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Randgold progresses despite Mali woes

Despite a creditable performance during 2012, the unresolved political problems in Mali are detracting from the group's operational progress
February 4, 2013

Judging by record production and a 25 per cent hike in the annual dividend, Randgold Resources (RRS) managed to largely shrug off its operational and security problems in 2012 - although military action in Mali has rendered the company's shares prone to volatility.

IC TIP: Hold at 6360p

Randgold pushed up full-year production by 14 per cent to 794,844 ounces, as the expansion of its flagship Loulo-Gounkoto complex in Mali moved ahead despite the insurgency by Islamists. Loulo exceeded its 2012 production target, delivering 503,224 ounces as the development of its Yalea and Gara mines continued apace. However, frequent outages in the grid power supply at the Tongon mine in Côte d'Ivoire - now remedied - reduced production there by 16 per cent.

Revenues were driven by a 10 per cent increase in gold sales, together with a 5 per cent rise in the average realised gold price to $1,652 (£1,046) an ounce. However, profits were held in check by an increase in fourth-quarter cash costs, largely as a result of a mill fire at Tongon. Despite this, Randgold recorded a 17 per cent rise in full-year net profits to $508m. Cash reserves remain strong despite $563m in capital expenditure, mainly linked to the giant Kibali project in the Congo.

Prior to these figures, broker Fox-Davies anticipated 2013 EPS of 739.1¢.

RANDGOLD RESOURCES (RRS)
ORD PRICE:6,360pMARKET VALUE:£5.9bn
TOUCH:6,355-6,370p12-MONTH HIGH:7,875pLOW: 4,480p
DIVIDEND YIELD:0.5%PE RATIO:21
NET ASSET VALUE:2,844¢NET CASH:$376m

Year to 31 DecTurnover ($bn)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
20080.3472.054.013.0
20090.4310686.017.0
20100.5114511420.0
20111.1349742040.0
20121.3256847050.0
% change+17+14+12+25

Ex-div: tba

Payment: tba

£1=$1.58