Reuters: Hot Stocks: UPDATE 2-Randgold shares surge as cost cutting, output rise kick in

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UPDATE 2-Randgold shares surge as cost cutting, output rise kick in Nov 7th 2013, 10:56 Share this Email Print Reprints Thu Nov 7, 2013 5:56am EST * Costs down 17 pct, production up 19 pct * Q3 profit after tax off 19 pct, EPS beats forecasts * Says on track to meet FY guidance * Sees output growing by at least 10 pct in 2014 * Shares jump nearly 9 percent (Adds CEO comments) By Sarah Young LONDON, Nov 7 (Reuters) - Africa-focused miner Randgold Resources said cost cutting and raising production to cope with a slump in the gold price had produced forecast-beating earnings, lifting its shares nearly 9 percent. Randgold said it was confident of increasing output further in 2014, enabling it to continue offsetting its chief executive's predictions of more falls in the price of bullion. Gold miners are under intense pressure to reduce capital and operating costs after the price of gold dropped by more than 20 percent from April to a nearly three-year low of about$1,180 an ounce in June. The metal has been stuck in a narrow $1,306-$1,321 an ounce range this week as markets await key U.S. economic data for clues on when the Federal Reserve will begin rolling back its $85 billion monthly bond purchases. "I think that we could see $100 or so more dollars an ounce on the downside in the short term but in the longer term, I think we've found a fairly steady trading range," Randgold chief executive Mark Bristow told Reuters on Thursday. Randgold, with gold mines in Ivory Coast and Mali, posted a 17-percent drop in cash costs in the third quarter from the previous quarter to $662 per ounce, while production grew 19 percent. Earnings per share were $0.88, beating a consensus forecast of $0.67 per share. Shares in the FTSE 100 company were up 8.9 percent to 50 pounds ($80.4) by 1050 GMT, outperforming the broader UK-listed mining sector which was trading 0.3 percent lower. Numis analysts said the company had beaten their forecasts for costs and production in the quarter by 12 percent and 6 percent respectively. The company's profit after tax fell by 19 percent to $98 million in the three months to Sept. 30 a year earlier, on an average received gold price which was also 19 percent lower at $1,327 per ounce. "Excellent quarter from Randgold. Cost control appears to have been strong in the quarter," Nomura analysts said. Randgold, fresh from opening the Kibali mine in the Democratic Republic of Congo ahead of schedule in September, said in August it would cut costs and raise production over the rest of 2013 to counter the lower gold price. Bristow said the improvement in costs in the three months to Sept. 30 were a direct result of it mining higher grades. The company has a 2013 annual production forecast of 900,000 to 950,000 ounces and cash cost guidance of around $700 to $750 per ounce, which Bristow said it was on track to meet. Gold from Kibali, set to exceed the company's expectations for this year, would boost next year's production, as will improvements at its Tongon mine in Ivory Coast and Loulo Guonkoto in Mali, putting the company on track to raise output by at least 10 percent in 2014. "We've three operations with big step-ups, it really does hit the bottom line. We've always said we want to beat 1 million ounces. We'll be comfortably north of that next year," Bristow said. (Editing by Clara Ferreira-Marques and Louise Ireland) Link this Share this Digg this Email Reprints

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