August 7, 2013 / 10:29 AM / in 5 years

UPDATE 2-Randgold says "more ounces, lower costs" to offset weaker gold

* Gold price has fallen more than 20 percent in 2013

* CEO says output to rise, costs to come down

* Full-year production and cash costs targets maintained

* Shares fall more than 6 percent

By Sarah Young

LONDON, Aug 7 (Reuters) - African gold mining group Randgold Resources pledged on Wednesday to cut costs and raise production over the rest of the year to counter plunging bullion prices which triggered a 62-percent slump in second quarter profit.

Precious metals mining companies are under intense pressure to cut costs with a 20-percent slump in gold this year sending prices to a near 3-year low of about $1,180 an ounce in June.

“The back end of the year is going to be more ounces and lower costs,” Randgold’s chief executive Mark Bristow said.

Randgold shares fell more than 6 percent, having hit a 3-1/2 year low in June, after the company posted profits of $54.1 million partly due to weaker-than-expected sales.

A change in export approvals at its Ivory Coast Tongon mine delayed sales and led to earnings per share of 0.50 cents, missing what one analyst said was a consensus forecast of 0.71 cents. Bristow said the delays would be fixed this quarter.

The company said it cut costs per ounce by 5 percent from the first quarter, with cost-cutting beginning at its Loulo-Gounkoto mine in Mali. In May it reduced funding by $50 million at new mine, Kibali, in the Democratic Republic of Congo.

Unlike many other gold-miners, the FTSE-100 firm has avoided having to make writedowns. The world’s No. 1 gold producer, Barrick Gold Corp announced a $8.7 billion writedown last week.

Randgold, which also has projects in Ivory Coast, said it expected to meet its 2013 annual production forecast of 900,000 to 950,000 ounces and maintained its cash cost guidance of around $700 to $750 per ounce for the year.

London-listed gold and silver mining peers, FTSE-100 company Fresnillo and FTSE-250 company Hochschild have said that, like Randgold, they are focusing their efforts on cost-cutting.

Randgold’s cash costs came in above target at $795 per ounce in the second quarter, but Bristow said the shift to mining higher grades at Mali’s Loulo mine, as well as being on track to start production at Kibali in October, would help bring costs to within the expected range.

“A weaker quarter as expected but as usual good progress on some fronts, especially costs, with the full-year remaining on track,” Numis analyst Cailey Barker said.

Randgold reiterated on Wednesday what it said in May, that gold would have to dip below $1,000 for it to revise its plans.

Spot gold fell to a three week low of about $1,275.4 per ounce early on Wednesday.

The company, whose shares have slumped 24 percent in the last six months, has a longer-term aim of exceeding production of 1.2 million ounces by 2015. It said that a recently secured revolving credit facility meant it was positioned to be able to fund future growth projects.

Also on Wednesday, AngloGold, the world’s No. 3 bullion producer, reported a loss in the second quarter and scrapped its quarterly dividend payment.

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