(Repeats story published late Thursday; no changes to text)
By Edward McAllister
DAKAR, April 7 (Reuters) - A steep rise in gold prices may
have given hope to a battered mining industry in 2016, but after
four tough years producers in Africa are still too wary to call
the bad times over.
Gold prices surged 15 percent in the first three months of
2016, the biggest quarterly rise in nearly 30 years, boosting
miners' share prices, attracting new investment and promising to
bolster the economies of gold-rich countries.
Experts say the rebound could spur development of major
unexploited deposits after low prices since 2012 crippled
exploration and made countless projects unprofitable.
Still, Africa-focused gold producers are not quite ready to
make investment decisions because of a brief price rise. Prices
have often spiked in recent years only to quickly retreat -
indeed, the recent rally has stalled in the last few weeks after
the very strong start to the year.
Prices aside, some industry experts say a recent spate of
takeover bids could be another indication of a sector recovery.
Amara Mining AMARA.L , which has projects in Ivory Coast
and Sierra Leone, was subject in February to an $85 million bid
by Australia's Perseus Mining PRU.AX .
Canada's Endeavour Mining EDV.TO , which owns gold mines in
Ivory Coast, Mali and Ghana, is in the process of taking over
TrueGold TGM.V , another West Africa-focused miner.
At two major industry conferences he attended last month,
Amara Chief Executive John McGloin said there was a sense that
things could be turning around. But no one was getting overly
excited.
"People weren't high fiving," he said. "There is confidence,
not exuberance."
OPTIMISTIC CAUTION
Gold prices XAU= dropped from over $1,900 an ounce in 2011
to near $1,000 at the end of last year. Mines that were
profitable at $1,500 suddenly became loss-makers. Exploration
halted; share prices dived.
Gold production has remained robust, mainly due to
production from existing mines. Without major new exploration,
however, output could drop in the years to come.
Prices are now over $1,200 per ounce, helped by low interest
rates. The cost of producing gold, which came down during the
slump, remains low for now, which could aid exploration efforts.
Endeavour Mining EDV.TO has seen its production costs fall
from $1,137 an ounce to around $900. At its Agbaou mine in Ivory
Coast, it produces gold at about $700 an ounce.
"There is optimistic caution," Endeavour Chief Executive
Neil Woodyer said. "It is a time for getting ready rather than
any huge commitments."
Endeavour, whose share price rose nearly 50 percent in the
first three months of the year, expects to spend $14 million
this year in "non-sustaining exploration", or exploration
involving new finds, up from $8 million last year. It hopes to
soon begin construction of the Hounde mine in Burkina Faso that
over 10 years will produce about 1.9 million ounces of gold.
Investors are taking notice.
"Over the last two years they have been in defensive mode
and cutting costs, now they are starting to generate cash," said
Andrew Breichmanas, analyst at BMO Capital Markets in London.
Erich Meier, who runs a suite of gold funds at Konwave AG in
Switzerland, said his funds have yielded over 60 percent this
year, a rebound from a drop of 27 percent last year.
"There are further risks remaining for an attack on gold
prices." Meier said. "But we are entering into a three-to-five
year bull market."
Randgold Resources RRS.L , a firm with mines across Africa,
stood out from peers by continuing to explore through the
downturn. Last year it produced a record 1.2 million ounces of
gold, it said in a statement last week.
According to Randgold Chief Executive Mark Bristow, however,
the industry needs more time to recover and generate cash. Much
of that will depend on the market.
"The gold price has to get over $1,500 to change the
viability of the industry," said Bristow.
"There is no way that will happen this year."