Randgold Resources upgraded to 'buy' from 'hold' by Numis

Randgold Resources shares rose on Monday as Numis upgraded its rating on the stock to ‘buy’ from ‘hold’ and left its target price at 9,000p.

Numis said it expects Randgold’s third quarter to show operational improvements and predicts a rise in production at the Tongon mine to 78,000 ounces from 50,000 ounces. It also expects production at the Kibali mine in the Democratic Republic of the Congo to stabilise with increased ore.

Numis forecasts third quarter production of 315,000 ounces, along with an increase in earnings per share to 93 cents per share and a decrease in cash costs to $620 per ounce.

Randgold reported a 4% drop in second quarter production to 281,000 ounces and a 12% gain in cash costs to $727 per ounce. Basic earnings per share dipped to 52 cents per share from 58 cents per share the same period a year earlier.

”Randgold faced a number of issues in the second quarter due to a combination of operational challenges at both Tongon and Kibali,” Numis said.

“Management have, however, retained guidance for the year of 1.25Moz-1.3Moz and we expect the shares to re-rate driven by improved operational performance in H2 with higher gold prices supported by stronger Asian demand in the fourth quarter.”

Shares rose 1.71% to 7,600p at 1001 BST.