A ray of clarity from the sometimes murky political world of the Democratic Republic of the Congo has been a boon to Moto Goldmines (MGL-T, MOE-L).
As recently as Feb. 7 the Perth, Australia-based company’s shares were trading for $3.46, but since then they’ve gained 47% to touch $5.08 on Feb. 19, largely on the back of word out of the DRC that the leases on its Moto gold project wouldn’t be revoked.
The Moto gold project is made up of one half of the Kilo-Moto gold belt in the northeast of the DRC.
While the incredible wealth of mineralization at the property has been long known, war and political uncertainty has made exploitation an arduous task.
But Moto has begun to turn the corner as of late. While investors had worried that the re-evaluation of mining licences which Moto was included in could leave the company with nothing, those fears proved unwarranted.
While Moto will be required to pay more for its leases and will also have to hand over greater participation to its 30% joint venture partner state run OKIMO the robustness of the deposit should make such upticks in costs bearable.
A feasibility study finished in November of last year put annual cash flows at US$89.5million over 8 years, with pay back coming in just three years.
Ore at the project will be drawn from open pit mining with probable reserves standing at 25.6 million tonnes grading 3.41 grams per tonne for 2.81 million oz. of gold.
Capital and infrastructure costs are estimated at US$296 million which include the building of a hydro electric power station.
Moto is still waiting to here back from the government regarding two more of its leases — Amani and Rambi. But since Moto already agreed to hand the leases to OKIMO back in 2006, the news is of little significance.
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