Randgold profit down on Tongon mill breakdown, lower Kibali output

JOHANNESBURG (miningweekly.com) –  Prolonged mill downtime at Tongon and the Kibali plant’s continuing transition to a mixed-ore feed negatively impacted the production and costs of London-listed Randgold Resources in the three months to June 30.

One of Tongon’s two milling circuits lost 46 days after a breakdown and Kibali’s production was 4% down quarter-on-quarter at 281 494 oz.

Cash costs an ounce rose 12% to $727/oz and profit was down 8% at $58.7-million.

On the positive side, net cash generated quarter-on-quarter rose 6% and cash holdings increased 7% to $272.7-million.

Randgold CE Dr Mark Bristow described the quarter as one of the toughest in years but said in June and July both Tongon and Kibali had made significant progress, with Tongon fixing the mill and completing the commissioning of its new quaternary circuit, and the new Kombokolo satellite pit at Kibali expected to improve its feed flexibility and grades. The development of Kibali as a complete project remains ahead of schedule.

Randgold teams have been reworking and optimising their mine plans to ensure that the company ends 2016 within guidance.

In addition, it was intensifying its focus on critical operational issues to ensure that the company delivered a “substantial” second-half improvement, Bristow said in a release to Creamer Media’s Mining Weekly Online, which singled out the quarter’s highlight as the advances made by the company’s exploration teams.

Advanced targets seen to have the potential to become important assets include Fonondara and Kassere on the Boundiali permit in northern Côte d’Ivoire, and Sofia in Senegal, which is showing signs of becoming a high-grade, free-leaching satellite resource for the feasibility study-stage Massawa project.

The greenfield Bakolobi target is being drilled in Mali, where Loulo’s Gara underground mine is showing potential to replace this year’s depletion at Loulo. At neighbouring Gounkoto, the feasibility study on the superpit option will be concluded by the end of this year.

In the Democratic Republic of Congo, the discovery and rapid development of the Kombokolo satellite illustrates the continued prospectivity of the Kibali permit area and augurs well for the Moku joint venture (JV) west of Kibali.

The Bambadji JV with Iamgold has been renewed and new permits are being sought in southern and western Mali as well as in southern Côte d’Ivoire, where a new JV is being negotiated.

Randgold is continuing to place emphasis on exploration at a time when the gold mining industry as a whole is tending to shy away from it, leading to a general consensus that new gold production is poised to continue to decline.

“This, in combination with growing global geopolitical and economic jitters, must be good for the gold price, at least in the long run . . . but considering the internal and external challenges ahead, our teams will have to test and, if necessary, reinvent the way they operate on a continuous basis,” Bristow commented.