TORONTO (miningweekly.com) – London- and Nasdaq-listed Randgold Resources on Thursday said it would cut its capital spending and reduce production from its Loulo-Gounkoto complex, in Mali, as it too was negotiating the effects of a sharply lower gold price, and a weaker first-quarter performance.

Randgold said a planned decrease in the grade mined at Gounkoto and a reduction in recoveries owing to copper-rich ore from the Yalea South pit pushback had a greater-than-expected impact on the Loulo-Gounkoto complex’s performance in the first quarter of the year.

The company said it had reacted quickly to the recent drop in the gold price to $1 321/oz in April, and had reviewed all its operations and projects, with this year being one if its biggest capital years as it pushed ahead to complete the giant Kibali project, in the Democratic Republic of Congo (DRC), with a focus on managing cash flows.

At Loulo-Gounkoto, the review had resulted in a change in the mining plan, which rescheduled expenditure on capital and operational development of the underground mines, as well as the build-up of lower-grade stockpiles, while efficiently feeding the ore mined to the plant. The net effect was a small reduction in grade, and consequently the complex had reduced its expected production for the year from 590 000 oz to 560 000 oz.

“We have a huge luxury in our high-grade deposits, in that we could decide to focus on higher grades and not impact overall reserves as severely,” CEO Mark Bristow told Mining Weekly Online in an interview.

Capital expenditure (capex) and working capital tied up in stockpiles were each also reduced by about $20-million.

Bristow said the company would again have to look at readjusting its operating strategies should the gold price touch $1 150/oz, noting that the company would still be profitable at a $1 000/oz gold price.

Loulo-Gounkoto’s reduced contribution and higher costs, a larger than usual amount of gold unsold at the end of the quarter and the lower gold price were reflected in Randgold’s first-quarter results. Production of 199 013 oz was down 7% quarter on quarter and profit dropped by 43% to $81.6-million.

Randgold’s Tongon mine, in Côte d’Ivoire, where operations were earlier this year disrupted by a fire, had improved its performance across the board, boosting gold production by 15% on the back of a stabilised power supply and increased throughput and efficiencies, while the Morila joint venture beat its production and cost targets.

The development of the Kibali gold project continued to progress quickly towards its goal of first gold production before the end of this year.

As part of the business review, the Kibali project had rescheduled a portion of the work related to the sulphide stream, planned for the current year, to early 2014. This was not expected to impact the forecast production schedule, but reduced the peak-funding requirement in this year. As a result, capex on the project this year was now estimated at about $700-million.

“While Randgold remains strongly placed to sustain its profitability under any realistically conceivable gold price scenario, we have nevertheless reviewed each operation’s plans in the light of the recent drop in the price, making adjustments where necessary to ensure we manage our cash flow given this year’s large capital spend,” Bristow said.

He added that despite the revised plan at Loulo-Gounkoto, the company’s forecast yearly production and cash costs remained within its previous guidance. He said the company’s business plan was based on realistic assumptions and were bolstered by Randgold’s secure long-term growth capability and reserves that were estimated at a $1 000/oz gold price.

Bristow had long been a staunch advocate for African mining jurisdictions not to alter mining codes. He noted that the lower gold price had inadvertently helped focus these countries and had helped them understand that profit was not just there for the taking, but had to be prudently managed to ensure long-term project sustainability.

The company’s stock traded at $78.77 apiece in New York on Thursday morning.