Precious metal prices have continued to fall over the past 10 months. The gold price is down by 15 per cent on this time last year, but many producers have fared even worse. Take Randgold Resources (RRS), an Africa-focused gold miner, which has shed a fifth of its market value despite record third-quarter production figures and net cash of $168m (£117m).
- Record Q3 production
- Net cash position - no debt
- Low end of industry cost curve
- Global gold output slowing
- US dollar strength
- Gold still in cyclical downturn
Randgold has managed to drive up output at its Loulo-Gounkoto complex in Mali, while total full-year cash costs are expected to fall at the lower end of the industry cost curve, within a $650-$700 an ounce (oz) range. Unfortunately, whatever operational improvements Mark Bristow and his management team at Randgold manage to achieve, the share performance of the 'pure play' gold miner is attuned to the underlying asset price. Although we're not expecting the yellow metal to test its 2011 high of around $1,900 an oz, we do believe that gold could start to ratchet up this year on intensifying worries over paper asset classes and concerns surrounding the macroeconomic outlook.