CAPE TOWN (miningweekly.com) – Real value can only be created in the gold mining industry when own world-class deposits are discovered and developed, says Randgold Resources CEO Dr Mark Bristow.

Paying premiums for more ounces through merger and acquisition (M&A) transactions often destroys value despite generally growing market capitalisation.

Bristow, who addressed the Investing in Africa Mining Indaba in Cape Town, says discovery and development protects shareholders from dilution as additional shares do not have to be issued for funding.

“It’s all about the discovery,” says Bristow, whose London-listed Africa-focused company has a $11-billion market cap.

Mining, processing and production are merely links in the conversion chain that transforms gold in the ground to money in the bank.

He finds that some gold majors would be more profitable if they were smaller and more focused.

The 700 000 oz/y Randgold, which is about to build its fifth mine in Africa, has no head office.

Its flagship Morila mine, now in the twilight of its life, and the Loulo complex of two opencast and two underground mines, all in Mali, were self-discovered and -developed.

All its mines have been profitable from the first quarter, including the new Tongon mine in Côte d'Ivoire, which was commissioned at the end of 2010.

Its latest, fifth, Kibali mine, in the making in the Democratic Republic of Congo is scheduled to begin producing in 2014.

Along with Loulo, Kibali will provide Randgold with two long-life high-grade mines and bring the company within reach of its 2015 production target of 1.2-million ounces a year.

“The key to this model is that everyone benefits, our shareholders and our host governments.

“In addition to the benefits of employment and indirect contributions to the economy, there’s a direct benefit to the country treasuries of more than 50% of the earnings after the recoupment of capital by the mining company,” Bristow adds.
 

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