London, Thursday 6 August 2015 - A solid all-round performance from its operations, with improvements in grade, throughput and recovery, powered Randgold Resources to a new gold production record in the quarter ended June, and lifted profit in the face of a declining gold price.
Group production rose 7% on the previous quarter to top the 300 000 ounce mark for the first time, while overall total cash costs of $684/oz showed a 3% improvement. Gold sales revenue of $354.8 million (Q1: $344.6 million) would have been higher by $11.7 million if gold doré on hand at the quarter end had been sold. Profit of $59.2 million was up 15% on the prior quarter.
Chief executive Mark Bristow said the results showed a business that stood strong in a sector that was buckling under the pressure of the gold price downturn. It was particularly significant, he said, that in an environment of radical cost-cutting, Randgold was able to continue investing in its capital projects while also strengthening its balance sheet. At the end of the quarter, the company had cash of $109.2 million and no debt on its books.
Reviewing the operations, Bristow noted that the Loulo-Gounkoto complex in Mali had delivered a 21% increase in gold production, with the Yalea and Gara underground mines maintaining steady production. Randgold continues to move steadily to full owner-miner status at both these mines. Tongon in Côte d’Ivoire was still hampered by season-related grid power interruptions but produced a significantly improved performance, while Kibali in the Democratic Republic of Congo had another good quarter, beating its production target. Since the end of the quarter, development of the vertical shaft at Kibali has reached its final depth, well ahead of schedule. Production from Morila in Mali was on plan as the operation prepares for its transition to tailings processing. Arrangements to mine the satellite Domba deposit, which will extend the life of Morila’s milling circuit, are being finalised.
Bristow said Randgold’s intensified focus on exploration was generating positive results, with nine promising projects in four countries at present. In Senegal, the Massawa project has been significantly enhanced by the Sophia deposit which has the potential to add non-refractory ore to Massawa’s business plan, lifting it to a level where the project would meet Randgold’s development criteria. In the Loulo-Gounkoto district, brownfields and greenfields exploration continues, with strong results from conversion programmes around the main orebodies and greenfields results showing exciting potential to the south of Yalea and along strike from the Gounkoto deposit. At Boundiali in Côte d’Ivoire, the Fonondara structure has been traced over 70 kilometres, with multiple targets confirmed over 30 kilometres of strike. These are currently being prioritised for follow-up work.
“In the 20 years of Randgold’s existence, we have made no material changes to our core strategy, but the refinements we introduced when we saw the downturn coming, and the fact that our business models were prudently based on $1 000 per ounce, are enabling us actively to manage the weakening gold price. At the halfway mark we remain on course to achieve our market guidance for 2015,” Bristow said.
“We are also very mindful that the increasing stress in the market may create interesting long term opportunities, and we are watching carefully for these.”