London, 7 May 2015 - Randgold Resources increased its profit from mining by 5% to $143.9 million in the quarter to 31 March 2015 despite slightly reduced gold production of 279 531 ounces, mainly as a result of planned lower grades. Profit for the quarter of $51.3 million (2014 Q4: $54.4 million) was impacted by increased exploration expenditure and corporate costs as well as adverse exchange rate movements during the period.
Q1 results, published today, show that despite the production decrease, total cash cost per ounce came down to $708/oz, reflecting a solid operational performance. Net cash generated by the operations increased from $69.3 million to $101.7 million, and this strong cash flow, combined with decreasing capital expenditure after the completion of Kibali’s first phase of construction, boosted cash on hand by 71% to $141.2 million.
Chief executive Mark Bristow said the quarter had been a very active one, with the underground mine development at Kibali advancing ahead of schedule, the continuing expansion and upgrade programme at Tongon delivering an improving performance, and Loulo moving towards full owner-operator status at its underground mines. A number of capital projects, including the construction of a second hydropower station and the commissioning of the paste backfill operation at Kibali, the medium voltage infrastructure upgrade at Loulo
and the completion of the new crushing circuit at Tongon, are still in progress.
He also said that Randgold’s traditional emphasis on exploration was being intensified and that the generative team had been strengthened to step up the hunt for the company’s next world-class discovery.
“Our exploration strategy has two pillars: a brownfields programme focused on the areas around our existing orebodies which is designed to replace the reserves depleted by mining; and a greenfields programme tasked with expanding our footprint and finding new targets,” he said.
“Last year, according to a survey carried out by Scotia Capital, Randgold was the only major or mid-cap gold mining company that managed to increase its reserves, which demonstrates both the effectiveness of our exploration effort and the importance of our core discovery-and-development growth strategy. That is why we remain committed to increasing the size and at least maintaining the quality of our existing asset base, while at the same time continuing to search for our next big mine.”
Bristow said he expected the gold price to stay in the $1 000 to $1 400 per ounce range as long as the market continued in its present oversupplied situation. With the gold mining industry in a highly stressed state, and many companies heavily burdened by debt, the status quo looked unsustainable and currently unprofitable production would eventually have to be eliminated.
“All our operations are profitable at $1 000 per ounce and we have planned a rising production profile on our existing asset base, with capital expenditure and costs forecast to come down. Add to this our growing balance sheet, our proven record of exploration success and our strong focus on sustained profitability, and we are well placed to continue creating and delivering value to our stakeholders,” he said.