UPDATE 2-Randgold overcomes Ivory Coast, Mali troubles

Mon Feb 4, 2013 10:51am EST

Related Topics

* FY 2012 profit rises 16 pct to $511 mln

* Gold production up 14 pct to 794,844 ounces

* Says Ivory Coast mine back to full production

* Says will not sell Morila mine

* Mali complex exceeds 2012 production targets

By Brenda Goh

LONDON, Feb 4 (Reuters) - West Africa-focused miner Randgold Resources shrugged off disruptions at its Ivory Coast mine and an uncertain security situation in Mali to post a 16 percent rise in 2012 profit, sending its shares higher on Monday.

The miner has been battling a series of disruptions at its gold mine in the Ivory Coast and concerns that unrest in Mali could hit production at its flagship Loulo-Gounkoto mining complex, which the company said has so far been unaffected.

"All things considered, to produce a 16 percent increase in profits is a testament to the organisational skills of the management team," said Richard Curr, head of dealing at Prime Markets, who rated the stock a 'buy.'

Randgold shares were up 4.7 percent at 1513 GMT.

Randgold said it had beefed up security and cooperation with local military police in all countries where it is active, including Mali, Ivory Coast, Senegal and the Democratic Republic of Congo, since the Algerian hostage crisis last month, which saw Islamist gunman attack a desert gas plant.

However, production at its Loulo mine in Mali, where French and Malian forces are battling against al Qaeda-linked Islamists in the north of the country, exceeded its production target for the year, delivering 503,224 ounces.

The company's Morila joint venture, in which Randgold holds a 40 percent stake alongside AngloGold Ashanti and the Mali government, also beat its forecast with annual production of 202,513 ounces, it said.

The mine is close to the end of its productive life, but chief executive Mark Bristow brushed off speculation the group could sell Morila, where costs are expected to rise.

"If you build these mines properly, you should close them properly," he said.

Randgold could, however, consider the future of its Massawa exploration project in Senegal next year, once it completes feasibility work currently under way, he said. The ore at Massawa is refractory, which means it is harder to unlock gold particles, and alternative technologies require far more power in a country that is already struggling to supply a booming mining sector - a major issue in much of Africa.

Randgold said its Kibali project in the Democratic Republic of Congo was on track to deliver its first gold by the end of 2013 and that the resettlement of up to 20,000 residents near the mine site was on track despite heavy storm damage.

The cost of developing the mine, however, increased 6 percent from 2011 to $1.66 billion.

The company said its profit for the year to the end of December rose to $511 million from $442 million in the previous year, helped by increased gold sales in the fourth quarter versus the prior quarter, and higher gold prices.

"Our chief objectives for this year are to pour first gold on schedule at Kibali, get Tongon back on target, maintain the strong performance at Loulo-Gounkoto and Morila, and continue to deliver profitable growth," Bristow said. "Beyond that, our sights are still set on reaching our annual production target of plus 1.2 million ounces of gold by 2015."

Gold production for the year jumped 14 percent from 2011 to 794,844 ounces and Randgold's board proposed increasing its annual dividend by 25 percent to 50 cents, the company said.

The company is targeting 2013 production of 900,000-950,000 ounces.

Total cash costs for the year rose 18 percent to $583.3 million from the previous year, mainly due to increased costs such as for repairs at the Tongon mine as well as costs associated with its Gounkoto mine.

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