Randgold sees 47% profit drop in Q2; no write-downs
African-focused Randgold (LON:RRS) will not be joining a slew of gold miners booking write-downs this quarter but the company did post a 47% profit decline compared to Q2 2012.
Weak gold prices are mostly to blame for the profit drop, according to the company’s Q2 financial report. However, lower grades and recoveries at Randgold’s Loulo-Gounkoto complex reuslted in a 14% sales decrease at the mine.
Total profit for the quarter came in at $54 million, and $135.7 million year-to-date; in the first six months of 2012 this number was $245.8 million.
The average gold price fell 17% this quarter as the miner sold its product for $1,363 per ounce, compared with $1,636 in March.
On a brighter note, the company did manage to trim cash costs per ounce by 5% and production in the first half of the year is outpacing 2012 by nearly 20,000 ounces.
Randgold did not see any impairment charges because it had “reviewed all its business plans at the beginning of the year and where necessary aligned them to the drop in the gold price,” Mark Bristow, the company’s CEO noted in statement.
Bristow also updated investors on progress at the Kibali mine in the Democratic Republic of the Congo where gold production is on track to begin in October. Additional drilling has increased total resources at the site by 13% to 21.5 million ounces.
The company focuses on four key regions in Africa: Mali, Côte d’Ivoire, Burkina Faso and the DRC. In a video interview with Reuters, Bristow commented on the advantages of working in these countries.
“Mali has been a great place to be,” said Bristow. “The government has always been aligned with the importance of attracting investment.”
The company has also invested in an exploration project in Massawa, Senegal and has advanced this work during a time when many in the industry are slashing exploration expenses.
“With the drop in the gold price and subsequent decline across the industry this period is viewed as an opportunity for Randgold to acquire new exploration ground,” the miner noted in its Q2 report.