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Randgold weak as Tongon strike caution offsets rise in second-quarter production and profit

The FTSE 100-listed miner said production rose by 9% quarter-on-quarter to 313,302 ounces of gold in the three months to 30 June 2018, as total cash cost per ounce fell 3% to US$697
Gold pour
Randgold saw its profit from mining in the second quarter increase by 6% to US$190.6mln

Randgold Resources PLC (LON:RRS) saw its shares fall on Thursday as caution over the strike at its Tongon gold mine in Mali offset a rise in second-quarter production and profit thanks to a good performance at its Kibali gold mine in the Democratic Republic of Congo.

The FTSE 100-listed miner said production rose by 9% quarter-on-quarter to 313,302 ounces of gold in the three months to 30 June 2018, as total cash cost per ounce fell 3% to US$697 and gold sales rose by 5% to US$411.5mln despite a lower gold price. 

READ: Randgold Resources slides on lower 1Q earnings due to impact of strikes

The group said its profit from mining in the second quarter increased by 6% to US$190.6mln and net cash generated by the operations rose by 49% to US$95.5mln.

Randgold maintained its annual targets of gold production reaching between 1.3mln-1.35mln ounces at a cost of between US$590-US$640 per ounce.

Strike action

A strike at Randgold's Tongon mine in Ivory Coast, which started on July 13, has crippled production at the operations and followed similar stoppages at the operation earlier this year.

Randgold’s chief executive Mark Bristow said: "The Tongon work stoppage is obviously a challenge, but we take comfort from the government's leadership in ensuring measures are taken to protect the assets and that they are dealing with the situation.“

He added: “We are still assessing its impact but at this stage, we still believe that, given Kibali's strong performance, we are on track to be within the group production and cost guidance for 2018.”

Tongon, which accounted for 22% of Randgold's 2017 total production, recorded a 12% increase in output in the second quarter, but its 2018 target was lowered to 250,000 ounces from 290,000 ounces previously.

In early morning trading, Randgold shares were 2.9% lower at 5,338p.

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