. Grade tonnage curves for KCD Underground Resources
are presented in Appendix 3
A tabulation of the classified KCD Underground Mineral Resources at a nominal 2 g/t gold cut-off as of September
2009 is shown in Table 14-16.
Table 14-16 KCD — Underground Mineral Resource Tabulation H 2.0 g/t gold — September 2009
Deposit
Tonnes
(Mt)
Grade
g/t
Gold
kOz
*Attrib
gold kOz
Tonnes
(Mt)
Grade
g/t
Gold k
Oz
*Attrib
gold kOz
KCD . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . .
39.26
39.26
6.1
6.1
7,674
7,674
3,453
3,453
18.24
18.24
4.4
4.4
2,569
2,569
1,156
1,156
The competent persons believe that the existence of the gold Resources of Table 14-16 is substaintiated by evidence
obtained from their site visits and observations, and is supported by the details of drilling results and analyses
68
presented in this report and takes account of all relevant information supplied to the competent person by Kibali
Goldmines.
14.2 Mineral Reserve Estimates
Mineral Reserve Estimates were last updated for the Feasibility Study for the Kibali Gold Project. These results
were reported in the Amended and Restated Technical Report by Adams et al, April 2009. The Reserve Estimates
stated below are therefore not based on the Resources, as stated in this current report but are included within these
mineral resources. Section 14.2 is reproduced in its entirety from the April 2009 Report.
All the Mineral Reserves calculated have been classified and reported in accordance with The 2004 Australasian
Code for Reporting of Mineral Resources and Ore Reserves (2004 JORC Code). The 2004 JORC reporting
guidelines are equivalent to the guidelines adopted for Canadian National Instrument 43-101.
14.2.1 Open Pit Mineral Reserves
14.2.1.1 Mineral Reserve Summary
The total open pit Probable Mineral Reserves within the Kibali Gold Project based upon the Feasibility Study pit
designs is 30.7Mt at 3.2 g/t for 3.2Moz of gold. These Mineral Reserves are contained within the Open Pit Indicated
Mineral Resources of the Kibali Gold Project.
Table 14-17 Open Pit Mineral Reserve Summary
Tonnes (kt)
Fresh
Transition
Oxide
LG Ore
Total
KCD . . . . . . . 2,063
Kombokolo . .
31
Mengu Hill . .
156
Pakaka . . . . . 1,027
Pamao . . . . .
277
Sessenge . . . .
438
Total . . . . . . . 3,992
579
40
221
94
155
87
1,177
568
14
451
353
117
234
1,737
3,210
35
829
1,474
549
760
6,906
Pit
Fresh
Transition
6,629
230
1,656
3,217
586
1,053
13,372
1,894
105
1,105
290
196
347
3,938
High Grs de Ore
Oxide
Total
2,471
70
1,821
1,136
203
765
6,467
10,995
405
4,583
4,643
986
2,166
23,776
Total Reserves
14,205
490
5,411
6,116
1,585
2,926
30,682
Mined Ounces (koz)
LG Ore
High Grade Ore
Fresh
Transition
Oxide
Total
Fresh
Transition
Oxide
Total
80
1
7
43
11
18
160
22
1
9
4
6
4
46
19
0
16
12
4
8
53
120
3
32
58
22
30
265
1,003
30
211
351
52
104
1,751
236
9
146
33
16
36
476
283
5
203
96
15
70
671
1,522
44
560
480
832
210
2,898
KCD . . . . . . . . . . .
Kombokolo . . . . . .
Mengu Hill . . . . . .
Pakaka . . . . . . . . .
Pamao . . . . . . . . .
Sessenge . . . . . . . .
Total . . . . . . . . . . .
Total Reserves
1,642
47
592
539
104
239
3,163
Mined Grades (g/t)
LG Ore
MGH
KCD . . . . . . . . . . . . .
Kombokolo . . . . . . . .
Mengu Hill . . . . . . . .
Pakaka . . . . . . . . . . .
Pamao . . . . . . . . . . .
Sessenge . . . . . . . . . .
Total . . . . . . . . . . . . .
Fresh
Transition
Oxide
1.2
1.3
1.4
1.3
1.3
1.3
1.2
1.2
1.1
1.3
1.3
1.3
1.3
1.2
1.0
1.0
1.1
1.0
1.0
1.0
1.0
Total
1.2
1.2
1.2
1.2
1.2
1.2
1.2
High Grade Ore
Fresh
Transition
Oxide
Total
4.7
4.1
4.0
3.4
2.8
3.1
4.1
3.9
2.6
4.1
3.5
2.5
3.3
3.8
3.6
2.2
3.5
2.6
2.2
2.8
3.2
4.3
3.4
3.3
3.2
2.6
3.0
3.8
Total reserves
3.6
3.0
3.4
2.7
2.1
2.5
3.2
The Mineral Reserves in Table 14-17 have been estimated by Quinton de Klerk, NHD MAusIMM. Quinton de
Klerk is a Director of Cube Consulting Pty Ltd and is independent of Kibali Goldmines..
69
14.2.1.2 Mineral Reserve Calculation Methodology
The calculation of Open Pit Mineral Reserves is based on the following key inputs:
•
Mineral Resource models (UC estimation methodology) estimating gold content and material weathering type;
•
estimated processing and general and administration costs (refer Table 14-18)
•
predicted metallurgical recovery by material type by deposit (refer Table 15-3);
•
geotechnical wall angle parameters (refer Table 14-21);
•
estimated mining costs (refer Table 14-19 and Table 14-20); and
•
cutoff grade analysis using final estimated costs derived from pit designs and pit schedules, and finalised
processing and administration costs.
Table 14-18 First Pass Processing and G&A Costs for Pit Optimisations
Moto Goldmines Ltd
Kibali Gold Project
Summary of Operating Costs
Costs Using 90% HEP and 10% Diesel Generated Power
Oxide Ore
Total Oxide
COST CENTRE
Labour Processing . . . . . . . . . . . . .
Operating Consumables . . . . . . . . .
Power . . . . . . . . . . . . . . . . . . . . . .
Maintenance and Repairs . . . . . . . .
Mobile Equipment . . . . . . . . . . . . .
Laboratory . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . .
......
......
......
......
......
......
......
Variable Cost
Tonnage
US$/Year
3,000,000
US$/t
Fixed Cost
US$/Year
US$/Year
US$/t
$ 2,898,504
$22,450,930
$ 7,611,024
$ 2,341,370
$ 177,410
$ 434,953
$35,914,191
$ 0.97
$ 7.48
$ 2.54
$ 0.78
$ 0.06
$ 0.14
$11.97
$ 2,898,504
$ 2,055,133
$ 4,708,352
$ 2,107,000
$ 177,410
$ 434,953
$12,381,352
$
0
$20,395,797
$ 2,902,672
$ 234,370
$
0
$
0
$23,532,839
$0.00
$6.80
$0.97
$0.08
$0.00
$0.00
$7.84
Transitional Ore
Total Transitional
COST CENTRE
Labour Processing . . . . . . . . . . . . . . . . . .
Operating Consumables . . . . . . . . . . . . . .
Power . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maintenance and Repairs . . . . . . . . . . . . .
Mobile Equipment . . . . . . . . . . . . . . . . . .
Laboratory . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable Cost
Tonnage
US$/Year
2,600,000
US$/t
Fixed Cost
US$/Year
US$/Year
US$/t
$ 2,898,504
$23,351,313
$ 9,123,062
$ 2,858,148
$ 177,410
$ 434,953
$38,843,391
1.11
8.98
3.51
1.10
0.07
0.17
$14.94
$ 2,898,504
$ 1,952,175
$ 4,757,235
$ 2,572,334
$ 177,410
$ 434,953
$12,792,611
$
0
$21,399,138
$ 4,365,827
$ 285,815
$
0
$
0
$26,050,781
$ 0.00
$ 8.23
$ 1.68
$ 0.11
$ 0.00
$ 0.00
$10.02
Primary Ore
Total Primary
COST CENTRE
Tonnage
US$/Year
2,600,000
US$/t
Labour Processing . . . . . . . . . . . . . . . . . .
Operating Consumables . . . . . . . . . . . . . .
Power . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maintenance and Repairs . . . . . . . . . . . . .
Mobile Equipment . . . . . . . . . . . . . . . . . .
Laboratory . . . . . . . . . . . . . . . . . . . . . . . .
$ 2,898,504
$23,351,313
$ 9,123,062
$ 2,858,148
$ 177,410
$ 434,953
$
$
$
$
$
$
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . .
$38,843,391
$14.94
70
1.11
8.98
3.51
1.10
0.07
0.17
Fixed Cost
US$/Year
$
$
$
$
$
$
Variable Cost
US$/Year
US$/t
2,898,504
1,952,175
4,757,235
2,572,334
177,410
434,953
$
0
$21,399,138
$ 4,365,827
$ 285,815
$
0
$
0
$
$
$
$
$
$
0.00
8.23
1.68
0.11
0.00
0.00
$12,792,611
$26,050,781
$10.02
General & Administration Costs
COST CENTRE
Labour Administration . . . . . . . . . . . . . . . . . .
General & Administration . . . . . . . . . . . . . . . .
TOTAL OXIDE . . . . . . . . . . . . . . . . . . . . . .
TOTAL PRIMARY . . . . . . . . . . . . . . . . . . . .
..
..
..
..
