Is Rangold (Nasdaq:GOLD) Valuation Too Pricey?

As Randgold (Nasdaq:GOLD) continues on its torrid upward share price move, some analysts are starting to get nervous about the company being too pricey to buy at this time, as valuations are high.

So far in 2010, Randgold has risen even faster than the exploding gold prices, adding to the concern investors may want to wait for them to pull back before putting more money into the company.

In 2010 Randgold shares have increased by about 27 percent, generating the concern of if they can continue to move up based on a forward price-to-earnings basis. In that regard they do seem expensive.

The company has also said gold production for the full year will be less than original estimates, dropping from 470,000 to around 455,000.

Increasing costs are also a concern, as the grew to $665 an ounce in the prior quarter.

CEO Mark Bristow has said over the mid- to long-term, hitting better grades will help bring down cash costs.

In the overseas markets the work in, the U.S. dollar won't help them as it continues to weaken, as the other currencies have remained pretty level against them.

Other inputs have also remained stable. So if better grades are hit and gold prices continue to rise, Randgold will have a lot of room to move upward, including new projects coming online.

If it takes a significant amount of time to cash in on better grades, then Randgold could experience downward pressure until the company catches up with it.

Long term they should continue to do well, although short term they could come under pressure.

Randgold (Nasdaq:GOLD) Plunges on 39 Percent Increase in Costs

No matter how hard Randgold (Nasdaq:GOLD) Chief Executive Officer Mark Bristow tried to deflect attention away from the 39 percent increase in costs, he couldn't do it, and the gold miner took a beating, even though other numbers were decent in their last quarter.

The cost issue came from power outages at their Loulo mine in Mali. That resulted in the cost increases, and in dollars it came to $665 an ounce of gold. Gold price for immediate delivery for the quarter were at $1,196.53 an ounce.

Consequently, gold production in the next quarter had to be downwardly revised, and will come in at best, about 5 percent within the target range of 477,000 ounces.

Bristow said about the Mali situation, “We’re at a point where we have identified the issue. By the fourth quarter we should be settled.”

Net income rose from the $14.9 million last year in the same period, to $34.4 million in the second quarter this year.

Randgold dropped to $86.96, a decline of $3.54, or 3.91 percent.