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Randgold profits up 92% but gold production falls short of target

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

, up 92%. However these apparently buoyant headline numbers are heavily supported by the surging price of the yellow metal, rather than its operating performance.

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.

Randgold shares fell over 250pts on the London Stock Exchange
, down 4.5% to £54.60 per share.

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).