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Randgold reports stellar performance, poised for 'step-up' in 2014

3rd February 2014

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

  

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JOHANNESBURG (miningweekly.com) – Randgold Resources has emerged out of what CEO Mark Bristow termed one of the company’s “best years” and was poised for “another big production step-up” in 2014.

The LSE- and Nasdaq-listed miner reported record-level gold production of nearly one-million ounces, while reducing the total cash cost to $715/oz during the year to December 2013.

Bristow commented in a statement on Monday that Randgold had made significant advances “on all fronts” despite multiple challenges.

“Perhaps most significantly, we anticipated the shift in the gold market and were able to align our operations to the changing environment in good time, securing our sustained profitability at the lower gold price,” he noted.

Randgold reported a 15% year-on-year rise in production to 910 373 oz and expected a continued rise in output over the next five years, with production in 2014 expected to increase by between 25% and 30% on the back of increasing grades at the Loulo-Gounkoto complex, improving recoveries and throughput at Tongon and the recently commissioned Kibali’s first full-year contribution.

“On the back of the higher production, gold sales of $1.27-billion for the year were almost in line with the previous year, but a drop of 17% in the average gold price received reduced profit from 2012’s $510.8-million to $325.7-million,” Bristow said.

The Loulo-Gounkoto complex, in Mali, beat its production guidance by 20 000 oz, reaching 580 000 oz at $34/oz, improving total cash costs to $704/oz.

While Loulo-Gounkoto’s gold output continued expanding, Randgold exploration executive Paul Harbidge said exploration teams continued the search for additional ounces around the existing orebodies as well as further world-class deposits.

“We believe this region has a high potential for the discovery of more multimillion-ounce gold deposits. A study into the feasibility of accessing the orebody underneath the Gounkoto pit is also well advanced,” he noted.

Efficiency enhancement projects at Randgold’s Tongon mine, in Côte d’Ivoire, had boosted its performance significantly; however, despite increased production, the mine was still struggling to break 80% recovery rates for the year. 

“An additional 2% was achievable by [improving the efficiency of] the existing recovery circuit, but raising the recovery rate to the targeted upper 80s will require an expansion of the flotation process to capture most of the sulphide in the ore,” Bristow noted.

The planned expansion of the flotation process, which would lift the recovery rate to its feasibility study level, was initially estimated to cost $12-million.

It is targeted for completion by the end of 2014 with a forecast payback period of eight to ten months.

Randgold forecast output from Tongon to reach 260 000 oz for 2014.

“Looking ahead, we remain fully committed to Côte d’Ivoire, which we believe has great potential for further world-class gold discoveries. We are intent on expanding our footprint in the country, but our efforts in this regard are currently being hampered by delays in permit approval,” Bristow added.

Kibali, which started production in September and sold its first gold in October, delivered 46% more gold at 88 200 oz at total cash costs of $464/oz for the year to December.

“Kibali is a work in progress, with the development of its second recovery circuit, three of the four hydropower stations and the underground mine still under way,” Bristow said, adding, however, that the mine was expected to meet its forecast of 550 000 oz for the year.

Meanwhile, despite Randgold’s Morila retreatment operation exceeding its budgeted production at a lower total cash cost, the mine was deemed marginal at current gold prices and its closure would be brought forward to the 2016/2017 financial year.

“The year ahead is going to be a tough one, but I am confident that we’re in good shape to deliver on our objectives again. We will be investing capital of some $330-million in our growth projects and a further $60-million in exploration.

“Exploration success, more than any other factor, has differentiated Randgold from the rest of the gold mining industry and we are sustaining our strong focus on the hunt for new discoveries as well as additional ounces for our existing orebodies,” Bristow said.

The group would also seek profitable acquisition or joint venture opportunities “generated by the current stress in the industry”.

Randgold declared a yearly dividend of $0.50 a share for the year to December.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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