Moto raising US$50M

Vancouver – Moto Goldmine‘s (MGL-T) share-price spent the better part of 2008 in a steep dive, sinking as low as 80¢ in November down from a high earlier in the year of over $6.

But recently buoyed by a resurgent share-price, largely due to good news at its namesake gold project in the Democratic Republic of the Congo (DRC), Moto Goldmines has come up for air to raise US$50 million in a bought-deal financing.

Moto will issue about 17.9 million shares at $2.80 a share.

Moto’s descent began well-before the fall market downturn and largely stemmed from uncertainty over the state of its joint-venture partnership on the Moto gold project in the DRC, 560-km north of Kisangami, in the country’s volatile Orientale province.

Moto has a 70% interest in the Moto gold project while a state-owned partner, L’Office des mines d’or Kilo-Moto (OKIMO), holds the rest.

The relationship between the two became especially rocky during the summer of 2008 as they began a renegotiation of a joint-venture agreement governing the project.

The sticky issues were how much financial assistance Moto would grant OKIMO and what level of participation OKIMO would have in the partnership directed through the Moto-Okimo owned subsidiary Borgakim.

After months of talks certainty finally came in January when Moto announced successful renegotiation of its joint-venture agreement. It confirmed the 70-30 balance and saw OKIMO assenting to transfer the project’s exploitation permits to Borgakim.

Moto will pay the government US$4.5 million once the government officially registers the transfer.

As for financial support, as previously agreed to by the two partners Moto will assume about US$34 million of OKIMO’s debt and extend it US$14 million in loans. Moto will pay the $33.8 million down in three nearly-equal and annually-spaced installments starting July 1, 2009.

And in addition to the financial assistance Moto will continue to pay OKIMO US$350,000 per month in exchange for lease rentals and will make a US$5.1 million over-due lease payment to the government that includes OKIMO’s US$2 million portion (as a loan).

The cemented bonds between Moto and OKIMO should help the two companies move the Moto gold project forward.

As reconfigured in a recent feasibility study Moto foresees not only mining via open pit but underground as well. It had previously envisioned extending an open pit to 340 metres, without any underground mine.

But the current feasibility study would only have the open-pit going to a depth of 170 metres and concurrent underground operations exploiting ore below that level.

As for the deposit’s size Moto pegs the open-pitable proven and probable reserves at 31 million tonnes grading 3.2 grams gold per tonne for 3.2 million oz gold. The underground proven and probable reserves come in at 11.6 million tonnes grading 6.2 grams gold for 2.3 million oz. gold.

The mine would produce for 16 years and Moto estimates pre-production capital costs at US$438 million. Deferred and sustaining costs would be US$180 million. Moto forecasts life of mine cash costs at US$281-per-oz. gold underground and at US$343-per-oz. gold for the open pit .