By Alex MacDonald
LONDON--West African gold producer Randgold Resources Ltd.
(GOLD) has received assurances from the Ivory Coast government that
the convention that defines its investment in the Tongon gold mine
won't be altered as the government continues to debate the
structure of its mining code, the company's Chief Executive Mark
Bristow said Monday.
"The government has reassured that... they will respect these
agreements," he told The Wall Street Journal in an interview. The
Ivory Coast put forward a new draft of their mining code last year
which introduced a mineral production sharing agreement, commonly
used in the oil industry. The draft faced stiff opposition from the
industry amid falling gold prices, which prompted the government to
open discussions with stakeholders about the mining code
amendments.
Mr. Bristow said that gold price slump combined with continuing
uncertainty about the country's mining code has resulted in mining
companies withdrawing from Ivory Coast or delaying or downsizing
their projects there. But he noted that "I'm absolutely convinced
that we will arrive at a very reasonable mining code" and added
that his company continues to make investments in the country.
"The government has already made significant progress in
restabilizing the country along with the other parties, and we are
confident that the country will also weather the storm in the gold
market if together we reinforce the partnership between capital,
labor and the state and renew our mutual commitment to the
long-term development of this industry," Mr. Bristow said.
He added that Rangold Resources continues to upgrade its Tongon
operations and is stepping up its exploration activity in the Ivory
Coast after recently receiving new exploration permits.
Nevertheless, some miners have signaled that they are facing
tough times in the Ivory Coast, due in part to falling gold prices
which have forced some to reassess the value of their projects.
Perseus Mining Ltd. (PRU.AU) said it has postponed the
development of its Sissingue gold project in the Ivory Coast until
it feels more confident about its ability to finance the project
and generate an acceptable return on its investment in the wake of
a lower gold price. While it said it continues to make positive
progress with the Ivorian government in setting a mining convention
for the project, Perseus previously said it would only commit
further significant sums of capital to the project once the mining
convention had been secured.
Australia-based Newcrest Mining Ltd. (NCM.AU) also said it
expects to lower the value of its Ivory Coast Bonikro gold mine
after announcing a potential writedown of $5 billion to $6 billion
at its upcoming results due to falling gold prices. Meanwhile
U.S.-based Newmont Mining Corp. (NEM) told the African Mining
Intelligence last year that it was winding down its exploration
activities in the Ivory Coast. The news agency said, without citing
sources, that the reason for the pull-back was due to lack of
prospects and inability to renew exploration licenses.
Write to Alex MacDonald at alex.macdonald@wsj.com
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