Miners say Mali operations 'normal'

2012-03-22 17:38

London/Toronto - Gold miner Randgold Resources said its operations in Mali were running normally, despite worries over unrest as renegade soldiers said they had seized power in the West African country.

The soldiers earlier went on state television to declare they had seized power in protest over the government’s failure to quell a rebellion in the north of the country.

Concern over the Loulo, Gounkoto operations of Randgold Resources and its joint venture Morila weighed on the miner’s shares on Thursday, which were down 8% at 6 064 pence at mid-afternoon.

But both Randgold Resources and other miners in the country said their operations in Mali, which account for about two-thirds of its production, were currently operating normally.

Chief executive Mark Bristow, who is at the company’s Loulo complex some 350 km from the capital Bamako, said exact details were unclear, but the situation at the flagship mine was calm.

“Malians respect laws and I don’t believe this will come with a high-handed change in political direction,” he said in a statement, adding the company was monitoring the situation.

“We don’t expect any subsequent governments to disregard proper and due process.”

Analysts said Randgold, which also operates in Ivory Coast, Senegal and the Democratic Republic of Congo, had experience in dealing with unrest, but said the lack of clarity would hit shares.

“(The) uncertainty will be negative for the share price as Randgold’s Malian operations represent 43% of the group net present value and 65 to 70% of group production in 2012,” Collins Stewart said in a morning note.

Other mines operating

Other miners with significant operations or exploration projects in Mali include Iamgold, Avion Gold and Cluff Gold - with the latter down 5.4% while AngloGold Ashanti [JSE:ANG] and Gold Fields [JSE:GFI] were also working in the country.

Iamgold and AngloGold, which jointly own the Sadiola and Yatela gold mines in the country, said the current political turmoil has not had an impact on their operations.

“We continue to monitor the situation closely,” said Bob Tait, Iamgold’s head of investor relations.

Iamgold’s New York-listed shares were down 2.2% at $13.11 in early trading. US-listed shares of AngloGold, which also owns a part of the Morila mine in Mali, fell 1.3% in morning trading.

Shares of Gold Fields, which owns the Yanfolila exploration project in Mali, were down 1.4% in early trading on the New York Stock Exchange.

“At the moment the situation at our Yanfolila camp is calm but we have stopped drilling for the day as a precautionary measure. We will review the situation on a regular basis to assess when to resume our drilling programme,” said Gold Fields spokesperson Sven Lunsche.

Mali is one of the most significant gold producers in Africa, alongside Ghana and South Africa, and gold is one of the country’s top exports.

In a note to clients, Citi analyst Jon Bergtheil said Mali has been a fairly stable country and so the political situation there could settle back into "business normality" in a few months.

Avion, a small Canadian gold miner that currently produces all of its gold from within Mali, said its operations are also still functioning normally.

“The mine at Tabakoto is running as usual. Our people are safe at site and secure,” said chief executive John Begeman. “We are still gathering as much information as possible.”

Avion’s Toronto-listed shares fell 12.4% in early trading to C$1.20. The shares of Canadian exploration company Great Quest, which owns projects in Mali, were the biggest losers on the TSX Venture Exchange, down 71 Canadian cents at C$2.29.