Showing posts with label Gold production. Show all posts
Showing posts with label Gold production. Show all posts

Thursday, January 10, 2013

Yamana Gold reports record gold production, adopts all-in cost measure

Yamana Gold says this year it will embrace the “all-in sustaining cash cost” measure advocated by the World Gold Council.

Author: Dorothy Kosich

Yamana Gold Wednesday reported record total production of 1.2 million gold equivalent ounces (consisting of 1.02 million ounces of gold and 9 million ounces of silver) for 2012, a 9% increase from 2011 and within guidance.

Total 2012 copper production was reported at 150 million pounds.

Full year 2012 cash costs were approximately $240 per GEO.

Yamana reported record fourth quarter preliminary production of 322,800 GEO and 40 million pounds of copper.

The company expects this year’s production to be in the range of 1.44 million to 1.6 million GEO with a target of more than 1.48 GEO, an increase of at least 20% over last year. 

Silver production is expected to remain consistent at between 8 million and 9 million ounces in both 2013 and 2014. Silver production is reported as a gold equivalent.

Estimated cash costs for 2013 are forecast to be below $365 per GEO. In 2013, anticipated cost increases will be driven by fewer copper by-product credits with high gold production, along with inflationary impacts in the nations in which Yamana operates.

Yamana’s all-in sustaining cash costs for 2013 are projected to be below $800 per GEO.

Tuesday, December 4, 2012

Here's what 12m @ 193 g/t gold looks like

Pilot Gold hits more impressive drill intercepts in Turkey. Are more to come
Author: Kip Keen

Pilot Gold drilled a nice looking intercepts with 12 metres @ 193 g/t gold and coarse gold grains on show.

plg123_VG

The drill intercept in question comes from Pilot Gold’s Kucukdag gold project in Turkey and stands as one of the highest grade intercepts it has hit on the project over such a sustained multi-metre true width.

In the grand scheme of things the intercept isn’t a revolution for Pilot Gold at Kucukdag, but it it does bolster Pilot Gold’s focus on a second kind of orogenesis it hopes has some potential for deposit size.

The intercept in question lies within what Pilot Gold calls stratiform mineralization and beyond an apparently more limited breccia zone, which has also yielded impressive results for Pilot Gold, including 5.94 g/t Au, 12.6 g/t silver and 0.53 percent copper over 137 metres (not true width). In being stratiform, the gold mineralization flanks along strata in the volcanic package of rocks at Kucukdag - flanking mineralization that Pilot Gold is drilling.

Pilot Gold vice president of Exploration, Moira Smith, had this to say about the latest intercept in a prepared statement: "The location of the intercept and the near-perpendicular orientation of the gold-bearing veins relative to the hole orientation suggest this intercept may reflect true width of the zone. The intervals form part of a newly recognized stratiform zone of mineralization that may have significant dimensions."

This is going to be worth watching as the “may have significant dimensions” hypothesis is being put to the test. Pilot Gold is flush with cash and actively drilling Kucukdag. The latest drill map also shows drillholes collared to the southeast of some of its best intercepts to date for which results are still pending.

Monday, December 3, 2012

Miners’ increasing focus on smart growth good – US Global

Smart companies are beginning to ignore analysts' insistence that production growth is always good, says US Global’s Brian Hicks and Ralph Aldis, An interview with The Gold Report.

The Gold Report: The Nov. 1 edition of Frank Talk suggested that gold equities generally perform poorly in a U.S. election year but rebound strongly the following year. Do you expect a better year for gold and gold equities in 2013?

Ralph Aldis: This year has not been a stellar year for gold equities. Most of the gold equity funds have negative returns for the year.

Brian Hicks: We believe gold equities will do well next year, largely due to macroeconomic factors that have been in place for some time, but which will become even more pronounced in 2013. Those factors include central banks expanding their balance sheets and increased concern over deficit spending here in the U.S. Looking at how cheap gold equities are relative to the bullion price, that spread will continue to be arbitraged in 2013.

TGR: Every media outlet in the country is talking about the fiscal cliff. If the U.S. goes over the fiscal cliff, what effect would that have on the gold price and on gold equities?

RA: No one has the stomach to let the country fall off the cliff. A compromise will be reached. The most likely scenario is that the government will have to print money in flight. That will be a very clear signal to own gold bullion, and gold equities will be handed their marching papers to go higher.

BH: Whether we get a compromise or go over the cliff, which is the less likely event, gold will do well. Either way, there will be a lot of uncertainty and concern about financial assets. That will prompt people to see gold as a hedge.

TGR: Gold equity investors have seen more volatility than gains in recent years. Should they expect more of the same over the next four to five years?

BH: The volatility has held true for the markets in general; it has not been specific to gold equities. On a relative basis, gold equities have outperformed the broader market since 2008.

To prepare for volatility, investors should be balanced, not overweight in any particular sector. You want to be able to capitalize on the volatility—to the upside or the downside. Gold equities are somewhat countercyclical; they can diversify a portfolio and be additive to overall risk-adjusted returns.

RA: When silver was hitting close to $50/ounce (oz), the regulators raised margin requirements something like five times in five days. That knocked silver for probably its biggest correction ever in a single week. If you live through that type of correction once, you become gun shy about going long on equities when the metal prices are going up.

More generally, the tech bubble, the credit crisis, the real estate crash and the large number of baby boomers approaching retirement are all causing people to sell equities. They are turning to fixed-income or structured interest-rate products. That provides a great buying opportunity for equities.

BH: Generalists talk about gold being in a bubble, but I agree with Warren Buffett that the real bubble is government bonds. At some point, that money will have to come out. When it does, it will be looking for returns and for yield. Gold stocks will be poised to capitalize on that.

TGR: How should gold equity investors handle common market corrections?

RA: One strategy, if you are certain that you are in a bull market, is to stay long the entire time.

I would say you stick with it.

However, in managing our funds, we always keep some cash on hand so we can buy stocks on these dips. For example, a company releases a good news story and the stock starts moving twice as much as any other stock that day. It is probably prudent to sell perhaps 1% of your position because you will be able to replace it later at a cheaper price.

TGR: Another edition of Frank Talk discussed how companies' margins are being compromised and growing thinner. What must gold companies do to boost investor confidence?

RA: The industry's mantra has been "grow production." That is what the analysts look for and what companies are trying to do, but it is difficult to grow production.

You can grow production through your own organic discovery or through acquisition. Too often, companies overpay or size up a marginal project from say, 30,000 tons (30 Kt)/day to 60 Kt/day. They have tried to grow production at the expense of lowering margins. If they lower their margins, they can no longer pay a dividend. If the gold price corrects, the project may no longer be economic.

Management needs to focus on return on capital, on making a sound investment in something that you can make money on.

TGR: What will drive up the value of gold equities over the next five years?

RA: Gold prices will go higher. Central banks around the world are hedging by buying gold in lieu of currency for their reserve holdings. Also, investor demand will push values higher.

Companies need to focus on growing their returns and not on growing the company or the production profile. Focusing on returns will allow them to pay a dividend.

