Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Randgold Resources Limited (GOLD) is an African focused gold play engaged in gold mining, exploration and related activities in Africa with the company listing on both the London Stock Exchange and NASDAQ. Major discoveries to date include the 7.5 million ounce Morila deposit in southern Mali, the 7 million ounce Yalea deposit and the 5 million ounce Gounkoto deposit, both in western Mali, the 4 million ounce Tongon deposit in the Côte d’Ivoire and the 3 million ounce Massawa deposit in eastern Senegal.
Mark Bristow has been the Chief executive since the incorporation of Randgold Resources, which was founded on his pioneering exploration work in West Africa. Has subsequently led the company’s growth through the discovery and development of world-class assets into a major gold mining business with a market capitalization of more than US$7 billion. He as also played a major part in promoting the emergence of a sustainable mining industry in West Africa. A qualified geologist with a PhD from Natal University, South Africa, Mark has held board positions at a number of global mining companies and is currently a non-executive director of Rockwell Resources International.
Mark was recently involved in a motor cycle accident while riding near the Massawa project, however, we understand that he will leave hospital this week and that he is still commanding operations as per usual.
Randgold Resources financed and built the Morila mine which since October 2000 has produced approximately 5.8 million ounces of gold and distributed more than US$1.6 billion to stakeholders. It also financed and built the Loulo operation which started as two open pit mines in November 2005. Since then, an underground mine has been developed at the Yalea deposit and construction of a second underground operation is underway at the Gara deposit. The company’s new Tongon mine poured its first gold on 8 November 2010. The company also has an extensive portfolio of organic growth prospects, which is constantly replenished by intensive exploration programmes in Burkina Faso, Côte d’Ivoire, DRC, Mali and Senegal.
More recently, Randgold Resources Limited has declared and shareholders have approved an annual dividend for the year ended 31 December 2010 of US$0.20 per share. The dividend payment will be made on 27 May 2011 to shareholders on the register on 13 May 2011. The ex-dividend date will be 11 May 2011. Having overcome a number of political problems in Côte d’Ivoire and the underground re-engineering of its flagship Loulo complex, Randgold Resources again posted substantial profit and production gains for the first quarter of 2011.
A profit of US$45.9 million was up 43% quarter on quarter and 92% on the corresponding quarter of 2010 while gold production of 139 403 ounces showed a 6% increase on the previous quarter and was 24% higher than the corresponding 2010 quarter. In the light of 2010’s good financial results, the board had recommended an increased dividend of 20 US cents per share (2009: 17c) and its proposal was endorsed by shareholders at the annual general meeting earlier this week.
Taking a quick look at the chart we can see that Randgold appears to have turned the corner and is heading higher. Also note that the 50dma is moving higher and could crossover the 200dma shortly which would be positive for this stock. The MACD now looks set to experience a crossover which bodes well for future progress. The RSI and the STO are also heading north from fairly low levels so we would expect Randgold to trade higher in the short term.
Although we do not own this stock at the moment we have made good profits trading it in the past and continue to monitor its progress with the view to snapping up a bargain or finding a suitable options trade.
Randgold Resources Limited has a market capitalization of $7.18 billion with the volume of shares traded ranging between 250,000 to 650,000 per day. This stock has a 52 week high of $106.04 and a 52 week low of $70.18, a P/E Ratio of 83 and an EPS of 1.39.
Randgold Resources Limited trades on the NASDAQ under the symbol of GOLD and on the London Stock Exchange under the symbol of RRS.
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