Randgold today also announced that commissioning of the plant at its new Tongon mine in Côte d’Ivoire was under way ahead of schedule. Because of the expected earlier start-up, Tongon’s production guidance for this year had been increased by approximately 10%. The company said it is targeting to bring the start of construction at the giant Kibali project in the Democratic Republic of Congo forward by six months to the middle of 2011 in the light of the rapid progress it had made in the pre-development phase.
While production for the quarter was down 17%, the profit of US$36.4 million was boosted by a higher gold price, a gain of US$6.3 million on the sale of part of the company’s stake in Volta Resources and by the write-back of a US$13 million provision in respect of an investment in Auction Rate Securities following the settlement of this issue.
Production and hence the cost profile for the quarter were impacted by issues at Randgold’s flagship Loulo operation in Mali, which suffered from extensive power black-outs during the period. Loulo is also still settling down its plant expansion project and dealing with the Yalea underground development. Production and cost levels are expected to be back on target by the fourth quarter.
Chief executive Mark Bristow said in spite of the dip at Loulo the group’s production guidance for the year remained within 5% of the original target.
“The increased contribution from Tongon will almost make up for the expected shortfall from Loulo, while Morila is holding steady. We’re therefore forecasting attributable production to be within 5% of the 477 000 ounces we gave as our guidance at the beginning of the year,” he said.
“This is a creditable performance given the very substantial challenges we’re dealing with this year at the start of our multi-mine growth phase.”
Bristow noted that the US$6.3 million realised through the disposal of part of the company’s shareholding in Volta was in effect an exploration profit as Randgold had received the shares in part consideration when it sold its Kiaka discovery in Burkina Faso to Volta. “Kiaka didn’t fit our development criteria but it was another significant deposit generated by our exploration programmes and we have continued to crystallise value from it,” he said.
Randgold today also said the continuing feasibility study on its Gounkoto target in Mali was confirming its potential. The company was now considering whether to develop it as a standalone open pit and underground operation or to combine it with the nearby Loulo in a high grade, low cost and long life megamine.
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