7th May 2015 06:54
LONDON (Alliance News) - Randgold Resources Ltd Thursday reported a steep drop in profit for the first quarter of 2015, as cost cutting only partially offset an impact from the fall in the gold price and the rise in the dollar against currencies including the euro, South African rand and Canadian dollar.
The gold producer reported a net profit of USD48.2 million for the three months to end-March, down from USD74.3 million a year earlier, while basic earnings per share fell to USD52 from USD0.80.
Gold sales declined to USD344.6 million from USD362.9 million, as the average gold price it received dropped to USD1,215 an ounce from USD1,296 an ounce. Its exploration and corporate expenditure dropped to USD8.7 million, from USD10.8 million, although total cash costs rose to USD200.8 million, from USD191.9 million, as the company ramped up production at the Kibali mine and suffered a significant drop in grade at the Loulo-Gounkoto complex.
It was hit by the strength of the dollar against currencies including the euro, rand and Canadian dollar, booking other expenses of USD5.7 million compared with an income of USD3.6 million a year earlier.
Compared with the fourth quarter of 2014, the company's gold sales rose 1% thanks to a 2% increase in the gold price, meaning profit from mining rose by 5% on the quarter. Total cash costs were down 1% on the quarter, as the company improved its operational performance and as fuel prices fell and the euro weakened. However, exploration and corporate expenditure was higher than the USD3.5 million spent in the previous quarter as exploration activity increased and a share award vested. Randgold had reported a net profit of USD49.6 million for the fourth quarter of 2014.
Chief executive Mark Bristow said he expects the gold price to stay in the USD1,000 to USD1,400 an ounce range for as long as the market remains oversupplied.
"With the gold mining industry in a highly stressed state, and many companies heavily burdened by debt, the status quo looked unsustainable and currently unprofitable production would eventually have to be eliminated," the company said.
"All our operations are profitable at USD1,000 per ounce and we have planned a rising production profile on our existing asset base, with capital expenditure and costs forecast to come down. Add to this our growing balance sheet, our proven record of exploration success and our strong focus on sustained profitability, and we are well placed to continue creating and delivering value to our stakeholders," Bristow said.
By Steve McGrath; [email protected]; @stevemcgrath1
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