Randgold Resources’ world class Tongon gold mine in Cote d’Ivoire has not been without its problems, but even so it has now paid off its shareholders’ loans of $448 million, used to partially fund its capital investment of $580 million, thereby moving it into a dividend-paying position.
Speaking at the mine’s quarterly briefing for local media, Randgold CEO, Mark Bristow described this as a significant achievement, particularly in the context of a global gold mining industry currently characterised by capital write-downs and impairments.
Although Tongon is only Randgold’s third largest mine – after Kibali in the DRC, and Loulo-Gounkoto in Mali – and is still operating below full capacity, it is a very significant gold mine by any standards, and is targeting gold output of 260,000 ounces, at a total cash cost of $820 per ounce, in the current year.
“Tongon has already paid close to $90 million to the Ivorian state in the form of royalties and taxes and the country will now benefit even more from the dividends the government will receive through its 10% carried interest in the mine as well as the increased revenue when Tongon starts paying full corporate tax at the end of this year,” Bristow said. He noted that since its commissioning five years ago, Tongon had also contributed more than $600 million to the Ivorian economy in the form of payments to local suppliers and had invested almost $6 million in community upliftment projects.
Bristow has also frequently described Cote d’Ivoire as being a highly prospective country in which to explore for new gold mining operations and has praised the government for its approach to foreign investment in the mining sector which it considers very favourable for attracting new business.
“Ongoing exploration around Tongon has increased its reserves after depletion by 18% since 2009, extending its remaining life by another year. We also continue to look for more multi-million ounce deposits elsewhere in this highly prospective country, and we are about to launch our biggest-ever exploration drive in Côte d’Ivoire. This will include a fresh look at the Nielle permit, which hosts Tongon, and a geophysical survey, followed by a diamond drilling programme, across our holdings in the north of the country,” he said.
He also cited Tongon as a particularly good example of the success of Randgold’s policy of recruiting, training and empowering nationals of its host countries to run world-class mines in Africa. The mine’s workforce is 97% Ivorian and only two members of its management team are not Ivorians.
Bristow also noted that Tongon has won the President’s Award as the best mine in Côte d’Ivoire for two successive years.
Randgold Resources CEO, Mark Bristow, has just given a quarterly update to media in Abidjan in Cote d’Ivoire where the company operates a major gold mining operation – the Tongon mine. The mine has had some problems which have prevented it meeting its full capacity, but is continuing to make good progress in resolving these.
Bristow likes the mining environment in Cote d’Ivoire where it has a good relationship with the government and he has continued to praise the country’s new mining code which he feels is supportive of those foreign potential mine developers looking to work there. Consequently he is also focusing some significant gold exploration work on the highly prospective Ivorian geology.
Speaking at the company’s quarterly update for local media, Bristow said Tongon’s recovery rate was improving, despite the problems presented by the erratic grid power supply, which management was addressing with the power utility. Following the commissioning of the new hydrocone crushers, work is continuing in conjunction with the equipment supplier to achieve the design performance level, and it has been decided to upgrade capacity by installing a fourth stage of three additional crushers at the end of the existing circuit.
“Looking beyond Tongon, we’ve stepped up our exploration effort in Côte d’Ivoire on the back of its positive new mining code, and the results are confirming our belief in the high potential of the country’s prospectivity,” he said.
“We’ve taken a fresh look at our Nielle permit, which hosts Tongon, and a number of targets for follow-up have already been generated. The most exciting suite of new targets is in the Boundiali permit. These include the very significant new target, Fonondara, and a series of other targets covering a strike of 60 kilometres at the western margin of the Boundiali belt, believed to be an extension of the Syama belt in Mali. A first-phase diamond drilling programme is currently underway at Fonondara and Sani.”
At Fonondara, six trenches over a 1.5 kilometre strike have exposed a system which averages 16 metres at 2.96g/t. Drill results beneath the trenches have returned best results of 16.53 metres at 3.38g/t including 7.40 metres at 5.88g/t from the main zone and 8.83 metres at 28.62g/t including 4.10 metres at 61.05g/t in the footwall. Results from Sani are pending.
On the Mankono permit, a very promising bulk mining target has also been identified, with trenches grading up to 1.8g/t over widths of 100 metres, and on the Fapoha permit, just south of the Nielle permit, three contiguous targets have delivered good initial sampling grades over a 13 kilometre strike with consistently anomalous pits in the target structure grading up to 8g/t.
“We are very encouraged by the government’s commitment to building and diversifying the Ivorian economy, among other things by facilitating foreign investment. Combined with the country’s geological assets, this is creating new opportunities for the mining industry which Randgold, with its long-established presence here, is particularly well placed to grasp,” Bristow said.
