London, 6 May 2008 - Randgold Resources today reported a net profit of US$18.2 million for the March quarter, up 25% on the previous quarter and 42% on the corresponding quarter in 2007, in spite of intensifying industry-wide cost pressures, notably the sharp rise in the oil price.
Attributable production of 103 649 ounces was down 13% on the previous quarter while total cash cost of US$440/oz was up 12% but both were in line with plan considering the oil price. Chief executive Mark Bristow said the company’s production and cost profile was expected to show improvement in the latter half of the year when the new high grade Yalea underground mine at its Loulo complex in Mali comes on stream.
The Yalea orebody has been intersected and the new mine has already delivered its first development ore to the Loulo plant. A second underground mine, Gara, is at final planning stage. Loulo’s two existing open-pit operations produced 63 249 ounces at a total cash cost of US$470/oz during the quarter and the mine is on track to meet its full-year target of 265 000 ounces. The underground operations are scheduled to increase this annual output to 400 000 ounces by 2010.
Elsewhere in Mali, Randgold Resources took over operational responsibility for the Morila mine from its joint-venture partner AngloGold Ashanti during the quarter. Following the change, a multi-disciplinary review team from both sides identified a number of operational issues which require rectification. Corrective action is being taken.
“As Morila continues to move to lower-grade ore and eventually to stockpile retreatment, plant efficiency and effective grade control will be paramount. Our first priority has been to ensure the maximum availability of the plant and we’ve made good progress on this and other fronts. We’ve also had to reconcile some discrepancies between the grade control and ore reserve models, as a result of which we have reduced Morila’s forecast production for 2008 from 465 000 to 430 000 ounces,” Bristow said.
Morila produced 101 000 ounces at a total cash cost of US$393/oz during the quarter against the previous quarter’s 129 193 ounces at US$334/oz.
In Côte d’Ivoire, site preparation is underway at Tongon where the company’s third mine is scheduled for development. Infill drilling increased Tongon’s probable reserves by 52% to 2.44 million ounces during the past quarter and Bristow said continued drilling was likely to upgrade more resources to the reserve category. He noted that development of the mine was proceeding in tandem with a steady improvement in the political climate in Côte d’Ivoire, where general elections have been scheduled for 30 November this year.
The acquisition of a further 5% participation interest in Tongon has increased Randgold Resources’ stake in the project to 81%. As in the case of Loulo, Randgold Resources will now be able to consolidate 100% of Tongon and show minority interest separately.
On the exploration front, three advanced targets - Massawa in Senegal, Tiasso in Côte d’Ivoire and Kiaka in Burkina Faso - are scheduled for drill-testing in the current quarter. The company’s exploration teams are active in six West and East African countries, constantly feeding new prospects into its pipeline.
“We’re also looking closely at a number of external growth opportunities, including joint ventures, which offer us the potential of creating real value through the application of our skills. Such opportunities will, of course, have to meet the same return and other investment criteria we require from our organically generated projects,” Bristow said.