During the quarter Loulo produced 87 625 ounces, at a total cash cost of US$631/oz compared to 106 564 ounces in the previous quarter at US$512/oz. Total cash costs per ounce increased by 23% quarter on quarter following a decrease in the ounces produced and an increase in the unit costs of mining. The decrease in production resulted from a reduction in the average ore grade processed, as planned, coupled with lower throughput, partially offset by higher recoveries. The increase in unit mining costs results from an increase in total tonnes mined and adjustments to the rise and fall provisions,  additional mobilisation costs for opencast equipment and increased underground operating costs attributable to significant expenditure on equipment maintenance. 

The average gold price received during the quarter was US$1 110/oz, a 13% increase on the previous quarter (Q4 2009: US$984/oz) resulting primarily from no hedge positions being scheduled for the current quarter. 

This increase in the gold price received was offset by the reduced production and a higher cost base which resulted in a decrease in profits from mining activity of 19% to US$40.7 million (Q4 2009: US$50.4 million).

While the Loulo plant expansion project was successfully commissioned in the previous quarter, the increased throughput rates put pressure on some of the plant sections (notably the mill pumps and the crushers which were not working at higher performance levels) resulting in a requirement for the mine to raise preventive maintenance performance as well as highlighting some bottleneck areas in the circuit. The delay in getting the maintenance activities on track along with removing the bottlenecks of feeding the secondary crusher and the screening plant resulted in the decrease in tonnes processed. Both of these issues are being addressed by mine management.

The development at the Yalea underground showed some improvement as the new mining team settled in and started implementing the revised production plan which was formulated after the exit of the previous contractor. At the Gara underground mine blasting on the decline commenced at the end of the quarter and the first development ore from this mine is expected on schedule by the end of the current year.

 

Randgold owns 80% of Loulo with the Government of Mali owning 20%.  The Government’s share is not a free carried interest.  Randgold has funded the Government portion of the investment in Loulo by way of shareholder loans and therefore controls 100% of the cash flows from Loulo until the shareholder loans are repaid.

Randgold consolidates 100% of Loulo and shows the non-controlling interest separately.

*    Refer to explanation of non-GAAP measures provided.

+   Includes the impact of 18 750 ounces delivered at US$428/oz in the quarter ended 31 December 2009 and 23 748 ounces delivered at US$441/oz in the quarter ended 31 March 2009. Also includes the impact of 84 996 ounces for the year ended 31 December 2009 delivered into the hedge at US$435/oz.

There were no hedge positions scheduled for the current quarter.


Mineral reserve update

During the quarter, the group released its annual mineral resource and mineral reserve declaration and the relevant extract relating to the Loulo mineral reserves is shown in the table below, including a comparison with 2008 figures: 

 
*  Excludes Gounkoto which is reported separately.