Randgold Resources Ltd. (RRS), a producer of the metal in Africa, said it’s unsure whether it will need to use a bank facility to complete its Kibali mine in the Democratic Republic of Congo after gold prices slumped.
“We’re not sure, that’s what we put it in place for,” Chief Executive Officer Mark Bristow said today in an interview in London. “How low will gold go?”
Randgold may have to use a credit facility to fund the $1.7 billion Kibali gold mine after the precious metal’s steepest quarterly decline in at least 90 years cut the company’s income. The mine, which Randgold is building with AngloGold Ashanti Ltd. (ANG), is due to start production later this year.
Randgold fell as much as 5.6 percent to 4,180 pence in London, a four-week low. The stock was at 4,260 pence as of 8:22 a.m. local time, extending its decline this year to 28 percent.
Randgold, currently debt free, secured a $200 million revolving credit facility in the first half. It will spend about $630 million developing mines this year as it seeks to produce more than 1.2 million ounces in 2014, compared with the 900,000 ounces to 950,000 ounces it’s targeting in 2013.
Gold declined 23 percent in the second quarter, reaching a 34-month low of $1,180.50 an ounce in London on June 28.
Randgold said earlier today that second-quarter profit slumped 61 percent from a year earlier to $46.3 million, while sales declined 27 percent to $252.8 million.
Bristow said the company is on target to produce gold at $700 to $750 an ounce this year, with costs per ounce falling to $630 to $670 in 2014.
To contact the reporter on this story: Thomas Biesheuvel in London at firstname.lastname@example.org
To contact the editor responsible for this story: John Viljoen at email@example.com