TGR: Do you own any companies with a market cap over $300 million (M) that do not pay a dividend?

RA: Yes. There are companies in the growth phase, in the capital phase where they are not cash-flow positive in the sense of having sufficient free cash flow to start writing checks to shareholders.

While some companies are paying modest dividends of 1–2%, paying a dividend is more the exception than the rule. The only high-price dividend payers are companies whose share price has been knocked down.

TGR: Given gold companies' heavy capital expense (capex) demands, do you see the major players getting to dividends in the 4–5% range?

RA: Rather than increasing dividends, companies have been upsizing their projects to grow their production profile. The only people making money are the consultants earning fees by telling the mining companies what to do with their project and the companies building the actual mines.

Gold companies are making profits but they are not yielding exceptional returns. The majors are all trying to push upside of the project in the false belief that if they move all the cash flow forward, they will get a higher multiple.

TGR: If the companies in your funds are making less money than their consultants, why are you in this sector?

RA: Our funds are weighted differently from indexes that focus on the big four.

As active managers, we are trying to scope out the companies that are doing the right things to achieve the top returns we want for our shareholders.

TGR: What is your investment thesis?

BH: Our view is that gold stocks have been derated since the introduction of the SPDR Gold Trust exchange-traded fund. That derating is reflected in lower multiples to cash flow and earnings, because returns on capital have not been sufficiently higher than their cost of capital. However, lower oil prices and fuel costs, as well as the delay or outright cancellation of many capital projects, could provide some relief in the cost of labor and raw materials. From that standpoint, over the intermediate term, margins could start to expand. That would be good for gold equities.

We also think money will continue to flow into the sector because we are bullish on gold. Historically, if you pick the right stocks, you get 2:1 leverage by owning the stock versus the commodity. Our job as active money managers is to sift through the large universe of companies and pick stocks that will exhibit that leverage in a rising gold market.

RA: George Topping, an analyst at Stifel Nicolaus, caught the gist of what needs to happen in his report, "Don't Build It and They Will Come." Since that report, companies have started looking at how to downsize projects. That may be the catalyst that will take some of the pressure off the margins.

The other thing that has hurt gold companies in this cycle is understating their cash costs. Only government officials really believe a cash cost of $700 to produce an ounce of gold. Governments look at those numbers and say, you guys are making windfall profits, so we need to raise your taxes. To combat that, companies need to talk about the cost to produce an ounce of gold in total cost terms.

That is beginning to happen. The World Gold Council met at the Denver Gold Show to talk about how to transition from a cash-cost definition to a total-cost definition. This would make the industry more transparent and the companies more accountable.

We will see a trend of companies taking the foot off the pedal and thinking about what makes sense. If you can develop a project at a higher margin, that is the smarter choice.

TGR: What equities are you bullish on?

RA: You have to give the royalty companies some serious thought. They are insulated from capital cost increases, at least on the cost-structure side. Companies have to be careful about buying a royalty on a project that has margins that may be too thin and getting in too deep. The royalty company may not be on the hook for more capital, but it has a lot of costs if that project is not built.

BH: Several silver companies look interesting. The price of silver is high enough for some of the lower-cost silver companies to generate free cash flow and superior returns on capital compared to their precious metal peers.

TGR: Are you buying companies now in the expectation of more merger and acquisition (M&A) activity as the gold price rises?

RA: Not really. I think M&A activity is on hold as companies figure out how to optimize their existing projects and increase their margins. Stupid acquisitions are one of the best ways to destroy capital. I do not believe M&A is the way to go right now.

TGR: You place a premium on communication. Why is that?

RA: We try to keep the lines of shareholder communication open because that signals to people how engaged we are in what we are trying to do. Shareholder education builds shareholder loyalty.

We cover a lot of topics. Frank Holmes travels the world and talks to thousands of people. Brian and I visit projects and have regularly scheduled calls with analysts three and four times a week. We try to synthesize our view and share it. The overall market seems to be highly depressed, and everybody just wants to talk about the negatives, but there is opportunity.

BH: As analysts and portfolio managers, summarizing what happened over a week's time, help us put events in perspective. When you have to write about it, you have to think clearly about the issues. It's a good tool for us as welTGR: What is a good rule of thumb for precious metals equities investors?

RA: On the gold and precious metals side, at a minimum they should keep 5–10% of their overall portfolio in gold and gold stocks and rebalance it annually.

The good thing about gold and gold stocks is that they are not as positively correlated to the overall market. When your gold equities are down, your other stocks tend to be up; if other stocks are down, the gold equities are probably making up the losses. We find that to be a great portfolio diversifier over time. If you do the efficient frontiers, gold equities not only lower the overall volatility, they also raise the average return.

TGR: And you, Brian?

BH: The precious metals market is surprisingly inefficient. There are opportunities to trade around core positions when you have dislocations in the market, whether it is a geopolitical event or a change in government policy.

On an individual basis, it can be daunting to navigate that on your own. We add value by having the resources and the time to be active managers and to capitalize on these dislocations and inefficiencies. I would say let professionals manage your gold portfolio for optimal risk-adjusted returns.

TGR: Brian and Ralph, thanks for your time and insights.

Ralph Aldis, CFA, rejoined U.S. Global Investors as senior mining analyst in November 2001. He is responsible for analyzing gold and precious metals stocks for the World Precious Minerals Fund (UNWPX) and the Gold and Precious Metals Fund (USERX). Aldis also works with the portfolio management team of the Global Resources Fund (PSPFX) to provide tactical analyses of base metal, paper, chemical, steel and non-ferrous industries. Previously, Aldis worked for Eisner Securities, where he was an investment analyst for its high net worth group and oversaw its mutual fund operations. Before joining Eisner Securities, Aldis worked for 10 years as director of research for U.S. Global Investors, where he applied quantitative skills toward stocks, portfolio tilting, cash optimization and performance attribution analysis. Aldis received a master's degree in energy and mineral resources from the University of Texas at Austin in 1988 and a Bachelor of Science in geology, cum laude, in 1981, from Stephen F. Austin University. Aldis is a member of the CFA Society of San Antonio.

Brian Hicks joined U.S. Global Investors Inc. in 2004 as a co-manager of the company's Global Resources Fund (PSPFX). He is responsible for portfolio allocation, stock selection and research coverage for the energy and basic materials sectors. Prior to joining U.S. Global Investors, Hicks was an associate oil and gas analyst for A.G. Edwards Inc. He also worked previously as an institutional equity/options trader and liaison to the foreign equity desk at Charles Schwab & Co., and at Invesco Funds Group, Inc. as an industry research and product development analyst. Hicks holds a Master of Science degree in finance and a bachelor's degree in business administration from the University of Colorado.

Friday, November 2, 2012

Newmont Q3 profit spirals on lower production, increased costs

Canada’s Newmont Mining, the world’s second-largest gold miner on Thursday reported a 26% drop in third-quarter profit as production slumped at its Indonesian and Australian/Pacific mines, and operating costs spiralled.

During the quarter ended September 30, the company’s Batu Hijau mine, in Indonesia, reported an 89% drop in gold production, and copper production decreased by 54% as a result of processing lower-grade ore.

