Randgold upbeat on Massawa viability despite current project shortfalls

The FTSE 100 company considered the recent discovery of the nearby Sofia deposit, also by Randgold, had “significantly increased” Massawa’s viability, with Sofia’s incorporation into Massawa enhancing the project’s overall economics with its low-cost, high-recovery ore.

“As things stand today, Massawa has a mineable reserve of 2.6 million ounces and the project has an internal rate of return of 18% at a gold price of $1 000 per ounce, which is a little short of our investment criteria of a 3 million ounce reserve and a 20% IRR,” said chief executive Mark Bristow, speaking at the start of the company’s annual three week review of some of its exploration projects.

“The detailed drilling required for the feasibility study as well as our continuing exploration of extensions to and satellites around the known orebodies should get the project across the line.

“In that case, Massawa will become the sixth mine Randgold has developed and our first in Senegal.”

Bristow said it would also be the first of the three new projects the company planned to deliver over the next five years.

He pointed to Massawa as a further example of Randgold's “long-term planning and perseverance”.

The company had started exploring in Senegal in 1995 - the year Randgold was established - before discovering Massawa in 2004 and spending “a long time” getting to grips with the geological and metallurgical complexities of the orebody.

It has so far spent $85m evaluating and advancing its Senegal portfolio.

While developing Loulo, Tongon, Gounkoto and Kibali, Randgold kept the work on Massawa going in the background, and the project moved to centre stage with the discovery of Sofia in 2016.

“We are also looking beyond Massawa with our sights set on expanding our exploration portfolio and continuing our search for additional discoveries and development opportunities in Senegal.”