Randgold Resources reports that its production and costs were hit in the quarter to June (Q2 2016) by a long mill downtime at the Tongon mine in Côte d’Ivoire and the continuing transition to a mixed-ore feed at the Kibali mine in the north-eastern DRC. The company says, however, that improvement expected in the second half of the year should boost its 2016 results to within its market guidance.
The flagship Loulo-Gounkoto complex in Mali ended the quarter ahead of target but with one of Tongon’s two milling circuits losing 46 days after a breakdown and Kibali still dealing with throughput, recovery and dilution challenges presented by multiple ore feeds, group production was down 4 % quarter on quarter at 281 494 oz while total cash cost per ounce rose 12 % to US$727/oz. With the higher gold price only partly buffering the impact on the bottom line, profit was down 8 % at US$58,7 million.
Bird’s-eye view of Ambarau, the second hydropower station serving the Kibali mine (photo: Randgold).
Compared to 2015’s record interim results, however, profit for the six months to June was up 11 %, production was steady and total cash cost was 1 % lower. Also on the positive side, net cash generated increased by 6 % quarter on quarter and cash holdings rose by 7 % to US$272,7 million.
Chief Executive Mark Bristow described the quarter as one of the toughest in years but said in June and July both Tongon and Kibali had made significant progress, with Tongon fixing the mill and completing the commissioning of its new quaternary circuit, and the new Kombokolo satellite pit at Kibali expected to improve its feed flexibility and grades.
Bristow said that the development of Kibali as a complete project remains ahead of schedule. The mine, the newest in Randgold’s portfolio, produced 122 532oz in Q2, a 6 % decrease on the prior quarter, but management is still targeting to exceed 600 000 oz of production for the year.
The Q2 report notes that remedial work on last year’s breached berm at the Ambarau hydropower project – designed to supply power to Kibali – is now complete. The extension of the Ambarau permanent hardfill wall foundations was initiated during the quarter and first power is still on schedule for Q4 2016. Construction on Azambi, the third new hydropower station, progressed during the quarter in line with budget and plan.
Together, the three hydroplants will have a capacity of 44 MW which may reduce to 20 MW during the dry season. Kibali’s peak demand is expected to be 40 MW and to ensure that this can always be met it has a high-speed diesel generating capacity of 36 MW. Its current supply is a 55/45 mix of hydro and thermal power but hydro’s contribution is planned to grow to 75 % as the Ambarau and Azambi plants are commissioned.
