News


Optimised business plan keeps Randgold’s growth strategy on track
Wednesday, May 1, 2013

London, 2 May 2013 - A planned decrease in the grade mined at Gounkoto and a reduction in recoveries due to copper-rich ore from the Yalea South pit pushback had a greater than expected impact on the Loulo-Gounkoto complex’s performance in the first quarter of the year, but Randgold Resources says its growth strategy remains intact.

The company says it reacted promptly to the recent drop in the gold price, and has reviewed all its operations and projects, with a focus on managing cash flows. At Loulo-Gounkoto, the review has resulted in a change in the mining plan, which reduces the expenditure on capital and operational development of the underground mines, as well as the build-up of lower grade stockpiles, while efficiently feeding the ore mined to the plant. The net effect is a small reduction in grade, and consequently the complex has reduced its anticipated production for the year from 590 000 to 560 000 ounces. Capital expenditure and working capital tied up in stockpiles have each been reduced by about US$20 million.

Loulo-Gounkoto’s reduced contribution and higher costs, a larger than usual amount of gold unsold at the end of the quarter and the lower gold price were reflected in Randgold’s Q1 results, announced today. Production of 199 013 ounces was down 7% quarter on quarter and profit dropped by 43% to US$81.6 million.

Elsewhere the company’s Tongon mine in Côte d’Ivoire improved its performance across the board, boosting gold production by 15% on the back of a stabilised power supply and increased throughput and efficiencies, while the Morila joint venture beat its production and cost targets. The development of the Kibali gold project in the Democratic Republic of Congo continued to progress rapidly towards its goal of first gold production before the end of this year. As part of the business review, the project has rescheduled a portion of the work related to the sulphide stream, planned for the current year, to early 2014. This is not expected to impact the forecast production schedule, but reduces the peak funding requirement in this year. Consequently capital expenditure on the project in 2013 is now estimated at approximately US$700 million.

Chief executive Mark Bristow said notwithstanding the revised plan at Loulo-Gounkoto, the company’s forecast annual production and cash costs remained within its previous guidance. Its solid business plan was based on realistic assumptions and bolstered by Randgold’s secure long term growth capability and reserves that were estimated at a US$1 000 per ounce gold price.

“While Randgold remains strongly placed to sustain its profitability under any realistically conceivable gold price scenario, we have nevertheless reviewed each operation’s plans in the light of the recent drop in the price, making adjustments where necessary to ensure we manage our cash flow given this year’s large capital spend. At Kibali, the rescheduled capital expenditure will reduce the peak funding requirement without materially affecting the production profile or putting cash flow generation at risk,” he said.

“In the meantime, the Loulo-Gounkoto complex is getting back to planned grade, recovery and production levels, Tongon continues to improve and the recently approved pit pushback project at Morila, which will extend that operation’s life by two years, is scheduled to start this quarter.”


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