Randgold half-year profit doubles on strong output

Africa-focused gold miner Randgold Resources said profit roughly doubled in the first half from a year ago, as higher production and strong gold prices countered a weakening dollar and rising costs.

Net profit for the six months to the end of June rose to $38,4-million from $19,6-million a year ago. Net profit of $20,2-million for the second quarter was up 11% on the previous quarter and up 196% on the corresponding quarter in 2007, Randgold said in a statement on Thursday.

Randgold chief executive Mark Bristow has said the group is relying on organic growth and acquisitions to boost output, which will plateau in about four years. It needs one new mine to lift it into the big league of gold producers, he has said.

Randgold also said the latest drilling results from its recently announced Massawa project in Senegal had confirmed this was a “major discovery”.

Group gold production increased 12% quarter-on-quarter to 115 598 ounces, Randgold said.

Total unit cash costs rose about 4% to $457 per ounce at the end of June from the end of March, but are up 27% from the corresponding period a year ago.

Gold sales for the half-year increased 41% compared with a year ago, as average gold prices rose to $833 an ounce in the half-year period, from $593 a year ago.

Steepening costs may soon become untenable, the company warned.

“Labour, steel, fuel, power, consumables, chemical reagents, explosives and tyres form a relatively large part of the operating costs of any mining company, and the price of all these items has increased considerably over the last three years,” Randgold said.

“The reality of the situation is that the mining companies cannot control the current wave of price increases.
The strategy therefore has had to shift to the areas where management can control costs, namely consumption.”—Reuters

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