Batu Hijau produced 7 000 oz of gold and 19-million pounds of copper at a cost of about $1 115/oz of gold and $2.38/lb of copper. Costs attributed to sales increased by 134% an ounce and 164% per pound of copper, owing to lower production and higher waste mining costs. Waste tons mined increased by 57% from the same comparable period a year earlier, as Phase 6 waste removal continued as planned.

Gold production from the Australia/New Zealand region decreased by 14% from the prior-year quarter owing to lower underground mining rates at Tanami, a delay in openpit ore production at Waihi and lower grades at Jundee and Kalgoorlie, partially offset by higher throughput at Jundee and higher grades at Tanami. The overall cost of sales per ounce increased by 36% year-on-year owing to lower production, higher operating costs, a stronger Australian dollar net of hedging gains and the impact of the carbon tax in Australia.

Newmont’s reported consolidated attributable gold production of 1.2-million ounces was down 5% year-on-year and copper production of 35-million pounds was down 38% from the prior-year quarter. Gold sales during the period were down 4% at 1.2-million ounces and copper sales were also down 27%, totalling 37-million pounds.

The average realised gold price for the three-month period was $1 659/oz and $3.55/lb of copper. This resulted in consolidated revenue of $2.5-billion, a decrease of 10% from the comparable quarter a year earlier.

Profit fell to $367-million or 74c per share, from $493-million, or 98c a share a year earlier.

"Balanced performance from our operating portfolio allowed us to deliver results that were on track with our expectations for the quarter with strong performances at both our Nevada complex, in North America, and Yanacocha, in Peru, offset by weaker performance in our Asia Pacific region, primarily at Boddington and Tanami in Australia," Newmont CEO Richard O'Brien said in a statement.

He added the company was seeing progress on its commitment to deliver profitable ounces from new projects, including our Akyem project, in Ghana, which was 65% complete and proceeding on budget and on schedule to begin production in late 2013, and in Nevada where the company’s Emigrant mine started production during the quarter.

Newmont now expected to come in at the low end of its production outlook for the year to produce 5-million to 5.1-million ounces of gold and 145-million to 165-million pounds of copper for the full year, and at the high end of its narrower cost outlook of between $650/oz and $675/oz (on a co-product basis), as a result of operational issues at Tanami, Boddington and Waihi.

Newmont also increased its copper costs outlook to between $2.20/lb and $2.35/lb, mainly owing to higher production costs from Boddington and Batu Hijau.

The company maintained its capital expenditure outlook at between $2.7-billion and $3-billion, or $3-billion to $3.3-billion on a consolidated basis.

The company had approved a fourth-quarter gold price-linked dividend of 35c a share, based upon the average spot price for the third quarter.

The company’s Toronto-listed shares shed 4.55% off its value to close at C$54.12 apiece on Thursday.

Edited by: Creamer Media Reporter

Tuesday, October 30, 2012

Yamana Gold profit down despite record Q3 production, revenue

TSX-listed Yamana Gold had reported 6% lower adjusted profit for the third quarter ended September 30, as lower metals prices and higher production costs on the company's strong production performance.

The miner, which is in the process of building three mines, reported record production during the period, lifting gold-equivalent production by 11% over last year’s comparable period to 310 490 oz.

The gold-equivalent production comprised of 266 374 oz of gold, and silver production comprised 2.2-million ounces, produced at a gold-equivalent cost of $201/oz, which had resulted in a cash margin of $1 479/oz.

The improved performance allowed the company to post record revenue of $612-million, 10% higher than the $555-million the company reported in the same comparable period a year earlier.

Yamana reported adjusted earnings, excluding one-off items of $178-million or $0.24 a share, slightly lower than the $190.26-million the company earned for the period a year earlier.

The company said at the end of the period it had over $1.15-billion in available funds, including cash and cash equivalents of $400-million.

"We delivered record revenue and production in the third quarter and year to date, which also resulted in strong cash flow. Our cash flow after changes in working capital reached record levels also.

“As production increases, and more production enter a commercial phase, that should translate into increasing cash flow. Our development projects continue to advance and delivery of additional future growth is in progress,” CEO Peter Marrone said.

He added that the company closed the acquisition of Extorre Gold, which was now being evaluated for its exploration and development contribution to Yamana.

The company’s stock changed hands at C$18.76 apiece on Monday.

Edited by: Creamer Media Reporter

Sunday, October 28, 2012

Goldcorp lifts quarterly revenue on increased production, sales

Canada’s Goldcorp had reported record revenue during the third quarter ended September 30, on higher production and increased sales at higher prices.

The TSX-listed firm reported that revenue increased by 17.5% year-on-year to $1.53-billion, compared with $1.3-billion in revenue a year earlier.

This was achieved on gold sales of 617 800 oz from production of 592 500 oz. This compared with sales of 571 500 oz on production of 592 100 oz in the third quarter of 2011. The average realised gold price was $1 685/oz of gold sold.

Total cash costs were $220/oz of gold on a by-product basis and $660/oz on a co-product basis.

Silver production totalled 8.5-million ounces, 30% higher than the 6.5-million ounces produced in the prior year's third quarter.

Goldcorp reported net earnings rose by 48% to $498-million, compared with $336-million in the same period a year earlier. Adjusted net earnings were, however, down 2% at $441-million or 54c a share, compared with $450-million at 56c a share.

Operating cash flow before changes in working capital was $687-million, compared with $681-million in last year's third quarter.

"Operating improvements at Red Lake and Peñasquito contributed to strong financial results in the third quarter. Our priority is on continuing work to maximise the strong potential at our two largest operations," Goldcorp president and CEO Chuck Jeannes said.

He said access to several stopes in the high-grade zone of the company’s largest mine, the Red Lake mine, in Canada, followed the completion of destressing work, which had resulted in stronger gold production in the second half of the year. An important new discovery next to the high-grade zone was also made, which supported the potential for greater future production flexibility.

At Peñasquito, Mexico, Goldcorp said there was enough water available to achieve 2012 guidance, and a study was under way to develop a long-term water strategy to meet the needs of both Peñasquito and emerging development opportunities in the Peñasquito district.

"Goldcorp's pipeline of high-quality gold projects comprises the leading growth profile in the sector, and we are pleased that the first of those new growth projects, Pueblo Viejo, in the Dominican Republic, achieved first gold production during the third quarter,” Jeannes added.

Among the company’s noteworthy projects was its Cerro Negro project, in Argentina, which was advancing towards first gold production in late 2013. All major mechanical equipment to be imported had arrived at the site or in the country, and development of the first three veins was progressing well. Based on expected throughput of 4 000 t/d, yearly gold production in the first five years of full production was expected to average 550 000 oz at cash costs of less than $300/oz.

At the Éléonore project, in Quebec, a milestone was reached with the completion of the Gaumond exploration shaft excavation, and at Cochenour, in Red Lake, a new study, including an updated development plan would be completed during the fourth quarter. Both Éléonore and Cochenour remained on track for first gold production in late 2014.

