UPDATE 2-Randgold sees 2012 output at lower end on weak Q3

Wed Nov 7, 2012 9:30am GMT

Quotes

   

* Sees 2012 output at lower end of 825,000-865,000 oz range

* Q3 production down 3 pct vs. Q2, profits down 15 pct

* CEO says confident on Q4

* Shares down 5 pct

LONDON, Nov 7 (Reuters) - Miner Randgold Resources said gold production for the year would come in at the bottom end of guidance after posting disappointing quarterly output and earnings, hurting its shares.

The Africa-focused company said on Wednesday that power problems at its Tongon mine in the Ivory Coast meant that annual production would be closer to the 825,000 ounce low end of a full-year output range, which stretched to 865,000 ounces.

Production in the third quarter fell 3 percent from the prior quarter, and lower sales contributed to a 15 percent drop in profits to $121 million, piling pressure on the company to post record production in the fourth quarter to be able to meet its guidance.

Shares in Randgold were down 5.45 percent to 7,020 pence at 0918 GMT, making the company the top faller on Britain's blue chip index.

Randgold also said total cash costs to produce an ounce of gold rose to $737, up 5 percent from the second quarter, as power costs were higher and it mined lower grades.

Analysts from a range of brokerages said production and earnings missed their forecasts and that Randgold's costs were higher than expected.

"(The) cost miss, continued problems at Tongon, and a hefty requirement for fourth-quarter production to make up for the third quarter miss should all weigh on the shares," Nomura analysts said.

Chief Executive Mark Bristow said in an interview he was confident that the company would bounce back in the fourth quarter.

"We're going to have a stonker fourth quarter. The costs will come down significantly on the back of us delivering on our production forecasts," he said.

Production at the company's Tongon mine, where it plans to introduce new power generators, will step up in the coming quarter, Bristow said.

He also said output from the Luolo project in Mali, where operations have been unaffected by unrest, will also rise in the period as higher grades are mined.

The company also said its Kibali project in Democratic Republic of Congo was on track to start production before the end of 2013.

"Kibali is on track. Nine months into construction, we're slightly ahead of plan," Bristow said, adding that December next year was the most likely date for start-up.

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