The share price of Randgold Resources (LSE: RRS) (NASDAQ: GOLD.US) — the African-focused gold mining and exploration company — is currently down over 4%, following release of results for the second quarter.
While gold production was in line with the previous quarter, the average price of gold received by the company dropped 17%, hitting profits — down 62% on the same quarter last year, to $54m — and basic earnings per share — down 61% for the same period, to 50 cents. The fall in the price received was offset slightly buy improved efficiencies, which reduced the total cash cost per ounce by 5%.
Commenting on the results, chief executive Mark Bristow was upbeat, noting that the company’s business model was able to deliver returns at lower gold prices. Its reserves had been valued on the basis of $1,000 per ounce, and it had therefore not been forced to make any write-downs.
Mr Bristow also said:
“Our giant Kibali project is scheduled to start gold production in October, Loulo and Gounkoto are both accessing higher grade sections in their orebodies, Tongon is continuing its turnaround and improved efficiencies across the group have already cut our total cash cost per ounce by 5% this past quarter. In addition, projects are underway across the group to increase throughput and recoveries and reduce unit costs further.“
And he went on to say that Randgold was still well placed to sustain profitability, although not at the levels that had been achieved during the peak in the gold price.
At the time of writing Randgold’s share price is 4,273p. That’s down over 30% on this time last year, although longer-term shareholders will take comfort in the 66% rise in the company’s share price over the past five years.
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> Jon doesn’t own shares in Randgold.