Tonnage
US$/Year
2,600,000
US$/t
Fixed Cost
US$/Year
$3,993,791
$5,690,719
$9,684,510
$9,684,510
$1.54
$2.19
$3.23
$3.72
$3,993,791
$5,690,719
$9,684,510
$9,684,510
Variable Cost
US$/Year
US$/t
$0
$0
$0
$0
$0.000
$0.000
$ 0.00
$ 0.00
TOTAL COST
Fixed Cost
Variable Cost
US$/Year
US$/t
US$/Year
US$/Year
US$/t
TOTAL OXIDE . . . . . . . . . . . . . . . . . . . . $45,598,701
TOTAL TRANSITIONAL . . . . . . . . . . . . $48,527,902
TOTAL FRESH . . . . . . . . . . . . . . . . . . . . $48,527,902
$15.20
$18.66
$18.66
$22,065,863
$22,477,121
$22,477,121
$23,532,839
$26,050,781
$26,050,781
$ 7.84
$10.02
$10.02
COST CENTRE
71
72
6000
5990
5980
5970
5960
5950
5940
5930
5920
5910
5900
5890
5880
5870
5860
5850
5840
5830
5820
5810
5800
5790
5780
5770
5760
5750
5740
5730
5720
5710
5700
5690
5680
5670
5660
5650
5640
5630
5620
5610
5600
5590
5580
5570
5560
5550
5540
5530
5520
5510
From
Kombokolo
Mengu Hill/Mengu Village
Pakaka
Pamao
Sessenge
5990
5980
5970
5960
5950
5940
5930
5920
5910
5900
5890
5880
5870
5860
5850
5840
5830
5820
5810
5800
5790
5780
5770
5760
5750
5740
5730
5720
5710
5700
5690
5680
5670
5660
5650
5640
5630
5620
5610
5600
5590
5580
5570
5560
5550
5540
5530
5520
5510
5500
2.77
2.77
2.77
2.77
2.84
2.93
2.98
2.89
2.96
3.19
3.50
3.90
4.68
5.05
5.37
5.70
5.95
6.08
6.17
6.29
6.44
6.65
6.79
7.23
7.26
7.69
7.73
8.16
8.19
8.63
8.66
9.00
9.13
9.16
9.36
9.56
9.76
9.96
10.16
10.36
10.56
10.76
0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
0.63
3.32
3.32
3.32
3.31
3.39
3.47
3.53
3.44
3.51
3.73
4.05
4.52
5.31
5.68
6.00
6.33
6.58
6.71
6.79
6.92
7.06
7.28
7.42
7.85
7.89
8.32
8.35
8.79
8.82
9.25
9.29
9.63
9.75
9.79
9.99
10.19
10.39
10.59
10.79
10.99
11.19
11.39
1.70
1.70
1.70
1.70
1.72
1.79
1.82
1.87
1.91
1.96
2.09
2.34
2.64
2.78
2.87
2.89
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.91
2.91
2.91
2.91
2.91
2.91
2.91
2.91
2.91
2.91
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
2.00
2.00
2.00
2.00
2.02
2.00
1.99
1.89
1.89
1.95
1.99
1.99
2.07
2.10
2.15
2.25
2.32
2.37
2.40
2.44
2.49
2.56
2.61
2.76
2.77
2.92
2.93
3.08
3.09
3.24
3.25
3.37
3.41
3.42
3.49
3.56
3.63
3.70
3.77
3.84
3.90
3.97
2.81
2.81
2.81
2.77
2.74
2.70
2.66
2.62
2.58
2.55
2.51
3.03
3.14
3.54
4.12
4.64
4.90
5.09
5.21
5.30
5.48
5.67
5.80
5.99
6.14
6.30
6.49
6.70
6.90
7.11
7.32
7.52
7.72
7.91
8.10
8.29
8.49
8.68
8.87
9.07
9.26
9.45
9.65
9.84
0.56 3.37
0.56 3.37
0.56 3.37
0.56 3.33
0.56 3.29
0.56 3.25
0.56 3.22
0.56 3.18
0.56 3.14
0.56 3.10
0.56 3.07
0.56 3.59
0.56 3.69
0.56 4.10
0.56 4.68
0.56 5.20
0.56 5.46
0.56 5.65
0.56 5.77
0.56 5.86
0.56 6.04
0.56 6.23
0.56 6.36
0.56 6.55
0.56 6.70
0.56 6.86
0.56 7.05
0.56 7.26
0.56 7.46
0.56 7.67
0.56 7.88
0.56 8.08
0.56 8.28
0.56 8.47
0.56 8.66
0.56 8.86
0.56 9.05
0.56 9.24
0.56 9.43
0.56 9.63
0.56 9.82
0.56 10.01
0.56 10.21
0.56 10.40
1.65
1.65
1.65
1.65
1.65
1.65
1.65
1.65
1.65
1.65
1.65
1.86
2.13
2.36
2.53
2.73
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
2.80
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
2.10
2.10
2.10 4.52
2.07 4.52
2.05 4.52
2.03 4.46
2.00 4.40
1.98 4.34
1.96 4.27
1.93 4.21
1.91 4.15
1.99 4.09
1.79 4.06
1.79 4.06
1.91 4.02
1.96 4.07
2.01 4.44
2.07 4.70
2.11 4.94
2.15 5.20
2.21 5.50
2.28 5.64
2.33 5.74
2.39 5.93
2.45 6.12
2.50 6.26
2.57 6.45
2.65 6.61
2.72 6.78
2.79 6.98
2.87 7.20
2.94 7.43
3.01 7.66
3.08 7.89
3.15 8.11
3.22 8.33
3.29 8.55
3.35 8.77
3.42 8.98
3.49 9.20
3.56 9.42
3.63 9.64
3.70 9.85
3.77 10.07
10.29
10.51
10.73
10.94
11.16
0.41
0.41
0.41
0.41
0.41
0.41
0.41
0.41
0.41
0.41
0.41
0.41
0.41
0.41
0.41
0.41
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
0.52
4.93
4.93
4.93
4.87
4.81
4.74
4.68
4.62
4.56
4.50
4.47
4.46
4.43
3.12
3.24
3.36
3.47
3.59
3.70
4.22
4.34
4.45
4.57
4.69
4.80
4.92
5.03
5.15
5.27
5.38
5.50
5.61
5.73
5.85
5.96
6.08
6.20
6.31
6.43
6.54
6.66
6.78
6.89
7.01
7.12
7.24
7.36
2.64
2.64
2.64
2.65
2.65
2.64
2.64
2.64
2.66
2.68
2.79
2.90
2.81
2.85
2.90
2.97
3.04
3.09
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
3.10
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
1.92
1.92
1.92
1.89
1.87
1.85
1.83
1.80
1.77
1.73
1.66
1.59
1.63
1.15
1.17
1.19
1.20
1.22
1.25
1.42
1.45
1.49
1.53
1.56
1.60
1.64
1.68
1.71
1.75
1.79
1.83
1.86
1.90
1.94
1.98
2.02
2.05
2.09
2.13
2.17
2.20
2.24
2.28
2.31
2.35
2.39
2.43
2.69
2.65
2.62
2.58
2.54
2.63
3.46
4.06
4.43
4.74
4.98
5.20
5.33
5.43
5.62
5.81
5.95
6.14
6.30
6.47
6.67
6.88
7.07
7.25
7.44
7.63
7.81
8.00
8.19
8.37
8.56
8.75
8.93
9.12
9.31
9.49
9.68
9.87
0.60 3.29 1.50
0.60 3.25 1.50
0.60 3.21 1.50
0.60 3.18 1.50
0.60 3.14 1.58
0.60 3.22 1.79
0.60 4.06 2.01
0.60 4.66 2.28
0.60 5.02 2.53
0.60 5.33 2.71
0.60 5.57 2.79
0.60 5.80 2.80
0.60 5.92 2.80
0.60 6.02 2.80
0.60 6.21 2.80
0.60 6.41 2.80
0.60 6.54 2.80
0.60 6.74 2.80
0.60 6.90 2.80
0.60 7.06 2.80
0.60 7.26 2.80
0.60 7.48 2.80
0.60 7.66 2.80
0.60 7.85 2.80
0.60 8.04 2.80
0.60 8.22 2.80
0.60 8.41 2.80
0.60 8.60 2.80
0.60 8.78 2.80
0.60 8.97 2.80
0.60 9.16 2.80
0.60 9.34 2.80
0.60 9.53 2.80
0.60 9.72 2.80
0.60 9.90 2.80
0.60 10.09 2.80
0.60 10.28 2.80
0.60 10.46 2.80
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
2.25
2.22
2.20
2.17
2.04
1.86
2.07
2.10
2.04
2.02
2.05
2.13
2.17
2.20
2.27
2.34
2.39
2.46
2.52
2.58
2.65
2.73
2.79
2.86
2.92
2.99
3.06
3.12
3.19
3.26
3.32
3.39
3.46
3.52
3.59
3.66
3.72
3.79
2.60
2.60
2.60
2.60
2.60
2.60
2.74
2.74
2.74
3.16
3.76
4.38
4.63
4.86
4.99
5.08
5.25
5.42
5.55
5.72
5.86
6.01
6.19
6.38
6.58
6.78
6.99
7.20
7.40
7.61
7.81
8.02
8.22
8.43
8.64
8.84
9.05
9.35
9.65
9.95
10.25
10.55
0.56
0.56
0.56
0.56
0.56
0.56
0.56
0.56
0.56
0.56
0.56
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
0.61
3.15
3.15
3.15
3.15
3.15
3.15
3.29
3.29
3.29
3.71
4.32
5.00
5.25
5.47
5.61
5.70
5.86
6.04
6.16
6.33
6.47
6.62
6.80
6.99
7.19
7.40
7.60
7.81
8.01
8.22
8.43
8.63
8.84
9.04
9.25
9.45
9.66
9.96
10.26
10.56
10.87
11.17
1.65
1.65
1.65
1.65
1.65
1.66
1.67
1.69
1.76
1.92
2.11
2.41
2.72
2.80
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
2.83
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
1.97
1.97
1.97
1.97
1.97
1.95
2.02
2.00
1.92
1.99
2.10
2.12
1.99
2.01
2.04
2.07
2.13
2.19
2.23
2.29
2.34
2.39
2.46
2.52
2.60
2.67
2.74
2.81
2.89
2.96
3.03
3.10
3.18
3.25
3.32
3.40
3.47
3.57
3.68
3.79
3.89
4.00
2.35
2.35
2.35
2.35
2.35
2.35
2.35
2.37
2.41
2.59
3.14
3.90
4.52
4.71
4.88
4.99
5.07
5.24
5.40
5.52
5.68
5.82
5.97
6.14
6.32
6.53
6.75
6.96
7.17
7.39
7.60
7.81
8.03
8.24
8.45
8.67
8.88
8.88
8.88
8.88
8.88
8.88
0.43
0.43
0.43
0.43
0.43
0.43
0.43
0.43
0.43
0.43
0.43
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
0.59
2.78
2.78
2.78
2.78
2.78
2.78
2.78
2.80
3.12
3.24
3.36
3.47
3.59
3.70
4.22
4.34
4.45
4.57
4.69
4.80
4.92
5.03
5.15
5.27
5.38
5.50
5.61
5.73
5.85
5.96
6.08
6.20
6.31
6.43
6.54
6.66
6.78
6.89
7.01
7.12
7.24
7.36
2.41
2.42
2.45
2.51
2.57
2.63
2.65
2.57
2.49
2.50
2.52
2.55
2.72
2.82
2.85
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
2.90
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.15
1.15
1.14
1.11
1.08
1.06
1.05
1.09
1.26
1.29
1.33
1.36
1.32
1.32
1.48
1.50
1.53
1.57
1.61
1.65
1.69
1.73
1.77
1.81
1.85
1.89
1.93
1.97
2.01
2.05
2.09
2.13
2.17
2.21
2.25
2.29
2.33
2.37
2.41
2.45
2.49
2.53
L&H
D&B
Total
Presplit
L&H
D&B
Total
Presplit Total
L&H
D&B
Total
Presplit Total
L&H
D&B
Total
Presplit Total
L&H
D&B
Total
Presplit Total
L&H
D&B
Total
Presplit Total
To $/BCM $/BCM $/BCM Density
$/t Total $/t $/BCM $/BCM $/BCM Density
$/t
$/t $/BCM $/BCM $/BCM Density
$/t
$/t $/BCM $/BCM $/BCM Densit
$/t
$/t
$/t
$/t
KCD
Table 14-19 Waste Mining Costs Used in Optimisations
73
Gold Price ($/oz) . . . . . .
Gold Price ($/g) . . . . . .
Gold Royalty ($/g). . . . .
Gold Security ($/g) . . . .
Net Gold Price ($/g) . . .
Processing Recovery . . .
Fixed Processing . . . . . .
Variable Processing . . . .
Total Processing . . . . . .
General/Admin . . . . . . .
Extra $/t (Ore Premium)
GC . . . . . . . . . . . . . . .
Mine Admin . . . . . . . . .
Overhaul . . . . . . . . . . .
Rehandle . . . . . . . . . . .
Rehab . . . . . . . . . . . . .
Water . . . . . . . . . . . . .
Wall Stab . . . . . . . . . . .
Total Ore Costs . . . . . . .
Cut off Grade
(Calculated). . . . . . . .
$ 0.91
$ 1.00
$ 0.15
$ 1.04
$ 0.10
$ 0.20
$ 0.10
$18.70
1.17
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
..
