Randgold Resources Ltd. (GOLD, Financial) is engaged in the gold mining, exploration and related activities. The company’s activities are focused on West and Central Africa.
The company produces gold through its mining operations at Loulo-Gounkoto complex, Morila, Tongon and Kibali.
In 2015, the complex and Kibali combined accounted for 84% and 80% of the total company’s revenues and profit from mining activities, respectively. Therefore Loulo-Gounkoto complex and Kibali represent the most important sources of sales and profit for Randgold.
In first half 2016, the company generated a profit of $122.6 million, an 11% increase year-over-year, driven by a 1.8% increase year-over-year in the average gold price received per ounce of gold sold and a 1% declined year-over-year in total cash costs per ounce as a result of optimal ore blending and enhancement of control system at the Loulo-Gounkoto complex, offset by challenges with throughput, recovery and grade at Kibali.
Earnings per share was $1.10, in line with the corresponding period of 2015. The production was in line with the corresponding first half year of 2015
Net cash generated from operations increased 6% and the miner added 7% to Cash and Short Term Investments that amounted to $272.7 million in second quarter 2016.
Randgold is developing projects in eastern Senegal, the Massawa gold project and undertaking exploration activities in Mali and the Democratic Republic of Congo.
First half 2016 operating results at mine
The most important company’s operations are localized in the west of Mali near the border with Senegal at Loulo-Gounkoto complex, which includes the Loulo underground mines, Yalea and Gara, and the Gounkoto open pit mine.
Source: Randgold Resources Ltd.’s website
Randgold (80%) shares the ownership with the State of Mali (20%) of the Loulo and Gounkoto mines.
We are talking about a high production operation complex with 630,167 ounces of gold produced in 2015 (approximatley 52% of total 2015 group production) at a total cash cost of $675 per ounce, in line with the prior year, total reserves of 7.8 million ounces and a LOM of 12 years.
In 2015, the complex generated $831.3 million of revenues, approximatey 60% of the total company’s revenues and a profit of $298.4 million from mining activities, approximately 52% of the total company’s profit from mining activities.
In first half 2016 at the Loulo-Gounkoto complex, a total of 342,744 ounces of gold were produced (+20.2% year-over-year) at total cash costs of $599 per ounce (-17.7% year-over-year) and a total of 340,809 ounces of gold were sold (+17.9% year-over-year) at an average gold price received of $1,223 per ounce (+1.9% year-over-year).
Morilla is situated 173.9 miles south east of Bamako, the capital of Mali. The mine is operated by Randgold (40%) in joint venture with Anglogold Ashanti (AU, Financial)(40%) and the State of Mali (20%). The gold company expects to extend operations until 2017 and an agribusiness project is on-going as part of a closure plan.
Source: Randgold Resources Ltd.’s website
In 2015, Morilla had 0.3 million ounces as estimated on Dec. 31, 2015, and produced 122,374 ounces of gold. The attributable gold production was 48,950 ounces at total cash costs of $674 per ounce.
The mine generated $57.2 million in sales, approximatley 4.1% of the total company’s revenues and a profit of $24.2 million from mining activities, approximately 4.2% of the total company’s profit from mining activities.
In the first half, a total of 12,249 ounces of attributable gold were produced at Morilla (-64.5% year-over-year) at total cash costs of $953 per ounce. (+71.4% year-over-year) and a total of 15,161 ounces of attributable gold were sold (-63.3% year-over-year) at an average gold price received of $1,238 per ounce (+3.5% year-over-year).
The Tongon mine is located in the north of Côte d’lvoire, 34.2 miles south of the Mali border. Randgold is the owner of 89% of the mine. The rest of the ownership is shared between the State of Côte d’lvoire (10%) and a local company (1%).
Source: Randgold Resources Ltd.’s website
At Tongon, gold is extracted from two open pit mines, the Southern and Northern Zones. Randgold is exploring the area to increase the current reserves that are 2.0 million ounces as estimated on Dec. 31, 2015, and the LOM that currently is seven years.
In 2015, Tongon produced 242,948 ounces of gold, approximately 20% of total 2015 group production at total cash costs of $836 per ounce.
The mine generated sales of $277.3, approximately 19.9% of the total company’s revenues and a profit of $75.4 million from mining activities, approximately 13.2% of the total company’s profit from mining activities.
In first half 2016, a total of 104,513 ounces of gold were produced at Tongon (-6.6% year-over-year), at total cash costs of $915 per ounce (+5.4% year-over-year) and a total of 127,442 ounces of gold were sold (-3.3% year-over-year) at an average gold price received of $1,227 per ounce (+2.3% year-over-year).
Kibali, one of the largest gold mines in Africa, is located in the Moto goldfields, north east of Democratic Republic of Congo (DRC), close to the border with Uganda. The mine is operated in joint venture with AngloGold Ashanti (45%) and the Congolese parastatal SOKIMO (10%). Randogold’s stake in the joint venture is 45%.
Source: Randgold Resources Ltd.’s website
At Kibali, the gold company extracts gold from an integrated open pit and underground that is currently developing.
In 2015, Kibali had 11.6 million ounces in reserves as estimated on Dec. 31, 2015, and produced 642,720 ounces of gold. The attributable gold production was 289,224 ounces at total cash costs of $604 per ounce.
The mine generated $336.3 million in sales, approximately 24.1% of the total company’s revenues and a profit of $161.2 million from mining activities, approximatley 28.2% of the total company’s profit from mining activities.
In first half 2016, a total of 289,224 ounces of attributable gold was produced at Morilla (-23% year-over-year), at total cash costs of $780 per ounce (+34% year-over-year) and a total of 114,950 ounces of attributable gold was sold (-22.6% year-over-year) at an average gold price received of $1,224 per ounce (+1.4% year-over-year).
Randgold Resources Ltd. has a market capitalization of about $7.88 billion. At the moment, the stock is trading at $84.52, down 2.44 (or -2.81%), it gained 36.48% year to date and is down trending since the beginning of July 2016.
The Enterprise Value/EBITDA is 19.45 and the Price/Book (mrq) is 2.39.
Disclosure: I have no positions in Randgold Resources Ltd.
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