Randgold shares soar after miner digs out boosted dividend and bumper profits
Shares in Randgold have soared this morning, after the gold miner announced it was rewarding investors with a hefty boost to its dividend.
The figures
The company revealed that profits for the full year had risen to $294.2m (£236m), up 38.2 per cent compared with $212.8m the year before. Meanwhile, profits for the firm's fourth quarter came in at $94.3m, up 22.1 per cent from $77.3m for the same period the year before.
Meanwhile, gold production rose to 1.25m ounces for the year, the sixth year in a row this measure has increased for the firm and up 3.4 per cent on the prior year's 1.21m ounces.
The company's board also proposed a 52 per cent boost to its dividend to $1.00.
Investors were clearly encouraged by the news, as shares in the miner are currently trading up 4.7 per cent at 7,180p.
Why it's important
While many markets may have gone haywire last year, particular around the time of the EU referendum and the US Presidential election, gold is traditionally seen as something of a safe haven. Today's results show the gold market has held up well for Randgold over the last year – the company announced the average price for gold in 2016 was $1,244 per ounce, up almost eight per cent compared with $1,152.
What Randgold 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," explained chief executive Mark Bristow.
What analysts said
"Today's massive dividend hike is at the heart of what makes Randgold attractive to investors; unlike most gold investments, it pays investors to wait – albeit not very much," said Nicholas Hyett, equity analyst at Hargreaves Lansdown.
"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."
In short
Investors in Randgold have a reason to be cheerful today, with a bumper dividend payout from the company on the horizon.