TORONTO (miningweekly.com) – LSE- and Nasdaq-listed Randgold Resources on Thursday said the new Kibali gold mine, which started production last month, could be the catalyst for substantial long-term value creation in the Democratic Republic of Congo (DRC) if it was handled correctly by all its stakeholders.
Randgold CEO Mark Bristow told a media briefing in Kibali that despite some apprehension in the market about the wisdom of attempting such a giant project in this region, Kibali had been brought into production ahead of schedule and within budget.
Randgold had developed and is operating the mine, which would be one of the largest of its kind in Africa, and has a 45% interest in it, with AngloGold Ashanti also owning 45% and the Congolese parastatal Sokimo holding the balance.
“We were able to prove the sceptics wrong because all the stakeholders – notably the Congolese government and people – wanted this mine, and cooperated energetically to bring it into being. The next challenge is to continue our partnership in this spirit, and to work together to make Kibali successful, so that it can serve as a foundation for building general economic welfare in this region,” he said.
The openpit mine is producing one-million tonnes of ore a month and the plant was reported to be ramping up well, already achieving 80% of its design capacity.
With steady-state production imminent, Kibali was set to start gold sales later this month.
In the meantime, decline development and shaft sinking for the underground mine was progressing ahead of plan, with first ore from undergound expected in 2015, while exploration continued to grow Kibali’s resources.
Randgold expected to publish a reserve update for Kibali later this year, ahead of its customary yearly group resource and reserve declaration.
“We’ll also be providing a new production forecast for this quarter soon and it is likely that this will exceed our original estimate of 30 000 oz, thanks to the successful early start-up. We also expect that, like all the other mines Randgold has developed, Kibali will make a profit in its first quarter of commercial operation,” Bristow said.
He added that Randgold saw itself as a regional development enabler, and in line with this belief had succeeded in interesting investors as well as the Congolese government in cooperating with it to establish a palm oil production business in Province Orientale, where Kibali is located.
“With much of Kibali’s construction now complete, the workforce has been reduced by some 2 500, and the proposed palm oil venture would not only ameliorate the impact of this but could make the DRC an exporter of oil and soap,” Bristow said.
He noted that the history of mining in Africa was littered with projects that had failed to realise their potential because exploitative developers and greedy governments had sought to cash in prematurely instead of focusing on value creation.
“In Province Orientale, Kibali’s stakeholders have an opportunity to start with a clean slate, and to demonstrate to the world what can be achieved in Africa through a real partnership between a mining company and its hosts.
“To date, Randgold has delivered all that it undertook to do, and more. We expect that the Congolese authorities will also keep their side of the bargain, among other things by building the administrative capacity required to fulfil their obligations under the mining code,” he said.
Bristow noted that that code was still under review and the company was waiting for its latest draft for comment.
“We are fully engaged in the review process, and the government is cognisant of our belief that any negative changes to the current code will obstruct the development of further Kibalis in the DRC.”