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Randgold doubles its dividend

Gold miner Randgold Resources has doubled its full-year dividend on strong sales and a rising gold price - although the group is struggling to keep costs under control
February 7, 2012

Africa-focused gold miner Randgold Resources doubled its dividend in the year on the back of a hefty step-up in operational activity. Indeed, Randgold sold 718,762 ounces of gold during 2011, representing a 74 per cent annual increase - and it benefited from an average selling price that rose a third in the period.

IC TIP: Sell at 7415p

New output from the Tongon mine in Côte d'Ivoire, and Gounkoto in neighbouring Mali, largely explained an overall 58 per cent year-on-year rise in gold production to 696,023 ounces - although fourth-quarter performance at Tongon was hit by delays arising from technical issues and wage negotiations. Still, Randgold's management has needed to steadily reduce its estimate of output since midway through last year, when production was expected to reach a minimum of 750,000 ounces. Moreover, and as with other African miners, Randgold experienced difficulties in keeping unit costs in check. Group cash costs, for instance, ticked-up over 2 per cent to $716 an ounce - this is partly explicable in terms of costs associated with its development projects, but that's still 19 per cent higher than last year’s target.

Prior to these results Investec Securities was forecasting adjusted pre-tax profit of $788m for 2012, giving EPS of 575.4¢.

RANDGOLD RESOURCES (RRS)
ORD PRICE:7,415pMARKET VALUE:£6.8bn
TOUCH:7,400-7,420p12-MONTH HIGH:7,565pLOW: 4,320p
DIVIDEND YIELD:0.3%PE RATIO:28
NET ASSET VALUE:2,382¢NET CASH:$485m

Year to 31 DecTurnover ($bn)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
20070.2867.060.012.0
20080.3472.054.013.0
20090.4310686.017.0
20100.5114511420.0
20111.1348541340.0
% change+122+234+262+100

Ex-div: tbc

Payment: tbc

£1=$1.58