Randgold Tumbles as Mounting Gold Mining Setbacks Hit Production

JOHANNESBURG (Capital Markets in Africa) – Randgold Resources Ltd. fell the most in 18 months in London after a series of setbacks across its African mines hit both earnings and gold production.

A labor dispute at its Tongon mine in Ivory Coast means the operation is unlikely to hit its full-year target, the miner said Thursday. Randgold’s new gold mine in the Democratic Republic of Congo faces uncertainty as the company joins other producers trying to win concessions from the government over a new mining code that threatens profit.

The shares fell as much as 9 percent, the steepest intraday loss since November 2016. The stock traded at 5,642 pence by 12:23 a.m. in London.

The company, one of Africa’s biggest gold producers, reported an 11 percent drop in first-quarter output of the metal from a year earlier, while profit declined 18 percent to $57.5 million. Costs per ounce jumped 16 percent to $720. Still, Randgold said it could make up the lost production and hit its full-year target of 1.3 million to 1.35 million ounces.

Here’s what analysts are saying:

• The results missed market consensus, BMO Capital Markets said.
• Shore Capital said first-quarter production of 286,890 ounces disappointed.
• It was a difficult quarter, Berenberg said .
  • “A busy quarter for the company with a series of work stoppages at Tongon, combined with the lower ore grades at Loulo-Gounkoto, resulting in significantly lower production.”
• Challenges are mounting and it will be hard for the miner to hit its full-year production goal, RBC Capital Markets said.
  • “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.”

Source: Bloomberg Business News