(Kitco News) - Randgold Resources (LSE: RRS; NASDAQ: GOLD) reported record gold production during the third quarter and said it is accelerating exploration efforts, although the company did report a lower profit for the period.
Gold production for the quarter was 305 288 ounces, Randgold reported. This was up from 300,039 ounces in the second quarter and 299,320 in the same period a year ago, with the company reporting that the Kibali and Morila mines are doing “exceptionally well.”
However, heavy rains in Mali resulted in a pump system failure at Loulo, which temporarily cut off access to the high-grade ore sections underground at Yalea, Randgold said. This resulted in lower-than-forecast grades and production and meant an increase in company-wide cash costs per ounce, which rose to $699 from $684 in the second quarter.
This and a drop in the gold prices led to lower earnings, Randgold said. The company listed a profit for the July-September period of $48.8 million, compared to $59.2 million in the second quarter and $66 million during the third quarter of 2014.
Gold sales for the third quarter of $340.7 million were down by 4% compared to the previous quarter due to a 6% drop in the average gold price received of $1,122 an ounce, Randgold said. This was partially offset by the increased gold production.
Mark Bristow, chief executive officer, welcomed the company’s performance considering the lowest gold price since the first quarter of 2010. He said the company remained debt-free, with net cash increasing from $109 million to $168 million.
During the quarter, Tongon paid back the last of its shareholders' loans of $448 million and can now start paying dividends, Randgold said. Kibali repaid another tranche of its shareholders' loans and Gounkoto declared a dividend of $11 million. Kibali remains on track to exceed its full-year production guidance of 600,000 ounces and the group as a whole is expected to be within its guidance range, Randgold reported.
The company said an intensified exploration drive was producing favorable results, with the goal of expanding its footprint in its western and central Africa.
“Key developments to date have been the good results from Sofia in Senegal, which have significantly enhanced the prospects of our Massawa project, the ongoing brownfields drilling at Gara and Yalea, the extension of resources and reserves around the Gounkoto and Tongon ore bodies, and our improved understanding of the controls and styles of mineralization across the Kibali permit, which I believe will deliver substantial additional resources,” Bristow said.
In the fourth quarter, Randgold will be “putting a big effort into our highly prospective holdings in Côte d’Ivoire,” he continued.
“The gold mining industry is severely stressed and Randgold is certainly not immune to the pressure,” Bristow said. “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.”
Source: http://www.kitco.com/news/2015-11-05/Randgold-Reports-Record-Production-3Q-Profit-Declines-On-Lower-Gold-Prices.html
