Gold’s fundamentals perfectly aligned for constantly rising price – Bristow

JOHANNESBURG (miningweekly.com) – Gold’s long-term fundamentals are perfectly aligned for a constantly increasing price, starting six to nine months out.

This is because the gold mining industry has gone ex-growth.

An increasing number of analysts are reaching the conclusion that new gold supply is under threat and some forecasts show 2025 as having 30% less gold – 20 t of gold instead of 30 t.

“That’s great for gold,” Randgold Resources CEO Dr Mark Bristow commented to Creamer Media’s Mining Weekly Online from London on Thursday, after his company delivered an outstanding set of results for the three months to the end of September.

At $77.3-million, Randgold’s third-quarter profit was 58% higher than the third-quarter profit of 2015, with all of the London-listed company’s gold mines designed to be profitable at a gold price of $1 000/oz.

“It’s only upside for us,” said Bristow.

Even the short term is a dynamic time for the gold price.

“You’ve got this hung decision on interest rates from the Fed, the ‘Goon Show’ of the American presidential election with everyone speculating what the outcome is going to do to the economy of America, and subsequently the dollar price, and therefore the gold price.

“You saw yesterday some guy speculated on Donald Trump winning and the gold price went over $1 300/oz. Then somebody woke up overnight and said they were going to force interest rates and the gold price went down.

“But in the long-term, the fundamentals are perfectly aligned for a constantly increasing gold price and I’m talking starting probably six, nine months out, because this industry is ex-growth,” he added.

Meanwhile, a strong third-quarter performance kept Randgold on track to meet its 2016 guidance.

Forecast cash flows generated from operations are expected to support funding for the three new projects the company has set as a goal to establish over the next five years, as well as increasing dividends.

Third-quarter production of 301 163 oz was 7% up on the second quarter and total cash cost of $663/oz was 9% down.

Cash grew to $361.1-million and should reach $500-million by year end if the gold price stays above $1 250/oz.

The Kibali gold mine, in the Democratic Republic of Congo, and the Tongon mine, in Côte d'Ivoire, recovered from the technical issues of the first half and the main Loulo-Gounkoto operation, in Mali, continued on its steady course.

Current priorities are fast-tracking the development of the Boundiali structures of Côte d'Ivoire, to establish whether Massawa or Gbongogo could replace Tongon, to define mineable satellites around Tongon while replacing depletion at the other mines and to continue driving programmes to feed the company’s resource portfolio.

The Gounkoto Super Pit feasibility study is nearing completion and if, as expected, the project goes ahead, it will significantly enhance the Loulo-Gounkoto complex’s production and cost profiles.

In the meantime, new targets at Loulo’s Yalea and Gara operations are being investigated in a programme which has already delivered600 000 oz additional resource at Gara.

Loulo-Gounkoto and Kibali are both placed to produce more than 600 000 oz of gold a year for the next ten years, and Tongon’s life-of-mine continues for at least another five years.