Speaking at a presentation on Randgold's quarterly results, chief executive Mark Bristow noted that the company's business model had been designed to deliver returns at lower gold prices, and it had therefore not been forced to write down its reserves as these had been calculated at US$1 000/oz. Randgold had, however, reviewed all its business plans at the beginning of the year and where necessary aligned them to the drop in the gold price.
"Our giant Kibali project is scheduled to start gold production in October, Loulo and Gounkoto are both accessing higher grade sections in their orebodies, Tongon is continuing its turnaround and improved efficiencies across the group have already cut our total cash cost per ounce by 5% this past quarter. In addition, projects are underway across the group to increase throughput and recoveries and reduce unit costs further," he said.
Randgold was therefore well placed to sustain its profitability, he said, albeit not at the levels achieved during the peak in the gold price.
Reflecting the turndown, the reduction of 17% in the average gold price received during the quarter to June impacted on profit for the period, which came down from US$81.6 million in Q1 to US$54.1 million. Production of 196 207 ounces was in line with that of the previous quarter.
Cash and cash equivalents on hand at the end of the quarter amounted to US$44.8 million which, together with the recently negotiated revolving credit facility of US$200 million secured by the company, meant it remained strongly positioned to fund its growth projects, Bristow said.
Bristow noted that while Kibali was now heading steadily to first production, continued drilling had increased the total resources there by 13% to 21.5 million ounces. At the Gounkoto underground project, drilling had identified a high grade intersection which could expand the project. Incorporation of the new data in the geological model would push the planned completion of the feasibility study out to 2014.
