Randgold gains stake in Malian gold mine

Randgold Resources, the exploration arm of South Africa’s Randgold group, has acquired the Malian subsidiary of BHP Holdings (International). The deal includes a 65% stake in Syama, a large Malian gold mine.

BHP Mali also held a 20% interest in the Loulo exploration project and two exploration permits, all in Mali.

Syama was originally commissioned in 1990 as an open-pit oxide mine. In September 1994, facilities designed to exploit the associated sulphide body were completed as part of a US$89-million expansion program.

The mine’s estimated resource amounts to 3.5 million oz. gold at an in situ grade of 4.1 grams gold per tonne, based on a cutoff of 2 grams gold.

Randgold aims to sustain production at 1.8 million tonnes per year.

“These calculations do not, however, take into account the substantial upside potential we see in Syama,” says Mark Bristow, chief executive officer of Randgold Resources.

“It’s true that Syama has not lived up to BHP’s expectations, but it is a very substantial, operationally profitable mine with a strong orebody, and the problems it has had are ones which Randgold is particularly well-equipped to address.”

Critical issues were identified during due diligence proceedings, and remedial plans are already in place to introduce effective ore reserve and ore flow management, apply proactive mine planning procedures, improve mining and upgrade the plant. Randgold has also set the improvement of the industrial relations climate as a major priority.

The deal will see Randgold Resources acquire 100% of BHP Minerals Mali from BHP in return for US$30 million in cash and a loan claim of US$23 million, part of which is convertible into shares of Randgold Resources. In addition, BHP will retain a US$31-million loan with a maximum payback period of six years.

Parent company Randgold will support the deal by raising US$40 million through an issue of convertible debentures and capitalizing US$30 million of the proceeds into Randgold Resources.