Randgold Resources to hike dividend after record gold production

The company said that it will hike its dividend by 52% to $1 per share after a 38% rise in profit to $294.2m in 2016, compared to the previous year, due to an increase in gold production.

The Loulo-Gounkoto site in Mali exceeded its annual guidance by 37,000 ounces at its lowest ever total cash cost per ounce, and along with “solid performances” from Rangold’s other mines it contributed to record production of 1.25m ounces, up from 1.21m ounces last year.

Total cash cost per ounce was down 6% to $639.

Randgold said it also broke another record with a 22% reduction in its lost time injury frequency rate to it lowest ever 0.46 and passed its net cash target of $500m, with $516.3m in the bank at the end of last year with no debt.

The Tongon mine in the Côte d'Ivoire achieved its revised production guidance and reduced its total cash cost per ounce, while the Kibali mine in the Democratic Republic of Congo rebounded after a slow first half and increased quarter-on-quarter production by 21% in the final quarter of 2016.

The shaft development of Kibali is scheduled for completion by the end of 2017 with the integration of its underground mine's decline and vertical shaft systems. Its second hydropower station has just started commissioning and Kibali’s third station is under construction.

Chief executive Mark Bristow said: "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 per ounce. It also envisages - but does not depend on - the development of three new mines over the next five years.

"The board has now given the go-ahead for the Gounkoto super pit and the technical and financial study on the Massawa-Sofia project in Senegal has demonstrated that this has the potential to meet our investment criteria."

He added that the company's exploration programmes have continued to add reserves at Loulo-Gounkoto and Sofia and it has to expanded its portfolio in Côte d'Ivoire and increased its presence in target areas through a number of early-stage joint ventures.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said that Monday's dividend hike is at the heart of what makes Randgold attractive to investors as unlike most gold investments, it pays investors to wait - albeit not very much.

"The group has once again demonstrated its ability to keep a firm grip on costs, even as production increases, and is taking steps to refresh the portfolio. However, while the group’s high-quality, low-cost mines aim to be profitable at $1,000 dollars an ounce, a price we haven’t seen since the financial crisis, it remains a play on the gold price, and that brings risks," Hyett said.

Shares in Randgold Resources were up 4.23% to 7,150p at 0917 GMT.