Randgold CEO Sees Bullion Slump as Chance to Buy Mines Cheap

Mark Bristow, who built Randgold Resources Ltd. by making discoveries across Africa, is turning to acquisitions as a slump in the bullion price forces rivals to consider selling mines.

Gold fell to a four-year low of $1,137.94 an ounce yesterday, below the production costs of seven out of 19 companies tracked by Bloomberg Intelligence, including Harmony Gold Mining Co., South Africa’s third-largest producer, and Primero Mining Corp.

Bristow, chief executive officer of Randgold, sees the chance to buy mines in Africa that would have once been beyond the Jersey-based company’s reach as peers struggle with debt and falling profits. AngloGold Ashanti Ltd., the world’s third-biggest producer, said this week it was putting mines up for sale to cut debt.

“Everyone would like to sell assets that they don’t want,” Bristow said today in an interview in London. “We want assets they don’t want to sell. It’s going to come as a surprise to the market as people realize they have to do it. There’s going to be a tipping point.”

Bristow said buying a mine, rather than a company, is Randgold’s preferred option.

“Driven by circumstances I believe there are going to be some opportunities,” he said.

Trashed Opportunity

Under Bristow, a geologist by training, Randgold has generally shied away from doing deals. The gold producer built its business by finding its own mines, making discoveries in Mali, Senegal and Ivory Coast. The exception was the 2009 acquisition of Moto Goldmines Ltd. with AngloGold.

As gold prices fell 4.7 percent last week, the Standard & Poor’s/TSX Global Gold Sector Index of 40 producers plunged 16 percent.

Randgold is the best-performing stock in the index in the past 10 years, rising more than fivefold in the period. The shares rose 1.2 percent to 3,811 pence as of 12:47 a.m. in London.

Bristow said many of the gold-mining industry’s problems are self-inflicted as companies racked up debt, chased low-quality assets and over supplied the market during the precious metal’s 12-year bull run.

“A lot of this is deserved,” Bristow said. “We trashed the opportunity of a rising gold price, 10 years of a rising gold price. We’re doing the same again as it comes down. There’s a whole pile wrong.”

Ebola Neglect

Bristow was also scathing about the developed world’s response to the Ebola in West Africa. He said the affected countries were neglected in the early months of the outbreak and much of the subsequent response has been “hysterical.”

“This foolish behavior by so-called first-world countries and their leadership is damaging,” he said. “What it does do is bring into question the real commitment that the developed world has to bringing along the rest of the world.”

The Ebola outbreak has killed more than 5,000 people, mostly in Liberia, Sierra Leone and Guinea, according to the World Health Organization. Randgold has mines in Mali, where there has been one confirmed case of Ebola, and Ivory Coast, which borders Liberia and Guinea.

“People play lip service to investment, upliftment and equality, and it all pales into nothing when you see how people behave in a situation like this,” Bristow said. “You can manage Ebola. It’s not an unmanageable disease.”

Randgold today reported a 29 percent decline in third-quarter profit to $58 million, even as sales increased 8 percent to $376.8 million. The company mined 299,320 ounces of gold in the quarter at an average cost of $692 per ounce.

The company maintained its full-year production target of 1.13 million ounces to 1.2 million ounces.

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