Trans
1.31
$ 0.91
$ 1.00
$ 0.15
$ 1.04
$ 0.10
$ 0.20
$ 0.10
$22.16
$ 600 $ 600
$19.29 $19.29
$ 0.48 $ 0.48
$ 0.06 $ 0.06
$18.74 $18.74
85.5% 90.1%
$ 4.13 $ 4.92
$ 7.84 $10.02
$11.97 $14.94
$ 3.23 $ 3.72
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Oxide
Oxide
1.41
$ 0.91
$ 1.00
$ 0.15
$ 1.04
$ 0.10
$ 0.20
$ 0.10
$22.16
1.04
$ 0.91
$ 1.00
$ 0.15
$ 1.04
$ 0.10
$ 0.20
$ 0.10
$18.70
1.23
$ 0.91
$ 1.00
$ 0.15
$ 1.04
$ 0.10
$ 0.20
$ 0.10
$22.16
1.58
$ 0.91
$ 1.00
$ 0.15
$ 1.04
$ 0.10
$ 0.20
$ 0.10
$22.16
1.20
$ 0.91
$ 1.00
$ 1.50
$ 1.04
$ 0.10
$ 0.20
$ 0.10
$20.05
1.40
$ 0.91
$ 1.00
$ 1.50
$ 1.04
$ 0.10
$ 0.20
$ 0.10
$23.51
Oxide
Trans
1.75
$ 0.91
$ 1.00
$ 1.50
$ 1.04
$ 0.10
$ 0.20
$ 0.10
$23.51
1.12
$ 0.91
$ 1.00
$ 0.15
$ 1.04
$ 0.10
$ 0.20
$ 0.10
$18.70
1.45
$ 0.91
$ 1.00
$ 0.15
$ 1.04
$ 0.10
$ 0.20
$ 0.10
$22.16
$ 600 $ 600 $ 600
$19.29 $19.29 $19.29
$ 0.48 $ 0.48 $ 0.48
$ 0.06 $ 0.06 $ 0.06
$18.74 $18.74 $18.74
71.6% 88.7% 81.7%
$ 4.92 $ 4.13 $ 4.92
$10.02 $ 7.84 $10.02
$14.94 $11.97 $14.94
$ 3.72 $ 3.23 $ 3.72
Mengu Hill/Mengu Village
Oxide
Trans Primary
$ 600 $ 600 $ 600
$19.29 $19.29 $19.29
$ 0.48 $ 0.48 $ 0.48
$ 0.06 $ 0.06 $ 0.06
$18.74 $18.74 $18.74
74.6% 89.3% 89.3%
$ 4.92 $ 4.13 $ 4.92
$10.02 $ 7.84 $10.02
$14.94 $11.97 $14.94
$ 3.72 $ 3.23 $ 3.72
Kombokolo
Trans Primary
$ 600 $ 600 $ 600
$19.29 $19.29 $19.29
$ 0.48 $ 0.48 $ 0.48
$ 0.06 $ 0.06 $ 0.06
$18.74 $18.74 $18.74
83.9% 95.6% 95.9%
$ 4.92 $ 4.13 $ 4.92
$10.02 $ 7.84 $10.02
$14.94 $11.97 $14.94
$ 3.72 $ 3.23 $ 3.72
KCD
Primary
Table 14-20 Waste Mining Costs Used in Optimisations
Oxide
Trans
1.45
$ 0.91
$ 1.00
$ 0.15
$ 1.04
$ 0.10
$ 0.20
$ 0.10
$22.16
1.10
$ 0.91
$ 1.00
$ 0.15
$ 1.04
$ 0.10
$ 0.20
$ 0.10
$18.70
1.39
$ 0.91
$ 1.00
$ 0.15
$ 1.04
$ 0.10
$ 0.20
$ 0.10
$22.16
$ 600 $ 600 $ 600
$19.29 $19.29 $19.29
$ 0.48 $ 0.48 $ 0.48
$ 0.06 $ 0.06 $ 0.06
$18.74 $18.74 $18.74
81.7% 90.9% 85.0%
$ 4.92 $ 4.13 $ 4.92
$10.02 $ 7.84 $10.02
$14.94 $11.97 $14.94
$ 3.72 $ 3.23 $ 3.72
Pakaka
Primary
Oxide
Trans
1.39
$ 0.91
$ 1.00
$ 0.15
$ 1.04
$ 0.10
$ 0.20
$ 0.10
$22.16
1.10
$ 0.91
$ 1.00
$ 0.10
$ 1.04
$ 0.10
$ 0.20
$ 0.10
$18.65
1.55
$ 0.91
$ 1.00
$ 0.10
$ 1.04
$ 0.10
$ 0.20
$ 0.10
$22.11
$ 600 $ 600 $ 600
$19.29 $19.29 $19.29
$ 0.48 $ 0.48 $ 0.48
$ 0.06 $ 0.06 $ 0.06
$18.74 $18.74 $18.74
85.0% 90.3% 75.9%
$ 4.92 $ 4.13 $ 4.92
$10.02 $ 7.84 $10.02
$14.94 $11.97 $14.94
$ 3.72 $ 3.23 $ 3.72
Pamao
Primary
1.46
$ 0.91
$ 1.00
$ 0.10
$ 1.04
$ 0.10
$ 0.20
$ 0.10
$22.11
$ 600
$19.29
$ 0.48
$ 0.06
$18.74
80.6%
$ 4.92
$10.02
$14.94
$ 3.72
Sessenge
Primary
Whittle optimisations were carried out on each of the deposits containing Indicated Mineral Resources. A range of
open pit optimisations were undertaken between US$300 (KCD US$150) and US$900 at US$25 increments and
evaluated for net cashflow. All subsequent pit designs were capped at a maximum possible gold price of US$600/oz
to ensure the project was robust.
14.2.1.3 Optimisation Results
Quantitative and qualitative analysis was used to determine the appropriate shells upon which to base pit designs.
Selected shells for each pit are listed in Table 14-23 along with shell physicals. The majority of the selected shells
are well below the US$600/oz revenue limit imposed for design purposes and therefore a degree of robustness is
built into the pit design process. An approximation of mining rate for each pit was used to determine the effect of
discounting the net cashflow.
14.2.1.4 Geotechnical Investigations and Implications for Mine Design
The results of geotechnical drilling programmes carried out during February to April 2007 at the KCD, Pakaka,
Pamao, Mengu Hill and Kombokolo deposits and in September 2008 at the Sessenge deposit have been evaluated
with an earlier programme in May 2006 to assess likely ranges in ground conditions, and their impact on future
slope designs.
The evaluations and recommendations have been based on inspections of, and interpretations made from borehole
logs (including structural geological measurements), borehole survey results, cores and core photographs,
destructive core testing and information on groundwater measurements.
Open pit mining at the proposed Karagba-Chauffeur-Durba (KCD), Pakaka, Pamao, Mengu Hill, Kombokolo and
Sessenge deposits will take place within variably weathered and altered, locally flexed and folded, shallow north to
north-east dipping, bedded and foliated volcano-sedimentary and intrusive rocks of the Moto greenstone belt. Gold
mineralisation plunges at generally shallow angles to the north and north-east. North-east and north-west striking
faults occur commonly.
The proposed mining area is located in a “low seismic hazard” zone.
All deposits are characterised by the presence of a near-surface groundwater table. Results obtained from
preliminary hydrogeological investigations carried out at the KCD deposit indicate potential for high groundwater
inflows to take place if the pit volume and wall rocks are not dewatered in advance of mining. Similar groundwater
regimes are currently inferred to exist at the other deposits but need to be investigated.
Rock weathering profiles at the deposits are variable, with the “top of fresh rock” occurring at depths ranging
between several tens of metres and around 100 m below surface. Deep rock weathering profiles associated with
faulting are judged to occur within the western sector of the KCD deposit and the north and western sectors of the
Kombokolo deposit.
Unconfined compressive strengths (UCS values) of intact fresh rocks are variable, being influenced by lithology
and, in particular, the presence of healed foliation and bedding planes in tested specimens. Likely “true” intact rock
compressive strengths would, in our opinion, be expected to fall within the range of “strong rock” (UCS value of
between 50 and 100 MPa) to “extremely strong rock” (UCS values H200 MPa).
Overall rock quality at the deposits is judged to range from “very poor” to “poor” within the weathered rocks, to
“good” and “very good” within the underlying fresh rocks (unaffected by faulting).
“Base case” pit wall design parameters provided for the deposits utilise a series of 5m, 10m,15m and 25m vertical
height benches, mined at face angles ranging from 55o to 80o, separated by berms ranging in width from 4 m to 8 m.
“Wider” berms have been incorporated in the fresh rock designs for the deeper pits at vertical intervals ranging from
45 m to 50 m.
The “base case” designs have been based on:
•
interpretations made from geotechnical drilling investigations;
•
information on rock weathering depths (assessed from exploration and geotechnical drilling results);
•
results of unconfined compressive strength tests carried out on representative core samples;
•
assessments of kinematically feasible potential gravity-induced wall failure mechanisms taking place along
geological structures exposed in future pit walls;
74
•
results of a limited number of two-dimensional limit equilibrium stability analyses, using inferred groundwater
conditions; and
•
experience gained elsewhere with wall stability in pits of similar depth mined in volcano sedimentary rock
environments.
Table 14-21 Recommended Slope Angles
Mine
KCD
Weathering
Oxide /Transition
Fresh
Kombokolo Oxide /Transition
Fresh
Mengu Hill Oxide /Transition
Fresh
Pakaka
Oxide /Transition
Fresh
Pamao
Oxide /Transition
Fresh
Sessenge
Oxide /Transition
Fresh
Domain A
Domain B
Domain C
Batter
Inter
Bench
Inter
Berm Angle
Bench Inter Berm Berm
Batter
Bench
Berm Berm
Batter Height
Berm
(m) (Deg) Height(m) Angle (Deg)
(m) Angle (Deg) Height (m) Angle (m)
(m) Angle (Deg)
(m) Angle (Deg)
5
5
5
5
7
7
5
5
6
6
55
70
70
70
55
55
55
55
55
55
70
70
5
5
5
5
5
5
5
5
5
5
5
5
30
36
36
36
34
34
30
30
28
28
20
25
5
8
4
5
5
7
5
5
5
5
5
8
55
80
60
80
55
80
70
70
55
80
55
80
5
15
5
10
10
15
5
5
10
10
10
15
30
55
36
56
40
57
36
36
40
56
40
55
4
5
55
80
5
10
34
56
5
7
55
80
10
15
40
57
14.2.1.5 Hydrogeological Investigation
Based upon the indications from findings of site visits, core inspection and geophysical testing as well as the high
pump rates achieved during pump testing, it is anticipated that the area comprises a weathered aquifer characterised
by relatively high transmissivity and storativity delivering relatively high aquifer yields. The aquifer yields
experienced in the fractured aquifers underlying the weathered zone deliver significant yields that also suggest high
storativity.
These general rock mass flows do not account for any high flows, which may report from individual structural
features which may intersect the pit design and have not been tested to date. Quantification of inflows from
individual structural features cannot be conducted at this time, however with identification and testing of these
features, flow estimates can be made.
In addition to groundwater inflows, additional water will report to the pits in the form of precipitation. Based upon
the average monthly precipitation values, average monthly precipitation inflows will range from approximately 30
mm in the dry season (November — March) to a peak inflow rate in August to September. Depending on the actual
area reporting to the pit sumps and the volume of water present within the pit, the actual pit dewatering requirements
may vary.
The surface hydrology is not expected to impact significantly on the mining operation as a system of bund walls and
dewatering trenches will be established prior to mining, which will stop inflow of surface water to the pit area. The
network of drainage channels will be maintained to discharge water intercepted by the perimeter drains to the Nzoro
/ Kibali River via a series of settling ponds.
14.2.1.6 Practical Pit and Road Designs
In all cases the relevant Whittle optimisation shell was imported into the MINESIGHT software programme and
used a basis for the design of the pit. These shells were used as a basis for the open pit inter ramp slope angle, berm
width and batter angle formation.
In all cases the strategy has been, where practically possible, to design an interim pit stage to account for the early
excavation of material at higher value to accelerate project payback.
As illustrated by Figure 14-1, the site is reasonably spread out, with the most activity occurring around the KCD pit.
Satellite clusters of pits are located at Pakaka and Pamao, with Mengu Hill positioned to the far north west of the
immediate project area.
The project will require the construction of approximately 18,000 m of haul roads ex-pit suitable for the transport of
material to the run of mine (ROM) pad, waste dumps and TSF. This consists of access haul roads from the ROM to
Pakaka / Pamao of approximately 5,500 m, Mengu Hill to Pakaka of 6,100 m and approximately 2,000 m of Haul
75
road from Sessenge to the ROM. Other minor roads are required to and from the pits to the waste dumps and from
KCD and Kombokolo to the TSF.
The designs have the natural ground being excavated to a level where the base and crushed rock will be always
added. The sub-base is put in as required to give more even changes of grade. The clearing width will vary
according to the drainage requirements.
76
Figure 14-1 Pit Location Plan
77
14.2.1.7 Cut-off Grade Analysis
The economic cut-offs that were determined at US$600/oz are shown in below in Table 14-22.
