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Mark Bristow: CEO, Randgold Resources

Are gold producers developing or exploiting?

MONEYWEB: Well, someone who’s no doubt been watching the cricket – and I hope you have been, Mark Bristow, ex Estcourt High School and Maritzburg University, now chief executive of Randgold Resources – I hope you still support the Proteas?   

MARK BRISTOW: Absolutely, Alec.

MONEYWEB: And I think the guys have got a lot of work to do in our innings, hey?  

MARK BRISTOW: Ja, I haven’t actually watched it today, I must confess.  

MONEYWEB: Well, 352 the Pakistanis have got.

MARK BRISTOW: Wow!

MONEYWEB: Mark, we’re talking gold and particularly the gold industry itself, which seems to be almost a bit of a disconnect here. There’s lots of interest in gold shares, but gold mines themselves are not really broadening their profit bases as you would have expected with the gold price rising like this.     

MARK BRISTOW: Yes, Alec, we’ve seen the costs go with the gold price, something I showed yesterday. So, when you look at the margins, they’re not as big as one would expect, and they are actually bigger in the industry on average than if we were all pure gold miners, because a lot of the gold mining companies now have copper credits in their revenue.     

MONEYWEB: Oh, so the copper price has gone up and that’s helped the gold miners?

MARK BRISTOW: Yes, because it has enlarged the profit margin, so it’s not all gold-driven.

MONEYWEB: But it has almost, as far as gold shares are concerned, become a merchant banker’s playground.

MARK BRISTOW: Well, you’ve sort of touched on my pet subject, and I don’t think its sustainable in the long term. These are opportunity times for lots of people, and it’s difficult to be able to promote long-term sustainability when everyone’s running around, you know, doing other things.      

MONEYWEB: We are having a bull market in gold shares. What should gold miners be doing, though, to possibly take advantage? It’s always difficult when the price of your commodity rises like this – one does get a little bit lax.

MARK BRISTOW: I think, Alec, the point that I often make is that successful operations support profitability, and profitability in turn supports sustainability. And if you don’t have that, you don’t’ have a business. It’s all very well to exploit the short-term opportunities in the market, but you at the end of the day can’t lose sight of the business. You know, South African gold miners have been through a couple of those cycles, and in the good times you’ve got to build capacity, you’ve got to spend the capital while you can and ensure that you can survive the downturns.     
 
MONEYWEB: Mark Bristow, chief executive, Randgold Resources.

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