Relocation of 15,000 villagers paves way for huge African gold mine

In today’s operating environment, a mining company is as likely to be judged on its environmental and social performance as its ability to pull minerals out of the ground. Randgold Resources has taken on an ambitious project in the Democratic Republic of the Congo to build one of the largest gold mines in Africa.

Randgold’s 2010 resource estimate pegs the Kibali deposit as containing 10 million ounces of gold. Randgold owns 45% of the deposit and will be the mine operator, while AngloGold Ashanti holds 45% and DRC-based Sokimo owns the remaining 10%. Before they can start mining, however,  LSE-listed Randgold (stock symbol RRS) had to relocate some 15,000 people from the proposed underground mine to a new town called Kokiza, which will be home for residents of 14 displaced villages.

Randgold said today it has started relocating the villagers to Kokiza. The purpose-built town will include 3500 houses, a Catholic Church, seven medical centres, five public markets and a government office. More than 50 kilometres of primary roads and 20K of secondary roads are being built to serve the town, which is located in a remote part of the country. Power will be provided by a hydroelectical power station expected to provide 30 megawatts during high-flow periods. Says Randgold Resources CEO Mark Bristow:

The first of these milestones was to connect this region to the outside world.  The second was to increase the ore reserves and optimise the development plan for the mine.  The third was to find a way of generating electrical power economically.  The fourth was to engage in consultation with all the affected parties so that we could clear the site to build the mine, guided by the principle that all the people to be relocated should be better off than they were before.

Shaft feasibility design has begun and tenders for mining, engineering and construction have been issued to possible suppliers. Adjudication of tenders will take place during the second quarter and contract awards are expected to be completed in the third quarter. The company expects to begin producing its first gold from Kibali in 2014.

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