Randgold profit falls but prospects are encouraging

South African gold miner, Randgold Resources, is in the last few years of production at its Morila operations in Mali, its oldest mine.

Falling production at Morila is reflected in last year’s profits, which are down year-on-year, despite the high gold price and additional output from Loulo, also in Mali.

The company recorded net profits of US$42.04 million in 2007, down from $47.56 million in 2006. Total cash costs per ounce rose sharply from $296 oz to $356 oz.

However, at Loulo profits were up 44% quarter-on-quarter and 10% year-on-year in the final quarter of last year. Production rose to 68,059 ounces during the three months to end December, from 58,020 ounces in the previous quarter.

The future of Randgold’s new mine at Tongon in Cote d’Ivoire is close to being secured and a draft mining proposal has been submitted to the Cote d’Ivoire government for approval.

Turning to other exploration projects, the Massawa prospect in Senegal is causing some excitement, with Randgold’s chief executive Mark Bristow, describing it as the jewel in company’s exploration crown.

The prospect is giving some good high grade results which are “at least as good as those for Morila or Loulo at the same stage.”

In addition, access to both Massawa and Loulo is set to benefit from a new road system being built to serve a nearby iron ore mining project run by Arcelor Mittal.

During 2008, Randgold will focus on cost control, although it has to be said that much of the 2007 rise was outside the company’s control.