Table 14-22 Pit Cut-off Grades
KCD
Mengu hill
Pakaka
Pamao
Sessenge
Kombokolo
Oxide
Trans
Primary
Oxide
Trans
Primary
Oxide
Trans
Primary
Oxide
Trans
Primary
Oxide
Trans
Primary
Oxide
Trans
Primary
Low Grade
Ore
High Grade
Ore
1.0
1.1
1.2
1.0
1.2
1.5
1.0
1.2
1.2
0.9
1.2
1.2
0.9
1.3
1.2
0.9
1.0
1.3
1.2
1.4
1.5
1.3
1.5
1.5
1.2
1.5
1.5
1.2
1.5
1.5
1.2
1.5
1.5
1.1
1.3
1.5
The high grade ore grade ore cut-off represents the lowest operational plant feed cut-off at which the mining
schedule will attempt to fill the plant. The low grade ore is intended as feed towards the end of the mine life when
mine and processing overhead costs are reduced in line with the complexity of the operation, typically in the stock
treatment scenario. The low grade ore also represents the cut-off for Mineral Reserves reporting.
Mineral Resources contained within the final pit designs were evaluated against these cut-off grades to produce the
Open Pit Probable Mineral Reserves.
14.2.1.8 Potential Dilution and Mining Losses
There was no further mining dilution or ore loss applied in evaluation of the Mineral Reserves. Both these factors
had already been taken into account in creation of the Mineral Resource models.
14.2.1.9 Sensitivity of Mineral Reserves to Variances in Modifying Factors
The robustness of the Mineral Reserves as stated in this report, have been quantified by observation of various
assessments and are discussed below:
Previous Study Optimisation Sensitivities
Sensitivity optimisation runs were carried out as part of the 2007 Feasibility Study which included the deposits in
this study. Although the Mineral Resource models have since been updated and the input parameters revised
following the completion of that study, the fundamentals of the sensitivities remain applicable and as such were not
repeated in the Feasibility Study. Key sensitivities included in these optimisation runs included:
•
Metallurgical recoveries
•
Operating costs
•
Wall angles
It is notable that the selected optimal pits in the optimisation runs in this Feasibility Study fall well within the
bounds of those evaluated in the 2007 Feasibility Study.
78
Analysis and Pit Selection in Nested Optimisation Runs
The results of the open pit optimisation process and shell selection itself in this study serves as a confirmation of the
robustness of the Mineral Reserves stated. Where the optimisations were carried out at a base revenue price of
US$600/oz, the selected shells used as guides for the pit designs were significantly smaller than the revenue factor 1
shells. In other words the selected shells correspond to gold prices well below the base US$600/oz shells. This is as
a result of the value driven shell selection process which ensured that only the highest value shells are included in
the study.
Sensitivity Analyses of Project Economics
The final confirmation of the robustness of the stated Mineral Reserves is contained in the sensitivity analyses as
reported in Table 16-2 of this report. Here the economic viability of the project using the stated Mineral Reserves is
confirmed across an extensive range of sensitivities
79
80
.
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9
9
7
9
3
10
Shell
Waste
Tonnes
69,113,278 57,027,081
26,174,237 21,618,787
14,236,416 10,039,006
10,441,169
8,205,678
3,055,797
2,628,936
5,238,844
4,201,543
128,259,741 103,721,031
Total
Tonnes
4.7
4.8
2.4
3.7
6.2
4.1
4.2
Strip
Ratio
Rcovered
Ounces
Mining
Cost
5660
5760
5735
5765
5820
5810
2,496,889
1,107,540
1,888,245
783,289
77,655
211,368
6,564,986
Ore
Tonnes
Royalty
Rec Oz
3.57 244,923
2.66 83,974
3.37 182,468
2.82 64,063
2.09
4,989
2.27 14,006
3.21 594,424
Au g/t
Oxide
Revenue
Undiscounted
Cash Flow
Discounted
Best
Discounted
Worst
1,949,886
284,069
1,126,157
340,242
112,429
233,349
4,046,132
Transitional
Rec
Oz
Ore
Tonnes
3.87 218,746
7,639,422
3.57 26,617
3,163,841
4.05 130,898
1,183,008
3.28 27,269
1,111,960
2.51
8,718
236,776
2.45 15,640
592,584
3.73 427,888 13,927,591
Au
g/t
Primary
Rec
Oz
306
397
273
357
414
459
324
Cost
per Ounce
4.61
949,559
3.50
291,103
4.63
126,156
3.09
89,167
4.33
24,570
2.75
44,565
4.15 1,525,120
Au
g/t
847,917,094 415,866,341 324,534,746 313,089,100
241,010,386
81,610,942 68,554,984 64,971,414
263,707,908 143,683,292 112,500,123 110,863,613
108,296,672
43,927,976 38,589,729 37,910,452
22,965,861
7,121,752
5,779,307
5,779,307
44,525,474
10,436,869
9,262,482
8,998,661
1,528,423,395 702,647,172 559,221,371 541,612,547
Ore
Tonnes
260,893,279 23,835,306
98,791,113 6,774,903
92,233,339 7,412,940
47,492,385 3,044,265
9,312,190
645,580
22,326,907 1,251,630
531,049,213 42,964,624
Processing
Cost
Note — Discounted best and discounted worst cashflows have been calculated at a high level using internal Whittle processes with an input of a 10% discount rate. The resulting ’discounted’ cashflows are considered to be
indicative only.
9
9
7
9
3
10
Base
RL
4.27 1,413,228 147,322,168
3.30
401,693 53,833,427
3.91
439,523 20,378,337
3.03
180,499 13,832,046
3.44
38,277
5,886,339
2.59
74,211 10,510,069
3.83 2,547,431 251,762,386
Shell
12,086,197
4,555,449
4,197,410
2,235,491
426,861
1,037,302
24,538,710
Processed
Tonnes Au g/t
..........................
..........................
..........................
..........................
..........................
..........................
..........................
5660
5760
5735
5765
5820
5810
Base
RL
KCD . . . . . . . . . . . . . . . . . . . .
Pakaka . . . . . . . . . . . . . . . . . .
Mengu Hill . . . . . . . . . . . . . . .
Sessenge . . . . . . . . . . . . . . . . .
Kombokolo . . . . . . . . . . . . . . .
Pamao . . . . . . . . . . . . . . . . . . .
TOTAL. . . . . . . . . . . . . . . . . .
Deposit
KCD . . . .
Pakaka . . .
Mengu Hill
Sessenge . .
Kombokolo
Pamao. . . .
TOTAL . .
Deposit
Table 14-23 Indicated Mineral Resource — Selected Optimisation Shells Evaluated at US$600/oz
14.2.2
Underground Mineral Reserves
14.2.2.1 Mineral Reserve Summary
The total underground Probable Mineral Reserves within the Kibali Gold Project based on the designs completed
for the Feasibility Study is 11.6 Mt at 6.2 g/t for 2,307 koz. These Mineral Reserves are contained within the
November 2008 Indicated Mineral Resources of the Kibali Gold Project.
Table 14-24 Underground Mineral Reserve Summary
Mineral Reserve — Kibali
Underground
Lode
Tonnage
(Mt)
Grade
(g/t)
Contained
Gold (koz.)
11.6
0.00
11.6
6.2
0.0
6.2
2,307
0
2,307
Underground Probable Mineral Reserve. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Underground Proven Mineral Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Underground Total Mineral Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Mineral Reserves in Table 14-24 have been estimated by Paul Kerr, BSc (Mining Engineering)
MAusIMM. Paul Kerr is an employee of SRK Consulting Pty Ltd and is independent of Kibali Goldmines.
14.2.2.2 Mineral Reserve Calculation Methodology
The calculation of Underground Mineral Reserves is based on the following key inputs:
•
cut-off grade criteria using 1st pass assumed operating costs for mining;
•
estimated processing and general and administration costs (refer Table 14-18);
•
predicted metallurgical recovery by material type by deposit (refer Table 15-3);
•
final stope and development designs;
•
final open pit designs;
•
final estimated mining costs; and
•
modifying factors for mining recovery, and mining unplanned dilution.
14.2.2.3 1st Pass Cut-off Grade Determination
Table 14-25 lists the input parameters and calculation of the 1st pass cut-off grade for Mineral Reserve
determination. In addition to the mining cut off grade, an incremental cut off grade (excluding mining costs)
was estimated to classify mineralised material generated from essential development in mineralised rock.
Table 14-25 1st Pass Underground Cut-off Grade Calculation
Description
Revenue parameters Gold price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Process recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Royalty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost parameters
Long hole stoping cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Paste fill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Process and administration cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total unit operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mining cut off grade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Incremental cut off grade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Units
Value
US$/oz
%
US$/oz
600.00
91.3
15.00
US$/t
US$/t
US$/t
US$/t
g/t
g/t
30.00
13.82
21.50
65.32
3.8
1.3
The mining costs estimated allow for longhole stoping using paste fill. The 1st pass cut-off grade is conservative due
to the gold price value used and the subsequently calculated lower unit operating costs.
81
14.2.2.4 Underground Mineral Resource
The assessment of underground Mineral Reserves considered only Indicated Mineral Resources. No Measured
Mineral Resources exist. The Mineral Reserve calculation focussed on only significant lodes with reasonable
geological and grade continuity. Mineral Resources exist outside the assessment which have potential for extraction
by underground methods.
It should be noted that the Mineral Resources used as the basis for underground Mineral Reserve determination
(listed in Table 14-26) include Mineral Resources that extend well into the open pit mining area of KCD. The
inclusion of these Mineral Resources in the assessment is essential for adequate determination of the underground
and open pit mining interface.
Table 14-26 Mineral Resource Inventory
Tonnage
Grade
Contained
(Mt)
(g/t)
Gold (koz.)
Lode
5100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5200 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5500 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5800 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9102 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9202 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal ACSA . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9201 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal ACSA Halo (VAG) . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
...................
...................
...................
...................
...................
...................
...................
...................
...................
...................
...................
2.74
0.53
1.64
0.80
2.71
7.21
15.63
2.14
3.88
6.02
21.65
6.2
4.7
4.9
5.3
7.5
6.4
6.3
2.1
1.7
1.9
5.1
542
80
258
137
657
1,490
3,165
146
216
362
3,526
14.2.2.5 Planned Recovery
Development and stope designs were generated for the selected mining method using the cut-off grade estimate to
target material for inclusion. Practical stope shapes were digitised around the main Acsa mineralisation for each
lode in Table 14-26. The stope shapes were created on the basis of the proposed mining method. Where appropriate,
the stopes shapes were trimmed to the Acsa hanging wall and footwall boundaries.
Following the design process, the Mineral Resource which is able to be recovered by the selected underground
mining method after due consideration of constraints on planned recovery was determined by reporting tonnes and
grade of stope wireframes against the Mineral Resource block model, and adding the tonnes and grade of
development wireframes against the Mineral Resource block model. Only development material above a 1.3 g/t
incremental cut-off grade was included. The resultant Mineral Resource is summarized in Table 14-27.
Table 14-27 Underground Mineral Resource Inventory with Planned Recovery Considerations Applied
Mineral Resources (with Planned
Recovery Constraints Applied)
Tonnage
Grade
Contained
(Mt)
(g/t)
Gold (koz.)
Lode
ACSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ACSA Halo (VAG) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.82
0.84
10.65
7.2
1.7
6.8
2,270
47
2,317
14.2.2.6 Planned Dilution
Allowances for planned dilution were included on a case by case basis according to final stope and development
designs.
The majority of the dilution allowances arise from the stope footwall geometries necessary to achieve practical
extraction. Stope troughs were formed generally outside the ACSA boundary in low grade halo or waste regions. An
example of planned dilution is illustrated in Figure 14-2 where it can be seen that Acsa Halo and waste material are
incorporated in the stope trough in order to maximise the recovery of the high grade Acsa material. Table 14-28 lists
the result of this Mineral Resource modification step.
82
Figure 14-2 Example of Planned Dilution Allowance
Table 14-28 Underground Mineral Resource Inventory with Planned Dilution Considerations
Applied
Underground Mineral Resource
Inventory (with Planned Dilution
Considerations Applied)
Tonnage
Grade
Contained
(Mt)
(g/t)
Gold (koz.)
