Randgold lifts payout 52% as racks up record output numbers

Mark Bristow, CEO, Barrick Gold

RANDGOLD Resources lifted the full-year dividend 52% to $1/share following a strong showing in which it grew cash to $516m on the back of record gold production of 1.25 million ounces.

The UK-listed group also said it had approved the development of the Gounkoto super pit development in Mali as well as a financial study of the Massawa-Sofia project in Senegal.

“We have shared with the market our 10-year plan, which shows how we plan to sustain our profitability over the next decade at a gold price of $1,000/oz,” said Bristow in commentary to the group’s figures.

“It also envisages -but does not depend on – the development of three new mines over the next five years,” he added. Bristow told Miningmx last year that the group had an aspirational gold production target of 1.5 million oz.

Commenting on future dividend payments, the group said it would first seek to keep cash at $500m in order to capitalise on a new mine development “or other growth opportunity”. It would distribute excess cash to shareholders.

The financial performance was based on higher output, a 6% reduction in cash costs whilst there was a near $100 per oz improvement in the dollar gold price received.

Operationally, the performance was driven by Randgold’s flagship mine Loulo-Gounkoto which produced 707,116 oz for the 2016 financial year far in excess of its 670,000 oz target. The mine would sustain production of about 600,000 oz/year for the next 10 years.

The production figures seemed unlikely following second quarter figures in which the group’s Tongon and Kibali mines encountered difficulties which moved CEO, Mark Bristow, to describe the period as among the firm’s most difficult.

Tongon met its production target whilst Kibali improved although grade would continue to be a challenge until the development of an underground mine later this year, said Bristow.

Kibali, which is situated in the Democratic Republic of Congo, was also contending with “critical issues” including the delayed payment of TVA refunds owed to it.

The DRC had agreed to the refunds and has made some payments, but “… the recent political difficulties in the country have distracted the administration from the settlement of these issues and the amount outstanding had increased at the end of 2016,” said Bristow.

“The situation is exacerbated by the foreign exchange risk posed by the continuing depreciation of the Congolese franc, and we trust it will be resolved now that the political transition has been settled,” he said.