[miningmx.com] — RANDGOLD Resources (Randgold) shares recovered marginally on the London Stock Exchange on Monday after the company increased its dividend for the year to end-December by 18% to $0.2 (2009 – $0.17).
The shares rose 2% to around ₤51 after having plunged from around ₤66 in October to below ₤50 because of production problems at the group’s Loulo/Yalea mine combined with investor concern over prospects for the Tongon mine which is situated in Cote d’Ivoire.
Randgold CEO Mark Bristow commented, “We warned the market that 2010 was going to be tough – we just didn’t expect it to be quite this tough.’
The results show Randgold’s attributable gold production was 30% up for the December quarter but 10% down for 2010 overall at 440,107oz (488,255oz) .
Attributable gold sales were 15% down at 413,282oz (486,324oz) because some 23,428oz of gold remained trapped and unsold at Tongon as of December 31 because of the political upheaval in the country.
That gold was worth $33m at the gold price of $1,410/oz that ruled at year-end and, had that gold been sold as planned, Randgold’s total earnings would have been $1.38 a share – 60% up on 2009 levels – instead of the reported $1.14 a share which was 33% higher.
Bristow told investors at a presentation in Cape Town on Monday that the Tongon situation was very difficult but that “we don’t see the loss of the project as a real possibility.’
He added, “We have managed a difficult situation without getting hysterical. Whoever ends up being the boss still needs us. We have been dealing – diplomatically and productively – for years with the factions that now constitute the rival governments.’
“We have slowed the production ramp-up at Tongon and the risk is a timing risk rather than a market value risk to our organisation.
“We have enough cash to deliver our five year growth plan without having to issue any new stock. That’s what separates us from the rest of the market.
“Even if we stop Tongon completely we can manage without having to raise any debt even if the gold price should fall to around $920/oz.’
Bristow said the problems at Loulo were the result of a “lack of proper planning and scheduling with inadequate management.
“We have made substantial changes to the management and what is virtually a new team is driving the turnaround. “
Bristow said Randgold was sticking to its organic growth production profile “assuming the situation in the Cote d’Ivoire does not impact upon operations much longer.
“Forecast group production for 2011 is 750,000oz to 790,000oz which is a 70% increase on 2010. On an equity attributable basis this equates to approximately 640,000oz to 670,000oz compared to 373,706oz in 2010. “
But Bristow added the production forecast is “skewed towards the second half of the year’ given the situation in Cote d’Ivoire; the ongoing remedial work at Yalea scheduled for the first quarter and the anticipated contribution from the new Gounkoto mine due to kick in from July.
