First Congo gold for Randgold Resources
IT SEEMS Randgold Resources CEO Mark Bristow has been talking to a receptive audience at the Denver Gold Forum where he announced that the Kibali mine in the Democratic Republic of Congo has poured its first gold bar.
Not only is that ahead of the official 2013 calendar year-end target, it also beat the October prediction made by Mr Bristow at a media briefing in Johannesburg in mid-July. Given that this is the world’s premier gold conference — and gold producers love using it to announce important news — there was probably a lot of pressure on the Randgold team to deliver that gold in time for the CEO’s annual trip to Denver.
The mine is a 50/50 joint venture between Randgold and AngloGold Ashanti and at that July briefing Mr Bristow said he had a bet on the timing of the gold pour with Anglo American CEO Mark Cutifani, who was CEO of AngloGold Ashanti when the Kibali joint venture was agreed. It seems Mr Cutifani now owes Mr Bristow a very expensive bottle of red wine from SA. Yesterday’s Morning Miner report from UK institution Numis said, “If you are a gold bug you should own Randgold. This is a good example of how a gold company should be run.”
JPMorgan Cazenove analysts Steve Shepherd and Alan Cooke said in their daily “postcard” from the forum that Randgold “is one of the few gold miners growing production and returns in the current environment in our coverage”. and 5% higher than the previous reporting period. Basic earnings per share are expected to be between 75c and 85c, compared to a loss of 3c per share.
The return to the black is largely a result of Altech, which Altron bought out two months ago for R1.8bn, having jettisoned its lossmaking East and West African operations. These businesses have been a drag on Altron’s earnings for the past five years.
This latest announcement doesn’t mean summer has arrived. Altron CE Robbie Venter has indicated this is not a short-term endeavour. But there are finally some signs of green shoots.
What many investors haven’t quite cottoned on to, is that Altron is no longer just a holding company but also an investment company. This change allows Mr Venter and his team greater control of capital allocation, and to be more agile with regard to business decisions. One hopes he is finally getting those operations which aren’t performing to expectations, such as Powertech, back on track. Should Mr Venter get it right, there is potentially significant upside for the stock.
Nick Wilson edits Company Comment (wilsonn@bdfm.co.za)