Despite a pronounced dip in earnings, the latest full-year report from Randgold Resources (RRS) demonstrates that the miner, unlike some sector peers, is well placed to offset weakening gold prices by driving production, while keeping a lid on unit costs.
A steep rise in ore grades, together with a maiden contribution from the Kibali mine in the Democratic Republic of Congo, enabled Africa-focused Randgold to increase gold output by 15 per cent through 2013 to 910,374 ounces. Continued upgrades at the Loulo/Gounkoto mining complex should result in a 27 per cent increase in output this year, taking the mid point of management guidance.
Admittedly, this rapid expansion is placing a severe strain on the balance sheet. Randgold generated $464m (£283m) in operating cash flow through the period, but a total capital expenditure bill of $743m at Kibali resulted in a net cash outflow of $336m. And group-wide capital outlay of $340m is expected for 2014.
The production surge also had the desired effect on fourth-quarter unit costs, which fell by 5 per cent on the preceding three months to $628 an ounce. Still, a 17 per cent reduction in Randgold's received gold price heavily impacted the bottom line.
| RANDGOLD RESOURCES (RRS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 4,260p | MARKET VALUE: | £3.9bn | |
| TOUCH: | 4,259-4,263p | 12-MONTH HIGH: | 6,465p | LOW: 3,600p |
| DIVIDEND YIELD: | 0.7% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 3,112¢ | NET CASH: | $37m | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2009 | 0.43 | 106 | 86 | 17.0 |
| 2010 | 0.51 | 145 | 114 | 20.0 |
| 2011 | 1.13 | 497 | 420 | 40.0 |
| 2012 (restated) | 1.18 | 548 | 470 | 50.0 |
| 2013 | 1.14 | 402 | 302 | 50.0 |
| % change | -4 | -27 | -36 | - |
Ex-div: 12 Mar Payment: 30 May £1 = $1.64 | ||||
