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Randgold bucks industry trend with new record

Cape Town – For Randgold Resources 2015 has been one of the best years in the company’s history, chief executive Mark Bristow said on Monday.

The record gold production is up 7% quarter on quarter and 6% year on year.

Bristow said the production increase is because the company managed to face down the challenges surrounding the embattled gold mining industry to post performance improvements and advances on every front.

“It’s easy to achieve when the stars are all aligned, but it’s a lot more difficult in a market as challenged as this one, which makes these results even more pleasing,” Bristow said.

He attributed it to improved plant throughput, ore feed and grade management as well as reduced underground mining costs at Loulo - following its transition from contract mining to owner mining - lower input costs and improved efficiencies across all operations.

Production and costs were in line with the company’s annual guidance, with production setting a new record of more than 1.2 million ounces - up 6% on the previous year.

READ: Randgold CEO warns bankers about unfrofitable gold

Group total cash cost per ounce was down by 3% at $679/oz. Strong cash flows from the operations boosted cash on hand by 158% to $213.4m, but profit for the year was $212.8m against the previous year’s $271.2m. This reflects the decline in the gold price.

Profit is up quarter on quarter and there are no impairments despite lower gold price. The board has proposed a 10% increase in the annual dividend, reflecting the strong cash flows generated by the business.

Bristow said Randgold had reviewed all its mine plans in the light of current conditions and with a focus on true returns and break-even cash flows. As a result of this, Loulo-Gounkoto and Kibali now both forecast annual production of more than 600 000 ounces at a total cash cost of around $600 per ounce or below - Loulo-Gounkoto for 10 years and Kibali for 12. Tongon was forecasting to produce an average of more than 300 000 ounces for five years.

Operationally, Loulo-Gounkoto came back strongly in 2015 after a shaky start to the year, while Kibali again beat its forecast. He said Tongon continues to improve its performance on the back of its plant upgrade and expansion programme. The retreatment operation at Morila, now scheduled for closure in 2019, remains profitable.

READ: Randgold pulls out of Ghana joint venture deal

Bristow said Randgold continued to invest substantially in exploration, which remains the engine that drives its business and is expanding its footprint in its target areas, as well as in its sustainability programmes. The company regards these as essential to retaining its social licence as it said without this no mining company can operate successfully in Africa.

Bristow said the company's exploration drive is making progress as it expands its footprint. It has already signed three new joint venture agreements.

“Randgold is now in a unique position to continue delivering value to all its stakeholders. Our mines can continue to generate cash flows at gold prices well below the $1 000/oz level. Our positive production and cost profile extends beyond 10 years," said Bristow.

"Our exploration teams are not only replenishing the ounces we mine, but are making significant progress in the hunt for our next big discovery. And when they find it, we can afford to build our next new mine without recourse to the market, thanks to our robust balance sheet.”

ALSO READ: Randgold aims to tackle debt - CEO

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