Congo civil society groups demand transparency in SOKIMO deal with AJN

DRC Gold

28/02/2020 20:46

JOHANNESBURG, Feb 28 (Reuters) - Civil society groups and a
member of Parliament in Congo are raising concerns that
state-owned gold company SOKIMO failed to follow an open and
transparent bidding process before agreeing to sell its stakes
in six gold assets, including 10% of Congo's biggest gold mine,
Kibali, to Canada's AJN Resources.
    The criticism follows action by Barrick Gold Corp  ABX.TO 
to block the proposed sale to AJN, after AJN on Feb. 6 said it
had reached a memorandum of understanding with SOKIMO. Barrick
and AngloGold Ashanti  ANGJ.J  each own 45% of Kibali, and
SOKIMO may not sell or transfer its Kibali stake without their
approval.
    Barrick last week said SOKIMO had not sought approval for
the sale, and said "nor will it be granted." On Wednesday,
Reuters reported that Barrick had issued a cease-and-desist
order to block the sale.  urn:newsml:reuters.com:*:nL5N2AR63O
    AJN's Canada-listed shares  AJN.CD  have plunged 48.7% since
the cease-and-desist order was reported, including a decline of
28.6% on Friday.
    Civil society demanded that government justify the deal,
under which SOKIMO would sell its 30% stakes in the Zani-Kodo,
Nizi and Kibali South projects, and 35% stakes in Giro
Goldfields and Wanga (Tendao), as well as the Kibali stake.
    "For us, this transaction is very unfavourable for the
Congolese state," said Jean-Pierre Okenda, Democratic Republic
of Congo country manager for the Natural Resource Governance
Institute. 
    SOKIMO's assets should have been independently valued before
the memorandum of understanding was signed, and they should have
been put to open tender in accordance with Congolese law, Okenda
added. 
    Roger Abotome Bekabisya, a National Assembly representative
of Watsa district in Haut-Uele province, wrote to DRC's minister
of portfolio on Monday demanding the details of the deal and the
value of the stakes SOKIMO would sell to AJN. 
    "It is best that we get an official response, in order to
know the truth," Abotome Bekabisya said by telephone Friday.
Watsa is the nearest town to Kibali gold mine.
    COGEP, a Congolese natural resource governance NGO, said
Prime Minister Sylvestre Ilunga should intervene to halt the
sale and demanded the minister of portfolio make a public
statement to clarify the situation. 
    DRC's minister of portfolio manages the country's
state-owned enterprises and approved the AJN-SOKIMO memorandum
of understanding, according to AJN's chief executive, Klaus
Eckhof.
    According to the memorandum of understanding, SOKIMO would
exchange its assets for a 60% stake in a newly capitalised AJN,
but with only two out of five board seats. 
    Eckhof did not respond to requests for comment on Friday.
The prime minister's office declined to answer Reuters'
questions.
    AJN's Canada-listed shares were trading at C$0.4 by 1711
GMT, below where they traded prior to the SOKIMO deal
announcement on Feb. 6, which had sent the stock up 140%. 
    

 (Reporting by Helen Reid; Additional reporting by Stanis
Bujakera; Editing by Leslie Adler)
 ((Helen.Reid@thomsonreuters.com; +27 11 595 2852;))