Poor comparative half-year figures from Randgold Resources (RRS) reflect a dramatic fall in the gold price in April and, although the Africa-focused miner pared back unit cash costs by 5 per cent during the second quarter, it will need to access higher grades, particularly at its Loulo mine in Mali, in order to mitigate the effects of a depressed precious metals market.
Indeed, June quarter gold production from Loulo - at 54,967 ounces (oz) - was down 38 per cent on the first three months of 2013. This was due to a pronounced fall in grades, coupled with the fact that the quantity of ore processed fell by over a quarter through the period. Despite this, Randgold managed to increase overall output for the half year by 5 per cent to 395,220 oz. Gold sales were broadly flat on the 2012 half year, while the average price received fell by 9 per cent to $1,502/oz (£982/oz), and down to $1,363 through the second quarter. The upshot was that net profitability at the half year fell by 45 per cent to $136m.
The giant Kibali project remains on track to commence gold production in October, and Randgold remains confident of driving full-year production towards 900,000 oz. Shareholders can also take heart from the fact that, unlike some peers, Randgold has not been forced to book any writedowns on its reserves as they have been calculated at $1,000 an oz.
Deutsche Bank expects 2013 EPS of $2.81 ($4.70 in 2012)
| RANDGOLD RESOURCES (RRS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 4,276p | MARKET VALUE: | £3.9bn | |
| TOUCH: | 4,276-4,286p | 12-MONTH HIGH: | 7,875p | LOW: 3,934p |
| DIVIDEND YIELD: | 0.8% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 2,932¢ | NET CASH: | $42m | |
| Half year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 (restated) | 546 | 259 | 225 | nil |
| 2013 | 514 | 146 | 126 | nil |
| % change | -6 | -43 | -44 | - |
£1=$1.53 | ||||
