JOHANNESBURG (miningweekly.com) - Africa-focused Randgold Resources will complete a scoping study on its most recent gold discovery in Senegal in the first three months of 2009, the London-listed company said on Thursday.

Randgold Resources, which unveiled the new major gold discovery in late July, would use the scoping study, together with a 35 000-m feasibility drilling programme, to form the basis of the prefeasibility study for the Massawa project.

Massawa was expected to be larger than Randgold Resources’ resource at Tongon, in the Côte d’Ivoire, where development work has started recently.

Tongon, which is the company’s third mine, was expected to produce an estimated 2,7-million ounces of gold over a ten-year life-of-mine, said CEO Mark Bristow.

Meanwhile, Randgold Resources reported lower revenue in the third quarter, as a drop in output from its two mines in Mali, and declining gold prices cut gold sales.

Gold sales fell by nearly 18% to $78,3-million in the September quarter.

The company reported output of 101 856 oz in the September quarter, compared with the June quarter’s 115 598 oz. The production decline was attributed to a drop in the average grade mined at both the Loulo and Morila operations.

Loulo produced 64 250 oz, compared with the previous quarter’s 70 100 oz. In the third-quarter of 2007, the mine produced 58 020 oz.

The Morila joint venture also saw a drop in grade from 3,5 g/t to 3 g/t and consequently in production from 113 746 oz to 94 016 oz.

Bristow noted that the last of the orebody was now being mined at Morila - the mine is scheduled for conversion into a stockpile processing operation next year - and that at this stage it had little operational flexibility. Production was also impacted on by a fire in the elution plant towards the end of the quarter.

“We expected this to be a tough quarter and it was,” commented Bristow.

“But the challenges are being dealt with and we’re moving ahead.

“Loulo is still on track to meet its production target for the year. Morila - which produced its five-millionth ounce during the quarter - continues to generate strong cash flows and we’re looking at every aspect of its operations and its cost structure to ensure that margins are maintained," he stated.

While rising costs was the most critical issue facing the gold-mining industry in the past quarter, Bristow said that the industry would also face tremendous volatility going forward.

He noted that a new mine plan for Loulo, which would increase production from Yalea and expand the plant, had enabled the company to delay the development of the second underground mine, Gara, by a year without affecting the overall production profile.

“This means that we can reschedule our capital plans by redesigning our production profile,” he said.

Bristow said that Randgold Resources’ cash resources - $264-million at the end of the quarter - and its strong revenue streams were sufficient to ensure the development of the Tongon mine and other projects.

“The fact that it would not require external funding for this growth was a very significant advantage given the current state of the capital markets,” he said.

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