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Randgold (LSE:RRS) took the opportunity to thump its chest today as it reported second quarter results that were, quite frankly, golden. Regulatory reports are usually quietly reserved as though they had been prayed over before leaving the bean-counters’ offices. Randgold’s report begins with a headline that says “RANDGOLD FIRES ON ALL CYLINDERS TO DELIVER ANOTHER ROBUST PERFORMANCE.” With a report like theirs, it’s okay to boast sometimes. Randgold’s share price was up 160.00p to 6,350p at noon today.
Another Record-Setting Performance
Randgold’s Louo-Gounkoto complex turned out a record performance with a yield of 210,534 ounces. That was a 27% increase over the first quarter’s 165,443 ounces. The complex also set records in profit and underground development. You might say that this complex has turned out to be a gold mine for the company.
Overall
Total production for the first six months was up 16% from the prior year, boosted by a 27% increase for the quarter. The company reported a 36% increase in profits over the first quarter and a 41% increase for the first half year-on-year. Earnings per share increase by 32% both quarter-on-quarter and for the first half versus the previous year first half. Sales for the quarter were $345.4 million, up from $271.8 million in the first quarter. First half sales were $617.1 million, up more than $100 million over the $508.1 million generated during the same period last year.
Randgold continues to focus on cost reductions, recognizing that rising costs are plaguing the industry worldwide. It strategy has been, and is, to drive production costs downward through 2015. CEO Mark Bristow said that, “The industry’s cost problem is that it’s under pressure grade-wise and we don’t experience that pressure. We’re mining better and higher-grade ore bodies, and we’re mining below our reserve grade, so we’ve got quite a bit of headroom to improve our costs.” Analysts at Canaccord agreed, noting, “We expect the grade-driven production growth to allow Randgold to better mitigate sector wide cost pressures over the medium term and marks the company as holding a superior position in the sector.”
Uneasiness in Mali is a Concern
Bristow knows that investors are starting to get nervous about the political upheaval in Mali where Muslim extremists have taken over some of the Northern provinces. They have imposed Sharia law in several towns. Reports are surfacing of public amputations as punishment for theft, an unmarried couple being stoned to death, and multiple numbers of people being whipped for smoking or drinking. The Jihadists are threatening to enlarge the revolt. For the time being, the revolts are taking place 1,000 miles away from Randgold’s major operations. Bristow said that he is “reasonably confident” that the revolt would not impact their mining operations. He said that, “We manage it all the time. We spend a lot of time with the various stakeholders.”
Randgold currently operates mines in Mali and Côte d’Ivoire. Exploration and development are ongoing in the DRC, Burkina Faso, and Senegal also.