“The low capital cost per ounce of new gold production for these four new projects creates the opportunity for very strong financial returns for our shareholders,” Jeannes said.

The company said it expected to produce between 2.35-million and 2.45-million ounces of gold for the year.

The company’s Toronto-listed stock traded 4.73% higher at C$42.72 apiece on Thursday morning.

Edited by: Creamer Media Reporter

Tuesday, October 23, 2012

Equipment delay puts pressure on Troy production guidance

By: Esmarie Swanepoel

Gold miner Troy Resources on Monday warned shareholders it might not reach its full-year production target of between 150 000 oz and 160 000 oz, following a three-month delay of equipment to its Casposo project, in Argentina.

“Increasingly complex import rules in Argentina led to a significant delay in the arrival of the mining contractor’s development Jumbo drill to the Casposo site,” said Troy MD Paul Benson.

He noted that the equipment arrived this month, and added that despite the company working to advance the portal and decline, access to high-grade ore from the underground operation would likely be delayed by two or three months from the original schedule, and would not enter the feed mill until the June quarter.

“Although too early in the financial year to determine, the delay in the access to the high-grade underground ore and greater volumes of lower grade ore in the pit will put pressure on us meeting the 2012 financial year company production guidance of 150 000 oz to 160 000 oz gold equivalent,” said Benson.

At the Casposo mine, Troy produced 18 409 oz of gold during the September quarter, compared with the 11 018 oz produced in the previous corresponding period. Silver production reached 270 380 oz during the quarter under review, compared with the 140 427 oz in the September quarter last year.

Benson noted Troy had approved a major modification to the Casposo processing plant with the addition of a ball mill in the open circuit.

“We initially started consideration of this modification after early testwork indicated a finer grind had the potential to increase silver recoveries when treating the very high silver grades in the deeper Inca ore.”

Benson added that further analysis indicated other improvements, including higher throughput rates, lower unit costs and decreased load in the semi-autogenous grinding mill.

“Due to the large ore stockpile on site, we believe we will be able to increase throughput by in excess of 15%. We have already acquired a suitable second-hand ball mill, which is currently being refurbished. We expect it to be operational during the June quarter,” he added.

Meanwhile, at the Andorinhas operation, in Brazil, Troy produced 9 975 oz during the three months to September, down from both the 12 921 oz produced in the previous corresponding period as well as the 10 791 oz produced in the previous three months.

The project was expected to reach the end of its life during the 2014 financial year, but the company said on Monday the exact timing would depend on the permitting of the Coruja pit, and the results of infill drilling to be completed in the December quarter, looking to convert resources to reserves to support small openpits.

Benson said permitting of new mine developments also remained uncertain in Brazil, with a moratorium on new approvals while the federal government reviewed the legislation.

“This is holding up development of the mining of iron-ore on the company’s leases by a local Brazilian company and production from the small Coruja opencut,” he added.

Edited by: Mariaan Webb

Wednesday, October 3, 2012

No easy ride for world's top 10 gold miners

It's tough being at the top and staying there and the world's top 10 gold miners are no exception. They have not been having an easy ride of late.

Author: Lawrence Williams

Nobody ever said mining was easy - all kinds of things can, and probably will, go wrong with an operating mine. And the world's top 10 gold miners, despite their years of mine-building expertise, are no exception, with most of them experiencing significant difficulties with one aspect or another of their operations over the past year or so. Indeed they have, as a group, come in for a significant amount of flak over their poor stock price performances vis a vis the gold price. In part this is because of a perception that ever rising production costs are eating into the profit potential generated by high gold prices, but, in truth, most of them have seen other factors coming into play which have also led to sometimes significant underperformance against the metal price - and even against their own past growth patterns.

But how does one categorise the top 10 gold miners? A common practice is to define them by market capitalisation - see Table 1. below, but this creates some anomalies in the pecking order - notably with companies which produce significant quantities of other metals or minerals. Most, in fact, do so either through co- or by-products which are very significant in some cases. Indeed in our listing by market capitalisation we have included Freeport McMoran in second place (a year ago it would have been top on the basis of the tabulation) which is actually primarily a copper miner, but, as can be seen in Table 2, which lists the major miners by annual gold output, it still classifies as one of the world's top gold producers under any categorisation so has been included nonetheless. In fact, of the global top 10 there are virtually none which could nowadays be classified as a 'pure' gold miner, except perhaps Randgold Resources which has come into the top 10 by market cap through a great growth performance and development pipeline, although remains well out of the listing of top gold miners by gold output.

If one goes through the individual companies in the listings one comes up with a chapter of problems for virtually all - from delayed new project developments (Barrick Gold), major labour disputes/difficulties - Freeport, AngloGold, Gold Fields (which has slipped out of the top 10 by market capitalisation but ranks fourth by mine output), Existing project expansion setbacks (Goldcorp, Newcrest), Geopolitical difficulties (Newmont), Significant underperformance of major strategic asset (Kinross). Indeed the perceived problems are such that so far two CEO heads have rolled (Barrick Gold and Kinross) and there are rumours that others may yet follow.

Table 1: Top 10 Gold Mining Companies by Market Capitalisation

Rank 2012

Company

Market Cap ($billion)

1

Barrick Gold

41.10

2

Freeport-McMoRan

37.57

3

Goldcorp

36.56

4

Newmont Mining

27.79

5

Newcrest Mining

22.28

6

Yamana Gold

14.27

7

Anglogold Ashanti

13.44

8

Kinross Gold

11.46

9

Randgold Resources

11.30

10

Eldorado Gold

10.87

The bigger the producer, the more pressure there is to develop new output just to maintain production, let alone to expand it, which has been the past pattern. With production from older mines declining through falling grades and/or ore reserve depletion, the pressure for replacement is enormous which means that deposits which would not have been seen as targets, due to grade or location, only a few years ago, are now being brought to production, so it's not surprising there are more problems coming to the fore. Developing a mega-deposit - like Barrick's Pascua Lama for example - creates a host of development and logistical problems that have to be worked through.

These problems of output maintenance through greenfield expansions in more hostile geographical, and sometimes political, environments are at last gaining recognition and it was noticeable that at this year's Denver Gold Forum last month, the CEOs of virtually all the major gold miners emphasised that their companies would not be looking at growth for growth's sake and would be closely examining all their new and existing capital projects.

Table 2.: Top 10 Gold Mining Companies by Gold Output

Rank 2012

Company

Gold production (tonnes)

1

Barrick Gold

239.50

2

Newmont Mining

161.74

3

Anglogold Ashanti

122.75

4

Gold Fields

98.80

5

Goldcorp

78.20

6

Kinross Gold

74.00

7

Newcrest Mining

71.10

8

Polyus Gold

46.66

9

Freeport-McMoRan

42.86

10

Harmony Gold

40.43

If one compares the two listings for the Top 10 gold miners it is particularly noticeable that the volume of output does not necessarily correspond with the company's ranking by market capitalisation and much of this difference, on closer examination, relates to the perceived political risk element.

