Anglo chief executive to cough up for fine wine on gold wager
Anglo American chief executive Mark Cutifani will need to splash out on fine wine in October when he loses a bet that the Kibali mine won’t produce gold this year, Randgold Resources chief executive, Mark Bristow, said.
“It’s still on track and it’s still within budget,” he said yesterday. “I’m in no doubt that Mr Cutifani is going to have to cough up for a very expensive South African red wine.”
The two made their wager on when output would begin at the Democratic Republic of Congo mine two years ago at an investor conference in Miami when Cutifani was the head of AngloGold Ashanti.
Cutifani offered to buy South African wine if it produced gold this year and an Australian vintage if output began in 2014. Bristow is South African and Cutifani from Australia.
Either way, the outcome of the bet won’t compensate for the 35% slump in gold prices to $1 255 from their peak of $1 921 in 2011 that is squeezing companies’ profits.
The industry needs major restructuring and must refocus on higher-grade ore that can be mined in quantity to reduce costs, Bristow said.
Kibali will help raise Randgold’s annual production to more than 1.2-million ounces by 2014 from about 800 000 in 2012, according to Bristow’s Johannesburg presentation yesterday. The mine will produce at least 30 000 ounces this year, 550 000 in 2014 and average about 600 000 ounces in its first eight years.
Randgold’s preferred exploration areas are West and Central Africa and Russia, with South American risks making it hard to run profitable mines even with deposits that are attractive, Bristow said. “South America carries much more risk than Africa,” he said. “Colombia makes Mali look like a walk in the park. We don’t have to arrive there in armored vehicles.”
Randgold is open to investing in Russia even with the potential for government interference, Bristow said. “If you’re not in Russia in the gold industry in the next 10 years, you’re going to be behind the curve,” he said. “We look over the fence at Russia all the time.”
Emily Blyth, a spokesperson for Anglo American, declined to comment on behalf of Cutifani. – Bloomberg