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Randgold shares slump as Q1 profits, production fall
Shares in Randgold Resources fell 9% on Thursday as the company said first quarter profits fell 22% year on year to $66.5m as a result of lower production and increased costs.
Production fell 16% quarter on quarter to 286,890 ounces from 340,958 ounces on lower output at the Loulo-Gounkoto complex, Tongon and Morila mines.
Costs rose to $720 from $627 per ounce. Revenues fell 14% $273m, below forecasts .
Randgold was also hit by labour stoppages at its mines but the company maintained its full targets were on track.
Chief executive Mark Bristow said Rangold was coming off a strong fourth quarter and record performance in 2017 and had anticipated a slower start to this year with a gradual build-up to follow.
Despite the issues that arose, it was still confident of meeting its annual production guidance of 1.3m to 1.35m 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."
The company is currently fighting plans by the Democratic Republic of Congo to introduce higher taxes under a new mining code which it fears will hit its Kibali operations.
"The investment in Kibali was motivated by the stability provision in the 2002 mining code, which in our view has been triggered by the recent promulgation of the 2018 code," Bristow said.
"We trust we shall be able to reach consensus on this issue with the government, which we believe is critical to future investment in the country."