Randgold Res. (GOLD) W. Africa article; likes peace
(from Creamer Media's Mining Weekly)
Company hopeful of peace in West African nation
With the recent announcement of a doubled profit over 2004, there is little doubt that London- and Nasdaq-listed gold-miner Randgold Resources is currently one of the more successful juniors operating in Africa. In its financial year-end report for 2005, Randgold Resources reported a net profit of $41-million for the year to December, more than doubling its 2004 earnings of $18,8-million, on the back of a 54% increase in production and a buoyant gold-price. This financial success is attributable to the impressive operational performance of the company’s two West African mines, Morila and Loulo.
The company’s Mali-based Morila joint venture produced 651 110 oz of gold during the year, outstripping its 2004 output by some 140 000 oz, and its new Loulo mine, which came into production in the last quarter of the year and shipped its first bullion in November, contributed 67 984 oz to the production total. However, the success of Randgold Resources should not only be attributable to the performance of its existing operations but also to the company’s philosophy of creating value through discovery.
In an interview with Mining Weekly, Randgold Resources CEO Dr Mark Bristow explains that the key component of the company’s growth strategy is an aggressive exploration programme, designed to discover profitable ounces and build a well-balanced portfolio. “This process constantly feeds in fresh prospects at the base of our resource triangle and evaluates these to produce a layer of targets from which we select our feasibility projects,” explains Bristow.
“The concept behind a resources triangle is to constantly invest in the bottom and systematically promote the most viable projects to the top, enabling each project to gain value as it is rolled out.
“It is very difficult for mining houses to create value unless they are able to discover and develop new deposits as orebodies are not inexhaustible.” In comparison to most gold-mining companies operating in Africa, Randgold Resources has one of the most well-structured resource triangles with 99 out of its 159 targets located at the bottom, or in the identified geological anomaly stage of the triangle. Following this, the company has 48 exploration targets, 12 feasibility projects and four mine and mine-evaluation projects in Senegal, Côte d’Ivoire, Mali, Tanzania, Burkina Faso and Ghana.
“Over the past year, we delivered on our promise to expand our country exposure and project portfolio throughout the major gold belts of East and West Africa.” “We now have a groundholding of 8 700 km2 and 159 targets in six countries, in five of which exploration and drilling programmes are currently under way.” Although the company intends to continue its aggressive exploration drive, Bristow contends that one of the most significant priorities for Randgold Resources this year will be to continue on from the prefeasibility study that was undertaken at its Tongon site in Côte d’Ivoire before the outbreak of civil unrest in 2002. Randgold Resources’ Tongon Project in northern Côte d’Ivoire is situated in the gold-bearing Eburian province, which also occurs in Ghana and Sierra Leone.
The province consists of a group of sediments and volcanic-rocks known as the Birrimian group, which is the most highly-prospective gold-bearing rock in West Africa.
The company’s portfolio in the north of the country includes the Niele permit, which hosts the three-million-ounce Tongon project and complementary satellite targets within a 10-km radius, the Boundiali permit where the advanced target of Tiasso is located together with three reconnaissance licences, which amount to a ground- holding of some 2 628 km2. According to Bristow, Randgold Resources embarked on a prefeasibility study in 2001 as a result of this impressive geology in the north of the country.
“The prefeasibility study was completed in 2002 and indicated that this site had the potential to meet the company’s criteria for investment.” “However, with the outbreak of civil unrest in Côte d’Ivoire in 2002, the commencement of the prefeasibility study on this project was put on hold owing to the force majeure that exists in this area.” The civil unrest is the result of an abortive coup carried out in 2002, which divided the government-controlled south and rebel-held north.
However, a United Nations-backed peace plan aims to reunite the country by the end of October this year through presidential elections.
Notwithstanding recent events of renewed unrest, there is evidence of new optimism that, with the successful rollout of national elections, the requisite conditions will be in place for Randgold Resources to return to Côte d’Ivoire.
As a result, the company is currently involved in preparations for a return to its Tongon site and has also completed a review of the economics of this project. “While the gold price has increased significantly since the pre- feasibility study was undertaken, substantial increases in diesel, steel and transport have negatively affected the project economics,” says Bristow.
“Nevertheless, the total resource in the Tongon area is slightly larger at a higher grade and a preliminary economic assessment shows that the project exceeds our investment criteria as well as the other strategic filters.” In addition to this economic review, Randgold Resources recently visited the project site and ascertained that, while the infrastructure on the site had deteriorated, it will be relatively simple to restore the project office and site accommodation so that the bankable feasibility study can be completed as planned.
“We plan to meet with the relevant parties as soon as conditions allow in order to obtain approval to start some of the preliminary work before the wet season in advance of the planned general election, after which we will mobilise a comprehensive programme to complete the definitive feasibility study.” In conclusion, Bristow states that the three-million-ounce Tongon project is a superb asset in the company’s portfolio and has the potential to yield high-grades at relatively low operating costs.
“Consequently, Randgold Resources is prepared to ride through this political unrest and contribute to the restructuring and development of the country after the successful completion of the elections in October.”
News 
Market Data 
Discover 