Lode
ACSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ACSA Halo (VAG) . . . . . . . . . . . . . . . . . . . . . . . . . .
Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
...................
...................
...................
...................
9.82
0.84
0.47
11.13
7.19
1.75
0.01
6.48
2,270.1
47.1
0.2
2,317.4
14.2.2.7 Unplanned Recovery
Unplanned loss factors account for the following situations:
•
stope under-break and unrecoverable bridging;
•
unrecovered stocks due to flat dipping footwalls and stope draw points;
•
misclassified ore hauled to waste dumps; and
•
over diluted ore (to the extent of unrecoverability) due to stope wall failures of backfill or waste.
Ore loss factors were applied based on the stoping methods used in individual lodes. The loss factors applied to each
of these scenarios is summarised in Table 14-29. A nominal 2% ore loss was used as a baseline and applied to
primary stopes. Loss factors were increased for secondary and tertiary stopes to account for the influence of the
paste fill in adjacent stopes.
83
A substantially higher loss factor (20%) was applied to up-hole retreat stopes located in the upper lodes. This
accounts for potential stope stability problems resulting in the need to increase pillars size or frequency or, in worst
case scenarios, stope abandonment.
Table 14-30 lists the results of the application of these factors.
Table 14-29 Underground Unplanned Recovery Factors
Lode
Stope type
Direction
5100
Primary
Secondary
Avoca
Up hole retreat
Bench stope
Primary
Secondary
Avoca
Up hole retreat
Bench stope
Primary
Secondary
Avoca
Up hole retreat
Bench stope
Primary
Secondary
Tertiary
Primary
Secondary
Tertiary
Primary
Secondary
Tertiary
Primary
Secondary
Tertiary
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Transverse
Transverse
Transverse
Transverse
Transverse
Transverse
Longitudinal
Longitudinal
Longitudinal
5200
5500
5800
910
920
Ore Loss
2%
3%
5%
20%
3%
2%
3%
5%
20%
3%
2%
3%
5%
20%
3%
2%
3%
5%
2%
3%
5%
2%
2%
5%
2%
3%
5%
Table 14-30 Underground Mineral Resource Inventory with Unplanned Recovery Considerations Applied
Mineral Resource Inventory (with
Unplanned Recovery
Considerations Applied)
Tonnage
(Mt)
Lode
UG Mineral Resource (with planned recovery and planned dilution
allowances) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mineral Resource loss (when unplanned recovery allowances are applied) . . . .
UG Mineral Resource (resultant Mineral Resource inventory after planned
recovery, planned dilution and unplanned recovery allowances are applied) . .
Overall unplanned loss factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Grade
(g/t)
Contained
Gold (koz.)
10.65
(0.36)
6.8
6.7
2,317
(78)
10.29
3.4%
6.8
2,240
14.2.2.8 Unplanned Dilution
Unplanned dilution was modelled for two identified sources — surrounding hangingwall / footwall dilution and
backfill dilution.
Hangingwall and Footwall Dilution
Stope dilution from the hangingwall and footwall was modelled using a technique of stope shifting to create an
envelope from which dilution factors and dilution grade could be determined.
84
The stope wireframes were shifted back and forward along x, y and z axes a distance equivalent to the over-break
envelope. After each shift, sub-cells were created within the wireframe using the grade of intersected or captured
blocks in the Mineral Resource model. After the shifting process was completed sub-cells for each stope were
reported for tonnes and grade and compared against the un-shifted stope inventory. Tonnage and gold increments
were used to calculate dilution factors and grade.
The distance of each shift was based on geotechnical recommendations. Where stope blast holes are drilled normal
to the plane of the stope wall, an over-break dilution envelope of 0.5 m was used. In the case of holes drilled parallel
to the stope wall, an over-break dilution envelope of 0.3 m was used. With the exception of the — z direction (into
the footwall), a dilution envelope of 0.5 m was used in each direction of shift. Because blast holes are likely to be
drilled parallel to the footwall, a dilution envelope 0.3 m in the — z direction was used. A schematic of the dilution
envelope created from the stope shifting technique is illustrated in Figure 14-3.
Figure 14-3 Rock Dilution Envelope
It should be noted that no dilution from in-situ adjacent stopes was factored into the Mineral Reserve. The net effect
was considered to be negligible. For similar reasons, no dilution was modelled for over-break occurring in
development ore drives.
The total dilution due to waste rock is estimated to be 0.55 Mt at a grade of 3.8 g/t.
Backfill Dilution
Stope dilution from paste fill was modelled on an area basis. A 0.5 m fall off from exposed faces was assumed and a
2.1 t/m3 in-situ fill density was applied to the volume. No grade was assigned to the paste.
Examples of the technique used to estimate paste fill for secondary and tertiary transverse stopes is given in Figure
14-4.
A nominal allowance for waste rock fill dilution was also incorporated into the Mineral Reserve estimate for the
Avoca and up-hole retreat stopes above the Avoca in the 5100 and 5500 lodes. A 10% allowance was assigned to the
Avoca stopes to account for waste rock being removed during the mucking process. A high value was used due to
the loader mucking directly against the fill.
A 5% allowance was made in the up-hole retreat stopes to account for the rock fill removed as a result of the loader
mucking over the top of the fill.
Backfill dilution factors which allow for paste and rock fill were applied to the Mineral Reserve estimate based on
the stoping methods used in individual lodes. The dilution factors applied to each of these scenarios is summarised
in Table 14-31.
The total unplanned dilution estimated from backfill sources is 0.50 Mt at zero grade.
85
86
Figure 14-4 Example of Estimate for Paste Fill Dilution
Table 14-31 Unplanned Dilution Allowances
Lode
Stope Type
Direction
5100
Primary
Secondary
Avoca
Up-hole retreat
Bench stope
Primary
Secondary
Avoca
Up-hole retreat
Bench stope
Primary
Secondary
Avoca
Up-hole retreat
Bench stope
Primary
Secondary
Tertiary
Primary
Secondary
Tertiary
Primary
Secondary
Tertiary
Primary
Secondary
Tertiary
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Longitudinal
Transverse
Transverse
Transverse
Transverse
Transverse
Transverse
Longitudinal
Longitudinal
Longitudinal
5200
5500
5800
910
920
Paste Fill
Dilultion
Rock Fill
Dilution
Total Fill
Dilution
0.0%
2.7%
2.3%
2.3%
1.4%
0.0%
2.7%
2.3%
2.3%
1.4%
0.0%
2.7%
2.3%
2.3%
1.4%
0.0%
2.7%
2.3%
2.3%
1.7%
5.9%
2.3%
1.7%
5.9%
0.0%
2.7%
2.3%
0%
0%
10%
5%
0%
0%
0%
10%
5%
0%
0%
0%
10%
5%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0.0%
2.7%
12.3%
7.3%
1.4%
0.0%
2.7%
12.3%
7.3%
1.4%
0.0%
2.7%
12.3%
7.3%
1.4%
0.0%
2.7%
2.3%
2.3%
1.7%
5.9%
2.3%
1.7%
5.9%
0.0%
2.7%
2.3%
14.2.2.9 Final Cut-off Grade Determination
Upon completion of final underground cost estimations and mill feed scheduling, the cut-off grade analysis was
revised (refer Table 14-32) with the final cut-off grades used to report the underground Mineral Reserves listed in
Table 14-33.
Table 14-32 Final Underground Cut-off Grade Calculation
Description
Revenue parameters
Gold price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Process recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Royalty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost parameters
Mining cost (including backfill) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Process and administration cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total unit operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mining cut off grade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Incremental cut off grade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Units
Value
US$/oz
%
US$/oz
600.00
91.3
15.00
US$/t
US$/t
US$/t
g/t
g/t
29.33
19.15
48.48
2.8
1.1
14.2.2.10 Underground Mineral Reserve Estimate
The conversion of Underground Mineral Reserve estimate based on the dilution and loss factors described is
summarised in Table 14-33 The effects of the Mineral Reserve estimation process on tonnes and contained ounces
is also illustrated in Figure 14-5.
87
Table 14-33 Summary of Conversion of Underground Mineral Resources to Mineral Reserves
Tonnage
(Mt)
Lode
Underground Mineral Resource . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Planned mining loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mineral Resource Inventory (after planned mining loss allowance) . . . . . . . . . .
Planned waste. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mineral Resource Inventory (after planned mining loss and planned mining
dilution allowance) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ore loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Planned waste loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Waste rock dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Backfill dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Underground Mineral Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Grade
(g/t)
Contained
Gold (koz.)
21.65
(11.00)
10.65
0.47
5.1
3.4
6.8
0.0
3,528
(1,210)
2,317
0.2
11.13
(0.36)
(0.01)
0.55
0.33
11.63
6.5
6.7
0.0
3.8
0.0
6.2
2,317
(78)
0
67
0
2,307
14.2.2.11 Sensitivity of Mineral Reserves to Variances in Modifying Factors
Major variances in factors such as the gold price, gold recovery and operating costs can result in modifications to
the mining cut off grade. For example, a 10% decrease of the contained gold in the Underground Mineral Reserves
is estimated to occur if the mining cut off grade increases from 2.8 to 4.1 g/t. Variations in the following modifying
factors would result in a cut off grade change to 4.1 g/t:
•
30% reduction in the gold price;
•
30% reduction in the process recovery; or
•
45% increase in the total unit operating costs
Smaller variations to multiple factors could also occur which, when combined, could result in an overall larger
variation to the cut off grade and the Underground Mineral Reserves. Variations to modifying factors could also
result in a lower cut off grade and additional material classified as underground Mineral Reserves. To quantify this,
stope shapes would need to be redesigned and all other modifying factors applied.
Variations to Mineral Reserve estimates and attributed Mineral Reserves as a result of environmental, permitting,
political, legal, title, taxation, social-economic, marketing or other factors may or may not occur, however at a high
level and without definition of the specific impact, the magnitude of the potential variation is unknown.
88
89
Figure 14-5 Changes in Tonnage and Contained Metal During conversion from Underground Mineral
Resource to Underground Mineral Reserve
15.0
MINERAL PROCESSING & METALLURGICAL TESTING
Mineral Processing and Metallurgical testing was last updated for the Feasibility Study for the Kibali Gold Project.
These results were reported in the Adams et al Feasibility Study reported in Amended and Restated Technical
Report, April 2009. Section 15 is reproduced in its entirety from that report.
15.1
Introduction
A programme of testwork has been completed previously in 2007 and updated in 2008 to determine the
metallurgical response of the ore. The main objectives of the testwork were:
•
complete a definitive feasibility level programme on the oxide and primary ore sources to provide sufficient
data for plant design and cost estimates;
•
complete a definitive feasibility level programme on the primary ore sources to provide sufficient data for plant
design and cost estimates; and
•
complete scoping level oxidation testwork to provide comparative data for future consideration.
15.2
Metallurgical Samples
The locations of the drill holes for metallurgical testwork samples were selected by the Kibali Gold Project site
geological and mining staff, the geological consultants (Cube) and the engineer (Lycopodium). The samples were
selected to intersect all the major rock types and distributed to represent the anticipated plant gold and sulphur grade
as best possible. It should be noted that sulphur values were based on visual assessment. No arsenic values were
available for consideration in the sample selection.
The composition of the hole composites was determined by the decision to target, as close as possible, the expected
orebody grades for primary and oxide ores respectively. No blending of the primary and oxide material was done
due to the decision to ultimately campaign treat the material separately.
It was originally intended that primary material from Chauffeur, Karagba, Pakaka North and Pakaka South would
each be subjected to the full suite of tests in the programme. The orebody at Pakaka presents a thin cross-section that
makes it difficult to source the large volume of sample required to produce sufficient flotation concentrate
quantities. The master composite for the primary material was thus a composite of material from Karagba,
Chauffeur and Durba .. Sufficient material from Pakaka was available to perform process confirmation, variability
and limited process optimisation testwork.
Two major sample selection reviews were conducted as the metallurgical and comminution testwork results became
available. Based on these reviews, additional samples were sourced from areas where the representivity was
questioned.
