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Randgold sees Yalea gold by year end
Allan Seccombe
Posted: Thu, 02 Aug 2007
[miningmx.com] -- RANDGOLD Resources will begin receiving ore from its Yalea underground mine in Mali during the last quarter of this year, CEO Mark Bristow said.
The West Africa-focussed miner and explorer produced 70,660 oz of gold at its Loulo mine in Mali during the June quarter at a total cash cost of $340/oz, which is $27/oz more than in the same period a year ago.
Yalea is on the same permit as Loulo and will exploit the principal ore body. During the quarter Randgold redesigned and scheduled Yalea because the previous plans were not optimal. Mining will now focus on high grade areas initially, Bristow said.
"We haven't assumed any increase in through put. One of the things we're looking at in the redesign is to extract at a higher rate and that would impact on our economics as will the higher grade material," he said.
By the end of the September quarter
Randgold will outline to the market what the redesign entails for costs and production plans.
The first noticeable kick up in gold output from Yalea will come in 2008, when it adds towards the increase from Loulo to 275,000 oz from about 250,000 oz this year. Yalea will bring production at Loulo to more than 400,000 oz by 2011.
Loulo, an opencast operation, generated a profit of $18.7m in the June quarter against $14.4m in the same period a year ago. It achieved higher revenues because it delivered 42% less ounces into its hedge commitments.
LSE-listed Randgold delivered 19,247 oz into its hedge during the quarter at an average price of $433, compared to the average price of $605 it received for its Loulo production.
It has shifted nearly 42,000 oz of gold commitments for 2007 at a price of $444/oz to 2010 to receive $500.
Loulo’s mined ore fell sharply in the quarter because of equipment breakdowns. It had to supplement plant feed with stockpiled material, adding to total cash costs.
Loulo's performance was above expectations despite the mechanical problems as it consumed part of the stockpile set aside for the rainy season. That stockpile will be rebuilt, Bristow said.
The next big project for Randgold is Tongon in Cote d’Ivoire where drilling towards a feasibility study is underway. A $13m bankable study should be
completed at the end of next year and gold production is forecast for late 2010. Tongon could be a 200,000 to 250,000 oz/year gold mine.
At the Morila mine, which is 40% owned by Randgold, cash costs bounded higher to $403/oz from $229 a year ago because of fewer ounces produced. Output fell to an attributable 86,832 oz in the June period from 135,387 a year back because of a lack of mining faces available and no access to higher grade blocks.
“Mine management is confident that they will meet the planned production scheduled for the second half of the year and is pursuing strategies to recover the production shortfall incurred during the first half of the year,” Bristow said.
Morila is expected to post a 50% increase in production in the last six months of 2007 as mining moves into higher grade ore.
Morila has two years of opencast mining left and about three years' worth of dumps to treat. The hunt is on for new resources to keep the operations
going, something Randgold and its partner at the mine AngloGold Ashanti have been unable to find.
"It's bit of a teaser. We had one hole that was interesting in the last quarter, but we are struggling to hang it together," Bristow said, adding a new geologist has been appointed.
"I still fundamentally believe in the potential of that area and we will keep spending a couple of million dollars a year in exploration until we have to close it," he said.
Randgold’s net profit for the quarter was $6.8m. It generated $14.6m in cash from its operations. It has cash of $137m.
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