African miner Randgold Resources expects to upgrade planned production at its new mine in Côte d’Ivoire, helping the firm to boost output by over 50% by 2011, its chief executive said on Thursday.
The firm, currently operating two mines in Mali, plans to ramp up production to around 650 000 ounces a year by 2011 from 400 000 ounces currently, CEO Mark Bristow told a presentation.
That will be possible due to the expected launch of output at its new Tongon mine in Côte d’Ivoire in late 2010, he added.
The company was in the process of adding a north section to the plans for Tongon, which could boost expected production of 200 000 ounces a year by about 25%.
”The possibility is exciting,” he said, adding that the firm would know in September after geological studies were completed exactly how much planned output might rise.
”If we increase it by 25% we’re moving it to a 250 000-ounce producer, which is very significant, and anything above that would be a bonus,” he said.
Expanding the proposed mine would likely boost capital expenditure to $200-million to $220-million from the current estimate of $150-million, Bristow added.
Cash costs at the mine, where a bankable feasibility study was due to be completed next year, were expected to be about $300 per ounce versus a current gold price of about $650.
There was also further potential for expansion in the West African country, where Tongon would be the first major gold mine.
”We are very upbeat about the opportunity for additional exploration in the area, this is a highly prospective area.”
Risks manageable
The company was not worried about the political situation in Côte d’Ivoire, where an attempt to assassinate the prime minister last week has shaken the war-divided state’s fledgling peace process.
Tongon is in the northern formerly rebel-controlled part of the country and Randgold has achieved deals with both the government and former rebels to support the mine.
”As political risks go in Africa, we believe this is very manageable,” Bristow said. ”The buffer zone has been dismantled, the road blocks are now in the villages and you don’t see armed guards so the disarmament process is happening.”
He repeated that the firm was constantly looking out for acquisitions, but it was not rushing to seal takeovers unless they added value.
While the overall market capitalisation in the gold sector has soared fivefold to $250-billion since 1999, this has been mainly driven by speculation in junior exploration companies, Bristow said.
”None of the big corporate consolidations are today trading at a premium to their deal prices, they all have lost value,” he said.
”For us, we find ourselves under pressure particularly by the Canadian banking community to be the consolidator of West Africa regardless of the asset quality and we resist it.” – Reuters