Randgold Resources
chief executive
Mark Bristow
 
London, England — MININGREVIEW.COM — 06 November 2008
A lower gold price and grades reduced Randgold Resources’ third-quarter revenue, but costs were well contained despite the peak in input costs and the company said it was well positioned to benefit from a stronger fourth quarter.

Reporting on its performance for the quarter ended 30 September 2008, the company confirmed that attributable gold production had been101 856 ounces against the previous quarter’s 115 598 ounces. This had been due to a drop in the average grade mined at both the Loulo and Morila operations in Mali.

It added that, combined with a 7% decrease in the average gold price, this had resulted in gold sales reducing from Q2’s US$95.2 million (R950 million) to US$78.3 million (R780 million). Total cash costs of US$52.3 million (R520 million) were in line with the previous quarter’s US$52.8 million R530 million).

Randgold posted a net loss of US$684 000 (almost R7 million) for the quarter, compared to a Q2 profit of US$20.2 million (R200 million)), but would have made a net profit of US$8.2 million (R80 million) had it not been for a non cash provision of US$8.8 million (almost R90 million) against investments in auction rate securities which had shown a deterioration in credit ratings.

Reviewing the operations, chief executive Mark Bristow said Loulo had done well to maintain throughput and achieve an output of 64 250 ounces (Q2: 70 100 ounces) during the wet season. By comparison, Loulo produced 58 020 ounces and processed 10% fewer tonnes in the same quarter in 2007.

He added that the Morila joint venture had also seen a drop in grade from 3.5g/t to 3.0g/t, and consequently in production from 113 746 ounces to 94 016 ounces. Bristow noted that the last of the orebody was now being mined at Morila – the mine is scheduled for conversion into a stockpile processing operation next year – and that at this stage it had little operational flexibility.

He confirmed that Randgold had recently started development of its third mine at Tongon in the Côte d’Ivoire, and said the latest update of the feasibility study had confirmed that it was a very robust project which would produce an estimated 2.7 million ounces of gold over a 10-year life of mine.

Work has also started on a scoping study on the company’s most recent major discovery – Massawa, in Senegal. This will be completed during the first quarter of next year and if positive –  together with a 35 000m feasibility drilling programme – will form the basis of a pre-feasibility study.

“We expected this to be a tough quarter and it was,” Bristow said, “but the challenges are being dealt with and we’re moving ahead.”  

He added that the company was in the fortunate position that its cash resources – US$264 million (more than R2.5 billion) at the end of the quarter – and its strong revenue streams were sufficient to ensure the development of the Tongon mine and other projects. The fact that it would not require external funding for this growth was a very significant advantage, given the current state of the capital markets, he concluded.