Good Morning,
What does it say for the risks of management when companies
are prepared to consider joint ventures on assets that are uneconomic? Of
course regular readers will remember the EMC: Volte Face Randgold Resources from September... after: EMC: Randgold preferred Fed Arb play.
To quote:
Whether its Elephant country or not (FT), prudence dictates purchasing
a decent asset with a better outlook than Obuasi. Good money after...As a
reminder, PWC's Mining Taxes and Royalties (PDF)s and
an article (Ghana Chamber of Mines) that AngloGold
Ashanti's might want one to quickly forget.
Disappointing waste of time on
RRS and perhaps losing ones mind! When investors thousands of miles away from
the mine can assess the benefits or lack of in investing in Ghana, concerns
should prudently be raised. More later...
It would appear Randgold needed to spend significant time
and perhaps money conducting due diligence to form the same opinion as EMC.
Today, they give an update on the Obuasi Gold Mine. Over to
Randgold (Bold Italics and Underline are additions):
Jersey, Channel Islands, 21 December 2015
On 16 September 2015, Randgold
Resources Limited (Randgold) and AngloGold Ashanti Limited (AngloGold Ashanti)
announced their intention to form a joint venture to redevelop AngloGold
Ashanti's Obuasi mine in Ghana, subject among other things to the
completion of satisfactory due diligence by Randgold and the agreement of a
revised development plan. After undertaking a due diligence exercise into
the mine and the redevelopment opportunity the mine affords, and following the
work undertaken on the revised development plan, Randgold has determined that
the development plan will not satisfy Randgold's internal investment
requirements. Accordingly, Randgold has decided to terminate the
investment agreement entered into with AngloGold Ashanti, with immediate
effect.
Chief Executive Mark Bristow
said Randgold remained committed to creating real value for all its
stakeholders by continuing to invest substantially in its exploration
programmes with their proven record of success as well as by investigating
potential growth opportunities presented by the market.
What due diligence was needed to formulate the same view as
here?? Randgold can now throw in the towel and purchase Amara Mining’s
(AMA), Yaoure Project, whom recently gave an update on grade and resource.
In other news, the AIM loses a director whom had sat on a
few boards…one such company, BacanoraMinerals Ltd. Perhaps entities were finding their proverbial taps cut off…same
for AfriAgPLC, InspiritEnergy (INSP), EvocutisPlc and RareEarth Minerals. Apologies if they weren't all covered…
We have not ignored the marco news, or iron ore moves, China’s woes
with imports/exports, BHP Billiton issues and other areas, merely time rationed.
Its interesting to note there are subsidies for purchasing cars if you “live
in a rural area.” As migrant work forces are considered as living in Rural
Areas, the mainstream media may need to wake up and consider the significance of such a
stimulus…bringing forward more purchases by near 3 years!
Atb Fraser
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