07/08/2006
West Africa-focused Randgold Resources has doubled first-half mining profits to £37 million and is optimistic about a final dividend.
Fully-listed Randgold increased year-on-year gold production from 133,052 oz to 224,377 oz in the six months to June, lifting revenues 118 per cent to £73 million. The Jersey-based company achieved this despite having to overcome a hold-up at its Loulo mine in Mali, where a defaulting contractor had left the processing plant unfinished.
Most of the ouput came from Randgold's Morila joint venture, also in Mali, where cash costs were kept to $229 an ounce, against a current market price of $648. The company hopes to start drilling next year at Tongon in Cote d'Ivoire.
With underground operations starting soon at Yalea to extend Loulo's life, chief executive Mark Bristow (who recently resigned from the board of Afplats over the ousting of its chairman by a US hedge fund) is enthusiastic about longer term prospects for Loulo. He argues it has the potential to hit peak annual production of 500,000 oz by 2012 and should last until 2024.
However, Bristow warns that costs, especially of fuel, are a matter of concern, sayIng expectations of breakeven costs (including finance and investment) are for $426 an ounce this year and $415 for 2007. Randgold's breakeven target is $350.
Randgold is looking at new potential opportunities in Sierra Leone, Guinea and Congo, says Bristow. At £12.06, the shares have nearly trebled in two years, though they are nearly £2 off their high last May, but still offer long term potential.
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