Randgold: Ups reserves, raises dividend, seeks more growth
This article by Lawrence Williams for Mineweb may be of interest to subscribers. Here is a section:
Bristow commented, “We have looked closely at all our mines to ensure that they will still be profitable at $1,000 per ounce and we’ll continue to review our operations against a range of gold price scenarios. With the inclusion of Gounkoto underground we are now able to demonstrate a 10 year plan of plus 1 million ounce production per year and all our operations will be profitable at a $1,000/ounce gold price which is unique in the industry.”
?In the event, despite mining 1.15 million ounces thereby effectively ‘depleting’ its reserves by this amount, the company managed overall to actually increase its total ore reserves by 1% mainly through ongoing brownfields exploration and drilling programmes. It would seem there is plenty of scope around its existing operations, to continue to do so in the future, even though it is mining at a plus 1 million gold ounces/year rate.
But looking ahead, Bristow notes that there is great potential in the existing low price environment for additional growth opportunities resulting from the squeeze on developers and explorers resulting from this. “Organic growth will remain our core driver but, as we look ahead from this position of strength, we will consider opportunities that are often generated by stressed markets and may well elect to play a part in the likely restructuring of the gold mining industry,” he says.
Randgold Resources is in an enviable position within a benighted sector. By concentrating on an all-in cost of production metric that is well below current prices the company has the wherewithal to engage in M&A activity. However while this is likely to create shareholder value over the medium-term the share is still subject to short-term swings in sentiment.
It failed to hold the breakout to new recover highs in January and continues to pull back into the underlying range. A sustained move above 500p will be required to signal a return to demand dominance and in the meantime the outlook is for lower to lateral ranging.
The NYSE Arca Gold BUGS Index continues to encounter resistance in the region of the 200-day MA following short-term rallies and it will need to hold the low near 150 if a resumption of the medium-term downtrend is to be avoided.