CEO PROFILE
Successful African development
The success and great example of Randgold and how it has been driven by Chief Executive Mark Bristow – a master of gold exploration, sustainability and the FTSE 100
The CEOs of many of the world’ s top mining companies, especially some of those who have moved on recently, have been subject to severe criticism from shareholders, the media and their peers. While Randgold is considerably smaller than those at the very top of the industry, it is an interesting and well-managed company from which lessons can be learned.
Randgold was built from scratch by its current CEO, Mark Bristow, who is now the secondlongest serving FTSE 100 chief executive. It is a testament to his leadership that Randgold is debt free when we can all see a great deal of indebtedness across the sector.“ We’ re the only company that’ s got no debt and paying a growing dividend,” he has noted.
Randgold can break even at a gold price of $ 770 / oz – lower at some operations. Bristow considers the gold sector to be in need of much housekeeping. He told the London Sunday Telegraph recently in an interview that he is frustrated by competitors putting“ unprofitable” gold on the market. He also professes to be amazed by the number of companies he sees“ who should really be out of business” but continue to raise money for projects – some of which, as ever in this industry, should not proceed.
The Sunday Telegraph quotes him saying that“ operationally, gold at $ 1,200 doesn’ t save the industry. Everyone’ s showing you a good picture, but it’ s an unsustainable picture at these sort of gold prices.” He is bullish on the gold price for the medium term but his company still uses a price of $ 1,000 / oz for resource / reserve estimates. A great deal of company strategy is driven by Bristow’ s background as a geologist. He has a PhD in Geology from Natal University, South Africa.
“ With our strategy, plans and projections intact, we are able to continue delivering value at current and even lower gold price levels. We’ re quite bullish about gold’ s medium to long term prospects, and when the cycle turns, the work we do now will have equipped us to
capitalise fully on the upside,” Bristow stated in May at the 2016 first quarter results presentation.
Generally, he does not consider the gold industry has a meaningful project pipeline. What the gold mining industry needs, he says, is to make new discoveries, as even a significant rise in the gold price and an injection of fresh capital will at best enable it to clear its debt, but will provide little scope for adding any value or reversing the production decline. Through its consistent investment in exploration and development Randgold, in contrast, projects sustained growth from a solid foundation.
“ Our mines have been modelled to generate cash flows at gold prices well below the
Bristow at Loulo
$ 1,000 / oz level. Our positive production and cost profiles extend to a 10-year horizon; we have had no impairments or write-downs, and have substantial cash resources. Our exploration teams are not only replacing the ounces we deplete but are making significant progress in the hunt for our next big discovery. In fact, we are in a unique position to continue delivering value to all our stakeholders,” he has said.
Unlike most other companies of this size and larger, there is no plush Randgold headquarters. Bristow eschews such excess and considers it an unnecessary waste of money.
Randgold’ s success has not been in the easiest locations in the world. Its achievements have come in some of the poorest, toughest countries in Africa, surviving coups, drought,
power supply problems and much more, but Bristow has a flair and all-too rare understanding for working in that part of the world. Today the company operates the Kibali mine in the DRC, the Luolo-Gounkoto and Morila mines in Mali and the Tongon mine in Cote d’ Ivoire, as well as having the Massawa feasibility project in Senegal( all gold).
When anything significant happens at any of those operations, Bristow is always there on the spot for presentations to and discussions with local stakeholders. He is very engaged while being very supportive of local management.
He has often spoken of his discomfort at the dismissive way many other mining and exploration companies behave in Africa, bringing in many more expatriates than are necessary rather than employing and developing local expertise.
He is justifiably proud of Randgold’ s policy of employing local people and forging local partnerships.
In the Sunday Telegraph he cited the Malian example, where all Randgold senior management is African.“ They operate more efficiently because they know the culture, they speak the language.” Of course, it also helps that the same management went to the same universities at the same time as the politicians that now run the countries.
In Cote d’ Ivoire, Tongon’ s workforce is 97 % Ivorian and only two members of its management team are not Ivorians
In the 2015 annual report, Chairman Christopher Coleman reported that even in the current challenging market, Randgold was not reducing its investment in corporate and social programs; in line with its philosophy that sustainability is central to all its activities – an ethos driven by Bristow.
“ Randgold’ s social initiatives extend far beyond the life of its mines. At all its operations, it is developing ambitious legacy projects designed to provide a permanent source of employment and economic opportunity to these communities. Based on agriculture, the primary building block of any developing economy, these range from training and funding would-be commercial farmers to a wide spectrum of agribusiness initiatives, many of which are already supplying local markets. The company is
86 International Mining | AUGUST 2016