Red Back and Moto have announced that they have entered into a business combination, where each share of Moto will be exchanged for 0.45 shares in Red Back. RBC Capital Markets believes the transaction “is slightly positive. Red Back’s operational experience and strong balance sheet should provide the clout necessary to put the world class Moto gold project into production.” The only negative RBC Capital Markets believes is if “Red Back is big enough to be able to wear the risk and negative attention of the DRC,” which it still sees as a political hotspot.
Red Back says the combination with Moto “creates a formidable African mining house and sets the stage for the development of the Moto gold project into a major African gold producer.” Red Back is an experienced African gold miner with a significant and expanding production profile at both its Chirano mine in Ghana and at its Tasiast mine in Mauritania. The combination with Red Back should bring the financing, development and operating expertise necessary to drive the Moto project to production.
Upon commissioning of the Moto gold mine, Red Back will achieve total gold production in excess of 1 Moz/y with cash operating costs well below the industry average. Red Back will be one of the largest African focused gold producers with a substantial expanding reserve base.
Commenting on the combination with Moto, Richard Clark, President and CEO of Red Back, stated: “We are delighted to have reached an agreement with Moto and look forward to developing the worldclass Moto gold project. The work done on the project to date by Moto is first class and we welcome the opportunity to add our development, operating and financing expertise for the benefit of both Red Back and Moto shareholders. Combined with our expanding resource/reserve base at Tasiast and commencement of production at Akwaaba Deeps at the Chirano mine, the addition of the Moto gold project confirms Red Back’s commitment to aggressive growth in Africa based upon exceptional projects”.
President and COO of Moto Goldmines, Andrew Dinning stated: “Moto is very pleased to have reached agreement with Red Back and with the combination of assets and the synergies between the two companies we see this transaction creating significant value for shareholders of both companies. Red Back is well funded and has an outstanding record of constructing and operating projects in Africa and with the inclusion of the Moto Gold project and dominant land and resource positions in both West and Central Africa we see the combined entity well positioned for significant growth going forward.”
Moto Goldmines is an emerging gold producer and its key asset is a 70% interest in the Moto gold project which is one of the largest undeveloped gold deposits in Africa. The project is a Joint Venture between L’Office des Mines d’or de Kilo-Moto (OKIMO) and Moto Goldmines and covers an area of approximately 1,841 km2 with significant mineral resources and growth potential. The company completed an Optimized Feasibility Study in February 2009 which contemplates an open pit and underground mining operation producing approximately 2.5 Moz in the first five years of operation.