* Q1 profit up 126 pct year-on-year to $104 mln
* Profit, sales down on Q4, hit by expected lower grades
* Expects Mali operations to continue to run at full production
* Shares down 1.6 percent, underperform sector drop
By Clara Ferreira-Marques
LONDON, May 3 (Reuters) - West Africa-focused miner Randgold Resources, seeking to brush off worries over unrest in Mali that have hit its shares, stuck to cost and output targets for 2012 after lower grades dented quarterly earnings.
Randgold said on Thursday its first-quarter results were largely unaffected by the disturbances in Mali, which did not begin until late in March.
One exception was a delayed shipment which meant just under 11,000 ounces of gold, worth more than $18 million, from its key Loulo-Gounkoto mining complex was unsold at the end of March.
Profit for the quarter rose to $104 million, more than double that in the 2011 period but down on the previous quarter's $145 million - an expected fall as it mined lower-grade ore at its Loulo-Gounkoto complex in Mali, and was hit by strikes and power cuts at its Tongon mine in Ivory Coast.
Gold sales revenue dropped 13 percent on the previous quarter, as a marginally higher price failed to offset the drop in ounces sold. Production came in at 165,443 ounces, up 19 percent year-on-year and again down on the fourth quarter.
"Our operations in Mali performed as planned despite the challenges ... We have had no threats from anybody around disrupting our business," chief executive Mark Bristow said.
The company, which has two thirds of its production in Mali, confirmed its 2012 gold production target of 825,000-865,000 ounces. Its Malian mines are close to the borders with Senegal and Ivory Coast and easily accessed, Bristow said.
Analysts and investors had also fretted about the potential impact of Mali's troubles on the miner's unit costs. Bristow said the company was sticking with its guidance of $650 per ounce, despite a rise in the quarter to $751 on the back of lower grades and the drop in ounces sold.
"We are still happy with our cost guidance. The biggest risk on costs currently is the fuel price," he told Reuters.
Randgold's shares have fallen 20 percent since mid-March, underperforming a falling mining index since troubles began in Mali. The stock was down 1.6 percent at 0945 GMT at 5,265 pence, underperforming a 0.7 percent drop in the broader London-listed mining sector.
"Randgold delivered a sound quarter, broadly hitting our earnings estimates, which is a positive result considering the challenges in Mali," Canaccord analysts said.
A military junta overthrew Mali's president in March after an army mutiny driven by frustration over the government's handling of a rebellion in the vast desert north, which has since split the country in two.
The country saw renewed clashes this week as loyalist soldiers tried to reverse the March coup.
"No one wants to throw the baby out with the bathwater," Bristow said. "Everyone involved in Mali knows we make a major contribution - not only with employment but to the national treasury."
Bristow said the company was working to reach a mine level agreement at its Tongon mine in Ivory Coast, where it suffered not only the impact of power surges and outages but also strikes as it negotiated with local unions and workers.
It expects to reach a deal in June or July.
"This is a start-up situation, where we are setting the ground rules," Bristow said, adding there was a "steady improvement" in production.