It's not for nothing that the three top gold primary producers by market capitalisation (i.e. ignoring Freeport) all generate the vast bulk of their production from areas that are deemed politically safe - mostly North America and Mexico, although Newmont drops down the list a bit because of significant output from Peru and Indonesia. The company has been running into some problems in both these jurisdictions.

But the political risk element really comes to the fore with the South African gold miners - AngloGold Ashanti, Gold Fields and Harmony. All three appear in the gold production top 10, but only AngloGold remains in the top 10 by market cap and at a relatively low 7th place despite it being the world's third largest gold producer after Barrick and Newmont. Gold Fields, the fourth largest gold producer by output, fell out of the top 10 by market cap this year due to its share price being knocked back sharply by the South African labour disputes, which have been taking a really ugly turn, and nationalisation debate, while Harmony - Number 10 in the gold output table - would be well down the list in market cap. Unlike AngloGold and Gold Fields, it currently has no significant production outside South Africa, although is looking to gold mining at Wafi and Golpu in Papua New Guinea to provide this - but significant output there is still a few years off. Indeed, Harmony is probably the most vulnerable of the South African miners to gold price weakness as it has the highest cost base given it was built through the consolidation of the assets of mostly lower grade marginal producers. Conversely, it has perhaps the highest upside potential should the gold price really take off.

Interestingly, developing miners Eldorado Gold and Randgold Resources squeeze their way into the top 10 miners by market capitalisation, although both would fall well down the listing of gold miners by output. Both have pretensions to grow into significant producers - and despite their main growth operations being in areas which some would consider as having a significant political risk element, they have strong followings among gold investors.

As for the big producers themselves they have been stung by criticisms from the financial community regarding their performance and their treatment of shareholders. As a result they have virtually all become more transparent in their reporting and have also implemented more generous dividend policies to try and improve their appeal to investors. There is thus a good chance that in the months ahead, assuming the gold price remains relatively strong and they follow the policies their CEOs are promoting, that they could once again outperform the gold price rise. They should be generating good cashflow at current gold prices, and dividends should continue to rise as a result. They may not offer the share price growth prospects of the better juniors in a rising gold market, but remain a much safer investment in a flat or declining one - and offer a yield that is comparable with that of many banks and other financial institutions nowadays.

Monday, October 1, 2012

Goldplat reports higher 2012 production, profit

JSE- and Aim-listed Goldplat on Monday posted record results for the year ended June 30, with production increasing 11% and profit surging 57%.

After-tax profit increased to £4.64-million, while operating profit rose 48% to £4.53-million, the gold recovery company reported.

The company produced 31 354 oz of gold, up from 28 185 oz in 2011, and 7 976 oz of silver, with 17 762 oz of gold attributed from Ghana and 13 592 oz of gold from its South African operations.

Goldplat, led by new CEO Russell Lamming, said the gold recovery operations had significant stockpiles of material for processing, and would continue to remain important to the group, providing investment capital to advance other exploration and mining projects, which negated the need to turn to other funding options.

“We have, therefore, focused on maintaining each plant’s operational efficiency with profitability remaining a key focus.”

Goldplat also said its strategic partner, Rand Refinery, had expressed its intention to expand the cooperation between the two companies in South Africa, as well as in East and West African countries.

“The strategy is to utilise Goldplat's recovery operations to upgrade material to such a grade that it is viable for Rand Refinery to process the concentrated material in its works,” the company explained.

Meanwhile, Goldplat is continuing to develop its gold mining projects, including the Kilimapesa gold mine, in Kenya, and the Anumso and Nyieme gold exploration and development projects, in Ghana and Burkina Faso respectively.

“We aim to increase production at our first gold mine, Kilimapesa, towards the 10 000 oz mark over the next two years and delineate in excess of one-million ounces of resources across our whole development portfolio by the end of the year.
“With a robust treasury to support growth at our existing operations and fund future acquisitions, Goldplat looks set to hit its key targets,” said Lamming, who took over from Demetri Manolis on September 1.

The company declared a maiden dividend of 0.6p a share, totalling £1.01-million.

Edited by: Mariaan Webb

Monday, September 17, 2012

Nevada gold mines do the heavy lifting in the first half 2012 - USGS

‘Going to see the elephant' is alive and well in Nevada, as the U.S. Geological Survey data revealed the state's gold mines produced 2,761,750 ounces of gold in 1H12.

U.S. gold mining production for the first half of this year declined 3% from the same period of last year, the U.S. Geological Survey has reported.

The USGS also reported a slight decline in June gold output from 20,800 kilograms (662,305 troy ounces) in June 2011 to 20,200 kilograms (649,445 troy ounces).

For the first half of this year, the agency report a total of 113,000 kilograms (3,633,034 ounces)of U.S. gold production, down 3% from the same period of last year. Of that January through June 2012 production, 85,900 kilograms (2,761,750 ounces) were mined in Nevada, while 12,300 kilograms (395,454 ounces) were mined in Alaska, according to the USGS.

Average daily gold production for U.S. mines was 674 kilograms (21,669 ounces) in June, compared with 639 kilograms (20,544 ounces) in May.

The average Engelhard gold price for June was $1,602.13 per ounce, a slight increase compared with the average gold price in May.

Among the noteworthy developments highlighted in the USGS report was Rio Tinto's announcement that it planned to invest $660 million over the next seven years in its Bingham Canyon mine near Salt Lake City to extend the life of the mine by 11 years. Beginning in 2019, Bingham Canyon is expected to have an average annual output of 5,750 kilograms (184,867 ounces) of gold, 180,000 metric tons of copper, and 13,800 metric tons of molybdenum.

The agency also observed that Yukon-Nevada has started construction of earthworks at Starvation Canyon at the Jerritt Canyon mine in Elko, Nevada. Starvation Canyon is planned to start production in 2013.

Thursday, August 23, 2012

Gold Fields reports lower earnings

South Africa’s second-biggest gold-mining company Gold Fields on Thursday announced lower net earnings of R1 606-million for the June quarter compared with R2 082-million in the March quarter.

The quarter was, however, up on the R1 267-million net earnings of the corresponding 2011 quarter.

Net June-quarter earnings of $198-million were well down on the $268-million for the three months to March 31, but up on the $186-million of the previous year.

The company produced 862 000 oz at a total cash cost of $851/oz and an all-in cost of $1 308/oz.

The operating margin was 47% and all-in margin of 18%.

Gold Fields CEO Nick Holland reported “good progress” on the South Deep project and stabilized production from the Kloof Driefontein Complex (KDC).

The company declared an interim dividend of 160c a share, payable on September 5.

Holland said that the company’s safety drive experienced a serious setback when five miners lost their lives in an underground fire at KDC West’s Ya Rona shaft.

The cause of the fire, which started in an old worked-out part of the shaft that had been closed for many years, remained unknown.

The balance of the September quarter would be focused on flushing out noxious gases and ensuring a safe and healthy environment to recommence operations in the last quarter of the calendar year.

Loss of production as a consequence of the fire was expected to be 50 000 oz or 1 600 kg.

With the KDC tramming fatality, the total number of fatalities in the quarter rose to six.

South Deep had been fatality-free for the past 18 months while Beatrix recorded a fatality-free quarter.

