Kilo Goldmines

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Kilo Goldmines is exploring in the Democratic Republic of Congo and its flagship Somituri project could be part of a much larger operation

TSX Venture-listed Kilo Goldmines has eight mining licences, valid until 2039, in the Democratic Republic of Congo (DRC), which has the potential for a multi-pit operation and shareholder backing for its Adumbi deposit.

The NI43-101-compliant deposit contains 1.9 million ounces (Moz) of gold at 1.63 grams per tonne (g/t) and has the potential to be an open pit mine with other promising prospects within a 5km radius.

“We are chasing that scale, the DRC greenstone belts are possibly an extension of the Tanzania greenstone belts which host world class deposits and have much of the same geology. The Adumbi gold deposit is part of a gold bearing structure in excess of 5km, which means multi-pit, single-plant potential,” explains Alex van Hoeken, president and chief executive of Kilo Goldmines speaking at a Proactive Investors event on June 14.

Major catalyst

New mining legislation in 2002 was the catalyst for significant investment in the DRC by junior and major miners such as Freeport McMoran, Vale, Anglo American and Kilo’s joint venture partner for iron at the drilling stage, Rio Tinto. Not to mention Rangold’s Kibabli deposit, which contains 30Moz of gold.

The Somituri project is currently held 71.25 per cent by Kilo, 5 per cent by DRC state and 23.75 per cent by property vendors. Upon completion of the bankable feasibility study, Kilo could own up to 95 per cent. Randgold can buy back 10 per cent of the project for $5 million if measured resources are greater than 2Moz.

“We have a very strong shareholder base, including Sprott Management, Libra Investors, Macquarie and others. When I took over as president, one of the first things I did was sort out the licences but afterwards when I saw the potential for a much larger resource after travelling the scale and breadth of our licence area, they backed a plan for a multi-pit operation,” van Hoeken said.

KWR Iron, which Kilo owns 75 per cent of, has exploration licences in a joint venture with Rio Tinto (15 per cent). Rio has a farm-in arrangement to earn up to 78.75 per cent in staged exploration expenditure spending $60 million before 2020. The gold rights, however, explains van Hoeken, are retained by Kilo Goldmines. The remaining partner in KWR Iron includes Suez Holdings at 10 per cent.

Road access for the project goes west through the largest city in the wooded region of DRC, Kisangani, 300km away and east through Kampala in neighbouring Uganda some 800km. In addition the team has project support between the two neighbouring countries in Beni and major airports include Kisangani, Entebbe in Uganda and Goma in Eastern DRC.

Afghanistan iron

If venturing into Congo isn’t enough, Kilo has also been selected as preferred bidder for the Hajigak iron project in Afghanistan for one of four blocks, Block A. Block A is estimated to contain 450Mt at 62 per cent iron content though work remains to get the resource to compliance. A state-backed Indian steel consortium received the other three blocks.

Kilo Goldmines owns 20 per cent of the Hajigak project, held by Kilo Iron and led by UK-based financier David Buckle. The project is located 130km west of Kabul and just 33km from a proposed rail line financed by China Metallurgical Group Corporation (MCC) as part of commitments to the Afghan government for mining rights to the Aynak copper deposit.

Van Hoeken points out that the DRC and Afghanistan operations are completely separate entities.

When questioned by audience members, many of who were investors, about the perceived environment of corruption in which Kilo operates, van Hoeken defends the operation.

“I have been working in DRC for 12 years and I have never had a problem. I have the lay of the land. Kilo is significantly undervalued considering its current assets and upside potential, and we will be aggressively augmenting shareholder value,” van Hoeken adds.

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