LONDON (Reuters) - Randgold Resources (RRS.L) reported a 24 percent quarter-on-quarter fall in profit on Thursday after labour strikes at its Tongon mine in Ivory Coast hit production and raised costs.
Shares sank 7 percent by 0950 GMT, on track for their biggest intra-day fall since December 2016.
First quarter profit totalled $66.5 million (49 million pounds), down 24 percent from the previous quarter and down 22 percent from a year earlier, the London-listed company said in a statement.
“Industrial relations at Tongon impacted us a little bit more than expected,” chief executive Mark Bristow told Reuters.
He said the recovery plan would take the mine’s output for the year back to between 280,000 ounces and the original target of 290,000 ounces.
Production in the three months to March fell 16 percent to 286,890 ounces from 340,958 ounces in the fourth quarter on lower output at the Loulo-Gounkoto complex, Tongon and Morila mines.
The company also suffered a one-day pay strike at its Loulo-Gounkoto mining complex in Mali last month.
Total cash costs per ounce rose to $720 from $627, mainly due to lower grades at Loulo-Gounkoto, higher strip ratio — the amount of waste compared to ore — and power costs at Kibali and the Tongon strike.
Randgold, which has operations in Mali, Senegal, Ivory Coast and the Democratic Republic of Congo, said it would meet its full-year production targets despite the labour stoppages.
The company plans to mine between 1.3-1.35 million ounces in 2018 at a cost of between $590-$640 per ounce.
Randgold’s only mine in the Democratic Republic of Congo, Kibali, raised output by 2 percent to 171,948 ounces quarter-on-quarter but was up 22 percent on the year following a full ramp up.
Randgold, along with miners such as Glencore (GLEN.L), China Molybdenum (603993.SS) and Zijin (601899.SS), is in negotiations with the Congo government over a new mining code that the companies argue would discourage investment.
The code, signed by President Joseph Kabila in March, abolishes a 10-year stability agreement and allows the government to decree minerals as “strategic substances,” which would be hit with a 10 percent royalty charge.
A draft of regulations to enforce the code showed that the Congo government had made no major concessions to miners.
“We want to be comfortable that, as we did with Kibali, when we bring in additional capital, or reinvest the Kibali cash flows, that our shareholders have stability,” Bristow said, adding that talks continued.
“Because everything you do in DRC is expensive and big.”
Mali, which expects gold output to jump 20 percent this year, said it would also review its own mining code.
Morgan Stanley said the share price fall in Randgold was “overdone” because the shortfall in first quarter results was driven by temporary factors such as labour action, adding that the miner would most likely recover lost output.
Additional reporting by Justin Varghese; Editing by Jon Boyle