Randgold still investing in Malian gold

As noted earlier this week,Randgold Resources CEO, Mark Bristow, has been on a tour of the company’s operations – all in West and Central Africa – ahead of the release of the company’s Q1 2018 results announcement in just under a week’s time.  The latest visit was to its Loulo-Gounkoto complex in Mali, which in combination is currently the largest gold producer in Africa, although this position may soon be usurped by the Randgold-operated, and 45%-owned, Kibali gold mine in the DRC.

In an announcement Randgold confirmed that it continued to see Mali as having potential for further growth and is continuing to invest there – Loulo-Gounkoto is already the single biggest foreign investment in the country.  The compzny says Q1 output will fall back from Q4 2017 levels due to scheduling production from lower grade areas – although we will have to wait for the quarterly announcement to find out by how much.

Randgold (LSE: RRS and NASDAQ: GOLD) has arguably been the No.1 global gold growth stock over the past several years, despite all its operations being in what the investment community sees as difficult investment environments.  It has been particularly adept in continuing to grow its gold output while maintaining mostly good relationships with its host governments, which is presumably why the much larger Anglogold Ashanti, which also owns 45% of Kibali, ceded construction and operational management of the DRC’s largest gold mine to Randgold.

A lightly edited version of Randgold’s statement on its Malian operations is set out below:

Randgold’s Loulo-Gounkoto gold mining complex in Mali, already one of the largest of its kind in the world, is still expanding, with the Gounkoto super pit and the new Baboto satellite pit joining its Yalea and Gara underground mines.

Speaking at a site visit for local media, chief executive Mark Bristow said the complex’s all-Malian management team, which steered it to a record performance in 2017, had made a good start to this year, although production was expected to be lower than the previous quarter on the back of forecast lower grades, reflecting the sequencing of mining lower grade blocks at both Loulo and Gounkoto.  Although slightly delayed, mining of the Baboto satellite pit was now well on track to support the complex with softer oxide ore feed.

“We expect grades to pick up and production to increase through the rest of the year to deliver our production guidance of 690,000 ounces for 2018,” said Tahirou Ballo, the GM of the complex.  Mr Ballo noted that production from the underground mines continued to show a steady improvement since Loulo took over the mining from contractors in 2016.

Chiaka Berthe, the West African GM of operations, said the Loulo-Gounkoto complex represented the largest foreign investment to date in the Malian economy.  After all these years it was still investing in new mining projects like the Gounkoto pushback and the new Baboto satellite pit he said.  The country is rich in other gold opportunities, and Randgold continues to search for extensions to the known orebodies as well as new discoveries in its extensive Malian landholdings.

On its sustainable development policy in the areas around its mining operations, Randgold also continues to invest substantially in its host communities.  Some 5,000 students are enrolled at 17 schools built by the company, and last year 52 of them were awarded bursaries for further study.  Randgold is also advancing the development of commercially viable agribusiness enterprises, to mitigate the socio-economic impact of the complex’s eventual closure.  The project already includes five incubation farms and an agricultural college with 70 students.

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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.