[miningmx.com] — Randgold Resources expects to be producing 1.2 million ounces of gold per year by 2015, and its operations will meet its 20 percent profit target even if gold falls to $1,000 per ounce, CEO Mark Bristow said.
“We should get to 1.2 million ounces by 2015, that’s growing from 440,000 ounces last year, so its a substantial growth.”
In an interview on Sunday night at Rangold’s Tongon mine in Ivory Coast, ahead of the mine’s official opening on Monday, Bristow told Reuters the firm was not hedging against a fall in gold prices because current economic turmoil and tight supply were bullish for the metal.
“$2,000 an ounce by next year is easily achievable,” he said. “The world’s pretty broken and gold is a barometer of how broken it is.
“It’s the only currency that politicians can’t print. As a hedge, it has proved itself in the last five years,” he said.
Bristow said Randgold remained on track to produce 750,000 ounces of bullion this year from its West African mines.
Randgold operates mines in Mali and Ivory Coast.
The 2015 production estimate figure includes expected output from its new Kibali joint venture with Anglogold Ashanti in northeastern Democratic Republic of Congo. Kibali’s reserves are estimated at 10 million ounces and is expected to produce 400,000 ounces a year once it is up and running in 2014.
Gold prices have been buoyed by financial turmoil in the past six months, especially worries over European debt.
Bristow suggested that even if Western countries resolved their debt problems and avoided deep recession or inflation caused by moves to expand money supply, the outlook for gold prices remained bullish on the basis of supply and demand.
“The gold industry is inefficient and largely unprofitable… and they aren’t finding any more, so new gold supplies are in decline. Central banks have been buying back for two years. There’s a supply-demand equation quite apart from the panic,” he said.
TONGON MINE OPENS
Bristow said Randgold’s projects would be profitable even if gold prices fall sharply.
“We’re looking at a 20% internal rate of return on projects with gold at $1,000 an ounce,” he said.
President Alassane Ouattara is expected to attend the official opening of the Tongon mine, in a remote, dusty corner of north Ivory Coast, on Monday.
The Tongon operation is located in the north of Ivory Coast, 55km south of the border with Mali. Randgold holds an 89% share, with the state share at 10%. Mining started in April 2010 and it has a 10-year lifespan.
Bristow said it was on target to produce 270,000 ounces this year and every year until it gets exhausted. The mine employs 1,500 people.
Randgold’s operations were disrupted for four weeks when Ivory Coast descended into civil war, after incumbent president Laurent Gbagbo refused to concede an election to Ouattara.
Bristow said the new government had been quick to grant Randgold exploration permits – the miner now has ten.
“It took two years to get a mining permit under the old regime. It’s taken weeks to get the others with the new one,” he said.