Tarkwa and Cerro Corona continued to report zero lost-time injuries and the overall lost-day injury frequency rate for the group improved from 5.21 to 4.51, but the days-lost frequency rate regressed to 234 from 220.

Edited by: Creamer Media Reporter

Wednesday, July 11, 2012

B2Gold expects increased gold production over two years

Toronto-listed miner B2Gold on Tuesday said it had achieved a marginal quarter-on-quarter increase in gold production from its two Nicaragua mines, lifting production by 6% to 36 803 oz.

However, the company pointed out that it expected output to increase further in the second half of the year, and that it planned to produce about 185 000 oz in 2013 and 200 000 oz by 2014.

The added production would come from processing higher-grade ore from the Jabali deposit through the Libertad mill.

B2Gold expected to produce between 150 000 oz and 160 000 oz of gold for the year, at a cash cost of about $590/oz to $625/oz.

During the second quarter, B2Gold raised its revenue by 5% to $57.3-million from the sale of 35 860 oz of gold.

The La Libertad mine lifted production by 3.67% to 25 135 oz during the quarter, compared with the first quarter production totalling 24 246 oz and remained on track to meet its full-year guidance.

The Limon mine increased gold production by 12.7% to 11 668 oz, compared with 10 356 oz in the first quarter. The mine remained on track to meet its full-year guidance.

Shares of the company, which has a market value of about C$1.28-billion, traded at C$3.31 on Tuesday on the TSX.

The company also holds a portfolio of development and exploration assets in Nicaragua, Namibia, Colombia and Uruguay.

Edited by: Creamer Media Reporter

Tuesday, June 26, 2012

Australia gold output declines for third consecutive quarter

Gold production in Australia declined by 5% quarter-on-quarter and by 4% year-on-year in the first three months of 2012, mining consultant Surbiton Associates reported over the weekend.

Australia produced 62 t of the precious metal in the first quarter.

Surbiton said in its quarterly review that this was the third consecutive quarter that gold production had declined, with lower output attributed to a number of factors, including the effects of wet weather.

“The March quarter often has lower gold production and this year was no exception,” said Surbiton director Dr Sandra Close.

“As well as the usual ups and downs, wet weather caused access problems in several mines, particularly in New South Wales and the Northern Territory, so there was greater reliance on treating lower-grade stockpiles, which reduced gold output.”

Also, the March quarter was one day shorter than the December quarter and Close said that this alone accounted for about two-thirds of a ton of gold output.

“Several of Australia’s largest operations, including Boddington, Cadia Hill and the Super Pit had lower output in the March quarter. Although, on the positive side, there are a number of new or redeveloped operations coming on stream,” she added.

At Newmont Mining’s Boddington mine, gold production fell by 43 000 oz, or well over a ton of gold, owing to lower grades being mined and fewer tons of ore being processed.

Ground slippage problems and heavy rain affected gold output at Newcrest Mining’s Cadia Hill operation in New South Wales, where production fell by 27 000 oz compared with the previous quarter.

The Super Pit, operation, which is 50% held by both Newmont Mining and Barrick Gold, regained its place as the largest Australian producer for the quarter, even though its output was down 16 000 oz owing to mill maintenance, which reduced the amount of ore processed.

“Some new or recycled operations have already commenced production in 2012, such as Ramelius Resources at Mount Magnet, while others will join the list of producers by the end of the year. Among these are a number of copper/gold producers including Osborne, DeGrussa and Kanmantoo,” Close said.

In Queensland, Ivanhoe Australia produced the first copper/gold concentrates from its reopened Osborne mine, near Cloncurry. Sandfire Resources shipped the first high-grade copper ore from its new DeGrussa copper/gold mine in Western Australia, while Hillgrove Resources’ Kanmantoo mine in South Australia, which was commissioned late last year, continued to ramp up production.

“In the near-term, output from these new copper/gold operations is offset by the closure of the openpit at Xstrata’s Ernest Henry operation in Queensland, which has been one of Australia’s largest gold by-product producers,” Close said.

“However, Ernest Henry is currently being redeveloped as an underground mine.”

She noted that by far the most significant new operation was Newcrest’s Cadia East gold/copper mine, near Orange, in New South Wales, which was slated to come into production around the end of this year.

“The Cadia East underground mine will replace the worked out Cadia Hill openpit and when it reaches full production around 2016, it will produce about 700 000 oz to 800 000 oz of gold and 100 000 t of copper annually,” Close said.

“It will be one of the largest underground mines in the world and by far the largest in Australia.”

Close added that there was also a string of medium to small gold operations that should begin production later this year. These include Regis Resources’ Garden Well operation in Western Australia, which should produce over 200 000 oz/y of gold and Millennium Minerals’ Nullagine plant, scheduled to produce about 100 000 oz of gold yearly.

“Each is not large but taken together they amount to a steady supply of new projects that replace those that are worked out and closed.”

Despite the decline in output, Close noted that there was still considerable focus on the gold price.

“Despite its volatility in US dollar terms since the start of the year, it has been much less variable in Australian dollar terms, due to exchange rate variations,” she said.

The US dollar gold price rose early in the year to peak at near $1 800/oz in late February and has now fallen to below $1 600/oz. By comparison, since the start of the year, the Australian dollar price has fluctuated in a narrower range, averaging around A$1 600/oz over the period. Over the same period the Australian dollar has varied some 10c against the US currency.

“Irrespective of the vagaries of the gold price and exchange rate variations, uncertainty remains on world markets,” Close said.

“While the European financial crisis is the current concern, many of the other factors affecting global financial, economic and political uncertainty remain and these problems are not going to be solved quickly.”

Monday, June 25, 2012

Australian gold output falls for 3rd straight quarter

The Australian Gold Quarterly reported gold production in the country dropped 4% during the March quarter, compared to a year ago, due to a number of factors.

Australian gold production fell for the third consecutive quarter with 62 tonnes reported for the first quarter of this year, a 5% drop from the fourth-quarter 2011.

In the most recent issue of Surbiton Associates' Australian Gold Quarterly, Managing Director Dr. Sandra Close said, "As well as the usual ups and downs, wet weather caused access problems at several mines, particularly in the NSW and the NT, so there was greater reliance on treating lower grade stockpiles which reduced gold output."

"Several of Australia's largest operations, including Boddington, Cadia Hill and the Super Pit had lower output in the March quarter," Close said.

At Newmont's Boddington mine, gold production fell by 43,000 ounces (or more than a tonne of gold), due to lower grades being mines and fewer tonnes of ore processed.

Meanwhile ground slippage problems and heavy rain affected gold output at Newcrest Mining's Cadia Hill operation in New South Wales, where production fell by 27,000 ounces.

Although production at Newmont and Barrick's Super Pit at Kalgoorlie was down 16,000 ounces during the first quarter due to mill maintenance, Close noted the operation regained its spot as the top Australian gold producer during the quarter.

The top five gold producers for the March 2012 quarter were: Newmont Mining/Barrick Gold's Super Pit JV, 182,000 ounces; Newmont's Boddington Mine at 162,000 ounces; Newcrest Mining's Telfer Mine at 135,684 ounces; Gold Fields' St. Ives Mine at 120,340 ounces; and Newmont's Jundee Mine at 91,000 ounces.

