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Randgold Resources: Tongon Update

Contributed by Fox-Davies Capital

Randgold has announced that production at its Tongon mine in Cote d'Ivoire is returning to normal after a fire in the mill section of its plant three weeks ago. Both mill circuits are expected to be fully operational within two weeks and, despite a series of setbacks, the mine produced 210,000 ounces of gold in 2012.

Although not explicitly stated, we suspect that the fire in the No 1 mill cyclone feed pipe was caused by a welder during mill maintenance. The fire then spread upwards into the No 1 cyclone cluster and moved to the No 2 cyclone cluster. Both cyclone clusters, flotation cells and blowers along with associated infrastructure for both milling circuits suffered damage.

The good news is that both grinding circuits are expected to be back to normal within two weeks and in 2012, the mine produced 210,000oz of gold. For the fourth quarter the mine produced 50.1k oz, which was 1.3k oz more than our estimate.

The fact that the mine will not be back in full production for another two weeks, suggests that originally we had overestimated mine production for the current quarter.