While the downturn in gold price has led to a gold mining crisis, Randgold Resources and Mali are in a strong position and remain committed to working together.
This is according to Randgold chief executive Mark Bristow. “Despite the challenges of the current market, Randgold has always planned its business to be profitable at lower gold prices. Although we have stress tested and revised some of our business plans, we have not been forced to shut down operations nor to cancel growth projects.”
He further stated: “With Loulo and Gounkoto both accessing higher grade sections of their orebodies, and efficiency initiatives underway at all our operations, we are confident in our ability to manage the business through these difficult times for the gold industry. And with the real prospect of an underground mine at Gounkoto as well as the possibility of further major discoveries here, we are looking forward to continuing our partnership with Mali and its people well into the future.”
Bristow said the country and the company had a long history of a mutually beneficial partnership and together they had overcome many challenges, not all of them economic. Through some difficult times, Randgold had retained its belief in Mali and in the Malian people’s ability to solve the country’s problems and this confidence had once again been vindicated by the previous week’s peaceful presidential election.
He cited the Malian government’s recent decision to waive its royalties for the 22 month duration of the Morila pit pushback project, as an example of fruitful cooperation between state and capital. This will enable a more equitable share for investors and the State while extending the mine’s life by a further two years and securing the employment of almost 1 000 workers until early 2015. In combination with a tailings retreatment project, this will also help fund the eventual rehabilitation of the mine site, as well as the establishment of a sustainable agribusiness to provide economic opportunity for the local community. The development of this business is already far advanced.
“The discovery and development of Morila was the foundation on which Randgold built its company, as well as Mali’s growth into a major African gold producer. Since it went into production in 2001, Morila has produced more than six million ounces of gold at an average cost of less than US$300 per ounce and contributed more than US$1 billion directly to the Malian treasury,” Bristow said.
“Our discovery of Morila was followed by that of Yalea and Gounkoto. These are already world-class operations and we are expanding and upgrading them further to reach their production target of over 600 000 ounces per year in 2014. We are working on a feasibility study on a possible underground mine at Gounkoto and, in the meantime, our exploration teams are looking for further multi-million ounce gold deposits in the Loulo-Gounkoto region.”
Last year Randgold’s mines in Mali had accounted for 10.8% of the country’s GDP, and this year it was expecting to pay some US$170 million directly to the Malian state in the form of taxes and royalties. Randgold employs 5 100 Malians and the management teams at Morila, Loulo and Gounkoto are composed almost entirely of Malian nationals. Its group regional executive for West Africa as well as its regional operations manager are also Malians. In addition to its policy of employing nationals of its host countries in preference to expatriates, the company also procures goods and services from local suppliers wherever possible, thus spreading the economic benefit of its operations even wider.