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Randgold’s Mining Setbacks Hit Earnings and Gold Production in Q1

Randgold’s Mining Setbacks Hit Earnings and Gold Production in Q1

Mon May 14 2018

 

One of Africa’s biggest gold producers, Randgold Resources (LSE:RRS), failed to meet earning and production expectations in Q1 2018 due to several mining mishaps, including a labor dispute at its Tongon mine, leaving the operation unlikely to hit its full-year target, the miner said Thursday (May 10).

 

The company’s Q1 output fell 11 percent from a year earlier, while profits declined 18 percent to US$57.5 million. Costs per ounce increased 16 percent to US$720.

 

“Although there is nothing in this quarter that provides a critical blow to the company by any means, it will be a stretch for the company to meet its annual guidance now,” said an analyst for RBC Capital Markets.

 

Randgold also saw its profits decrease to US$66.5 million, but the company remains debt-free and its cash and cash equivalents were up 3 percent, landing at US$739.5 million.

 

Despite setbacks, the company believes it can make up for the production lost in Q1 in order to meet its full-year target of 1.3 to 1.35 million ounces of gold.

 

“Coming off a strong prior quarter and record performance in 2017, the company had anticipated a slower start to this year with a gradual build-up throughout the year,” said Randgold CE Mark Bristow.

 

“Despite the issues that arose, Randgold is still confident of meeting its annual production guidance of between 1.3-million and 1.35-million ounces,” he added.

 

Fueling that confidence is the successful commissioning of Kibali, the company’s underground mine in the Democratic Republic of Congo (DRC), operations resuming at its Tongon mine and continued negotiations with the DRC government.

 

“[Randgold] successfully handled the difficult labour situation at Tongon, sorted out the sequencing at Loulo and continued negotiations relating to the new mining code with the DRC government. This demonstrates the depth and competence of our management team, and its ability to deal with complex operational and sociopolitical issues on multiple fronts,” noted Bristow.

 

The company stated that during the quarter, exploration results proved there is potential to add ounces at Kibali, Loulo and Tongon, as well as new reserve opportunities at the Massawa project in Senegal.

 

Looking forward, Bristow stated that Randgold is “aggressively hunting” for its next big project in the African gold belts and beyond.

 

Source: https://investingnews.com/