Randgold Q1 2017 Highlights

Generally the Q1 figures this year were better than Q1 2016 in terms of production, revenue and costs, but down on the record Q4 2016.  The quarterly highlights as reported by the company were as follows:

BUILDING ON LAST YEAR’S RECORD RESULTS, RANDGOLD MAKES STRONG START TO 2017 – Q1 results
KEY PERFORMANCE INDICATORS FOR THE Q1 ENDED 31 MARCH 2017• Gold production up 10% on corresponding quarter of prior year and down 15% on record Q4 2016
• Profit up 33% on corresponding quarter of prior year and down 10% quarter on quarter
• Total cash costs per ounce down 4% on corresponding quarter of prior year and up 13% quarter on quarter
• Cash increases 16% quarter on quarter to $600 million, with no debt
• Another solid operating quarter at Loulo-Gounkoto supported by high recoveries
• Morila tailings retreatment operation starts to deliver on plan and Domba project approved
• Tongon delivers steady performance with good cost control
• Kibali tracks guidance as it works to deliver on underground plan
• Group attributable reserves replaced at higher grade
• Busy quarter for greenfields exploration complemented by good progress on brownfields targets
• Shareholders approve 52% increase in annual dividend to $1.00 per share
Randgold Resources

Thus the company presents the figures in a positive light despite financials down on the previous quarter and cash costs up, although the latter will be partly due to the lower gold output. Net cash available increased to $600 million though which leaves the company well placed to take advantage of any M&A or new development and expansion opportunities without having to resort to borrowing.

Company CEO Mark Bristow is due to present to analysts in London at midday today and undoubtedly we’ll learn more about what is expected for the rest of the year then.

Update on Africa’s biggest gold mine

Randgold Resources, the biggest London listed gold miner by market capitalisation and the 14th largest gold producing company in the world, currently operates the two biggest gold mines in Africa according to consultancy Metals Focus – the Loulo-Gounkoto complex in Mali and Kibali in the DRC – and both are among the world’s Top 20 gold producing operations – See: World Top 20 Gold Miners and Mines.

Last year Loulo-Gounkoto, at No. 13 on the global list, was the bigger producer, but Kibali was experiencing some technical and operational  difficulties which reduced its output a little, but still came in as the world’s 16th largest gold mine by production.  It is currently  putting the problems behind it as its underground operations build up to full output and it should regain its top spot among African gold mines by the end of the current year.

The mine is owned 45% by Randgold, 45% by Anglogold Ashanti, with the remaining 10% by DRC parastatal, Sokimo.  Randgold built the mine – located in one of the most remote areas of the African continent close to the DRC’s north eastern border with South Sudan – and operates it.

The company’s latest statement on the mine and its progress is published here in full, but note CEO Mark Bristow’s warning about possible DRC governmental goalpost-moving on the country’s mining code:

KIBALI HEADS FOR FULL PRODUCTION AS UNDERGROUND MINE NEARS COMPLETION AND SECOND HYDROPOWER STATION IS COMMISSIONED
The Kibali gold mine’s underground operation, which will significantly increase production, is on track to start commissioning in the third quarter of this year, Randgold Resources chief executive Mark Bristow said at a media briefing.

The mine is forecast to deliver approximately 610,000 ounces of gold this year, up from 585,000 ounces in 2016, but annual production is scheduled to rise to around 750,000 ounces from 2018, when the underground operation will make it fully functional.

Bristow noted that Kibali ended 2016 with a creditable performance after having to contend with a range of operational challenges as well as the constraints imposed by limited open pit mining flexibility.  In addition to dealing with these issues, the Kibali team succeeded in keeping the underground development on track, successfully constructing and commissioning four ultrafine grind mills in the metallurgy circuit, as well as progressing work on the mine’s second new hydropower station which was commissioned in February this year.  The third and last of the new hydropower stations is currently being built by an all-Congolese contracting group.

“Kibali has stayed on course to become one of the world’s great gold mines despite the challenges of last year and the volatile political climate in the DRC at present,” he said.

“Randgold remains committed to the DRC and is confident that its government, politicians and civil society have the will as well as the capacity to work together to secure the country’s future.  We therefore continue to invest in exploration here and to lead the way in developing the north eastern DRC as a major new gold mining region.  Our engagement with the country and its people is also evident in our substantial investment in local economic development and community upliftment programmes.  These include macro and micro agribusinesses designed not only to provide regional food security but to generate surplus produce for export.”

It was a source of concern, however, that the DRC government had once again signalled its intention of reviewing the country’s 2002 mining code with the clear intention of maximising state revenue, Bristow said.  This could have a very negative impact not only on the mining industry but also on the economy.

“Now more than ever the DRC should be focused on retaining its existing investors and attracting new ones.  It’s certainly not the time to harvest more from less for short term gain.  It’s my sincere hope that this time round the government will engage the mining sector fully in the proposed review to achieve an outcome that will be in the best interests of the Congolese economy as well as the country’s mining sector,” he said.

“The existing code is in fact a good one but it is not always being applied effectively and there are still many mining operations that do not operate under the code.  There are also a number of issues and challenges which mining companies are having to face which make operating in the DRC more challenging.  In Kibali’s case, these issues include more than $200 million in unpaid TVA and duty refunds.”

Randgold Resources: Tough Quarter, Good results

Followers of perhaps the best performing gold mining major of the past few years are directed to the following article I’ve published on the Seeking Alpha website: Randgold: Tough Quarter, Good Results.  Interestingly Randgold (LSE: RRS, NASDAQ: GOLD)’s stock price has not risen nearly as much as some of its peers but that is because of its far better performance while virtually all the other major gold stocks were dropping like stones.  It has no debt, has not needed to take any impairments and is operating a progressive dividend policy where again most of its peers have been slashing their shareholder payments.  It has thus just announced a 10% dividend increase to $0.66 a share.

