Randgold

Randgold walks away from Obuasi

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In separate announcements issued today Randgold Resouces and AngloGold Ashanti have both stated that Randgold has decided not to proceed with the proposed joint venture to redevelop AngloGold’s Obuasi gold mine – the original Ashanti gold mine – in Ghana.

To recap, on 16 September this year, the two companies had announced their intention to form a joint venture to rebuild the mine, which still has a very substantial good grade gold resource, despite its 118 year mining history.  However, the proposal to undertake this would be, subject among other things to the completion of satisfactory due diligence by Randgold and the agreement of a revised development plan.

Randgold comments that after undertaking its own due diligence exercise into the mine and the redevelopment opportunity the mine affords, and following the work undertaken on the revised development plan, the company has determined that the development plan will not satisfy its own internal investment requirements.  Accordingly, Randgold has decided to terminate the investment agreement entered into with AngloGold Ashanti, with immediate effect.

Randgold and AngloGold have a good history of working together on gold mining projects – initially in Mali – and most recently in what appears to be the very successful building of the totally new Kibali mine in the DRC which is now probably the most productive gold mine in the whole of Africa.  There is a strong synergy between the two companies but obviously this was not strong enough to overcome the Randgold ethos of only developing projects in which it sees a strong return, and obviously Obuasi, with some significant ongoing social and technical problems, did not meet Randgold’s investment criteria, which have meant it has consistently outperformed its peers among the major and mid tier gold miners globally.

Randgold Chief Executive Mark Bristow commented that Randgold remained committed to creating real value for all its stakeholders by continuing to invest substantially in its exploration programmes with their proven record of success as well as by investigating potential growth opportunities presented by the market.

AngloGold noted in its statement that it remains committed to continue with its Limited Operating Phaseat the mine designed to resurrectoperations there at a smaller scale and at  lower cost

AngloGold goesd on to note that this decision follows concerted efforts by both companies to improve the project’s returns and also to secure an appropriate set of consents from the Government of Ghana, within an ambitious timeframe that would have allowed for a feasibility decision on the redevelopment of the mine in early 2016.  Although improvements have been identified, these have not been sufficient to commit to a substantial investment under the prevailing conditions.

The Minister of Lands and Natural Resources of Ghana has approved continuation of Obuasi’s limited operating phase during Q1 2016.  Limited operations will be undertaken at reduced cost, compared to 2015, including  maintaining  the operations, security, environmental management, optimising the feasibility study,  as well as ongoing sustainability work.

“We have made a concerted effort to unlock a new opportunity for Obuasi, and the work we have done lays a good foundation for the operation in the long term,” AngloGold Ashanti Chief Executive Officer Srinivasan Venkatakrishnan said. “But in the current environment, we believe it is prudent to conserve our resources and to revisit this opportunity when market conditions improve.”

Randgold sees Tongon gold mine pass major milestone and ups Cote d’Ivoire exploration

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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.

Seeking Alpha: DRC’s big Kibali gold mine sustains momentum

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Randgold/Anglogold/Sokimo Kibali gold mine is progressing well and is now expected to exceed this year’s planned gold output level of 600,000 ounces – which would make it Africa’s largest gold mine in gold production terms.  To read full article on Seeking Alpha click on:

Big Randgold/AngloGold Kibali Gold Mine Sustains Momentum

Randgold’s promising Cote d’Ivoire gold exploration targets

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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’s Tongon gold mine on track to meet this year’s target production.

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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.

Kibali – already one of Africa’s largest gold mines – going strong

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The ongoing search for additional reserve ounces at Kibali will secure its future as a long-life mine and one of Africa’s largest gold producers, Randgold Resources chief executive Mark Bristow said in a speech in Kinshasa, DRC.  Randgold develops and operates the mine and has a 45% stake, which it owns in partnership with AngloGold Ashanti (also 45% owners)  and the Congolese parastatal SOKIMO which holds the 10% balance.

In 2014, its first full year of operation, Kibali produced 526,627 ounces of gold at a total cash cost of $573/oz and Bristow told a media briefing here that production and cost for the first quarter of 2015 were likely to be within guidance.

“When you’re producing gold at the rate of around 600,000 ounces per year, the need to replace the reserves that are consumed is of critical importance,” he said.  “We believe Kibali’s KZ structure hosts significant additional resources, and our continuing exploration is confirming this potential.  A number of targets have been identified and the Kalimva-Ikamva and Kanga sud targets have been prioritised for in-depth investigation.”  One suspects that the promising geology around the mine should host sufficient gold resources to keep it in operation well beyond its initial 18 year mine life.

Kibali is still a work in progress, with its third open pit now operational and the development of its underground mine ahead of schedule.  Ore from its stopes is already being delivered to the plant but the underground mine is only expected to be in full production by 2018.  The first of the mine’s three hydropower plants was commissioned last year and work on the second is well underway.  The metallurgical plant is operating at its design capacity and construction of the paste plant is nearing completion.  Despite the high level of production and development activity  –  some 5,000 people are currently employed on site  –  Kibali is maintaining a good safety record, with the lost-time injury rate reduced by 16% last year.

Kibali represents an initial investment of more than US$2 billion and at a gold price of $1,200/oz and its current mine plan is only expected to repay its funding after 2024.  Thanks to its strong cash flow, however, it has already been able to repay the first tranche of its debt in March.  The whole project has been a remarkable success to date, particularly given its location – almost right in the geographical centre of the African continent, close to the South Sudan and Ugnadan borders which necessitated the bulk of the supplies and equipment having to be delivered from the African east coast rather than through the DRC itself.

Bristow said Kibali was continuing to invest in the development of the regional economy by using local contractors and suppliers wherever possible.  A prefeasibility study on a palm oil project, designed to provide a sustainable source of post-mining economic activity for the region, has been completed and work on a bankable feasibility study has started.

On the issue of the DRC’s proposed new mining code, Bristow said he welcomed Prime Minister Augustin Matata Ponyo’s recent statement that the government was ready to re-engage with the mining industry with the intention to review the draft submitted to parliament and was open to further discussions with the sector.

“We were surprised and disappointed when the ministry of mines presented a draft code to parliament without taking the industry’s comments on board and which departed radically from the common ground we thought had been established.  As the DRC Chamber of Mines warned at the time, enactment of the code in this investment-hostile form will have a catastrophic effect not only on the mining sector but on the Congolese economy generally.  It was therefore very heartening to learn from the prime minister that the government has recommitted itself to negotiation,” he said.

Randgold says troubled Tongon gold mine to deliver this year

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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.