West African gold miner Randgold Resources (RRS) disappointed the City with net profit of $235m (£155m) - a 16 per cent fall on last year's figure. Yet management still felt able to bump up the dividend by a fifth on the back of a largely positive operating performance. And Randgold's solid balance sheet positions it well to exploit acquisition opportunities if indebted precious metals miners start to hive off assets.
The decline in profitability was primarily due to the fall-away in the gold price - down 27 per cent since February 2013. Randgold chief executive Mark Bristow argues that the miner has been quick to respond to the lower-price environment, having rejigged its cost base to sustain profitability at a gold price of $1,000 an ounce.
A maiden full-year contribution from Randgold's Congolese Kibali gold mine helped drive gold output up by over a quarter to 1.14m ounces. The step-up in production helped Randgold reduce its cash costs by 2.4 per cent to $698 an ounce. Further scale benefits could eventually flow from the development of an underground mine below Randgold's existing Gounkoto open pit in Mali. A recent feasibility study concluded that the project could generate a 20 per cent internal rate of return, based on a long-term gold price of $1,000.
| RANDGOLD RESOURCES (RRS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 5,330p | MARKET VALUE: | £4.9bn | |
| TOUCH: | 5,325-5,335p | 12-MONTH HIGH: | 5,750p | LOW: 3,638p |
| DIVIDEND YIELD: | 0.7% | PE RATIO: | 32 | |
| NET ASSET VALUE: | 3,338¢ | NET CASH: | $81.4m | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2010 | 0.5 | 145 | 114 | 17 |
| 2011 | 1.1 | 497 | 420 | 20 |
| 2012 | 1.2 | 548 | 470 | 40 |
| 2013 | 1.1 | 402 | 302 | 50 |
| 2014 | 1.1 | 353 | 254 | 60 |
| % change | -4 | -12 | -16 | +20 |
Ex-div: 12 Mar Payment: 29 May £1=$1.52 | ||||
