Randgold second quarter mining profit flat on lower output, higher cost

© Reuters. Randgold second quarter mining profit flat on lower output, higher cost

By Mamidipudi Soumithri

(Reuters) - Randgold Resources (LON:RRS) Ltd said its second-quarter profit from mining was flat, as lower production and a rise in costs offset higher gold prices.

Randgold stock fell as much as 12 percent in morning trade on the London Stock Exchange, wiping nearly a billion pounds off its market value.

Gold production during the quarter was hit by mechanical breakdowns at a mill in its Ivory Coast mine and challenges in recovery and throughput at its operations in the Democratic Republic of Congo, the company said.

Chief Executive Mark Bristow said the company was on track to meet its full-year production target of 1.25-1.3 million ounces, helped by its flagship Loulo-Gounkoto complex in Mali.

"With the $1,300 gold price the outlook is particularly positive. We've got this behind us. It's good to be able to get on with it and deal with the future," Bristow told Reuters.

Spot gold hit a two-year high of $1,374.91 per ounce earlier in July, having risen 7.3 percent in the second quarter as geopolitical uncertainty and Britain's vote to leave the European Union prompted investors to buy the metal.

Analysts remained unconvinced, however, pointing to results that missed their expectations and doubted the company's ability to meet its own forecasts.

"The company will do well to get close to guidance, in our view, let alone reach it," Canaccord Genuity analysts wrote in a note. The brokerage rates the company a "hold".

Randgold said on Thursday that quarterly gold production fell 6 percent to 281,494 ounces, while total cash costs rose 6 percent to $727 per ounce.

The company reported profit from mining of $150.6 million for the three months to June 30.

Shares in the company were trading down 11.5 percent at 7,960 pence at 0834 GMT, making them the second-largest percentage loser on the FTSE 100.

However, the stock is still more than 20 percent up from its close on June 23, the day before the result of the EU referendum.