Congo-owned Sokimo may hinder transfer of Kibali mine to Barrick

Congo's Société Minière de Kilo-Moto SA, better known as Sokimo, warned Friday that if Randgold Resources transfers to Barrick its stake in Kibali gold mine, in which the state miner has a 10% interest, it would be forced to “assert its rights”.

Canada's Barrick Gold (TSX, NYSE:ABX) agreed to buy Randgold Resources (LON:RRS) this week in a $18.3 billion share deal, which will create the world's largest gold company by value and output. Kibali, one of Africa's biggest gold mines, was flagged as one of the five “tier-one” considered key to the business case of the proposed merger.

While Sokimo did not clarify its plans, it did say the proposed merger was another example of large groups imposing themselves in the countries where they operate.

While Sokimo did not clarify its plans, it said in a statement quoted by Jeune Afrique (in French) it had learned of the tie-up through the press. It added the proposed business combination was “another illustration of control transfer deals between large global groups, conceived and structured to impose themselves, without any prior discussion, in the countries from which the resources that make up their wealth are extracted.”

The same kind of strong nationalist language was used by Congo's other state miner, Gecamines, against Freeport after the US company announced in 2016 the sale of its stake in the Tenke copper mine to China Molybdenum. Gecamines received $100 million in a settlement.

Kibali, a joint venture between Randgold (45 percent), AngloGold (45 percent) and Sokimo, produced 596,225 ounces of gold last year at a total cash cost of $773 per ounce. Gold sales amounted to $754.9 million (100% basis) resulting in a profit from mining activity (before interests, tax and depreciation) of $287.7 million.

The operation, which cost $2.5 billion to develop, is expected to generate 730,000 ounces of gold this year.

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