Rangold Resources shares went up in smoke yesterday following a fire at its troubled Ivory Coast gold mine over the festive period. Thankfully no one was injured – although the company said now expects to produce 208,000 ounces from the Tongon mine in 2012 rather than the expected 270,000 ounces announced at the beginning of the year.
The mine has been hit by power shortages and labour unrest since it opened in 2010. The latest setback spooked investors, with shares in the company closing down 30p at 6,090p yesterday.
This was despite Randgold saying that its flagship Loulo mine in Mali was on course to meet full-year production targets of 500,000 ounces, while its Morila project in the country was likely to exceed its predicted 200,000 ounces for 2012.
Kate Craig, analyst at Liberum Capital, retained a "hold" on the stock, but added: "The fire at Tongon comes at the end of a challenging year at the mine which has seen production guidance fall from 285,000 ounces at the start of the year. In effect, the fire allows management to kitchen sink the unresolved issues at Tongon. We expect the plant to be up and running within 10 days in a slightly limited capacity, ie lower throughput and recoveries into the first quarter of 2013."
Overall, the FTSE 100 index rose 12 points to 5,954.30 on its first day back in action since the festive break. The wider FTSE 250 also advanced 12 points to 5,954.30. Analysts said its performance up to New Year's Eve would hinge on events across the pond.
"President Obama has cut short his holiday in Hawaii to return to talks in Washington to avert the fiscal cliff, however markets are unconvinced, and instead are now trying to get comfortable with the idea that the US will go over the cliff, despite how difficult that scenario is for financial markets," said Ishaq Siddiqi, market strategist at ETX Capital.
"No deal overnight will mean the increased likelihood that US lawmakers will have to reach some sort of makeshift solution before the year-end and address the issue with a more comprehensive plan in January."
On a more positive note, data from China showed a recovery in the country's industrial sector, a sign some believe shows that its economy is gaining momentum. Among the miners, Eurasian Natural Resources Corporation rose 10.2p to 289.4p, while Anglo American climbed 40p to £19.21 and Kazakhmys jumped 7.5p to 777.5p.
Another digger, Evraz – which is part owned by Roman Abramovich, the Russian owner of Chelsea – climbed 5.1p to 259.4p after it received clearance from the Russian Federal Antimonopoly Service to buy a controlling interest in rival Raspadskaya.
At the other end of the table, consumer goods stocks fell out of fashion. Unilever dipped 25p to 2,395p, while Diageo fell 18p to 1,809.5p and Durex-owner Reckitt Benckiser slipped 51p to 3,895p.
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