mining news
8
07.13
The recent drop in the gold price has high-
lighted the need for governments of mineral-
rich countries to cooperate with mining com-
panies in the optimal development of their
resources, says Randgold Resources Chief
Executive Mark Bristow.
Speaking at a recent media briefing in
Johannesburg, Bristow said the two parties
should be united in a common purpose but
sometimes seemed like ships passing each
other in the night. “Governments are tempted
to harvest the green shoots before the en-
terprise comes to fruition; the gold mining
industry tends to exaggerate the risk without
fully addressing its own internal problems,”
he said.
This disconnect arose from the mistaken
perception that gold mining companies must
have made extraordinary profits during the
long bull run in the gold price, Bristow said. In
fact, with escalating costs cramping margins,
most gold companies had not managed to
create real value and at the height of the boom
the industry had actually been ex growth. The
declining gold price meant that many gold
mining companies were now again having to
fight for survival, as evidenced by a spate of
write-downs and abandoned projects.
“The pursuit of quality assets has led gold
companies away from their traditional hunt-
ing grounds and towards regions which are
more prospective but present a greater risk.
All these regions are now competing with
each other for mining investment, and while
Africa has the advantage of great mineral
wealth, its competitors generally have better
infrastructures, greater skills pools and more
sophisticated economies,” he said.
In order for African countries to attract
mining investment and benefit fully from their
mining industries, they should participate
fully in the value creation process.
“Real value is created by the discovery of
multi-million ounce deposits and their devel-
opment into profitable mines. Governments’
Gold price slide highlights the need for partnerships
A very recent photo of Kibali showing the boxcut with portals to underground declines (photo: Randgold Resources).
Mark Bristow on site (photo: Randgold Resources).
role in this should be firstly to provide a
stable, business-friendly regime that will at-
tract investors, and then to partner the mining
company in the development process, driv-
ing the project up the value curve and sharing
fairly in its returns,” Bristow argued.
Randgold owns and operates the Loulo
complex in Mali and the Tongon mine in Côte
d’Ivoire, and also operates the Morila joint
venture in Mali. In addition, it is currently de-
veloping the giant Kibali project in the north-
east of the DRC, which will eventually be a
combined open-pit/underground operation
producing 600 000 ounces a year.
“When the gold price started turning down,
we reviewed all our business plans and ad-
justed them where necessary. Our key ob-
jectives remain intact, notably the aim of ex-
ceeding 1,2 million ounces of production by
2015,” he said.
“With our robust operations, low costs and
no debt, and Kibali on schedule to pour its
first gold before the end of this year, Rand-
gold can face any realistically foreseeable
gold price scenario with equanimity.”
Bristow said the current squeeze on the
industry had in fact created new opportuni-
ties for Randgold, as gold mining juniors with
quality assets had to seek elsewhere the sup-
port no longer available from bankers and
investors. “While our core strategy remains
organic growth, we have entered into a num-
ber of earn-in joint ventures on promising
projects, most recently the agreement an-
nounced last week with Taurus in Mali,” he
concluded.
