Strike ends at Morila

A three-day strike over a productivity bonus has ended at the Morila gold mine in southern Mali, reports operator Randgold Resources (GOLD-Q).

In a prepared statement, Randgold said it is “willing to continue negotiations with the union on the issue, and remains committed to an equitable and mutually acceptable solution that will enable the mining industry to contribute effectively to the economy of Mali.”

The company says that although the Morila plant remained operational during the strike, the work stoppage is expected to cut into second-quarter production.

During the first three months of 2004, the mine squeezed 107,115 oz. of gold out of 795,000 tonnes of ore running 4.9 grams gold per tonne, compared with 119 637 oz. from 842,000 tonnes averaging 5 grams during the previous quarter. The latest quarter’s production is well off the year-earlier pace, when the mine spat out 238,421 oz., as grades ran 9.8 grams gold, and recovery hit 93.7%.

Production throughput slipped owing to downtime related to a delay in plant expansion (planned to offset the lower grades) commissioning during the quarter. Likewise, the plant’s recovery rate slipped slightly to 86%. The lower production pushed total cash cost 67% higher to US$185 per oz.; the production was sold for and average of US$369 per oz.

Thanks to the lower production, Randgold’s first-quarter profits from mining slipped by nearly 40% to US$7.8 million. Overall, the company’s net loss came to US$4.9 million, owing mostly to 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.

Randgold expects production at Morila to pick up later in the year as higher-grade ore is accessed, and higher plant throughput comes on line. In all, the mine is expected to produce some 535,000 oz. during 2004. After 2004, the mine’s entire production will be exposed to spot gold prices.

Since beginning production in October 2000, the mine has produced more than 2.5 million oz. at an average total cash cost of about US$90 per oz.

At the end of 2003, Morila’s measured and indicated resources stood at 32.6 million tonnes running 3.6 grams gold, for 3.8 million contained ounces of gold.

Meanwhile, drill testing of the first of nine new targets around the mine has begun. Geological modelling has also turned up several areas around the current pit with the potential to host continuous flat-lying mineralization; further drilling is planned.

Randgold and AngloGold (AU-N) each own 40% of Morila; the government of Mali holds the remaining 20%.