Randgold Resources, the Malian gold miner and African explorer, is sitting with $45 million in cash with another $100 million on the way from a share placement, but Mark Bristow, the company’s chief executive says the board is still waiting for sufficient cover before declaring a dividend.
“As soon as the board is happy with our cover we will consider paying a dividend. There is no change with that,” says Bristow.
Over the next four years the company will be spending cash on building an underground gold and silver mining operation at Loulo, its open pit gold mine in Mali. One-third of that $85 million will be spent next year according to Bristow.
“I have always said that $100 million is a good figure,” Bristow told media in a news conference Thursday, when presenting the September quarterly results. He was talking both about acquisitions and possible dividend flows. When asked about acquisition opportunities, Bristow says he does not agree with the acquisitions being made at the currently historically high gold prices, where companies are overvalued. “Having said that, we are not shy of M&A activity but we are not going to grow just for the sake of growing,” says Bristow. The company was sitting with $78 million at the beginning of the year, but has spent a net $33 million in cash during first nine months, which included further capital costs in constructing the Loulo open pit mine.
Bristow says that Loulo is just barely on target for its first 100,000oz of production by year-end. While next year it is expected to produce between 200,000oz-250,000oz of gold with 80% attributable to Randgold.
At Morila, also a mine in Mali, where Randgold holds a 40% stake along with AngloGold Ashanti, the company is expecting about 500,000oz next year, with about 200,000oz of that going to Randgold. This is good news for anyone looking to invest in gold as a part of their 401k rollover retirement plan.
Costs have been well controlled at the mine, after Anglo original forecast costs north of $200/oz at the beginning of 2005. So far this year, costs are around the $180/oz level.
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Political issues in the Ivory Coast are still preventing Randgold from getting the final feasibility done on its Tongan project, another area where the cash could be spent.
With the $100 million, from the capital raising nearly in the bag, and a healthy amount of cash flow expected from it mines in the coming year, the board of Randgold Resources will probably, like the end of last year, look closely at becoming a dividend payer in future.