JOHANNESBURG (miningweekly.com) – Africa-focused miner Randgold Resources’ profit increased by 80% quarter-on-quarter to $97.5-million during the three months ended September, despite a 3% drop in the average gold price, owing to strong performance at its flagship Loulo-Gounkoto complex in Mali.

However, the drop in the average gold price did result in a 20% year-on-year decrease in profits. Similarly, basic earnings a share increased to 88c, up 76% from the prior quarter and down 22% compared with the corresponding quarter in 2012.

Gold sales increased by 38% from that of the previous quarter owing to a 42% increase in ounces sold, following increased production at Loulo-Gounkoto, driven by increased grades and recoveries, as well as the sale of ounces produced but not sold during the second quarter.

Randgold CEO Mark Bristow told Mining Weekly Online he was satisfied with the third-quarter results, stating that the company’s performance was in line with expectations. 

The Loulo-Gounkoto project achieved a 36% quarter-on-quarter increase in production to deliver a record 165 146 oz, while the total cash cost an ounce dropped by 23% to $616/oz.

“The improvement in the recovery rate was achieved by commissioning a milling circuit recycle crusher and a new oxygen plant.  Other projects completed during the quarter included the conversion of the mine's generators to heavy fuel oil and the expansion of the carbon-in-leach tank,” Randgold stated.

Further, the quarter also saw the early commissioning of the Kibali project, in the Democratic Republic of Congo, contributing to a 19% increase in group production to 233 676 oz and a 17% reduction in cash cost to $622/oz on the back of the production rise.

Kibali poured its first gold in September, ahead of the original target date, and had since started commercial production from its openpit mine.

The mine was expected to exceed its 30 000 oz production forecast for the fourth quarter of this year and was on track to meet its target of 550 000 oz for 2014, Randgold highlighted. 

Bristow said the successful start-up of Kibali represented a considerable feat of geology, metallurgy, engineering and logistics, as well as negotiation and diplomacy.

"The Randgold team only moved on [to] site in January 2010 and, in less than four years, has built a world-class gold mine in one of Africa's remotest regions and, in the process, more than doubled its reserves to 11.6-million ounces and increased its resources to 21-million ounces.  While doing this, we have also completed or progressed major performance-enhancing capital projects at Loulo-Gounkoto and Tongon," he explained.

At the Tongon mine, in Côte d'Ivoire, mining performance improved in line with the mine plan during the third quarter, with mill throughput rising significantly as a result of the commissioning of a number of throughput-related capital projects. 

A further mill tonnage ramp-up at the mine was scheduled for the fourth quarter with the commissioning of new crushers and a cyclone pump upgrade. 

“The increase in throughput was offset in the third quarter by a drop in the recovery rate, but this will be brought in line with plan through the [implementation] of recovery-enhancing unit processes and ongoing focus on operational efficiencies,” the company said.  

Total cash cost an ounce produced at Tongon was reduced by 6% quarter-on-quarter through tighter cost control and improved efficiencies.

Meanwhile, the company’s total cash cost increased by 18% quarter-on-quarter, and was 24% higher than that of the corresponding period in 2012, owing to inventory movements during the quarter associated with the gold on hand at the end of June 2013, which was sold during the current quarter. 

Notwithstanding the increase in total cash costs, total cash cost an ounce was down 17% from the prior quarter and 8% from the corresponding quarter in 2012, principally, as a result of increased production and sales, Randgold said.

"Our focus now is on securing steady-state production at Kibali while completing the rest of the development and achieving the full benefit of the performance-enhancing projects at Loulo-Gounkoto and Tongon,” Bristow said, adding that the company would maintain a strong emphasis on exploration.

“Our current successes are a product of what we did in the past and not of what we are doing now. Exploration sets the horizon for the future and, therefore, we are still investing in exploration unlike many of our industry peers,” Bristow said.

“At Kibali, where an upgrade of the underground mine plan has already delivered an interim increase in reserves, continued exploration points to a further upside. In West Africa, our geologists are moving back into the field after the rainy season to follow up identified targets," he noted.

Randgold, therefore, also expected the fourth quarter to be positive as the company would start seeing the benefits from the Kibali project.

“We have also always said we would like to achieve 1.2-million ounces of production on a consolidated basis by 2015, and we are well on track to achieving that,” Bristow concluded.