Bristow notes that Randgold has solid operations with strong cash flows, a robust balance sheet with no debt and substantial cash, and a share price which for years has consistently outperformed the market. Its five year forecast shows a growing production profile and a reduction in costs.
“Organic growth will remain our core driver but, as we look ahead from this position of strength, we will consider opportunities that are often generated by stressed markets and may well elect to play a part in the likely restructuring of the gold mining industry,” he says.
Chairman Christopher Coleman adds that the industry’s overall operating environment is more complex than at any time since the 90s. “The board and management continue to look closely at all the realistically conceivable scenarios for the next five years, identifying the opportunities and obstacles that lie ahead, and incorporating them in our planning,” he says.
Buidling net cash position to $500 million
Randgold Resources intends to continue to pay a progressive ordinary dividend that will increase or at least be maintained annually, the company says in its annual report for 2014 published today. The board has proposed a 20% increase in the 2014 dividend to $0.60 per share for approval at its annual general meeting on 5 May 2015.
Chief financial officer Graham Shuttleworth says that the company also intends to build its net cash position to approximately $500 million to provide financing flexibility for future new mine developments and/or other growth opportunities
Randgold replenishes reserves in record production year
Randgold Resources has increased its total attributable ore reserves in 2014 despite significant depletion from mining in a year that delivered record production of 1.15 Moz. The company’s annual resource and reserve declaration, published today as part of its annual report for 2014, shows attributable reserves up by 0.8% to 15.2 Moz while resources decreased by 3% to 27.8 Moz.
Randgold reserve and resource management executive Rod Quick says this was achieved through on-going exploration and resource conversion. “We are committed to replacing the ounces we mine through our on-going brownfields exploration and drilling programmes,” he said.
At Kibali in the DRC, total reserves decreased to 11 Moz at 4.1g/t from 11.6 Moz at 4g/t as a result depletion, partly offset by gains in underground reserve and the conversion of the Gorumbwa open pit resource to reserve.
At Loulo in Mali, reserves decreased to 4.9 Moz due to mining depletion. Drilling continues to test the depth and strike extensions of the two principal ore bodies, Yalea and Gara, and is expected to deliver resource increases during 2015. The neighbouring Gounkoto saw total reserves increase to over 3 Moz on the back of the completion of the underground feasibility study which added 900 000 oz to the reserve base. There is still real potential to expand this reserve through on-going drilling and optimisation work, says Quick.
In Côte d’Ivoire, Tongon’s resources were increased and reserves replenished by on-going ore body gains from advanced grade control drilling within the pit. Drilling continues to highlight the potential for further gains within and immediately below the current pit design which will be tested this year.
Bristow says that, unlike most of the gold mining industry, Randgold had not needed to write down its reserves and resources as the gold price dropped because it had calculated its reserves at $1 000/oz and its resources at $1 500/oz for the past four years.
“We have looked closely at all our mines to ensure that they will still be profitable at $1 000/oz and we’ll continue to review our operations against a range of gold price scenarios. With the inclusion of Gounkoto underground we are now able to demonstrate a 10 year plan of +1 Moz production per year and all our operations will be profitable at a $1 000/oz gold price which is unique in the industry,” he concludes.