Randgold: Q1 Production and Profits Lower but Guidance Unchanged

As readers of lawrieongold will know, Randgold Resources is a gold mining company I cover more comprehensively than most as its stock is an important constituent of the FTSE 100 index here is London.  It has released its Q1 2018 financials and production data today and I will be attending CEO Mark Bristow’s presentation to analysts at the london Stock Exchange later today.  In the meantime, to keep readers up to date, here is the company’s own release on the Q1 figures, but bear in mind as a company press release it will present the data in the best possible light!  Hopefully more detailed analysis will be available following Bristow’s presentation later.  He is not a CEO who tends to bypass difficult questions!

KIBALI SHINES AS RANDGOLD MAINTAINS ANNUAL PRODUCTION GUIDANCE

London, 10 May 2018  –  Randgold Resources said today its 2018 production guidance remained intact despite a softer first quarter in which it contended with multiple challenges.

Following the full commissioning of its underground mine, Kibali in the Democratic Republic of Congoincreased quarterly production by 22% compared to the corresponding quarter of the prior year and is on track to achieve its 2018 target of 730 000 ounces.

In Côte d’Ivoire, Tongon’s production was impacted by a series of work stoppages.  With operations now back at full capacity, the mine is committed to clawing back most of the lost production.  Randgold’s flagship operation, the Loulo-Gounkoto complex, made a strong start to the year although changes in the mining schedule affected the underground grade, impacting on production.

Results for the quarter, published today, show group production lower at 286 890 ounces (Q4 2017: 340 958 ounces) and total cash cost per ounce higher at $720/oz (Q4 2017: $627/oz).  Profit was down at $66.5 million (Q4 2017: $87.1 million).  Cash and cash equivalents grew by 3% to $739.5 million while the company remains debt-free.  At the recently held AGM, shareholders approved the 2017 dividend of $2 per share, a 100% increase on the previous year.

Chief executive Mark Bristow said 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.  Despite the issues that arose, it was still confident of meeting its annual production guidance of 1.30 to 1.35 million ounces.

“It was a very active quarter, in which we ramped up the underground production at Kibali, advanced the Gounkoto super pit project and the development of the Baboto satellite pit at Loulo, and prepared the Ntiola satellite deposit at Morila for mining,” Bristow said.

“At the same time we also 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 socio-political issues on multiple fronts.”

During the quarter, exploration highlighted the potential to add ounces at Kibali, Loulo and Tongon as well as new reserve opportunities at the Massawa project in Senegal.  Bristow said Randgold was also aggressively hunting for its next big project in the African gold belts as well as further afield.

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Randgold Q1 2017 Highlights

Generally the Q1 figures this year were better than Q1 2016 in terms of production, revenue and costs, but down on the record Q4 2016.  The quarterly highlights as reported by the company were as follows:

BUILDING ON LAST YEAR’S RECORD RESULTS, RANDGOLD MAKES STRONG START TO 2017 – Q1 results
KEY PERFORMANCE INDICATORS FOR THE Q1 ENDED 31 MARCH 2017• Gold production up 10% on corresponding quarter of prior year and down 15% on record Q4 2016
• Profit up 33% on corresponding quarter of prior year and down 10% quarter on quarter
• Total cash costs per ounce down 4% on corresponding quarter of prior year and up 13% quarter on quarter
• Cash increases 16% quarter on quarter to $600 million, with no debt
• Another solid operating quarter at Loulo-Gounkoto supported by high recoveries
• Morila tailings retreatment operation starts to deliver on plan and Domba project approved
• Tongon delivers steady performance with good cost control
• Kibali tracks guidance as it works to deliver on underground plan
• Group attributable reserves replaced at higher grade
• Busy quarter for greenfields exploration complemented by good progress on brownfields targets
• Shareholders approve 52% increase in annual dividend to $1.00 per share
Randgold Resources

Thus the company presents the figures in a positive light despite financials down on the previous quarter and cash costs up, although the latter will be partly due to the lower gold output. Net cash available increased to $600 million though which leaves the company well placed to take advantage of any M&A or new development and expansion opportunities without having to resort to borrowing.

Company CEO Mark Bristow is due to present to analysts in London at midday today and undoubtedly we’ll learn more about what is expected for the rest of the year then.

Randgold Resources: Tough Quarter, Good results

Followers of perhaps the best performing gold mining major of the past few years are directed to the following article I’ve published on the Seeking Alpha website: Randgold: Tough Quarter, Good Results.  Interestingly Randgold (LSE: RRS, NASDAQ: GOLD)’s stock price has not risen nearly as much as some of its peers but that is because of its far better performance while virtually all the other major gold stocks were dropping like stones.  It has no debt, has not needed to take any impairments and is operating a progressive dividend policy where again most of its peers have been slashing their shareholder payments.  It has thus just announced a 10% dividend increase to $0.66 a share.

Highlights from Q1 2016 are as follows:

  • Profits up 19% quarter on quarter and 25% on corresponding quarter of prior year
  • Production down 11% quarter on quarter but up 4% on corresponding quarter of prior year
  • Total cash cost/oz up 3% quarter on quarter but down 8% on corresponding quarter of prior year
  • Cash increases 19% to $253.8 million on the back of reduced total cash costs and higher gold price
  • Solid quarter from Loulo-Gounkoto with production in line with plan and significant decrease in total cash cost/oz
  • Morila delivers steady performance with lower costs
  • Tongon production impacted by quaternary crushers commissioning and power supply interruptions
  • Kibali completes challenging quarter including optimising 100% sulphide feed, compounded by mill downtime
  • New Moku JV adds 1 275km2 to Randgold exploration portfolio in same greenstone belt as Kibali
  • West African exploration programmes deliver positive borehole and trench results
  • Shareholders approve 10% increase in annual dividend of $0.66 per share

In addition to the article on Seeking Alpha linked above, you can download the full quarterly statement at http://www.randgoldresources.com/quarterly-reports-page/3321