Highlights from Q1 2016 are as follows:

  • Profits up 19% quarter on quarter and 25% on corresponding quarter of prior year
  • Production down 11% quarter on quarter but up 4% on corresponding quarter of prior year
  • Total cash cost/oz up 3% quarter on quarter but down 8% on corresponding quarter of prior year
  • Cash increases 19% to $253.8 million on the back of reduced total cash costs and higher gold price
  • Solid quarter from Loulo-Gounkoto with production in line with plan and significant decrease in total cash cost/oz
  • Morila delivers steady performance with lower costs
  • Tongon production impacted by quaternary crushers commissioning and power supply interruptions
  • Kibali completes challenging quarter including optimising 100% sulphide feed, compounded by mill downtime
  • New Moku JV adds 1 275km2 to Randgold exploration portfolio in same greenstone belt as Kibali
  • West African exploration programmes deliver positive borehole and trench results
  • Shareholders approve 10% increase in annual dividend of $0.66 per share

In addition to the article on Seeking Alpha linked above, you can download the full quarterly statement at http://www.randgoldresources.com/quarterly-reports-page/3321

Randgold’s gold mining success story. Dividend increases while its peers are cutting

“Randgold Resources’ (LSE: RRS, NASDAQ: GOLD) operations are strongly placed to generate robust cash flows even at gold prices below current levels and to continue delivering value to all stakeholders”, so says chief executive Mark Bristow in a release on the company’s 2015 annual report published today.

Randgold has arguably been the biggest gold mining success story of the past two decades (It was only established back in 1995 and was first listed in 1997).  It has increased gold production from tiny beginnings to become the world’s 15th largest gold producer (according to consultancy Metals Focus) with an attributable output now of comfortably over 1 million ounces a year.  It now numbers Africa’s two biggest gold mines – Kibali in the DRC and the Loulo-Gounkoto complex in Mali, both of which it built from scratch – among its operations,  All this has been accomplished in a part of the world which some of its major gold mining peers feel is too risky in which to manage significant operations.

At Kibali in particular it succeeded in building a huge gold mine in one of the most remote parts of Africa, close to the DRC’s border with South Sudan, hundreds of miles from both Africa’s east and west coasts and with virtually no local infrastructure – a major logistical exercise in its own right.  And yet it succeeded in bringing the mine on stream ahead of schedule.  It is notable here that although it is in equal partnership with the world’s third largest gold miner, AngloGold Ashanti (both have 45% stakes), the latter ceded construction and operational control to its much smaller partner, presumably because of Randgold’s unparalleled record of building and operating mines in West Africa and its skills in navigating the often troubled political waters of the region.

What the gold mining industry needs, says Bristow, is to make new discoveries, as even a significant rise in the gold price and an injection of fresh capital will at best enable it to clear its debt, but will provide little scope for adding any value or reversing the production decline.  Through its consistent investment in exploration and development Randgold, in contrast, was projecting sustained growth from a solid foundation.

“Our mines have been modelled to generate cash flows at gold prices well below the $1,000/oz level.  Our positive production and cost profiles extend to a 10-year horizon, we have had no impairments or write-downs, and have substantial cash resources.  Our exploration teams are not only replacing the ounces we deplete but are making significant progress in the hunt for our next big discovery.  In fact, we are in a unique position to continue delivering value to all our stakeholders,” he says.

Randgold set a new annual production record of more than 1.2 million ounces in 2015, up 6% on the previous year, while reducing group total cash cost per ounce by 3% to $679.  Strong cash flows from the operations boosted cash on hand by 158% to $213.4 million.  However profit for the year was $212.8 million against the previous year’s $271.1 million, reflecting the decline in the gold price.  The board has nevertheless still recommended a 10% increase in the annual dividend.

Also in the annual report, chairman Christopher Coleman reports that even in the current challenging market, Randgold is not reducing its investment in corporate and social programmes, in line with its philosophy that sustainability is central to all its activities.

“Randgold’s social initiatives extend far beyond the life of its mines.  At all its operations, it is developing ambitious legacy projects designed to provide a permanent source of employment and economic opportunity to these communities.  Based on agriculture, the primary building block of any developing economy, these range from training and funding would-be commercial farmers to a wide spectrum of agribusiness initiatives, many of which are already supplying local markets.  The company is equally mindful of the health and safety of its employees, and it strives constantly to improve an already exemplary record in this regard,” he says.

Contrary to the position of many of its peers, Randgold, as noted above, also reaffirmed its intention to continue to pay a progressive ordinary dividend that will increase or at least be maintained annually.  The board thus proposed the 10% increase in the 2015 dividend to $0.66 per share for approval at its annual general meeting on 3 May 2016.  This is almost unique among major gold miners, most of which have been having to take big impairments in their balance sheets, have been having to cut debt and have been sharply reducing their dividend payments.  Randgold has taken no impairments, has no debt and is raising dividends year on year.

Commenting on this statement, financial director Graham Shuttleworth said that at a time when the gold mining industry was focused on survival, Randgold was able to maintain its dividend policy on the back of last year’s strong performance.  He confirmed that the company still intended to build its net cash position to approximately $500 million to provide financing flexibility for future new mine developments and other growth opportunities.

Randgold Bucking Gold Mining Lower Dividends Trend; Positive Results Despite Falling Gold Price

Article Highlights:

Randgold hits 2015 gold production guidance and reports lower Q4 costs.

Rigid new project investment criteria keep the company profitable, even at lower gold prices.

Dividend raised 10% when many peer companies are making payment cuts.

See latest article on Seeking Alpha: http://bit.ly/1KbSvAo

 

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

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

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.