Gold miner Randgold Resources Ltd. (GOLD, RRS.L) Monday reported a surge in pre-tax profit for the fourth quarter, helped by strong growth in gold production as well as higher average gold price. Further, the company said the year ahead is going to be another testing one. Randgold shares are currently trading up more than 6% on the London Stock Exchange.
Pre-tax profit for the quarter surged to US$45.45 million from US$15.34 million in the comparable quarter.
Profit attributable to the company was US$32.08 million or US$0.35 per share, much higher than US$9.12 million or US$0.12 per share in the previous year. Profit for the quarter included a gain of US$10.7 million related to the sale of the Kiaka Project in Burkina Faso to Volta Resources. On average, five analysts polled by Thomson Reuters expected the company to report earnings of US$0.23 per share. Analysts' estimates typically exclude special items.
The London-based miner's total revenues were US$138.63 million, up from US$78.06 million generated in the previous year. The company's gold sales increased 78% year-over-year to US$139.15 million, mainly attributable to a 28% increase in attributable production for the quarter. Average gold price received was US$1,012/oz, up 39% year over year.
Commenting on the results, Chief Executive Mark Bristow said, "...the year had been an extremely challenging one, in which the Randgold team had to meet ambitious production targets while expanding Loulo, building Tongon, moving ahead on Massawa and Gounkoto, and swiftly completing the contested acquisition of Moto."
Profit from mining activity was US$67.05 million, up 133% from US$28.81 million in the comparable quarter, mainly due to increased gold sales. Total cash costs for the quarter increased 46% to US$72.1 million, partially attributable to the higher throughput at Loulo. Randgold owns 80% of Loulo with the Government of Mali owning 20%, while the company consolidates 100%. Loulo's gold sales surged to US$105.02 million from US$40.46 million in the previous year. Profit from mining activity was US$50.43 million, much higher than US$8.85 million in the previous year. The mine produced 106, 564 ounces of gold at a total cash cost of US$ 512/oz, compared to 60, 495 ounces produced last year on a total cash cost of US$523/oz. Average price received improved to US$984/oz from US$669/oz a year earlier.
Morila's gold sales dropped to US$34.14 million from US$37.59 million in the comparable period. Profit from mining activity declined to US$16.63 million from US$19.95 million in the prior-year quarter. The mine produced 30,768 ounces of gold, compared to 46, 826 ounces in the previous year. For fiscal 2009, pre-tax profit increased to US$105.71 million from US$71.58 million last year. Profit attributable to the company grew to US$69. 40 million or US$0.84 per share from US$41.57 million or US$0.54 per share in the comparable year.
Annual revenues were US$432.78 million, up from US$338.57 million a year earlier. Analysts estimated earnings of US$0.79 per share on revenues of US$412.85 million for the year.
Bristow said, "The year ahead is going to be another testing one, in which we aim to increase production at Loulo further, pour first gold at Tongon and progress the Kibali, Massawa and Gounkoto projects. We'll also be maintaining our strong focus on the exploration programmes which have already delivered so much and will continue to be the main driver of our organic growth."
Given the profit increase, the board increased the annual dividend by 30% to US$0.17 per share, which would be be paid on March 18, 2010 to shareholders on the register on February 26.
RRS.L is currently trading at 4,480.00 pence per share, up 271.00 pence or 6.44%, on the London Stock Exchange.
GOLD closed Friday's regular trading at US$69.68 per share on the Nasdaq.
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