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Randgold Resources: Record Annual Production Achieved in 2012

Contributed by Fox-Davies Capital

Randgold reported its December quarterly and 2012 full year production and financial figures. For the December quarter Randgold produced 214,394oz of gold at a total cash cost of $790/oz. Total profit attributable to shareholders was $121.5M. This took gold production for 2012 to 794,844oz at an average total cash cost of $735/oz and the annual profit attributable to shareholders was $431.8M.

Whilst it was a record year financially, the December quarter narrowly failed to achieve a quarterly record, either for gold produced or profits. The fire at Tongon saw to that. However, the steps taken at Tongon to improve availability should also help with recoveries and we expect recoveries at the Loulo-Gounkoto complex to also improve as the copper bearing ore is mined out. Recoveries at these mines should continually improve throughout the year as the various steps are completed. Barring unforeseen events, 2013 should see gold production continue its trajectory towards the 1Moz mark, an event that should be achieved in 2014 once the Kibali mine starts to wind up production. It is ahead of schedule at the moment and due to start production in the last quarter of 2013.

The proposed dividend is being increased by 25%. 2013 is the year of maximum capital expenditure, and it is expected that cash on hand will drop to around $100M from its current $387M. However, with the capital expenditures dropping in 2014, and substantially more gold being produced, there is the potential for another substantial increase in dividends being proposed in early 2014.