Barrick Gold Corporation and AngloGold Ashanti have agreed to sell their 80% interest in the Morila gold mine in Mali to ASX-listed Mali Lithium.
Mali Lithium has been an active gold explorer in Mali, Africa’s third largest gold producer, since 2011.
The deal was struck in late August 2020 for a cash consideration estimated at between $22 million and $27 million, depending on closing adjustments, and is subject to certain conditions, including the acknowledgement of the transaction by the state of Mali, which holds the remaining 20% of the Morila gold mine.
Barrick said the decision of the current shareholders to sell their stakes in Morila, which it operates, offered the potential for the mine to continue under a new ownership structure, which would bring access to additional resources and a different approach to how the infrastructure is used to extend the life of operations. This would allow Barrick to focus on its strategy of discovering, developing, owning and operating Tier One assets.
The parties are targeting the closing of the deal before end of October 2020.
The acquisition of the Morila mine will instantly transform Mali Lithium into a cash generating gold producer. The mine is forecast to produce approximately 26 350 oz of gold from November 2020 to the second quarter of 2021 and there is excellent potential for near term growth in production and mine life.
Mali Lithium intends to increase sustainable production at Morila as quickly as possible after acquisition. Much of the initial work required can be financed through the existing cashflow at Morila. Mali Lithium has retained Euroz to advise on financing the acquisition and provision of working capital.
In addition, the company is considering various options for Morila SA to supplement its cashflow and, if required, to finance any potential production expansion.
Mali Lithium’s strategy for the Morila operations is as follows:
- Continue tailings operations and generate cashflow
- Undertake Mineral Resource Estimates for Morila, Domba, Viper and N’Tiola pits and the Koting discovery
- Commence infill and extension drilling at Morila and its satellites
- Complete ore reserve estimates, mine design and scheduling of production and determine capital and operating costs.
- If studies are favourable, Mali Lithium will re-commence open pit mining at satellite pits to potentially increase production and displace tailings production, re-commence open pit mining at Morila to further increase production
- Explore high value targets on the 474 km2 Massigui project and 211 km2 Morila lease to discover additional shallow resources
The discovery and development of Morila, which poured its first gold in October 2000, laid the foundation for Barrick legacy company Randgold Resources’ growth into one of the world’s leading gold miners.
Known in its heyday as “Morila the Gorilla”, the mine produced 6.9 Moz of gold and paid more than $2.5 billion to its stakeholders in the form of taxes and dividends. It served as the base for Randgold’s expansion into Africa, among other things through the development of Loulo-Gounkoto in Mali and Kibali in the Democratic Republic of Congo. Both these mines are now part of Barrick’s Tier One portfolio.
In 2015, Morila transitioned to a stockpile and tailings treatment facility and was forecast to close in 2021.
Willem Jacobs, Barrick’s COO for Africa and the Middle East, says the proposed acquisition by Mali Lithium offered an opportunity for a new owner to extend the life of the mine by utilising the existing infrastructure, applying different planning and evaluation criteria, and accessing additional satellite resources which would continue to benefit Morila’s in-country stakeholders.
Executive Chairman of Mali Lithium, Dr Alistair Cowden says that Morila is one of West Africa’s great gold mines and the company is excited and privileged to acquire a mine of Morila’s calibre with its past production plus mineral resources of 8.7 Moz of gold.
“This is truly a transformative transaction for the company as we become a gold producer.
“We have a unique advantage as the newest gold producer on ASX as Morila has all the infrastructure required of an operating remote gold mine as well as the expertise of the operating team. We will benefit from the substantial sunk capital invested by the previous owners over the last twenty years.
“We plan to use the cashflow from the current tailings retreatment at Morila to ramp up the operations through recommencing open pit mining as soon as practicable. We are already working on defining larger resources and reserves that may support a long mine life at higher rates of gold production through a restart of mining.
“It is a truism that the best place to find gold is in the shadow of the headframe and Morila has immediate upside without the need for drilling by modelling existing data; in addition, the depth and lateral extensions to this monster mine are not well understood. As we learn about the deposit, it is our intention to aggressively invest in drilling with the aim of building a large resource base to support a long mine life.
“Our current intention is that all employees at the mine will retained and it is our hope that we can support the local community through additional employment opportunities as operations scale up.
“We have a second world class asset in the Goulamina lithium project, however, Morila and Goulamina will benefit from a sharp individual focus.
We will soon complete the definitive feasibility study for Goulamina and then we will undertake a strategic review to investigate the optimum path to maximise the value of Goulamina for shareholders,” Cowden concludes.