[miningmx.com] – RANDGOLD Resources is to build a $500m cash pile which it would use for expansion or corporate action despite maintaining a progressive dividend policy which saw a one fifth increase in the 2014 payout.
Commenting in the Africa-focused gold group’s annual report which was published today, Randgold CEO, Mark Bristow, said the current squeeze on the gold sector would create growth opportunities.
“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,’ said Bristow in the report.
In his CFO’s report, Randgold’s Graham Shuttleworth said the company intended to build its net cash position to approximately $500m to “… provide financing flexibility for future new mine developments and/or other growth opportunities”.
Expansion was also alluded to by Christopher Coleman, Randgold’s chairman, who commented that the gold sector was “more complex” than at any time since the Nineties, but that the firm would examine “all realistically conceivable scenarios” for the next five years “… identifying the opportunities and obstacles that lie ahead, and incorporating them in our planning”.
As of end-December Randgold had no debt while cash on hand had more than doubled to $83m ($38m). It proposed a 20% increase in the 2014 dividend to $0.60 per share for approval at its annual general meeting which is scheduled for May 5.
Bristow told Miningmx in February that the gold industry was currently unsustainable. “If I am fundamentally right on my numbers, then the gold industry cannot continue as it is at the moment. Just about everybody in the industry is bust and the financial stress regime they are facing is exponential in nature,” he said.
“Times are very tough. It’s tough enough for us and we are profitable. When you have three out of the five world major gold producers sitting with debt almost as great as their market capitalisations – or more – you have a real problem in the industry.
“When you look at their reserves, very few of these highly geared companies, be they large or medium, can actually repay their debt on their current reserve base. Plus all the mines in that situation are high-grading because they have to service this debt despite the fact that they are not making real profits,” he said.
