5th Nov 2015 14:43
LONDON (Alliance News) - Randgold Resources Ltd on Thursday said its revenue from gold sales dipped in the third quarter, leaving its profit for the period lower, as it continued to deal with the tough conditions in commodities markets.
Randgold shares were down 3.0% to 4,185.0 pence per share on Thursday afternoon.
The FTSE 100-listed gold miner, which operates mainly in central and west Africa, said its gold production in the third quarter, which rose to 305,288 ounces from 300,039 ounces a year earlier, was a quarterly record for the group, but said profit fell due to lower average grades and the lower price received on its gold sales.
Gold sales generated revenue of GBP340.7 million in the third quarter, down from GBP354.8 million a year before which led pretax profit to fall to USD48.8 million from USD59.2 million.
Although it hit record levels of production in the quarter, Randgold said this was still hampered by rain-related weather which temporarily cut off access to high-grade ore sections at its operations.
To round up the results for the first nine months of 2015, Randgold generated USD1.04 billion of revenue from gold sales compared to USD1.09 billion a year earlier with its pretax profit dropping to USD159.2 million from USD216.8 million a year earlier.
One of the main reasons for the fall in revenue throughout 2015 was lower gold prices. The average gold price received fell to USD1,174 an ounce in the first nine months of 2015, from USD1,288 a year earlier. The hit this delivered to its revenue was eased by the group selling more gold in the first nine months, up to 885,763 ounces from 850,410 ounces a year earlier.
Randgold's cash cost also rose, compounding the lower prices, to USD697 per ounce in the first nine months of 2015 from USD693. For the third quarter, Randgold achieved an even lower average gold price of USD1,122 per ounce with even higher cash costs of USD699 per ounce.
Cash costs increased at the Gounkoto, where additional stripping was undertaken during the rainy season, and at Tongon and Kibali mines as a result of additional throughput. Lower grades and production from the Kibali and Morila mines also contributed to higher cash costs.
The Gounkoto and Morila mines are in Mali whilst the Kibali mine is in the Democratic Republic of Congo. The Tongon mine is in the Ivory Coast and Randgold also has a development project in Senegal.
"The gold mining industry is severely stressed and Randgold is certainly not immune to the pressure. Relative to our peers, however, we are still doing well. We have a proven strategy against which we constantly test our businesses, and we are relentless in our drive to deliver on our plans," said Chief Executive Mark Bristow.
Looking ahead to the full year, Randgold said production from Kibali is expected to exceed its production guidance provided at the start of 2015, but said the Loulo-Gounkoto complex "may fall short" of its annual target due to the lower-than-expected grades.
"As such, the group continues to forecast production and cash costs within the guidance range set out at the start of the year," it said.
Randgold is aiming to produce between 1.20 million to 1.26 million ounces of gold in the full year. In the first nine months of the year it has produced 885,000 ounces. It is also targeting cash costs to average USD600 to USD700 per ounce for the full year, with year-to-date costs sitting at the very top end of that range.
Exploration and corporate expenditure in the quarter was down 25% from the previous quarter at USD9.8 million due to decreased exploration fieldwork and drilling activity, partially because of the wet season in Africa.
Capital expenditure for the full year is now expected to be lower than originally anticipated because some expenditure has been rolled into 2016 due to timing of commitments and payments, it said.
Randgold will be finalising its 2016 budget during the fourth quarter and guidance for 2016 will be given with the year end results.
By Sam Unsted; [email protected]; @SamUAtAlliance and Joshua Warner; [email protected]; @JoshAlliance
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