6 months old, but a good refresher of what's happening at rangy. Everything appears to be going according to plan, especially the "heaping up the bullion" part. :)
Randgold heaping up the bullion at bargain costs
WITHIN two years, Randgold Resources (RR) will be producing close to half a million ounces of gold at very low cost. Chairman Peter Flack estimates a positive cash flow of $50-million a year if gold can earn about $320/oz, writes JULIE WALKER.
RR is 57%-held by SA holding company Randgold & Exploration, also chaired by Flack. Between December and January, Randgold sold 3.7-million shares in Harmony and 2.4-million shares in Durban Roodepoort Deep for net proceeds of R59.3-million. Randgold retains 12% of Durban Deep's ordinary capital and 6% of Harmony's. It also has 50.6% of dump treatment company Crown Consolidated and a portfolio of SA mineral rights.
The proceeds will be invested into RR, which is producing encouraging results. The Syama mine achieved record gold production of 36 000oz in spite of a lock-up of 80kg (2 572oz) of gold. "It's difficult to produce from a plant while trying to improve it," Flack notes. Syama's progress is on track and on budget. "We'll make believers of the doubters." He concedes that if he were a stranger to Syama he might also be a doubter, but being in the picture, he is encouraged.
"Randgold Resources' reputation rests on Syama's achieving 270 000oz a year at a cost of $210/oz. We are preparing a bankable feasibility study for a heap leach project which would add 30 000oz at only $110/oz - a really nice sweetener."
Flack reports that news from the Loulo prospect was all good. A welcome problem is the siting the tailings dam: the original choices were later proved to be orebodies themselves. Several options exist for treatment of the Loulo ore; expect a decision by the middle of the month. Production starts next year.
Perhaps more exciting is the Morila project in Mali: "This could be the real bonanza, the one that really makes us," says Flack. Not only is it on a tar road readily serviced, it has yielded excellent results: wide rich strikes and easily extractable gold. The feasibility study at Golden Ridge in Tanzania is due for completion in July and looks promising. RR's total attributable resource measures 7.8-million ounces of gold. There are 183 prospects at present.
Randgold's loans to RR will be converted into equity, with other shareholders being offered a clawback as per London's listing regulations.
Back home, Crown Consolidated Gold Recoveries completed its maiden quarter with a clear strategy of creating a best-practices marriage out of the components RMP Properties and Knights.
Flack refers to new technology for pretreating dump material: the use of cyclones and spirals can concentrate 70% of the gold into only 15% of the mass. "It could drop treatment costs dramatically," he says.
The overall picture is robust. RR, Crown and Randgold have cash, the operations aspire to lower production costs and have strong expansion prospects. Randgold itself has only two full-time employees, Flack and his secretary.
At January 26, Randgold's net asset value was R344-million or 832c a share. It was bid 120c up early on Friday at 820c as punters spotted the potential.
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