After one year of operations, LSE- and Nasdaq-listed Randgold Resources is turning its focus to finding more reserve ounces at the Kibali mine, in the Democratic Republic of Congo (DRC), to secure its future as a long-life mine and one of Africa’s largest gold producers.
Randgold developed and operates the mine, which it owns in partnership with AngloGold Ashanti and Congolese parastatal Sokimo.
Last year, during its first full year of operation, Kibali produced 526 627 oz of gold at a total cash cost of $573/oz, and CEO Mark Bristow said in a media briefing last week that output and cost for the first quarter of 2015 were likely to be within guidance.
“When you’re producing gold at the rate of around 600 000 oz/y, the need to replace the reserves that are consumed is of critical importance. We believe Kibali’s KZ structure hosts significant additional resources and our continuing exploration is confirming this potential. A number of targets have been identified and the Kalimva-Ikamva and Kanga Sud targets have been prioritised for in-depth investigation,” he noted.
Randgold noted that Kibali was still a work in progress, with its third openpit now operational and the development of its underground mine ahead of schedule.
Ore from its stopes was already being delivered to the plant, but the underground mine was only expected to be in full production by 2018. The first of the mine’s three hydropower plants was commissioned last year and work on the second was well under way.
The metallurgical plant was operating at design capacity and construction of the paste plant was nearing completion.
Despite the high level of production and development activity – some 5 000 people were employed on site – Kibali was maintaining a good safety record, with the lost-time injury rate reduced by 16% last year.
Kibali represented an initial investment of more than $2-billion and, at a gold price of $1 200/oz, its current mine plan was only expected to repay its funding after 2024. Thanks to its strong cash flow, however, it had already been able to repay the first tranche of its debt in March.
Bristow explained that Kibali was continuing to invest in the development of the regional economy by using local contractors and suppliers wherever possible. A prefeasibility study on a palm oil project, designed to provide a sustainable source of postmining economic activity for the region, had been completed and work on a bankable feasibility study had started.
Further, Bristow welcomed DRC Prime Minister Augustin Matata Ponyo’s recent announcement that the government was ready to re-engage with the mining industry regarding its proposed new mining code, with the intention to review the draft submitted to Parliament, and was open to further discussions with the sector.
“We were surprised and disappointed when the Ministry of Mines presented a draft code to Parliament without taking the industry’s comments on board . . . [The draft code] departed radically from the common ground we thought had been established.
“As the DRC Chamber of Mines warned at the time, enactment of the code in this invest- ment-hostile form will have a catastrophic effect not only on the mining sector but also on the Congolese economy generally. It was, there- fore, very heartening to learn from the Prime Minister that the government had recom-mitted itself to negotiation,” he commented.