DJ Moto Goldmines Completes Congo Mining Review Talks
Moto Goldmines Limited announced Wednesday that its wholly owned subsidiary, Borgakim Mining sprl has successfully concluded a series of meetings with L'Office des Mines d'or de Kilo-Moto, its partner with whom it is developing the Moto Gold Project in the Democratic Republic of Congo (DRC).
The meetings, which were conducted in the presence of experts appointed by the DRC Minister of Mines have led to the partners entering into amendment agreements to reflect the agreed terms and to the registration of the consolidated lease entered into between Okimo and Borgakim in July 2008 (the Consolidated Lease) with the DRC Mining Registry (CAMI).
The agreements reached as a result of the Review Meetings have now become effective following approval by the Okimo board, notification to Okimo's umbrella authorities, which are the DRC Minister of Mines and Minister of Portfolio and specific approval from the Minister of Mines.
The Review Meetings and approval by the Umbrella Authorities conclude the renegotiation of the Moto group's original contracts which commenced in 2006 and the DRC mining review process which commenced in 2007 and confirmed the key terms of the Project.
Summary of Key Terms
* The area of the Project has been confirmed at 1,841 sq. kms
* The joint venture company will be Borgakim
* Okimo will contribute the exploitation permits covering the Project to Borgakim for no additional charge
* Borgakim will be held as to 30%. (non dilutable) by Okimo and 70%. by Moto
* $10 million of sunk exploration expenditure will be capitalised by Moto with the balance of the monies necessary to complete the Project being provided by way of shareholder loan which will carry interest at a market rate
* Borgakim will pay a pas de porte of $4.5 million
* Borgakim has paid $5.1 million of historic surface rentals, of which $2 million shall be repayable by Okimo to Borgakim
* Borgakim will pay a royalty on production to the DRC State in accordance with the Mining Code
* Borgakim will assume the Okimo debt to Société d'Organisation, de Participation et de Management (Orgaman) of $33.8 million and the debt shall carry a market rate of interest * The parties will seek to conclude the joint venture agreement by February.
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Chairman, Sam Jonah, said "I am very pleased that, with the conclusion of the renegotiation of our arrangements with Okimo, we are now able to proceed with the development of the Moto Gold Project for the benefit of all stakeholders. The Company looks forward to the ongoing support of the DRC government."
Moto has continued during the review period to conduct exploration and drilling and has been optimizing the previously announced feasibility study.
The Project has been reconfigured into an open pit and underground mining complex with a reduction in planned throughput.
The optimised feasibility study will focus on grade optimisation with the intention of presenting an option which is more readily financeable than the Project contained in the original feasibility study.
It is anticipated that the updated drilling results and the optimised feasibility study will be released by the end of January.
Moto will reduce its other cash expenditure in 2009 mostly through reduced drilling activity whilst maintaining its community development programs and advancing the project by prioritising low cost, long lead, critical path items. Having taken account of the amounts outlined in this release Moto's current cash position will see it through to the latter part of 2009.
In November 2006, Moto announced that it had entered into an agreement with Okimo to rationalise the area leased to the Moto group. In July 2008, Borgakim and Okimo entered into the Consolidated Lease which confirmed the area of the Project at 1,841 sq. kms.
All the exploration work carried out by the Moto group falls within the Consolidated Perimeter. The Consolidated Lease has now been registered with CAMI and is shown as a lease over 10 exploitation permits held by Okimo which cover the Consolidated Perimeter (the Exploitation Permits).
Contributions of the parties to the Joint Venture and shareholdings in the joint venture company In view of the substantial drilling programme carried out by the Moto group between 2004 and 2008, the delivery of the feasibility study in December 2007 and the other contributions of the partners to the joint venture, the shareholdings of the partners in Borgakim have been confirmed at 30%. (non dilutable) Okimo and 70%. Moto, in line with the November 2006 Protocol. 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 Borgakim for no additional payment.
Upon completion of the transfer, Borgakim 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. Moto has agreed to capitalise $10 million of its funding of the exploration expenditure for the Moto Gold Project. Following this capitalisation, the joint venture company, Borgakim, will have an issued share capital of 10 million shares of which 3 million shares will be held by Okimo and 7 million shares will be held by the Moto group.
All other funding of Borgakim provided by the Moto group shall be by way of shareholder loan carrying interest at a market rate. Payments to the DRC State Borgakim will pay a pas de porte of $4.5 million on the joint venture agreement being approved by the Umbrella Authorities and the transfer of the Exploitation Permits being registered with CAMI.
As previously announced, Borgakim has paid its share of $3.1 million in respect of outstanding surface rentals of $5.1 million for 2004 - 2007, being a period when force majeure was claimed for the Consolidated Perimeter and other areas previously leased to the Moto group.
To assist Okimo, Moto has provided funding to Okimo of $2.0 million to enable it to pay its share of the outstanding surface rentals. This payment was required for the Consolidated Lease to be registered with CAMI.
The partners will agree on repayment of the $2.0 million funding provided to Okimo as part of the settlement of the joint venture agreement, discussed further below. In addition, Borgakim will pay royalties on production to the DRC State in accordance with the Mining Code. Payments/Contributions to Okimo The overall monthly rental payable under the Consolidated Lease until the commencement of production has been confirmed at $350,000 per month. The partners have, in line with the November 2006 Protocol, agreed that Borgakim will assume the entire debt of Okimo to Orgaman, including interest, which amount is calculated by Moto to be $33.8 million, subject to certification. Borgakim and Orgaman are expected to enter into an agreement to reflect this.
As part of this agreement, Moto will, as previously announced, acquire the benefit of the debt payments from Orgaman for consideration equal to the face value of the debt, such consideration to be paid in three instalments. Moto and Borgakim have now agreed to restructure the payments due to Orgaman so that the first payment of $10 million will be made within seven business days of Jul. 1, 2009, the second payment of $10 million will be made on Jul. 1, 2010 and the balance of $12.8 million plus accrued interest will be paid on Jul. 1 2011. Moto continues to have the option to pay up to 50% of any instalment by the issuance to Orgaman of Moto common shares, subject to receipt of regulatory approvals.
Borgakim has also agreed to make the following additional loans to Okimo to assist it financially:
* A loan of $5.0 million (as agreed in the November 2006 Protocol, of which $3.75 million remains payable);
* A loan of some $7.0 million in accordance with the Revised ATF as discussed below, which is expected to be advanced over a two year period; and
* A loan of up to $3.0 million following independent review to help Okimo fund payment of arrears due to Okimo employees, including termination payments due to former employees.
Revised ATF
As previously announced, Borgakim will provide financial and technical assistance by way of loan to Okimo in accordance with the revised financial and technical assistance agreement dated Jul. 3, 2008 (the Revised ATF) of some $7.0 million with the objective of assisting Okimo to redevelop its mining production.
Moto will fund this loan by way of shareholder loan to Borgakim and such amount will carry interest at a market rate. Joint Venture Agreement The partners have agreed that by February 2009 they will seek to conclude the negotiation of the joint venture agreement and ancillary documents in good faith so as to reflect the resolutions of the Review Meetings and to ensure an efficient exploitation of the deposits covered by the Exploitation Permits.
The joint venture agreement will be subject to approval by the Umbrella Authorities. The joint venture agreement will also take into account a number of points discussed during the Review Meetings including effective participation of Okimo in the management of Borgakim and confirmation of the social and community benefits of the Project.
The board of directors of Borgakim will consist of five members, two of whom shall be appointed by Okimo and three by Moto. The chairman of the board shall be appointed annually on a rotating basis, with Okimo appointing the first chairman. |
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