TORONTO (miningweekly.com) – Randgold Resources CEO Mark Bristow is sticking with his prediction of $1 500/oz gold next year, and objects to suggestions that the LSE- and Nasdaq-listed company's shares are expensive compared with its peers, he said in Toronto on Friday.

In a presentation to analysts and investors, Bristow was also characteristically blunt in criticising what he sees as overpriced acquisitions embarked on by industry rivals in recent months.

“If you are doing a deal and you are giving a premium, it doesn't create any value unless you do something with it. Because eventually the market catches up with that transaction,” he said.

“I'll use this opportunity to caution our shareholders that they can't expect us to do something like that.”

Bristow predicted in March that gold would reach at least $1 200/oz this year, and rise to $1 500/oz in 2011.

The metal's price will continue to be supported by investment demand linked to economic uncertainty, as well as a fundamental supply shortage as gold-miners struggle to boost production, he said on Friday.

“I would stick with my $1 500/oz gold for 2011, with some comfort,” Bristow told Mining Weekly Online later.

Randgold operates the Loulo mine, in Mali, and now the new Tongon operation in the Cote de I'voire, where the first gold was poured earlier this month.

The firm also produces gold from the now-halted Morila mine, where it is processing stockpiled ore.

With Tongon now in production – the first commercial ore shipment took place this week – the next project in line is Randgold's Gounkoto discovery on the Loulo property, followed by the big Kibali project in the Democratic Republic of Congo (DRC), and then Massawa, in Senegal.

The company has completed an environmental-impact assessment on the Gounkoto openpit project, and expects to have a full feasibility document finished next month, Bristow said.

Although Gounkoto falls under the Loulo mining licence, the firm intends to ask the Malian government to split the licence so that the new project is seen as a separate operation, he said.

This would allow the company to take advantage of a tax holiday provision in the first five years of operations.

The appeal from the government's point of view is that it holds a 20% stake in Loulo, and the sooner Randgold recoups its investment on the project, the sooner the State will receive its share of profits, Bristow said.

Randgold intends to start trucking ore from Gounkoto for processing at Loulo in the second half of 2011.

The company also announced in July this year it plans to start construction at the Kibali project six months earlier than previously indicated, in mid-2011.

The firm bought the Kibali asset in 2009 when it teamed up with larger rival AngloGold Ashanti to buy Moto Goldmines. The two companies now each hold a 45% stake in the project, and the DRC government owns the other 10%.

Randgold has said the early construction timetable should result in gold production from Kibali by 2014. The asset has 9,2-million ounces in gold reserves.

PREMIUM

Randgold's shares have generally outpaced industry rivals over the last six years, which has led to a perception among analysts and investors that the stock is expensive.

“We're challenging that,” Bristow said, arguing that cost and production forecasts put out by other gold miners are often misleading and based on expectations rather than real contained reserves.

“When you look at our peer group and the analyst models, they are assuming significant extra ounces in their NPV [net present value] calculations on a relative basis, relative to the number of ounces that are used in our models.

“We do not have models that do not have reserves in them.”

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.