|ORO Y PLATA INTERNACIONAL S.A.
Battle over 20 million ounces of gold
30/04/07. Moto Goldmines (MGL, C$4.20 a share, C$257m), plagued with the
label of "world's hottest gold stock" has at last issued its version on the
mighty legal battle it is waging in the Democratic Republic of the Congo
(DRC). Where the discovery of 1m ounces of gold is generally regarded as
"world class", Moto Goldmines has outlined nearly 20m ounces of gold
resources in the far northeastern part of the DRC, in Orientale province, just
outside the Ituri "province", after the proclamation of James Kazini, a
warlord, in 1999. It is here that Moto Goldmines is waging a battle that has
little to do with gold mining as such.
The current focus is a November 2006 Protocol between Moto Goldmines
and Okimo, (L'Office des Mines d'or de Kilo-Moto, a State-owned gold mining
entity), which sought a "simplified" contractual arrangement to govern the
development of and future production activities at the Moto Gold Project. In
2003 Moto Goldmines had entered into a joint venture with Borgakim sprl, a
subsidiary of Orgaman sprl. Both are privately owned entities under the
control of the Damseaux family, with headquarters at Avenue Lt. Colonel
Lukusa, in Kinshasa, the DRC capital.
The November 2006 Protocol provided that Orgaman would hold 10% of the
Moto concessions, as defined; Okimo would hold a non-dilutable 30%, and
Moto Goldmines itself, 60%. It was agreed that the project's existing
contracts be amalgamated in favour of a 30 year lease over some 2350km2,
with the balance of the area being released to Okimo.
In January this year, certain Moto Goldmines subsidiaries received letters
from the-then CEO of Okimo, Victor Kasongo (now vice minister of mines),
claiming certain obligations under Moto Goldmines's existing contracts "had
not been satisfied" and giving 90 days to rectify matters. Moto Goldmines
said it "strongly disputes that it has failed to satisfy any performance criteria
under any of the contracts with Okimo and is seeking formal withdrawal of
the letters". Moto Goldmines later received a copy of a letter to Kasongo
from the chairman of Okimo "making it clear that he had no authority to write
the letters", but Moto Goldmines awaited formal withdrawal of the letters.
In its most recent update, Moto Goldmines says it has obtained a copy of a
formal, separate, legal notice under which Moto Goldmines understands that
a Commission has been appointed under the authority of the Minister of
Mines to review various mining agreements entered into by the DRC
government, or State bodies such as Okimo, within a period prior to mid-July
Moto Goldmines explains that while it has not "formally" been notified that
its contracts with Okimo will fall within the ambit of the review, Moto
Goldmines is also "aware of news stories circulating with statements from"
Kasongo to the effect that some or all of Moto Goldmines's contracts will be
reviewed, along with 60 other mining agreements starting on May 15, with a
decision expected after mid-July 2007.
Moto Goldmines states that it is further aware that Kasongo was quoted
recently as having said that the period for curing of breaches in relation to
the Moto Goldmines agreements expired on April 26 2007 without Moto
Goldmines having fulfilled its commitments. In reaction, Moto Goldmines
states that it "wishes to re-iterate that this statement has been made without
foundation, and to point out that the Okimo board of directors and relevant
government ministries have been made fully aware of the work carried out
by Moto Goldmines and its partners in compliance with its contractual
The Moto Goldmines board remains confident, according to Moto
Goldmines's statement, that "any review process will confirm the validity and
fairness of its recently negotiated November 2006 Protocol". While Moto
Goldmines has not yet received "formal confirmation", its understanding is
that Okimo will be restricted from progressing matters, including the
withdrawal of its allegations of breaches, until the various agreements have
been reviewed by the Commission.
After challenges to Moto Goldmines's title arose earlier this year, Moto
Goldmines said it would "actively update influential people in the DRC and
internationally". Given its standing board of directors, it seems that Moto
Goldmines had an early sense of what it would find in the Moto concessions,
part of the famous Kilo-Moto gold trend.
Moto Goldmines's standing board of directors include Sam Jonah of Ashanti
renown, Klaus Peter Eckhof, Andrew Dinning, Mark Arnesen, Walter
Kansteiner (erstwhile US assistant Secretary of State for African Affairs),
David Hodgson (erstwhile COO of AngloGold Ashanti), Jeff O'Leary, T. Sean
Harvey, and Patrick John Flint.