Randgold Resources (LON:RRS) has posted its first-quarter results this morning, unveiling a 25-percent rise in profits year-on-year.
Highlights from Randgold's statement:
Randgold Resources' flagship operation, the Loulo-Gounkoto complex in Mali, delivered a robust performance in the quarter to March when its Kibali and Tongon mines were impacted by commissioning and other technical issues. This enabled the company to post a profit increase for the first quarter compared to the previous quarter and comparative prior year quarter.
The group also posted a significant improvement in safety with three out of five operations reporting zero lost time injuries for the quarter. Likewise the ongoing fight against malaria delivered another step decrease in incidence rate and all operations retained their international safety certifications with only Kibali still working towards certification, planned for this year.
While production was down 11% from the previous record quarter at 291 912 ounces, the profit of $63.9 million was 19% higher than that of the previous quarter and 25% up on the corresponding quarter in 2015. This reflected Randgold's tightened focus on the profitability of its mines and a 9% increase in the average gold price received for the period. Total cash costs of $189.0 million were down 8% on the previous quarter, thanks mainly to Loulo, where the transition from contract mining to owner mining started paying off in terms of improved efficiencies and lower operating costs.
At Kibali in the Democratic Republic of Congo, the two mill circuits, usually split between sulphide and oxide ores, were both campaigned on sulphides for an extended period in preparation for the ramp-up in underground ore. Interruptions associated with this process before its successful completion, compounded by a week-long breakdown of one of the ball mills, negatively affected production and costs.
In Côte d'Ivoire, commissioning of Tongon's fourth crushing stage, which completes the mine's flotation upgrade and crushing extension project, took longer than expected, and the operation was also hit again by the recurring instability of the power supply from the national grid. Tongon continues to engage with the government and the power utility on this issue and is also expanding its own generating capacity.
Morila in Mali remained profitable even while milling material with a head grade of 0.7g/t showing a significant improvement in cost and profitability compared to last quarter. Preparations for the transition to the treatment of tailings are well underway while discussions with the government and the local community regarding the Domba project are still continuing.
Chief executive Mark Bristow said it had been a busy and demanding quarter for Randgold but in addition to dealing effectively with operational challenges at the mines it had also continued to reinforce the foundations of the business to ensure that it is in good shape to cope with the cyclical nature of the gold mining industry.
"Despite last year's record production, we replaced 76% of our reserves and all our resources depleted, and our exploration teams continue to hunt for additional ounces around our existing operations as well our next big discovery. Confirming the down plunge extensions of our orebodies in the Loulo district is testament to this, as are the encouraging results from ongoing work in Côte d'Ivoire, where drilling at Gbongogo has confirmed a large intrusion hosted stockwork. Around Kibali work is identifying multiple mineralised shoots around KCD.
We're also steadily expanding our footprint in our target areas, most recently through the Moku joint venture adjacent to Kibali. Over at the Ngayu belt 200km to the SW of Kibali we are preparing to fly a helicopter VTEM survey over recently signed joint ventures and we continue our regional research programmes across West and Central Africa. We keep strengthening our social licence through constructive engagement with and commitment to our host countries and communities," Bristow said.
"With our strategy, plans and projections intact, we are able to continue delivering value at current and even lower gold price levels. We're quite bullish about gold's medium to long term prospects, and when the cycle turns, the work we do now will have equipped us to capitalise fully on the upside."