Randgold Resources’ Tongon gold mine in Côte d’Ivoire is on track to achieve its production and cost guidance for 2015 after a year in which its management made significant progress in dealing with the recovery and throughput challenges that had hampered the operation in its early stages, CEO Mark Bristow told a meeting in Abidjan, capital of Cote d’Ivoire.
Although Tongon is smaller than Randgold’s big Kibali gold mine in the DRC and its Loulo-Gounkoto complex in Mali, Tongon is still a major world class gold mine in its own right and its host country’s biggest gold producer. However it has had to overcome a number of problems since its start-up in 2010 – initially logistical as a result of civil conflict, and then technical, and it has yet to reach its initially planned full gold output potential of around 300,000 ounces a year. However at long last it does seem to be getting close.
Speaking at the mine’s quarterly update for local media, Bristow noted that the commissioning of its new flotation circuit and the ongoing expansion of the crushing circuit were having the anticipated impact on production and costs, steadily lifting Tongon towards its designed performance level. The construction of the upgraded flotation circuit is complete and automation and optimisation are underway. At the same time, Sandvik and Randgold are still jointly working on optimising the crushing circuit upgrade to meet Tongon’s planned production outputs.
Following the recent dry season’s impact on the Ivorian power utility’s power generation capacity, there has been constructive cooperation between the utility and mine to minimise the impact.
The mine is forecasting production of some 260 000 ounces of gold at a total cash cost of $820 per ounce in 2015. At the current gold price, it should be able to repay its capital this year as scheduled. In the meantime, continuing exploration has replaced all the reserves consumed by mining in 2014, effectively extending Tongon’s life by another year.
Bristow said that with operational pressure easing, management had been able to advance Tongon’s ambitious social initiatives, designed to develop a sustainable agribusiness as the mine’s economic legacy to the community. The strategy has two components: an industrial agribusiness to replace the mine after its eventual closure and a community agribusiness based on small farming operations. Work is underway on the construction of a fish farming project capable of delivering almost 10 tonnes of fish per year, while several women’s market garden projects have already produced their first crops.
In February the Ivorian Prime Minister, Daniel Kablan Duncan, and the Minister of Industry and Mines, Jean-Claude Brou, accompanied by high-ranking officials, visited Tongon, and Bristow said he was heartened by their interest in and support for the sustainability initiatives.
“Ultimately projects like these succeed only when there is a significant engagement by government, at central as well as local level, and when the local community is actively involved,” he said.
To continue building a good working relationship with local businessmen, Tongon hosted an on-site lunch for 35 entrepreneurs from the Korhogo region in March, providing them with an overview of the operation and identifying opportunities for co-operation.
Randgold Resources’ Tongon gold mine in northern Cote d’Ivoire has been underperforming primarily due to some technical problems, but now, according to the company these problems are behind it and it is now geared to build up to full design capacity this year. This has involved replacing its crusher circuit and installation of a flotation section which between them should see a boost in mill throughput and an improvement in recovery. At full capacity Tongon should produce in excess of 260,000 ounces of gold a year – currently it is languishing at around 30,000 ounces or more short of this target. Even so it has been a profitable, and significant, gold producer and Cote d’Ivoire’s biggest gold mine. More information should be available with the publication of the Randgold’s Q4 and 2014 results next Monday when company CEO, Mark Bristow, will be presenting these in Cape Town on the sidelines of the big Mining Indaba conference.
Read Randgold’s latest release on Tongon issued today, and set out below
Randgold Resources’ Tongon gold mine is poised to deliver on its designed capabilities in 2015, chief executive Mark Bristow told a media briefing here today.
Bristow said the mine’s management team had spent the past year building a solid foundation for Tongon’s future growth by dealing with some serious technical issues such as the replacement of a faulty crushing circuit and generally improving efficiencies while curbing costs.
“Towards the end of last year the recovery programme was producing signs of improvement in key areas such as throughput and recovery. By now the beneficial effects of those improvements are real and the full flotation circuit upgrade is on track for completion by the end of the quarter,” he said.
“While ramping up production at Tongon, we’ll also continue working with the Ivorian government in their drive to position the country as a preferred destination for new investment in gold exploration and mining. Côte d’Ivoire’s new mining code is investor-friendly but it should now be actioned as a matter of urgency. We’re still waiting for the approval of our new permits that will enable Randgold and Côte d’Ivoire to start reaping the benefits of all the good work that has been done.”
Bristow pointed out that Tongon’s tax holiday ends this year. At the same time, it is forecast to pay back its capital, which means that the State should start to share in the value created in the form of corporate taxes and dividends, on top of the revenue from royalties and other taxes and duties.