Africa-focused Randgold Resources is 
 keen to take advantage of acquisition opportunities, but would not pay a premium for projects that are being talked up unreasonably by potential sellers, CEO Mark Bristow said in Toronto last week.

“This market has come from a point where ideas or promises attracted value, and there’s a perception that that is going to continue, but it is not,” he said in an interview.

Management or directors tend to “over-promote” projects, to stir up interest among potential buyers, “and we want to send that message out to the market that we don’t overpay”, Bristow said.

“If you are trying to overpromote some-thing for the sake of an exit, you mustn’t count us in. 
“And the shareholders should be aware that we are not going to play in that game,” he said.

He confirmed that he had held talks with the management of Moto Goldmines, which plans to build a large new gold mine in the Democratic Republic of Congo (DRC).

Randgold mines gold in Mali and is building a new operation in Côte d’Ivoire, and Bristow believes the company’s experience in mine building, permitting and infrastructure development would benefit the project.

The Moto project, which the Australian company says this will cost $438-million to build, will be the DRC’s largest gold mine when (or if) it starts up.

However, Bristow said it was unlikely that the timeframe to production being touted by Moto is realistic.

“With Moto, the point is that here is a junior company promising to build a mine in Africa, which hasn’t ever been built before, in a market where eight out of ten developments didn’t work,” he commented.

An all-share transaction would provide a better gearing for Moto shareholders, because they would swap the pure DRC risk for Randgold’s multicountry risk, they would benefit from any upside in Randgold’s own growth prospects, and their exposure would still be higher than if Moto was acquired by a senior gold company.

“It makes sense on a scrip basis, because shareholders see the upside and so do we.”

While there were several assets that Randgold would look at, Bristow said he was not interested in buying into Banro Corp’s Twangiza project, nor the Sabodala gold project, in Senegal, owned by Mineral Deposits.
The company has heightened its interest in the DRC, which is “a great address geologically, but pretty scary politically,” he commented.

Still, the recent developments in the coun-try may bode well, Bristow said.


‘Bigger Than Tongon’

Setting aside the prospect of corporate activity, Randgold plans to increase its attributable production organically to more than 600 000 oz/y by 2011, as it expands underground production at Loulo, in Mali, and starts up the new Tongon mine.

The firm will start production at Tongon in 2010, and has also found more higher-grade oxide ounces in a smaller pit at Loulo, which will help top up output levels, Bristow said.

Further, Randgold is increasingly excited about its Massawa discovery, in Senegal, where it is delineating mineralisation over a 7-km strike.


Bristow is confident that Massawa will turn out to be “bigger than Tongon”, and the company is currently working on an initial scoping study which will produce the first resource estimate for the deposit.


A prefeasibility study should be completed by year-end and a bankable study by the end of 2010, he said.


“Certainly, it has the potential to be one of our most significant discoveries.”

Thanks to the company’s robust and growing production profile, it will have more than enough money in the bank to cover its spending plans for the next three years.


Assuming a gold price of $800/oz, the firm will have $500-million in cash by the end of 2011, Bristow said.

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