Karen Rebelo

A PRODUCTION hiccup at Randgold Resources’s fledgling mine in the Democratic Republic of Congo (DRC) overshadowed a jump in the company’s quarterly profit, sending the shares down nearly 2 percent in London.

Randgold produced less gold at the Kibali mine in the second quarter than in the preceding three months as it was forced to process harder ore pending the installation of new equipment. It said it remained on track to meet its full-year target.

“Any production dip is never taken well, so we expect the market to react negatively,” analysts at GMP Securities said.

The shares closed 1.82 percent lower at £50.6132 (R915) on the London Stock Exchange, ranking among the top losers.

Kibali is Randgold’s biggest project in terms of investment and represents the DRC’s return to the world stage as a producer and exporter of gold.

The $2.5 billion (R27bn) joint venture with AngloGold Ashanti and state miner Sokimo poured its first gold in September last year and could eventually rank among the biggest gold mines.

Production at the mine fell to 91 137 ounces in the quarter to June from 112 549 ounces in the preceding three months, a drop attributed by the company to lower recoveries from “tricky transitional ore”.

“We started the mine on the back of oxide material and, as you mine the open pit and it increases with depth, you move from soft-weathered ore to hard-sulphide ore,” Randgold chief executive Mark Bristow said. “With that… the metallurgical processing becomes more complex.”

Randgold said Kibali was on track to meet its full-year target of 550 000 ounces. A sulphide circuit to treat the harder, sulphide ore had been commissioned by the end of June.

Randgold operates the mine and, like AngloGold Ashanti, has a 45 percent stake. The company’s attributable gold production from Kibali for the second quarter was 41 012 ounces.

Randgold, which also mines gold in Mali and Ivory Coast, reported a 41 percent year on year increase in production for the second quarter, driven by output from its flagship Loulo-Gounkoto operations in Mali.

Profit from mining jumped 54 percent year on year to $162.3m for the quarter to June. The average gold price received fell 5 percent to $1 290 an ounce, while total cash costs fell 12 percent to $701 an ounce. – Reuters