Randgold Resources (GOLD, Financial) reported slightly lower production on quarter-over-quarter basis at its flagship Loulo-Gounkoto complex, but the production matched the company’s expectations. Further, on a year-over-year basis, the complex production increased 22%, exceeding the expectations, while net cash costs per ounce declined by 13%. Therefore, Loulo-Gounkoto is believed to be rightly positioned to exceed the earlier guidance for the year of 640,000 ounce.
Better prospects
Randgold is keeping a differentiation with several of its peers and plans to enhance the drilling at Gounkoto, Gara and Yalea. Hence, there’s a major optimization study in progress at those two underground mines to ensure the safety of miners.
Some significant gold resources being targeted by Randgold include the greater Senegal Malian Shear zone, stretching from Gounkoto into Sadiola, and are believed to be one of West Africa's highest productive gold belts and are expected to have significant potential to expand into the gold region.
Considering Gounkoto, It is estimated to be a significant part of the Loulo-Gounkoto complex. In the quarter, Randgold slowed the production of the ore at the pits.
This slow down in the ore production at the pits is believed to hurt the company’s margins, going forward.
The ongoing operations at Morila continue to perform excellently. And, Randgold plans to transform the agribusiness feasibility projects into successful commercial enterprises.
Rangold’s Côte d’Ivoire mine in Tongon looks like a brilliant position for the quarter with production increasing by 22%, recovery rising 6.6% and mining profit increasing significantly by 64% with the declining costs and gredes in line with the reserves.
Hence, Tongon is estimated to be the company’s lone operations which illustrate huge cost benefit by being integrated with the national power grid, and the management is continuously and closely focused on working with its other key oriented partners in the state power utility for allowing the targeted grid to deliver 98% of utilization.
Strong production growth
Randgold achieved 59% increase in quarter-over-quarter production at Kibali despite minor technical issues.
Thereby, Randgold recorded a significant increase in recovery, head grade, throughput and tons mined with notable decline in net cash costs per ounce.
The mine at Kibali has started funding its own capital since the previous 4 months as of now and targets on achieving 550,000 ounces of production by the end of the year.
Phase two at Kibali comprise of the early development of the vertical shaft and underground mine, which is planned to be completed in 2017 and the development of the rest hydropower plants, including the second plant which is progressing on construction and is estimated to begin commissioning in the early next year.
Conclusion
Randgold is primarily focused on exploring and generating profitable mines, competing effectively with other mining majors. It targets on exceeding the 1 million ounce production mark by the year-end coupled with delivering superior shareholder returns.