Subsequent to the initial test programme, additional samples were sourced from the underground sections to
determine process amenability and potential recovery when subjected to the flowsheet selected based on the
original testwork programme. The samples were selected from the 9100 and 9200 mineralised zones from Sessenge
Deeps. These were tested for both oxide and primary process routes and also included confirmatory engineering
design and comminution testwork.
15.3
Testwork Regime
15.3.1 Head Assays
•
The Moto hole composites were selectively blended to produce the oxide, primary and underground master
composite samples. These were subjected to a complete head assay, including elements of interest to the
cyanidation process and to environmental considerations.
•
Gold head grade for the oxide master composite was 2.90 g/t, for the primary master composite was 4.02 g/t and
for the underground master composite 8.84 g/t.
•
Silver content is low and is not expected to influence carbon loadings or elution performance significantly.
Higher silver values are however associated with high grade underground samples.
•
Mercury levels are low, but appropriate ventilation is still recommended in the gold room. The values recorded
in the underground samples are slightly higher at around 280 ppb compared to 120 ppb in the open pit areas.
•
Antimony levels are low and are not expected to influence recoveries.
90
•
Arsenic levels are moderate and may contribute to low leach recoveries and / or potentially result in soluble
arsenic in the final tailings.
•
Organic carbon levels are low indicating that the preg-robbing potential should be low.
•
Base metal concentrations are low and should not influence carbon loadings.
•
Telluride levels are low and are not expected to adversely influence gold leaching kinetics or recovery.
91
92
Gangue
Minerals
Au Particles
Detected
Six
occurrences,
measuring 8, 9,
10, 30 ⫻ 15,
20 ⫻ 2 and
30␮ms
Haematite Ti
Oxides Pyrite
Magnetite
Goethite
(0.1) mm
Quartz - Major
Kaolin - Minor
Muscovite - Minor
Chlorite - Accessory
None Detected
Haematite
Magnetite Ti
Oxides Mn
Oxides
Accessory
Minerals
Trace Minerals
Goethite
Major Minerals
+0.1 mm
Oxide Master Composite Sample
Arsenopyrite
Haematite
Pyrrhotite
Ilmenite
Chalcopyrite
30␮m particle
consisting of a
50:50 gold:
pyrite
intergrowth
Pyrite
Magnetite
(0.1) mm
Quartz - Major
Siderite - (Major)
Muscovite - (Minor)
Chlorite - Accessory
Ankerite - Accessory
Plagioclase - Accessory
Arsenopyrite
Haematite
Pyrrhotite
Ilmenite
Chalcopyrite
20, 22, 5, 4, 20,
3, 5 and 5␮m
gold particles
mainly
associated with
pyrite
Pyrite
Magnetite
+0.1 mm
Primary Master Composite Sample
None Detected
Pyrite
Haematite
Rutile
Magnetite
(0.1) mm
Quartz - Major
Siderite - (Minor)
Plagioclase - (Minor)
Mica - (Accessory)
None Detected
Pyrite
Haematite
Magnetite
+0.1 mm
Underground Flotation Tail
Sample
Table 15-1 Mineralogy Summary
7 occurrences
detected, free
gold of 25, 50
and 40␮m and
gold particles
associated with
pyrite of 25, 5,
7 and 6␮m
Arsenopyrite
Magnetite
Fahlore Gold
Pyrite
(0.1) mm
Quartz - Major
Siderite - (Minor)
Plagioclase - (Minor)
Mica - (Accessory)
14 occurrences
detected,
ranging from 3
- 90␮m gold
particles all
associated with
pyrite
Arsenopyrite
Magnetite
Pyrrhotite
Ilmenite Gold
Pyrite
+0.1 mm
Underground Flotation Concentrate
Sample
15.3.2 Comminution
The 85th percentile ore characteristics were calculated for each of the three main ore sources, namely KCD, Pakaka
and Mengu Hill based on comminution testwork carried out. These 85th percentile values were then weighted
according to the contributions of each of these ore sources in the mill feed blend. This process was followed for the
oxide and primary ores. The following table summarises the 85th percentile comminution design criteria selected.
Table 15-2 Comminution Parameters
Production Parameters
SAG Mill Feed Size (F80). . . . . . . . . .
SAG Mill Product Size (P80) . . . . . . .
Ore Parameters
CWi . . . . . . . . . . . . . . . . . . . . . . . . .
UCS . . . . . . . . . . . . . . . . . . . . . . . . .
RWI . . . . . . . . . . . . . . . . . . . . . . . . .
P80 . . . . . . . . . . . . . . . . . . . . . . . . .
BWI . . . . . . . . . . . . . . . . . . . . . . . . .
P80 . . . . . . . . . . . . . . . . . . . . . . . . .
Ai . . . . . . . . . . . . . . . . . . . . . . . . . . .
RWi:BWi . . . . . . . . . . . . . . . . . . . . . .
JK Drop weight
JK – A . . . . . . . . . . . . . . . . . . . . . . .
JK – b . . . . . . . . . . . . . . . . . . . . . . . .
JK – A ⫻ b . . . . . . . . . . . . . . . . . . . .
Ta . . . . . . . . . . . . . . . . . . . . . . . . . . .
DWi . . . . . . . . . . . . . . . . . . . . . . . . .
Ore SG . . . . . . . . . . . . . . . . . . . . .
Unit
Primary
Oxide
.................................
.................................
mm
␮m
160
106
160
106
.................................
.................................
.................................
.................................
.................................
.................................
.................................
.................................
kWh/t
MPa
kWh/t
␮m
kWh/t
␮m
8.9
87
13.1
807
8.2
75
0.37
1.61
9.8
524
7.2
73
0.19
1.37
68.4
0.69
47.2
0.46
5.92
3.13
4.46
2.89
.................................
.................................
.................................
.................................
.................................
.................................
kWh/t
15.3.3 Oxide Ore Leach Testwork
Testwork on the oxide master composite showed the following:
•
Leach tests were completed at grind sizes of 80% passing 150, 125, 106 and 75␮m. The results showed
optimum revenue gain at grind conditions of 80% passing 106␮m for the oxide.
•
The gravity-leach testwork results indicated that additional gold can be recovered via gravity and intensive
leaching at all grind sizes. The results were then compared to the grind size evaluation without gravity. The
comparison indicated that there is a benefit in including the gravity circuit and that the optimal benefit is still
achieved at a grind size of 80% passing 106␮m.
•
A pre-oxidation stage followed by leaching at an initial cyanide concentration of 0.05% was necessary for
optimal leach extraction.
•
Testwork on oxide variability samples showed that gravity recovery varied between 3% and 62%, with an average
value of 18%. The total extraction (gravity plus leach) varied between 42% and 98%, with an average of 83%.
As a result of variable recoveries, selected samples were subjected to the primary processing route for comparison.
Sample availability dictated which samples could be retested. It was evident that significant improvements could be
realised by subjecting problematic oxides / transition ores to flotation and leaching of the flotation tail.
It is recommended to perform basic flotation and bottle roll cyanidation leaches on samples from each mining
bench as part of the grade control exercise. Once mining has progressed past the transition zone this practice will no
longer be required.
In order to have a better understanding of the slow leaching characteristics and poor gold recoveries from certain
oxide samples, additional diagnostic testwork was conducted at the Australian Commonwealth Scientific and
Industrial Research Organisation (CSIRO). Two samples, one with ‘good’ and one with ‘poor’ recovery were
investigated and compared. The investigation provided the following additional information regarding the
mineralisation and leach responses for both samples:
•
Elemental analysis found a strong correlation of gold with arsenic, but not with sulphur across size fractions.
•
Goethite was the dominant mineral in the -38␮m fraction, quartz and muscovite in the +38 -75␮m fraction and
iron oxide in the +75␮m fraction.
93
•
Most of the gold was associated and locked within the iron oxides in the coarse fraction for the ‘poor’ recovery
sample. Diagnostic leach results indicated a small improvement in recovery at a grind size of 80% passing
50␮m.
•
Pre-oxidation was confirmed to increase the leach kinetics, but neither intensive cyanidation nor acid treatment
facilitated significant additional recoveries.
Oxide Ore Ancillary Testing
Viscosity measurements of oxide slurries indicated that there should be no issues with slurry viscosities at slurry
densities up to 50% solids.
The carbon kinetic constants were normal and no difficulty is indicated in reaching the chosen target loadings.
Thickening testwork indicated optimal solids loading of 0.8 t/m2h at a flocculent dose rate of 20 g/t to achieve an
underflow density of 60% solids.
15.3.4 Primary Ore Flotation Testwork
Flotation tests were completed at grind sizes of 80% passing 150, 125, 106 and 75␮m. The results indicated
optimum revenue gain at grind conditions of 80% passing 106␮m for the primary ore. To ensure optimum gold
extraction by flotation for the purpose of the study, all further flotation testwork was conducted at a P80 grind of
106␮m.
An assessment of gravity recoverable gold was made to decide whether there is a significant benefit with the
inclusion of a gravity circuit. Results indicated that at grinds below 150␮m the inclusion of a gravity recovery stage
increased overall recovery.
Flotation in site water, sourced from the Kibali River, did not indicate any problems. The effect of mine dewatering
water was however not tested as part of the current study.
A pilot flotation run on approximately 1,200kg of the primary master composite was conducted to generate
concentrate for leach tests. Results showed flotation gold recovery to concentrate of between 97% and 98%.
15.3.5 Primary Concentrate Leach Testwork
Leach testwork on the primary concentrates showed the following:
•
Approximately 60 kWh/t of power was required to reduce the flotation concentrate particle size to 80% passing
T12␮m.
•
For the master composite sample, grinding the concentrate to less than 15␮m increased leach extraction to over
80%.
•
A leach residence time of 48 hours and an initial cyanide concentration of 0.25% were found to be optimal for
the flotation concentrate.
Cyanide consumption was low when compared to most ultra fine grind / leach applications.
15.3.6 Oxidation Process Testwork
Scoping level testwork was carried out on primary concentrates to determine the effect of oxidative processes:
•
Pressure oxidation resulted in an overall recovery from concentrate of approximately 96%.
•
Roasting resulted in an overall recovery from concentrate of approximately 94%.
•
Biological oxidation testwork was aborted due to laboratory problems.
•
Albion process testwork indicated overall recoveries from concentrate in excess of 98%. Partial oxidation had
the following results, 0% oxidation = 82% recovery, 14% oxidation = 84% recovery, 39% oxidation = 90%
recovery, 55% oxidation = 90% recovery and 84% oxidation = 98% recovery. The oxidation was associated
with high limestone consumptions to ensure that the pH is maintained above 4. This is required to ensure
goethite is the favoured iron precipitate during the “alkaline” Albion leach process.
94
15.3.7 Variability Testwork
The variability samples were selected to represent a wide range of gold grades and also to represent the various ore
bodies spatially and at varying depth. The minimum gold head grade for the variability samples was 0.64 g/t and the
maximum 30.45 g/t. The average grade was 4.88 g/t for the open pit ore.
The sulphide sulphur values ranged from less than 0.02% to a maximum value of 6.6%. It was again noted that the
geologically logged oxidation state and the sulphide sulphur content of the samples have a poor correlation. Sulphur
analysis was not considered to be a good indicator for determination of the optimal process route for the ore.
The minimum arsenic head grade for the variability samples was 18 ppm and the maximum 13,290 ppm. The
average grade was 1,508 ppm. The arsenic content varies significantly between the various pits. High arsenic
samples were specifically included to establish the response of this ore to the chosen processing route. High arsenic
values generally resulted in high residual gold values, but some low arsenic values also resulted in poor extraction.
The overall correlation between arsenic content and residual gold grade is poor.
The optimal process route and operating conditions were selected based on the results of the oxide master
composite and primary master composite samples respectively.
Oxide Ore Variability Testing
The total gold extraction (gravity plus leach) from the oxide variability samples varied between 42% and 98%, with
an average of 83%. It should be noted that the two Mengu Hill ‘oxide samples’ proved to be transition samples upon
investigation into the poor dissolutions. The variability in these extraction numbers was considered to be
unacceptably high and warranted further investigation.
