Randgold Resources - poised for growth in African gold

Randgold Resources - poised for growth in African gold

Thursday, April 1, 2010

Gold miner and developer, Randgold Resources, continues to grow as it brings new West African mines on stream and starts to meet the challenges of the huge Kibali gold project in the DRC.
Author: Lawrence Williams

London -

2009 has been a milestone year for African gold producer Randgold Resources - one in which Chiarman Philippe Liétard says the company laid the foundations for its next growth phase. Randgold through its successful mining and exploration activities, so far focused in West Africa, as been one of the best performing gold stocks anywhere, and its new move into Central Africa - specifically the Democratic Republic of Congo - although carrying a fair amount of risk, has the potential, along with its growth projects in its traditional operating area, of moving the company up another notch on its way to becoming a Tier 1 gold miner.

Liétard says the company's record results for 2009 - which included a 79% profit surge - had demonstrated again the effectiveness of its strategy, which was focused on the long term creation of value rather than on seizing short term gains.

"In 2009 Randgold was able to pluck some of the fruits of its past investments in the discovery and development of profitable gold projects, as well as in people and partnerships. By the same token, we believe that the work done during the past year will deliver its rewards in times to come," he says.

"In 2009, the foundations were laid, through organic development as well as acquisition, for the next stage in the company's growth. At this raised level, Randgold's horizons are being broadened significantly on every front: the geographical spread of its activities; its resource base and production profile; and the reach of its ambitions."

What Randgold has managed to achieve in West Africa - a formula it will be carrying through to the DRC - is what Liétard reckons to be the ideal model for successful and sustainable mining in Africa. Company policy incorporates the concept of partnership with its investors and the host government in developing and operating its projects. If you can keep the host government on side some of the problems experienced by other companies operating in Africa may be, hopefully, avoided.

West African operations are moving forward nicely. While the former flagship Morila gold mine in Mali is being phased out - now being a profitable dump and tailings retreatment project - its other Mali operation - the Loulo complex - is progressing with the Yalea and Gara underground sections moving ahead - not always as fast as hoped, but in mining one can't expect everything always to go smoothly, particularly when operating in relatively remote areas.

But adding to the Malian project, Randgold is commissioning a new mine at Tongon in the Côte d'Ivoire with first production due in Q4, and advancing the Massawa project across the border from Mali in Senegal and the new Gounkoto deposit back in Mali and only around 20 km from Loulo. All of these are multi-million ounce gold projects. Gounkoto is currently the favoured one for the next new mine, but this is aided by being able to use much of the Loulo infrastructure - as well as showing some very good gold grades.

But it is the massive Kibali project in the Democratic Republic of Congo which is the potential elephant for Randgold - and potentially the most risky. Randgold holds 45% of this in partnership with AngloGold Ashanti which also hold 45% ad is the project operator. The balance is held by DRC parastatal mining company - Office des Mines de Kilo Moto (OKIMO). This project was acquired through the take-over by Randgold and AngloGold of Moto Goldmines last year. Randgold CEO, Mark Bristow, reckons Kibali could become "one of the world's great gold mines".

However he goes on to state: "The excitement generated by the Moto/Kibali acquisition will not, however, distract us from our key strategy of organic growth through exploration success, and our primary objective is still to create value through the development of profitable mining projects."

Mining in the DRC has been a major problem for a number of companies trying to develop and operate other ‘world class' operations, but in the copper/cobalt sector and in their dealings with another DRC paratstal mining company in Gécamines. Randgold has to hope its experience in dealing with governments in the West African states in which it has been operating can be transferred into the DRC!

In its Annual Report, released today, Randgold announced an overall 69% increase in its total mineral resources and a 75% rise in attributable reserves in 2009. The company's annual resource and reserve declaration shows that at the attributable level, the measured, indicated and inferred resources grew from 16.13 million ounces of gold in the ground to 27.33 million ounces while proved and probable reserves rose from 8.87 million ounces to 15.56 million ounces. Bristow noted that with its average reserve grade now above 4 g/t (excluding Morila which is no longer an operational mine) Randgold had not only increased the size but also enhanced the quality of its asset base.

So Randgold is definitely poised for its next advance. Its problem will probably be to remain focused on all its operating and developing projects simultaneously - particularly in dealing with yet a new government in the DRC - one which has not proved easy to work with as a number of other Western companies have found out to their cost. If Randgold can tread a relatively smooth path here then it is certainly poised for its next major growth phase and help it remain one of the stock market's favourite gold miners.

Randgold Resources - poised for growth in African gold Reviewed by NajlA On Thursday, April 1, 2010, at 5:06 AM Rating: 5
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