Randgold Resources's (LON:RRS, NYSE:GOLD) second quarter results reflect the exceptionally strong gold market, as the FTSE100 gold miner almost doubled year-on-year Q2 profits
Gold sales were boosted by an average gold price of US$1,110/oz, up 33% from Q209’s S$832/oz, however the positive profit trends and strong gold price appreciation somewhat masks the company’s weakened production profile.
Attributable production slumped 23% quarter-on-quarter.
The company told investors that production and costs profile were impacted by extensive power black-outs at Randgold's flagship Loulo operation in Mali. The group's production guidance fell short off the company’s original target, and it now expects production to be within 5% of its target.
“[we are] forecasting attributable production to be within 5% of the 477 000 ounces we gave as our guidance at the beginning of the year ... This is a creditable performance given the very substantial challenges we're dealing with this year at the start of our multi-mine growth phase", Randgold chief executive Mark Bristow said.
The company expects production and cost levels to get back on target by the fourth quarter.
For the three-months ended 30 June 2010, Randgold reported profits of US$36.4m, up 52% from US$23.9m in the preceding quarter. In addition to the higher gold prices, the company was also boosted by US$6.3m from its sale of its interest in Volta Resources, and a US$13m write-back (due to a settlement relating to Auction Rate Securities).