Based on the variability of the results, Cube was tasked to investigate factors like core recovery, spatial / domain
location and transition ore content in the oxide ore. The conclusions can be summarised as follows:
•
Certain oxide samples were found to be transition ore. However, even when these were excluded there is still a
high degree of variability.
•
There was no spatial or domain relationship that could explain the variability in extraction.
•
Some of the holes had low core recovery. However, there was no clear relationship between core recovery and
metallurgical extraction.
•
The Moto ores displayed greater tropical weathering than typical West African laterites. This suggests that the
oxide and transition profiles in the weathered ore zones will be intermixed, with the level of intermixing
dependent on the intensity of silica alteration in the original ACSA ore zones.
The cause for the underlying variability within the oxides was however not conclusive.
Primary Ore Variability Testing
•
Extraction results varied between 55% and 89% when primary ores were treated via the gravity / flotation /
concentrate fine grind / concentrate leach route.
•
It was notable that certain samples showed a significant benefit when the flotation tail was leached, but this must
be evaluated on a case by case basis.
•
Evaluation of the variability results is complex as the reasons for low extraction results were not consistent
between the various samples based on spatial distribution, gold grade, sulphur grade or arsenic grade.
Underground Ore Variability Testing
Underground samples were subjected to the oxide and primary process routes to establish likely recovery levels at
the selected operating parameters. Seven samples were tested individually and a master composite sample was also
prepared from the seven individual samples.
•
Extractions ranged from 71% to 81% when the oxide process route was followed, with an average of 76%.
•
Extractions ranged from 85% to 94% when the primary process route was followed, with an average of 90%.
15.4
Metallurgical Recoveries
Samples were delineated based on spatial location. Only samples which did not come within a 5 m buffer zone of
the base of the oxidised layer (BOX) were classed as true oxides. Only samples which did not come within a 5 m
95
buffer zone of the top of the fresh rock (BOW) zone were classed as true primary material. Solution losses to tailings
of 0.012 ppm Au at 40% solids for the oxide, transition and the primary ore were adopted. This equates to
approximately 0.6% overall recovery reduction in each instance.
The recovery of each of the variability samples was calculated as follows:
Table 15-3 Predicted Gold Recovery
Ore Source
KCD . . . . . . . . . . . . . . . . . . . . . . .
Pakaka . . . . . . . . . . . . . . . . . . . . .
Mengu Hill . . . . . . . . . . . . . . . . . .
Kombokolo . . . . . . . . . . . . . . . . . .
Pamao . . . . . . . . . . . . . . . . . . . . . .
Sessenge . . . . . . . . . . . . . . . . . . . .
Underground . . . . . . . . . . . . . . . . .
Oxide
Oxide process Route
% Recovery
Transition
Primary Process
Route Plus Tail
Leach
% Recovery
Primary
Primary Process
Route Plus Tail
Leach
% Recovery
85.5
88.7
N/A
95.6
90.86
90.3
N/A
90.1
81.7
89.3
95.9
85.0
75.9
N/A
83.9
81.7
71.6
74.6
85.0
80.6
91.3
...............
...............
...............
...............
...............
...............
...............
NOTE 2: Advice from geological consultant indicates limited transition ore for Pakaka and Pamao. Primary recoveries were used for transition
material predicted recovery.
NOTE 3:
15.5
No oxide samples sourced from Mengu Hill. All ore logged as oxide from this deposit is assumed to be treated as transition ore.
Process Plant and Services
Based on the physical characteristics of the ore, metallurgical testwork results and the proposed operating
philosophy, the following process plant flowsheet has been selected:
•
Single stage primary crushing fed by front end loader or direct truck tip for treatment of both oxide and primary
ores. Crusher product, nominal P80size of 160 mm, will be conveyed to a surge bin for direct transfer to mill
feed, with excess being placed on a dead stockpile.
•
Reclaim of crushed ore from the stockpile via apron feeders.
•
Single stage SAG milling of the ore in a closed circuit with hydro-cyclones. The mill will be 7.0 m (diameter) x
6.4m (effective grinding length) 5.5MW mill, to a P80 size of 106␮m with scats recycled to the surge bin.
•
Gravity gold recovery circuit incorporating a centrifugal concentrator and tabling of concentrates.
•
Eight leach/CIL tanks for multi-stage leaching of oxide or flotation tailings streams.
•
Flotation plant for primary and transitional ore to produce a gold concentrate. The flotation plant will consist of
conditioning, rougher flotation, scavenger flotation, and concentrate thickening.
•
Fine grinding of concentrate before leaching in the dedicated CIL circuit.
•
A dedicated 5 tank leach / CIL circuit for leaching of ground flotation concentrates, with one tank for preoxygenation.
•
Gold room activities comprising tabling of gravity concentrates, acid washing of carbon, an AARL elution
circuit with electrowinning and smelting of gravity and electrowinning products to produce dore bars.
•
Cyanide detoxification (product G50ppm) on oxide leach tailings and concentrate leach tailings via air / SO2
methodology.
•
Discharge to the tailings storage facility (TSF) after thickening.
•
Separation of process water streams into high-cyanide and low cyanide streams and allowance for
detoxification of TSF supernatant solutions to minimise any deleterious effects on flotation.
In general the design criteria for the process plant have been defined on the basis of an 85th percentile of the relevant
characteristic for ore types blended as per the mine schedule supplied by Moto.
Feed scheduling is based on 8,000 operating hours per annum for the plant and total throughput varies from 2.5Mtpa
to 2.9Mtpa depending on ore hardness.
96
Infrastructure and services required to be developed for the plant and site operations include:
•
Nominal 20MW Hydro-electric power station on the Nzoro River, 30km from site and associated 66kV
transmission line.
•
Supplemental and back-up diesel-fired power generation facilities.
•
Site roads, environmental control dams and event ponds.
•
Accommodation and messing facilities.
•
Water harvesting facilities at the nearby Kibali River.
15.6
Gold Production Forecast
The optimised mill feed schedule yields significant metal production in the early years of the operation as listed below:
Table 15-4 Gold Production Profile
Year
Gold Output (oz)
Year
Gold Output (oz)
1
397,955
2
432,338
9
284,629
3
525,812
10
217,896
4
513,060
11
175,948
5
552,474
12
135,643
13
117,144
6
430,700
14
92,370
7
391,673
15
81,159
8
325,362
16
94,474
Production forecasting is based on Mineral Reserves only — no Inferred Mineral Resources are included.
97
16.0
OTHER RELEVANT DATA AND INFORMATION
16.1
Independent Status of Authors
Cube is an Australian owned company providing geological and mining consulting services and software systems
to the resources and industrial sectors. The organisation is well resourced with an established office in Perth,
Western Australia and has undertaken work for a number of substantial international mining houses. Cube
Consulting comprises a team of technical professionals dedicated to providing excellence of service in their field of
expertise. Neither Cube nor the authors of this report have or have had previously any material interest in Moto or
related entities or interests. Cube’s relationship with Moto is solely a professional association between client and
independent consultant. The report has been prepared in return for fees based on agreed commercial rates and the
payment of these fees is in no way contingent on the results of this report.
16.2
Environmental Considerations
16.2.1 Environmental Legislation
The primary piece of legislation governing mining environmental issues in the DRC is the Mining Code. The
Mining Regulations, promulgated in terms of this Mining Code, are of particular relevance.
16.2.1.1 Financial Security Obligation
Articles 410 to 414 of the Mining Regulations set out the obligations in respect of a financial security which must be
provided in terms of Article 294 of the Mining Code. The financial security must provide for the rehabilitation of
the environment to the standard specified in the approved Environmental Adjustment Plan (EAP). The funds of the
financial security shall be made available to the State and managed for the purpose of rehabilitating the site.
Provision for the rehabilitation security will become effective from the third year of production. If the operation
were to become ISO 14001 compliant the financial security would be waived.
16.2.2 Environmental adjustment plan
Under the Mining Code mining operations which existed at the time the Mining Code came into force must be
covered by an EAP approved by the DRC Ministry of Mines. The purpose of the EAP is to give an overview of the
environmental condition of the areas covered by the relevant mining title under which such operations are
conducted and to describe any measures that have been or will be taken for the purpose of the protection of the
environment.
Kibali Goldmines has completed a full environmental baseline study, followed by a Plan for Attenuation and
Rehabiliation as required by the Mining Code. This has been submitted to the Ministry of Mines.
16.2.3 Decommission, Closure and Security for Rehabilitation Works
The Mining Code also requires the holder of a mining title to provide security guaranteeing the performance of its
environmental rehabilitation obligations under its EAP.
The Equator Principles and good international practice dictate that the operator must make provision for closure
and rehabilitation. The costs of ongoing rehabilitation of worked out or completed areas are to be provided for as
part of the overall project costs, and final closure costs will be estimated as part of the Equator Principles report. A
restoration and rehabilitation bond will be held against closure costs.
16.2.4 Ongoing Environmental Compliance
Kibali Goldmines recognises that the World Bank and its affiliated bodies have issued guidance on the
environmental standards that mine operators should aim to adhere to while conducting their operations. The
Group therefore intends to implement the Kibali Gold Project in a manner that is compliant with the environmental
guidelines set out in the World Bank Pollution Prevention and Abatement Handbook and supplements thereto, and
the IFC’s Performance Standards on Social and Environmental Sustainability (which have superseded the IFC
Safeguard Policies and which form the basis of the Equator Principles), and that reflects these standards and
policies, with any modifications as are appropriate for the Group’s circumstances.
98
16.2.5 Resettlement
It will be necessary to relocate in excess of 10,000 persons from the immediate project area to allow drilling and
project development to take place. The Group has begun negotiations with the affected communities and will be
putting plans in place for such relocations.
In addition, a number of smaller settlements within the zone of the Group’s proposed operations require relocation
and the Group will need to find suitable available land for subsistence farming for these settlements. The Group has
already carried out some of this resettlement and is working to develop plans for the other areas where resettlement
will be required.
The Group expects to comply with IFC guidelines in relation to these planned relocations and has budgeted
accordingly.
16.3
Economic Analysis
16.3.1 Assumptions
Physical information set out in the Mining and Metallurgical sections of this report, as well as financial information
set out in the Capital Cost Estimate and the Operating Cost Estimate sections of this report, form the basis of the
financial model.
In addition, the following financial and market related assumptions have been included in the Base Case financial
model:
•
gold price of US$750/ounce (no credit has been allowed for silver);
•
equity financing of 100 percent of the Kibali Gold Project;
•
royalties payable allowed at 2.5% of net sales revenue, deductable as an expense for taxation calculation
purposes;
•
corporate taxes at 30% are payable on assessable income, assumed paid in the year incurred;
•
tax losses carried forward for a maximum of 5 years;
•
depreciation and amortisation has been allowed as per provisions of the DRC mining Code 2002 and the DRC
Tax Code 1969. Key features are an accelerated rate of depreciation of 60% for Year 1 and an accelerated
amortisation rate for capital development;
•
no allowance has been made for closure costs — the large Inferred Mineral Resource base provides good
potential for extensions to the Feasibility Study mine life;
•
working capital, first fill and initial consumable stock values have not been returned at end of mine life; and
•
sunk costs of US$90.8M have been included in the analysis for the purposes of taxation calculations — sunk
costs do not feature directly in calculation of total capital expenditure for the Kibali Gold Project.
16.3.2 Base Case Financial Evaluation
The principal outcomes from the financial evaluation of the Feasibility Study, using Probable Mineral Reserves
only, are as follows:
Initial Capital Payback Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mine Life (total operation life post processing plant commissioning) . . . . . . . . . . . . . . . . . . . . . . .
3.1 years
16 years
Table 16-1 Kibali Gold Project Net After-Tax Cashflows (US$M)
Year
Cashflow
(1)
(438.0)
Year
Cashflow
1
134.6
2
127.0
9
93.7
10
60.5
3
160.9
11
52.4
4
159.4
12
43.2
5
188.2
13
34.6
6
121.8
14
17.6
7
119.7
15
14.3
8
112.8
16
32.4
16.3.3 Project Sensitivity Analysis
The sensitivity of the Kibali Gold Project to the variation of major high level inputs was assessed with the results
presented in Table 16-2.
