London, 2 November 2011 - Despite torrential rains which flooded its flagship Loulo/Gounkoto complex in Mali during August, Randgold Resources ('Randgold') maintained gold production and on an adjusted basis significantly increased profit in Q3.
Comparisons with Q2 are skewed by the sale during that quarter of 31 646 ounces on hand at Tongon from the first quarter, when conditions in Côte d'Ivoire prevented their disposal. Excluding the sale of those ounces, profit for Q3 was up 29% at US$122.9 million. Production of 182 362 ounces was in line with Q2's 184 711 ounces, as was total cash costs of US$135.1 million.
The Loulo/Gounkoto complex had to contend with a downpour of a once in a hundred years severity, which flooded the pits and made the haulage road between Gounkoto and the Loulo plant impassable. It nevertheless increased production by 9.3% to 87 070 ounces, thanks to an increased contribution from Gounkoto as it ramped up its output. The growing proportion of Gounkoto's higher grade and lower cost ore in the plant feed mix also reduced total cash costs per ounce by US$21 to US$818. The complex's profit from mining jumped by more than 50% to US$77.9 million.
The development rate of Loulo's Yalea underground mine continued to improve. Development of the high-grade 'purple patch' has reached the limit line of the transverse zone and the advance to the next level is on schedule. There has been an extensive review of stoping methods and layout, and the revised design concepts, capital schedules and mining rates are currently being evaluated and optimised along with a series of trade-off studies. The Gara underground development remains on schedule and the orebody has already been exposed in preparation for the imminent start of the stoping production build-up.
At Gounkoto, the mine's own fleet of purpose-built 50 tonne Volvo trucks arrived on site and was commissioned this quarter. Mining and hauling rates have already picked up and production volumes are planned to increase during Q4. Infrastructure development is continuing and the mine's crusher is expected to be operational by the end of this year. The new mill for the Loulo processing plant has arrived on site and commissioning is scheduled to start in December this year.
Also in Mali, the joint-venture Morila retreatment operation is ahead of budgeted production and profit for the year on the back of higher gold prices and better than expected grades from the stockpiles being processed. Production of 60 955 ounces was slightly down on the previous quarter but ahead of plan, and total cash costs per ounce of US$795 was in line with Q2. Studies on the tailings retreatment and pit pushback projects are being finalised and the agribusiness initiative continues to make progress.
In Côte d'Ivoire, the Tongon mine was officially opened by President Alassane Ouattara last week. During the quarter, Tongon produced 70 910 ounces against 80 180 ounces in Q2 as a result of a drop in mill throughput related to the commissioning of the hard rock crushing circuit. Reflecting the lower production, total cash costs per ounce increased from US$477 in Q2 to US$637. Both phases of the secondary and tertiary crusher installations have now been completed.
At the Kibali project in the DRC, progress was in line with the schedule and final design and development plans are expected during this quarter with the approval of the mine development by the shareholders early in the new year and commissioning still scheduled to start in Q4 2013. In the meantime, the first of the 14 affected villages has been resettled at the Kokiza model town, where houses are now being built at the rate of 35 per week. Three Congolese contractors have been appointed as partners in the construction of these houses. The major long-lead items for the mine, including the winder, mills, turbines and openpit mining equipment have been ordered and the appointment of the key contractors is at the final adjudication stage.
On the exploration front, Q3 coincides with the rainy season in West Africa and, with fieldwork temporarily halted, is traditionally used for evaluation, analysis and planning.
Chief executive Mark Bristow says that despite the company's big development and operational load, it was not diminishing its exploration effort, as exploration success remained the key to its organic growth strategy.
"The annual exploration review has highlighted significant potential for the new field season. The Loulo/Gounkoto region remains highly prospective for new discoveries, and we are also rolling out our exploration teams into the equally promising northern region of Côte d'Ivoire. At Kibali our fieldwork has identified a second style of mineralisation which opens up a whole new dimension of possibilities in our tenements there. We've also passed the 3 million ounce Massawa project in Senegal back to the exploration team with the brief of finding a further 2 million ounces of metallurgically simpler ore than the current deposit," he said.