"The March quarter often has lower gold production and this year was no exception," Close observed. The March quarter is also one day shorter than the December quarter, which she said alone accounts for about two-thirds of a tonne of gold output.

In her analysis, Close noted a number of copper-gold producers have already commenced or will go into production this year.

In Queensland, Ivanhoe Australia produced the first copper-gold concentrates from its re-opened Osborne mine, near Cloncurrey. Sandfire Resources shipping the first high-grade copper ore from its new DeGrussa copper-gold mine in Western Australia. Commissioned last year, Hillgrove Resources' Kanmantoo mine in South Australia continues to ramp up production.

Close said that by far the most significant new operation is Newcrest Mining's Cadia East gold-copper mine, near Orange, New South Wales, which is scheduled to come into production at the end of this year.

"The Cadia East underground mine will replace the worked-out Cadia Hill open pit and when it reaches full production around 2016, it will produce about 700,000 to 800,000 ounces of gold and 100,000 tonnes of copper annually," Close noted. "It will be one of the largest underground mines in the world and by far the largest in Australia.

"There is also a string of medium to small gold operations which should begin production later this year," she added. They include Regis Resources' Garden Well operation in WA, which should yield more than 200,000 ounces of gold annually and Millennium minerals' Nullagine plant, scheduled to produce about 100,000 gold ounces annually.

In her analysis, Close advised, "There is still considerable focus on the gold price. Despite its volatility in US dollar terms since the start of the year, it has been much less variable in Australian dollar terms, due to exchange rate variations."

The U.S. gold price peaked near US$1,800 per ounce in late February and now has dropped to below US$1,600 per ounce. By comparison, the Australian dollar has fluctuated in a narrower range, averaging around A$1,600/oz since the start of this year. During the same period the Australian dollar has varied some 10 cents against the U.S. currency.

"Irrespective of the vagaries of the gold price and exchange rate variations, uncertainty remains on world markets," Close observed. "While the European financial crisis is the current concern, many of the other factors affecting global financial, economic and political uncertainty remain and these problems are not going to be solved quickly."

To obtain a copy of the most recent issue of the Australian Gold Quarterly Review, go to www.subiton.com.au

Sunday, June 24, 2012

Newmont 'identifies with' Peru mine requests -Humala

Peruvian President Ollanta Humala said on Thursday Newmont Mining has "finally identified" with stricter environmental mitigation plans the government requested for the Conga gold mine project.

Humala did not say if the company had specifically told the government that it would accept calls for a more demanding environmental plan and move forward with the $4.8 billion project, which would be Peru's largest mining investment ever.

Conga has been stalled since November over protests by community groups who say it would hurt water supplies and cause pollution. The government has sought to mitigate the conflict by asking Newmont to make slight changes to its proposal.

"We welcome the fact that they have finally identified with our proposal," Humala told reporters when asked if Newmont had accepted recommendations to build larger reservoirs that could replace two or more alpine lakes.

Newmont, which says the project would guarantee year-round water supplies in towns that currently suffer shortages, declined to immediately comment on Humala's statement.

In an attempt to quell the protests against the mine, the government hired outside experts to recommend improvements for the project's environmental impact plan.

Conga, which is partly owned by local miner Buenaventura , would produce between 580,000 and 680,000 ounces of gold annually.

Newmont said last month that it would take a decision in late June on whether to push ahead with the project.

Peru, which has vast mineral resources, is the second largest producer of copper and sixth of gold, but many mining communities suffer from widespread poverty and complain Peru's decade-long economic boom has passed them by.

Source: Reuters

Wednesday, May 30, 2012

Gold Forecast Triple bottom? A Base or a Trap?

The pain in Spain falls mainly on it's credit rating, which is to blame.

As the sovereign debt crisis in the European Union accelerates, today we witnessed another nation of the E.U. have its credit rating lowered. This action put substantial pressure on the euro, which traded close to a two-year low, spurring the U.S. dollar to continue its rally. Eagan-Jones downgraded Spain's credit rating and one of Spain's largest banks, Bankia, was in such immediate peril that it was given a significant infusion of cash over the weekend in order to keep it solvent. These new developments come on the heels of heated concerns as to whether Greece will remain part of the E.U., or exit the union, dumping its financial obligations and the euro in one fell swoop.

There was an abundance of safe haven buying, but the focus was in U.S. dollar backed investments and not traditional safe haven vehicles such as the precious metals. The dollar is currently trading at a 21-month high, and continues to strengthen as uncertainty in the EU grows.

Reports surfaced last night that China may in fact introduce new monetary stimulus measures in order to boost their economy. However, it needs to be noted that the Chinese economy has been running in overdrive and even in its current slowdown still maintains a vigorous pace. Any monetary stimulus measures, whether implemented by the United States, the E.U., or China, could very well have a strong bullish effect on the precious metals markets.

See Video:

Source: The Gold Forecast.com

Thursday, May 24, 2012

Gold production, exploration and ‘peak gold' - an analysis

Global gold production is at an all-time high, according to a new report from the USGS. Micheal George*, the USGS gold specialist comments on ‘peak gold', output and exploration trends. Gold Report Interview.

The U.S. Geological Survey's (USGS') Mineral Commodity Summaries (MCS) 2012 describes world mine production and reserves by country. What are the biggest changes from last year?

Micheal George: There weren't a lot of big changes other than replacing reserves that were mined during the previous year. The largest changes were Australia increasing reserves by 100 tons (t) and Canada decreasing reserves by 70 t. The reason behind Canada's decrease was the closure of mines due to exhausting mineable reserves. Australia's increase was due to adding new mines to its potentially active mine list.

Annual world mine production increased approximately 5% in 2011. It was the third year in a row of an increase in production and marked an all-time high for gold produced since recorded history. Compared to the recent low in 2008, production is up about 19% or 440 t. So it's recovered quite a bit.

TGR: What are the reasons for higher gold production? Is it simply because the gold price was higher?

MG: The gold price was higher, so more mines are processing, and they're pushing out more gold. A lot of it is coming from China right now. Quite a bit of gold is coming from other countries as well.

TGR: Are mining companies replacing reserves through exploration or acquisition?

MG: Both. Nowadays, a lot of the additional reserves have been coming from exploration, mainly around the deposits that are currently being mined.

TGR: How does the USGS estimate reserves for this report?

MG: Reserve estimates are calculated by the government in each country in the report. For example, the Australian government or Canadian government does research and revises reserve numbers and that is what we use in the report. The USGS also researches public company reserve reporting. Sometimes we use company published reserves if we know all of the companies in a country. For example in Papua New Guinea, all the mining companies are publicly traded, so they all have to report their reserves.

