Randgold continues expansion

08/02/2010 Robert Tyerman

African miner Randgold Resources plans hefty production and resource increases after lifting annual gold sales 27 per cent to £288 million.

In a bullish trading statement, the west and central Africa-focused company, which raised profits before tax and financing costs 53 per cent to £73 million last year, says it increased group production by 14 per cent to 488,255 oz and chalked up a 60 per cent increase in attributable gold reserves, while hoisting the dividend 30 per cent. Steered by redoubtable South African mining figure Mark Bristow, fully-listed Randgold, which upped net cash from operations 12 per cent to £40 million, lifted output from Loulo in Mali 36 per cent to 351,600 oz and stands poised to start production shortly from Tongon in the Cote d’Ivoire, holding an estimated 3.16 million oz of gold.

The company, which derives useful cash from its Malian stockpile treatment operation, Morila, has particularly high hopes for its 45 per cent-owned Kibali project in the Congo, which holds a possible 9.2 million oz at more than 6 grammes of gold per tonne of ore but will need the tactful ‘relocation’ of some 5,500 local residents. Bristow waxes enthusiastic about Gounkoto, near Loulo, with suggested potential of 2.7 million oz of gold, and is optimistic about prospects at Massawa in Senegal.

Recommended by Growth Company Investor at £12 in 2006, Randgold shares have traded between £53.45p and £28.33p over the past year. Now £44.80p, valuing the company at £4 billion, they should remain an interesting market, with eventual bid interest not impossible, though the cautious might consider partial short-term profit taking.