Randgold’s Kibali on track to produce 700,000 gold ounces this year

Africa-focused gold miner, Randgold Resources has a remarkable track record in developing gold mining operations in a part of the world most of its Tier 1 gold mining peers avoid – West and Central Africa  It has built up a major gold production base in Mali and Cote d’Ivoire, but it deserves particular credit for its development and operation of the Kibali open pit and underground operation in one of the remotest parts of the African continent in the far northeast of the Democratic Republic of Congo (DRC), close to the border with South Sudan.  The logistics of building what is probably now Africa’s single largest mine about as far from the coast as any mine could be, will have been daunting, yet Randgold brought Kibali on stream ahead of schedule and within its estimated cost parameters.

Kibali is owned 45% by Randgold and 45% by the far larger gold miner, Anglogold Ashanti, with the balance owned by DRC parastatal SOKIMO.  Even though Angolgold is the much larger company it ceded development and management of the Kibali mine to Randgold due to the latter’s particular expertise in running mining operations in remote areas of Africa and, perhaps most importantly, maintaining good working relationships with the host governments – a skill where many of the other gold majors fall short.

It is now eight years and $2.5 billion since Randgold started developing Kibali, and the giant gold mine is expected to be in full production this year following the successful commissioning of its underground operation’s integrated automated ore handling and hoisting system.

Randgold chief executive Mark Bristow, who is touring his company’s African mines en route to Cape Town for this year’s Mining Indaba Conference,  told local journalists in Kinshasa in the DRC that the mine was on track to produce its targeted plus 700,000 ounces of gold in 2018, making it Africa’s largest gold mine and one of the largest of its kind in the world.

Its high level of mechanisation, which features multiple driverless loaders operating with full automation as well as a single haulage drive with a high-strength surface, is believed to be a first for the gold mining industry in Africa.

“The past quarter has been a particularly busy one for Kibali.  In addition to completing the underground haulage and hoisting system, the team has settled the processing challenges, improving the recovery while keeping throughput above the plant’s nameplate design level.  At the same time, the mine’s conversion to the latest ISO 14001:2015 environmental standard was successfully certified and it readied itself for alignment with the new, and yet to be published, ISO 45001 safety standards,” Bristow said.

“All that now still remains to be done is to ramp-up the underground production and complete the construction of Azambi, Kibali’s third new hydropower station, which is scheduled to be plugged into the grid by the middle of this year.”

Bristow noted that with development expenditure tapering off, Kibali should now be in a position to start repaying its capital loans.  Unfortunately, Bristow commented, due to the continued non-repayment of tax credits to the tune of $192 million, Kibali’s shareholders have had to inject more money into the operation during the past year to enable the mine to pay its creditors.

“Over the past eight years, while Kibali was still a work in progress, it has paid $2.25 billion to the state and people of the DRC in the form of taxes, permits, infrastructure, salaries and payments to local suppliers.  Its shareholders, on the other hand, have not as yet received a return on their investment,” Bristow said.

“The surprise re-tabling of the controversial new draft mining code, which takes no account of the industry’s very serious concerns about the negative impact it will have on any prospect of further investment in this sector, is particularly disappointing.  I appeal again to the government to engage with the industry in the formulation of a code that will stimulate this key component of the DRC’s economy instead of crippling it.” said Bristow.

Bristow stressed that Randgold remained committed to a future in the DRC, and was already hunting for new development opportunities there.  In the DRC as in its other host countries, Randgold regarded itself as a partner of the government and the people, and its view on this issue should be seen not as unconsidered criticism but as a plea, from a major investor, for an outcome that will benefit all these partners equitably.

So the Kibali development has not been without its problems, but Bristow has a major point in that if the DRC does not put its mining code and its government-industry relations in order it could dissuade future external investment in the further development of the country’s very substantial mineral potential.  Geologically it is one of the world’s richest nations with enormous resources of precious, base and key industrial metals just waiting to be exploited.

We should learn more about progress at Kibali and the company’s dealings with the DRC Government, as well as on Randgold’s other operations and exploration progress when CEO Bristow presides over the release of the Q4 and FY 2017 financial and operational results on February 5th in Cape Town.

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