99
100
OPEX . . . . . . . . .
CAPEX
⬚.........
($M) . . . . . . . . . .
UG Mined Grade . .
(g/t) . . . . . . . . . . .
OP Mined Grade . .
(g/t) . . . . . . . . . . .
Gold Price . . . . . .
($/oz) . . . . . . . . . .
(20)%
(13)%
(7)%
0%
+7%
+13%
+20%
(20)%
(10)%
0%
+10%
+20%
(20)%
(10)%
0%
+10%
+20%
(20)%
(10)%
0%
+10%
+20%
(20)%
(10)%
0%
+10%
+20%
600
650
700
750
800
850
900
2.56
2.89
3.21
3.53
3.85
4.94
5.55
6.17
6.79
7.41
350.4
394.2
438.0
481.7
525.5
% Variance Input Factor
Kibali Gold Project
Feasibility Study
547
710
872
1,035
1,198
1,361
1,523
763
899
1,035
1,171
1,308
820
927
1,035
1,143
1,251
1,097
1,066
1,035
1,005
974
1,237
1,136
1,035
935
834
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(17)
(17)
(17)
(17)
(17)
(17)
(17)
(17)
(17)
(17)
(17)
(17)
(17)
(17)
(17)
(17)
(17)
(13)
(15)
(17)
(18)
(20)
(17)
(17)
(17)
(17)
(17)
(108)
(108)
(108)
(108)
(108)
(108)
(108)
(108)
(108)
(108)
(108)
(108)
(108)
(108)
(108)
(108)
(108)
(86)
(97)
(108)
(119)
(130)
(108)
(108)
(108)
(108)
(108)
(313)
(313)
(313)
(313)
(313)
(313)
(313)
(313)
(313)
(313)
(313)
(313)
(313)
(313)
(313)
(313)
(313)
(251)
(282)
(313)
(345)
(376)
(313)
(313)
(313)
(313)
(313)
76
96
115
135
154
173
193
79
107
135
162
190
132
133
135
136
137
135
135
135
135
135
155
145
135
124
114
64
85
106
127
138
147
156
85
106
127
136
142
106
116
127
136
143
111
120
127
127
127
143
136
127
113
99
126
149
155
161
177
195
213
165
163
161
171
184
140
150
161
173
187
157
158
161
171
181
181
170
161
157
153
124
124
142
159
177
194
212
142
151
159
168
177
124
142
159
177
195
158
159
159
160
161
181
170
159
149
138
132
150
169
188
207
226
245
163
176
188
201
213
156
172
188
204
220
187
188
188
189
189
208
198
188
178
168
78
92
107
122
137
151
166
105
113
122
131
139
95
108
122
135
149
121
121
122
122
123
141
131
122
112
103
80
93
106
120
133
146
160
101
111
120
129
138
98
109
120
131
141
119
119
120
120
120
136
128
120
111
103
79
91
102
113
124
135
146
99
106
113
120
127
93
103
113
123
132
112
113
113
113
113
124
118
113
107
101
65
74
84
94
103
113
123
82
88
94
99
105
76
85
94
103
112
93
93
94
94
94
104
99
94
88
83
38
46
53
61
68
75
83
51
56
61
66
71
48
54
61
67
73
60
60
61
61
61
71
66
61
55
50
34
40
46
52
58
64
70
39
46
52
59
65
47
50
52
55
57
52
52
52
53
53
61
57
52
48
44
29
34
39
43
48
52
57
29
36
43
50
57
43
43
43
43
43
43
43
43
43
43
49
46
43
40
37
23
27
31
35
39
43
47
22
29
35
41
47
35
35
35
35
35
34
34
35
35
35
40
37
35
32
29
8
11
14
18
21
24
27
8
13
18
22
27
18
18
18
18
18
17
17
18
18
18
24
21
18
14
11
5
9
12
14
17
20
23
5
10
14
18
23
14
14
14
14
14
14
14
14
14
15
20
17
14
11
8
23
26
29
32
36
39
42
23
28
32
37
42
32
32
32
32
32
32
32
32
33
33
36
34
32
31
29
Total Life
of Mine Year (4) Year (3) Year (2) Year (1) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16
Cashflow Sensitivity
Annual After Tax Project Cashflows (US$M)
Table 16-2 Sensitivity Analysis — Kibali Gold Project Net After-Tax Cash flows (US$)
17.0
REFERENCES
Adams, P., Coupland, T. (November 2004). Moto Project Resource Estimate, November 2004. Cube Consulting
Perth, Australia.
Adams, P., Coupland, T. (August 2005). Moto Gold Project — Independent Technical Report, August 2005. Cube
Consulting Perth, Australia.
Adams, P., Coupland, T. (November 2005). Moto Gold Project — Independent Technical Report, November 2005.
Cube Consulting Perth, Australia.
Adams, P., Coupland, T. (April 2006). Moto Gold Project — Independent Technical Report, April 2006. Cube
Consulting Perth, Australia.
Adams, P., Coupland, T., de Klerk, Q., Hansen, T. (December 2006). Moto Gold Project — Independent Technical
Report, December 2006. Cube Consulting Perth, Australia.
Adams, P., Hansen, T., Wearing, I. (January 2008). Moto Gold Project — Independent Technical Report, January
2008. Cube Consulting Perth, Australia.
Adams, P., Coupland, T., Kock, F., Hansen, T., Sapienza, C., Wearing, I., (November 2008). Moto Gold Project —
Independent Technical Report, November 2008. Cube Consulting Perth, Australia.
Adams, P., Graindorge, J., Hansen, T., Kerr, P., Kock, F., Leonard, R., Sapienza, C., Schmiede, P., (April 2009).
Moto Gold Project — Amended and Restated Technical Report, April 2009. Cube Consulting Perth, Australia.
Camden-Smith, P. (2005) Report Moto, June 2005. Camden Geoserve CC. South Africa.
Davis, B. Moto Project Structural Geological Investigation, (August 2004). RSG Global Perth, Australia.
Deraisme, J. (2005) Recoverable Resources Estimation: Indicator Kriging or Uniform Conditioning? EAGE 2005
Workshop http://www.geovariances.com/technical-references-mining-ar0041.html
Deraisme, J., Roth, C. (2000) The Information Effect and Estimating
http://www.geovariances.com/IMG/pdf/The — information — effect-2.pdf
Recoverable
Reserves.
Hamilton, J., Smith, G., Kiza, G., Sullivan, J. (February 2006). Moto Information Circular 2006-01 Geological
Synopsis and Project Statistics for the Moto Gold Project, North-Eastern DRC prepared for the Indaba Conference
held in Capetown, South Africa.
Humpreys, M. (1998) Local Recoverable Estimation: A Case Study in Uniform Conditioning on the Wandoo Project
for Boddington Gold Mine, from Beyond Ordinary Kriging Symposium Proceedings of a symposium held Friday 30th
October 1998 Perth, Western Australia http://www.gaa.org.au/html/gaa — mono 1 papers.htm
Jones, C (June 2005). Independent Technical Report — Moto Project prepared on behalf of Moto Goldmines Ltd,
June 2005. RSG Global Perth, Australia.
Lycopodium Engineering Pty Ltd. (September 2007). Moto Gold Project — Feasibility Study, September 2007.
Lycopodium Engineering Pty Ltd.
Mercier, M (September 2005). Audit Report — Preparation Laboratory of Borgakim Mining (sprl), Moto Project,
Doko-Watsa, NE Democratic Republic of Congo, September 2005.
Mercier, M (January 2006). Quality Assurance and Quality Control Report of all Database Gold Assay Data
Received Before the End of August 2005 by Borgakim Mining (sprl), Moto Project, Doko-Watsa, NE Democratic
Republic of Congo, January 2006.
Mercier, M (June 2006). A Study of the Database Gold Assay Data for Check Samples Received by Borgakim (sprl)
Between Late August 2005 and 12 May 2006, Moto Project, Doko-Watsa, NE Democratic Republic of Congo,
June 2006.
Mercier, M (February 2007). A Study of the Database Gold Assay Data for Check Samples Received by Borgakim
(sprl) between 13 May 2006 and 4 January 2007, Moto Project, Doko-Watsa, NE Democratic Republic of Congo,
February 2007.
Mercier, M (August 2007). A Study of the Database Gold Assay Data for Check Samples Received by Borgakim
(sprl) between 4 January 2007 and 24 June 2007, Moto Project, Doko-Watsa, NE Democratic Republic of Congo,
August 2007.
101
Mercier, M (December 2008). A Study of the Database Gold Assay Data for Check Samples Received by Borgakim
Mining (sprl) between 24 June 2007 and 24 October 2008, Moto Project, Doko-Watsa, NE Democratic Republic of
Congo, December 2008.
Moto Goldmines Ltd. Exploration Department (Moto June 2005) Lithologic Descriptions and Proposed
Stratigraphy for the Moto Gold Project Area, DRC, June 30 2005. Internal Moto Goldmines document Doko DRC.
Stephenson, P R and Stoker, P T (2001). Classification of Mineral Resources and Ore Reserves, in Mineral
Resource and Ore Reserve Estimation — The AusIMM Guide to Good Practice. AusIMM. Melbourne, Australia.
Thatcher, E (October 2004). Petrographical Descriptions of Selected Drill Core Samples from the Gorumbwa
Deposit — DRC, October 2004. Microsearch CC. Petervale South Africa.
Thatcher, E (June 2005). Petrographical Descriptions of Selected Drill Core Samples from the Mengu Hill
Deposit — DRC, 21 June 2005. Microsearch CC. Petervale South Africa.
Vann, J., Jackson, S., Bertoli, O (September 2003). Quantitative Kriging Neighbourhood Analysis for the Mine
Geologist: A description of the Method with Worked Case Examples, September 2003. Quantitative Geoscience.
Perth, Australia.
102
18.0
REPORT AUTHOR LISTING
The following people are responsible for supervising and/or preparing this report, which is effective as at 30th
November 2009.
Patrick (Rick) Adams
Bsc MAusIMM CPGeo
Director — Geological Resource Services — Cube Consulting Pty Ltd
Dated this 30th day of November 2009
Terje Hansen
Bsc MAusIMM
Director — Geological Consulting — Cube Consulting Pty Ltd
Quinton de Klerk
National Higher Diploma MAusIMM
Director — Mining Engineering — Cube Consulting Pty Ltd
Rod Leonard
MSC (MetEng), BSc (MetHonEng) MAusIMM
Technical Director — Lycopodium Minerals Pty Ltd
Fred Kock
National Higher Diploma in Extractive Metallurgy MAusIMM
Lead Metallurgist — Orway Mineral Consultants (WA) Pty Ltd
Paul Kerr
BSc (Mining Engineering) MAusIMM
Senior Consultant — SRK Consulting Pty Ltd
103
APPENDIX 1: PROJECT RESOURCE IMAGES
104
OPEN PIT RESOURCE METHODOLOGY — LOCAL RECOVERABLE (UC) IMAGES
Karagba-Chauffeur-Durba UC Mineralised Zone — Plan
105
Karagba-Chauffeur-Durba UC Mineralised Zone — Section Looking North
Karagba-Chauffeur-Durba UC Mineralised Zone — Section Looking West
106
UNDERGROUND RESOURCE METHODOLOGY — GLOBAL INSITU IMAGES
Karagba-Chauffeur-Durba OK-UG Mineralised Zone — Plan
107
Karagba-Chauffeur-Durba OK-UG Mineralised Zone — Section Looking North
Karagba-Chauffeur-Durba OK-UG Mineralised Zone — Section Looking West
108
APPENDIX 2: RESOURCE VALIDATION PLOTS
109
Open Pit Resource Methodology — Local Recoverable
110
111
112
113
114
115
Underground Resource Methodology — Global Insitu
116
117
118
119
APPENDIX 3: GRADE TONNAGE CURVES
120
121
122
123
124
125
126
127
128
129
130
131
132
O
U07895

Annual Report on Form 20-F 2009: Class 1 Circular

Transcription

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