Randgold dives as Morila output drops
February 2, 2004
By Sherilee Bridge
Johannesburg - Shares in gold exploration and development firm Randgold Resources tumbled as much as 17 percent following AngloGold's announcement that production at the Morila gold mine in Mali had fallen by 40 percent.
Bloomberg said Randgold's shares fell as much as £2.20 to £10.75 in London.
AngloGold and Randgold share ownership of the mine, which is 20 percent held by the government of Mali. It is the only operating mine in which Randgold has a stake.
Pre-empting the Randgold report-back to the market, scheduled for next Monday, AngloGold said attributable operating profit from Morila had plunged 53 percent to $9 million in the quarter to December.
Randgold was burned by AngloGold late last year when the world's largest producer snatched Ghana's Ashanti Goldfields from under Randgold's nose for $1.5 billion.
AngloGold managed to secure the favour of the Ghanaian government despite its bid being lower than Randgold's offer of $1.7 billion.
Dave Hodgson, the chief operating officer at AngloGold, said at the presentation of AngloGold's December quarterly results that recovered grades at Morila had fallen 41 percent to 4.41 grams a ton (g/t).
"The decrease in production, coupled with increased mining contractor costs, resulted in total cash costs rising by 67 percent to $182 an ounce," Hodgson said.
Commissioning of the plant expansion project had also been delayed, he added.
Peter Townshend, a mining analyst at Barnard Jacobs Mellet, predicted that grades at Morila would continue to decline, lowering output again this quarter.
Positioned as one of the world's cheapest gold producers, Morila's grade has come off significantly since the September quarter last year.
Ore grade dropped from an average of 11.9g/t for the nine months to September 2002 to 9.47g/t for the same period last year, revealing a return to more sustainable grades.
The mine came on stream in 2000 and achieved accumulated cash profit of $500 million by June last year.
Shares in Randgold & Exploration, the Johannesburg-listed company that owns 42 percent of Randgold Resources, closed R1.80 lower at R30 on Friday.
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