Randgold Resources said production for the current 2014 financial year would be up to 30% higher owing to the first full-year of output at Kibali, the company’s newly commissioned Congo operation.
Higher grades at its Loulo-Gounkoto complex in Mali and improved recoveries at Tongon, a mine in C?te d?Ivoire, would also contribute to targeted production that would burst through the 1 million ounce mark. Kibali is held in joint venture with AngloGold Ashanti.
However, Morila gold mine – the operation on which Randgold Resources’ was founded – would be closed earlier than expected as a result of difficult market conditions.
“The Morila retreatment operation exceeded its budgeted production at a lower total cash cost but at current gold prices it is becoming marginal and its closure has therefore been brought forward to 2016/2017,” the company said in an announcement.
Commenting on its new financial year, Randgold Resources CEO, Mark Bristow, said it would be difficult.
?The year ahead is going to be a tough one, but I am confident that we?re in good shape to deliver on our objectives again,” he said. Some $330m would be invested in capital growth projects, and a further $60m in exploration.
Bristow was commenting following the publication of Randgold’s full-year figures in which profit fell to $325.7m from $510.8m in the 2012 financial year – a fall attributed to the 17% drop in the average gold price.
Randgold’s board recommended an unchanged dividend of 50 cents a share reflecting caution for 2014 which some analysts said could result in a further weakening of the gold price.
In a report published last week, JP Morgan estimated an average gold price of $1,263/oz for 2014, some 11% lower than in its previous estimate, with only a slight increase in the 2015 calendar year where it would average $1,275/oz.
“We?ve lowered our long-term real gold price assumption to $1,400/oz based on our assessment of the industry?s all-in cost of production,” the report’s authors said.
Randgold said that its cash balance had improved quarter-on-quarter. It ended the year with no net debt having been able to resist dipping into a $200m credit facility. Bristow said this was achieveable provided the gold price didn’t fall below $1,000/oz.
Randgold has also run into production difficulties at Tongon which recently completed a raft of efficiency projects but is still below targets. It was decided to expand the mine’s flotation circuit to improve recoveries from certain ore.
Investec Securities commented that the results would be “taken well” by the market as the figures exceeded estimates both in production and profitability. “We continue to like Randgold Resources given its superior production growth, a higher grades profile and greater operational diversity,” it said in a morning note.
Shares in Randgold were up just over 3% in the first few minutes of trade on the London Stock Exchange.
Source: miningmx
