London, 7 November 2013 - A strong performance by its flagship Loulo-Gounkoto complex in Mali powered Randgold to an 80% quarter on quarter profit increase for the three months ended September despite a 3% drop in the average gold price received over that period.
In a quarter that also saw the early commissioning at its giant Kibali project in the Democratic Republic of Congo, Randgold increased group production by 19% to 233 676 ounces and reduced its total cash cost per ounce by 17% to US$662/oz on the back of the production rise. Despite its capital expenditure, mainly on Kibali, peaking during the quarter, the company remained net cash positive.
Kibali poured its first gold in September, well ahead of the original target date, and has since started commercial production from its open pit mine. It is expected to exceed its 30 000 ounce production forecast for the fourth quarter of this year and is on track to meet its target of 550 000 ounces for 2014. It is currently ramping up to full capacity on the plant’s oxide circuit with the completion of the remaining plant and hydropower stations, and the commissioning of the sulphide circuit, scheduled for next year. The development of the underground mine is progressing well.
Chief executive Mark Bristow said the successful start-up of Kibali represented a considerable feat of geology, metallurgy, engineering and logistics, as well as negotiation and diplomacy.
“The Randgold team only moved on site in January 2010 and in less than four years it has built a world-class gold mine in one of Africa’s remotest regions, in the process more than doubling its reserves to 11.6 million ounces and increasing its resources to 21 million ounces. And while doing this, we have also completed or progressed major performance-enhancing capital projects at Loulo-Gounkoto and Tongon,” he said.
At Loulo-Gounkoto, an increase in the grade coupled with a substantial improvement in recoveries delivered a 36% increase in production to a record 165 146 ounces over the previous quarter, while total cash cost per ounce dropped by 23% to US$616/oz. The improvement in the recovery rate was achieved through the commissioning of a milling circuit recycle crusher and a new oxygen plant. Other projects completed during the quarter included the conversion of the mine’s generators to heavy fuel oil and the expansion of the CIL tank.
At Tongon in Côte d’Ivoire, mining performance improved in line with plan, with mill throughput rising significantly as a result of the commissioning of a number of throughput-related capital projects. A further mill tonnage ramp-up is scheduled for the fourth quarter with the commissioning of new crushers and a cyclone pump upgrade. The increase in throughput was offset in the third quarter by a drop in the recovery rate, but this will be brought in line with plan through the installation of recovery enhancing unit processes and ongoing focus on operational efficiencies. Total cash cost per ounce was reduced by 6% quarter on quarter through tighter cost control and improved efficiencies.
“Our focus now is on securing steady-state production at Kibali while completing the rest of the development, and on achieving the full benefit of the performance-enhancing projects at Loulo-Gounkoto and Tongon. But we’re also still maintaining a strong emphasis on exploration, which has traditionally been the driver of Randgold’s growth. At Kibali, where an upgrade of the underground mine plan has already delivered an interim increase in reserves, continued exploration points to a further upside, and in West Africa, our geologists are moving back into the field after the rainy season to follow up identified targets,” he said.