Randgold turns a new gold leaf
Expansion planned after return to profit
November 11, 2009
By Asha Speckman
RandGold Resources has bounced back from its $1.43 million (R10.6m) net loss in the third quarter of last year to post net income of $11.3m. The loss of 2 US cents a share was turned into a profit of 14c a share, the international mine developer said yesterday.
The Jersey-based company released its third-quarter results yesterday and announced the upcoming development of four mines. It already operates two mines in Mali.
The expansion of its Loulo mine complex in Mali is to be completed by the end of the first quarter in 2010. The projected returns for the project are in excess of 60 percent.
Also in its future is the fast-tracking of its Gounkoto project in Mali; the development of the Tongon mine in Ivory Coast, due for first production in 2010; a pre-feasibility study on the Massawa project in Senegal to be completed by year-end; and development of the Kibali project (formerly Moto) acquired jointly with AngloGold Ashanti.
"We are a growing company much like some South African growth stories in the 1990s that everyone was ululating about. We are starting to see the (results) of our investment eight, nine, 10 years ago," said Mark Bristow, the chief executive.
Bristow said the company's balance sheet reflected over $500m "and we've got another $120m coming in. We can deliver on our four mining projects without diluting shareholders or going to the bank." The year was tough but Bristow attributed the rewards to outstanding delivery from the exploration and project teams.
Sholto Dolamo, a resource analyst at Stanlib, attributed the company's strong performance to its ability to deliver, competent management and the ability to identify performing assets within a reasonable capital expenditure. "We've liked (RandGold) for a while. It's one of the best gold growth companies over the last couple of years. It is a star performer."
Nick Kunze, the head of private client dealing at Barnard Jacobs Mellet, rated the Nasdaq and FTSE-listed company as a relative outperformer against its peers such as AngloGold. However, yesterday the share fell in London trading. By mid-afternoon it had lost 5.1 percent.
Kunze said the decline should be viewed in the context that the company's shares had "pretty much doubled since the beginning of the year".
"They are obviously reaping the benefits of a strong gold price," he added.
Bristow and analysts expects the price of gold to reach levels of $1 200 an ounce.
As to the debate over the nationalisation of mines, Bristow said communities around mines should be looked after by the government, as the companies paid taxes. "The one thing governments are not good at - and it's been proven over time - is (running) mines. It makes sense to build transparent partnerships instead of trying to go back in time."
Additional reporting by Bloomberg and Reuters
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