Friday, May 4, 2012

Gold production to rise and costs to fall after a testing Q1 - Randgold

CEO of the West African gold miner, Mark Bristow, feels the results are robust and represent a good start to the year

It depends how you read Randgold Resources' latest quarterly statement as to whether Q1 2012 has been good or indifferent! Year on year it shows a very substantial profits increase, but quarter on quarter it suggests an admittedly predicted downturn. Overall though, Q1 could well prove to be the forerunner of the company's continuation of its remarkable profit growth record given some of the political and technical trials and tribulations it has had to go through - although the political ones have not proved to be nearly as problematic as some observers would have had us believe.

Speaking to an assembled audience of mining analysts, Randgold's CEO, Mark Bristow, gave an avowedly upbeat view of progress and his take on the political situation in West Africa and its effects on the company's operations there which account for all its gold output - that is until the big Kibali gold mine jv with AngloGold Ashanti in the north eastern DRC comes online in late 2013 if everything goes to plan. There's never a guarantee that things will work out as planned in remote parts of Africa in particular, or indeed in mine development in general, but according to Bristow things at Kibali are well on track towards meeting its first production schedules. When it does start producing, Kibali will be one of Africa's largest gold mining operations with planned output building up to 600,000 ounces a year.

Bristow described the Q1 results as a solid quarter and a good start to the year, although did comment that some reports on the figures were not quite so understanding. However he did point out that the company is not high grading, but mining the full orebodies and there were thus bound to be times when grades would fluctuate when lower grade sections predominated. In this case he expected grades to pick up as the year progressed which, together with increased mill throughput would lead, barring unforeseen circumstances, to significantly higher gold output, better profits and lower cash costs over the year ahead.

Overall, Randgold's Q1 profit amounted to US$ 104 million very significantly up from the $45.9 million in an admittedly weak Q1 2011, but was down on record Q4 2011 figures of $144.7 million - a predicted fall after a drop in sales from its key Loulo-Gounkoto complex in Mali as it mined lower grade ore, and was hit by both stoppages and lower grades at its Tongon mine in Cote d'Ivoire.

But looking ahead Bristow said that the lower grade sections at Gounkoto will be passed through and figures should start improving moving up to a return to near 5 g/t by the end of the year compared with 3.5 g/t in the latest quarter, while Tongon is also mining through a lower grade transition zone. Q1 revenue and profit figures were also impacted by the hold up in sale of 11,000 ounces from the Mali operations due to the coup there which, relatively briefly, closed the borders - but this will be recouped in the current quarter boosting earnings unless there are further shipment disruptions experienced. Overall, Randgold is maintaining its production guidance for the year of 825-865,000 oz and costs of less than US$650/oz.

Looking at the individual operations, Randgold's old flagship West African mine - Morila in Mali is currently in the winding down phase. Mining has ceased and the operation is currently treating low grade dump material, but nevertheless performed better than expected in terms of attributable gold output of 21,852 ounces generating $22.4 million in attributable profits. (Morila is owned 40% by Randgold, 40% by AngloGold Ashanti with the balance by the Malian state.)

The new flagship is the Loulo complex which has been given a new lease on life through the development of the high grade Gounkoto mine a short distance to the south. Ore is trucked from Gounkoto for processing at Loulo which has enabled the latter to put in an extra mill and raise throughput accordingly. The company is reviewing extending the Loulo plant further with additional crushing, CIL, elution and electrowinning facilities which would enable it to raise throughput to 450,000 t/month from the current 330,000, but whether it does this, or undertakes a smaller upgrade, or keeps it as is will be subject to the outcome of cost benefit studies which won't be completed until late this year or early next as the company is keen to focus its capital cost controls on Kibali in the DRC - the project which should bring Randgold into Tier 1 production status.

While Gounkoto ore is processed at Loulo, Randgold has negotiated a significant agreement with the Malian government which means the Gounkoto operation is being treated as a separate mine with some very positive tax implications. Even so, the strong production at Gounkoto and the decision not to build a separate concentrator there, but truck the ore to Loulo, has enabled it to repay its capital costs within the year. Indeed despite the lower grade section being mined, Gounkoto produced 71,650 oz gold in the quarter generating very positive net cashflow.

The company's new mine at Tongon in the northern Cote d'Ivoire has been going through a few teething problems as it builds to full production. There have been some labour disputes and technical difficulties with the connection to grid power which caused some power outages. The operation has been mining through a transition zone which led to lower grades to the mill, but Bristow is confident that it can put most, if not all, of these issues behind it as the year progresses.

Once again Randgold is looking to exploration to further extend its options over its land holdings in northern Cote d'Ivoire and reckons to have found some extremely prospective areas, some showing potential for excellent gold grades which it will be examining more closely in the months ahead.

In Senegal, just over border from Mali, the company still hopes for big things from its Massawa exploration programme where it reckons to have outlined high tonnages of gold bearing material. But so far although it has added significant reserves to its existing finds, these are of relatively low grade and Bristow feels they don't yet meet the company's investment criteria. Nevertheless it is continuing with its major exploration programmes in the area, but at this rate it may be put on the back burner again in favour of what it may see as better prospects elsewhere in west Africa - notably around Loulo/Gounkoto in Mali, in the northern Cote d'Ivoire, and in new highly prospective ground it is just beginning to look at in Burkina Faso.

But it is Kibali, the big $2.5 billion new gold mine being developed in jv with AngloGold Ashanti both of which own 45% of the project, which is being operated by Randgold (with the DRC state-owned SOKIMO holding the minority interest) which is exciting the company as a brand new mine development and is the subject of much of its management efforts at the moment. Construction has commenced and Bristow reckons it is currently on target for pouring its first gold by the end of 2013 as Phase 1 of the operation - the open pit - kicks in. Phase 2 - the higher grade underground section is due to come into play in 2015. While the capital costs are high - and logistical problems from building such a large mine must be a nightmare working in such a remote region, Bristow feels the exploration potential in the immediate vicinity will have the effect of bringing the project cost down from a currently estimated $200 per reserve ounce (high for Randgold's own admitted mine cost development targets) down to around $150/reserve ounce, or perhaps even less.

With the bulk of power to be supplied by four new hydro-electric plants, but with back up diesel generators, power costs at the mine should come in at only 12 cents per kwh - a significant benefit, although at the expense of a higher capital cost.

So overall Q1 has been an interesting quarter for Randgold. It has seen its way through civil unrest in Mali with barely a blip in its operations - as indeed it did with Tongon in Cote d'Ivoire a year earlier. Bristow had some interesting things to say about African politics, pointing out that miners like Randgold which are happy to work with governments of any hue, and contribute hugely to a country's economy through employment, taxes, royalties and participation agreements, are seen as assets by these government, even when major changes in the political environment come about.

Randgold likes to be seen as a good citizen - and to this end has highlighted a couple of instances where it has helped out communities which might not fall into its normal remit, including help rebuild a school devastated by storm damage in the DRC, and most recently in northern Mali where it has delivered 60 tonnes of food aid to people in the areas most affected by the Touareg-initiated disturbances in the region. It is also proud of its safety record at its mining operations with Morila, Gounkoto and Tongon recording zero lost time injury free hours in the quarter. Given that at Tongon, in particular, the workforce is nearly all made up with people who have never worked in an industrial environment before, that is a credit to its safety training. Miners can be good citizens too.