Resolute buys out Randgold at Syama

Randgold Resources (GOLD-Q) has sold its 80% stake in the dormant Syama gold mine in southern Mali to Resolute Mining of Australia. In return, Resolute paid Randgold US$6 million in cash and has assumed mine-related liabilities totalling US$7 million.

The Malian government continues to have a 20% stake in the operation.

When the gold price is greater than US$350 per oz., Randgold will receive a royalty of US$10 per oz. on the first million ounces attributable to Resolute, and US$5 per oz. on the following 3 million oz.

The Syama mine has been closed since 2002. Proven and probable reserves are estimated to be 12.9 million tonnes grading 3.93 grams gold per tonne, based on a cutoff grade of 1.75 grams gold per tonne (T.N.M., April 19/04).

Resolute hopes to be producing gold there by late 2005.

Nearby, Randgold is developing the Loulo and Yalea deposits as open-pit operations, with production at the latter expected in mid-2005.

Drilling has tested both deposits at depth, and a prefeasibility study is assessing the potential for subsequent mining underground.

Highlights of drilling at Yalea include:

— 7.3 metres grading 18.47 grams gold per tonne at a vertical depth of 510 metres;

— 12 metres grading 18.56 grams gold at a vertical depth of 511 metres;

— 3.7 metres grading 23.97 grams gold at a vertical depth of 484 metres; and

— 6.6 metres grading 40.23 grams gold at a vertical depth of 418 metres.

In 11 other holes, intersections ranging from 4.5 to 32 metres in length graded 1.99-13.45 grams gold. The deposit is open to the north and south and at depth.

Deep drilling at Loulo has delineated two high-grade shoots. Highlights include one hole that intersected 12 metres grading 10.65 grams gold at a vertical depth of 172 metres and, in another hole, 20.5 metres grading 10.7 grams gold at a vertical depth of 220 metres. In eight other holes, assays of 2.8-14.15 grams gold were intersected over widths of 3.8-19.2 metres and at depths ranging from 158 to 384 metres.

Meanwhile, a 3-day strike over a productivity bonus has ended at the Morila gold mine in southern Mali. The operator, Randgold, says it is willing to continue negotiations with the union on the issue.

Although the Morila plant remained operational during the strike, the work stoppage is expected to cut into second-quarter production.

In the first three months of 2004, the mine squeezed 107,115 oz. gold from 795,000 tonnes grading 4.9 grams gold per tonne, compared with 119,637 oz. from 842,000 tonnes at 5 grams per tonne in the final quarter of 2003. In the first quarter of 2003, Morila produced 238,421 oz. at an average grade of 9.8 grams.

The shortfall, caused in part by downtime related to a delay in plant expansion, pushed total cash costs 67% higher to US$185 per oz.; the production was sold for an average of US$369 per oz.

First-quarter profits from mining slipped by nearly 40% to US$7.8 million. Overall, the company’s net loss was US$4.9 million, reflecting a non-cash loss of US$5.8 million on the mark-to-market valuation of the forward sales taken out as part of the financing for the 80%-owned Loulo gold project.

Morila is expected to produce higher-grade ore later in the year, and throughput should increase as well. Output for 2004 is pegged at 535,000 oz.

Since startup in October 2000, the mine has produced more than 2.5 million oz. at a total cash cost of US$90 per oz.

At the end of 2003, Morila had a measured and indicated resource of 32.6 million tonnes grading 3.6 grams gold, or 3.8 million oz.

Meanwhile, drill crews have begun testing nine new targets around the mine. Randgold sees potential for continuous flat-lying mineralization.

Randgold and AngloGold Ashanti (AU-N) each own 40% of Morila, with the remainder held by the government of Mali.