Johannesburg, 1 February 2006 - Société des Mines de Loulo SA (Somilo) today filed an urgent application in the South African High Court and was granted a provisional order for the liquidation of MDM Ferroman, formerly the main contractor for the plant at its new Loulo gold mine in Mali.
Dr Mark Bristow, chief executive of Somilo's majority shareholder and Loulo project sponsor Randgold Resources (LSE:RRS) (Nasdaq:GOLD), said the company had taken this step to protect its interests in the light of MDM's apparently deteriorating financial position. Last month Somilo took back the Loulo Phase II plant construction project from MDM on the grounds that MDM had defaulted on its contract. Bristow said that since then a Randgold Resources team had been managing the project and the liquidation of MDM would therefore have no further effect on its completion.
Somilo's application to the court says MDM has failed to give any indication of how it proposes to repay the debt it owes Somilo as a result of advance payments made to ease its financial difficulties. It notes that MDM is clearly not in a position to assist it with the completion of the project but is still in possession of technical drawings and related data which the company wishes to recover.
Loulo has been in production since the last quarter of 2005. Completion of the second phase of the plant, the hard-rock crushing circuit, has been delayed by MDM's default but remedial measures taken by Randgold Resources have ensured that this delay should not impact on planned production.