Randgold chief oozes optimism
WITH the gold price looking so tarnished investors in precious metal mining companies have had nothing to celebrate. But the boss of gold specialist Randgold Resources tried to brighten the mood yesterday.
Chief executive Mark Bristow, in a jovial mood as he celebrates 20 years since the company was created, told the City that his company stood strong in a sector that is ‘buckling under the pressure of the gold price downturn’. He added that it is circling stressed companies and is ready to take over assets at the right price.
Bristow said his company can cope with the price as low as $1000 a tonne – it is currently $1090 – and said it is nowhere near as bad as when Randgold started out 20 years ago when the gold price was around $380.
The FTSE 100’s only gold miner revealed first half pre-tax profit fell a third to £85.7m on revenues down 17pc to £308.6m compared to the previous year.
Bristow said Randgold, with operations in Mali, Ivory Coast and the Democratic Republic of Congo, is in better shape than most.
It reported a record quarterly gold production at 300,000 ounces for the first time, up 7.5pc compared to the first quarter and told investors the business can cope with a gold price as low as $1,000 but is already looking at options to reposition to cope with a price as low as $800.
The price hit a five-year nadir this month with low inflation and the strong dollar ensuring investors spurned it.
Bristow said its share price was dragged down by sentiment but added that, unlike peers, its shares are not at all-time lows.
It has more than £65m of cash on the books and acquisitions are on the cards.
He said: ‘I am not managing for survival, I am managing for profit.’ He said he was waiting for people to give up good assets at the right price before he swooped, adding: ‘Don’t be surprised when we do something.’
Not everyone agreed of course. Panmure Gordon’s Jamie Campbell said: ‘ We can’t argue with the view that Randgold presents one of the safer options in the gold space, but we still don’t see value for investors at current levels particularly given the headwinds gold continues to face.’
For now, investors believed Bristow’s story and the shares were 31p brighter at 3864p.
The market might have been expecting news of interest rate rises from the Bank of England yesterday but instead UK borrowing costs were held at 0.5pc again.
Trustnet Direct analyst Tony Cross said: ‘So “Super Thursday” wasn’t so “super,” at least not for backers of sterling as the British pound took a tumble after the Bank of England voted 8-1 to keep interest rates where they are for the time being.
‘That knocked a few hawks off their perch who had been hoping for more support for a rate hike. As it is, it seems fairly certain that rates in the UK will stay lower for longer.’
The markets were lacklustre and the FTSE 100 slipped 5.32 points to 6747.09 and the FTSE 250 lost 29.24 points to 17745.84.
Housebuilders benefited from the fact that interest rates stayed the same. Taylor Wimpey climbed 4.5p to 200.7p and Persimmon rose 35p to 2089p.
Shares in Inmarsat rocketed to the top of the table, up 60p to 956.5p, on news of a 4pc rise in second- quarter earnings. It also delayed the launch of its third Global Xpress satellite to the end of August. The delay follows a launch failure in May.
Defence and engineering group Cobham reported a 15pc rise in first half underlying pre-tax profit to £135m.
But despite the strong performance, on a statutory pre-tax profit basis it fell 92pc to £4m which it blamed on its £970m purchase of New York rival Aeroflex last year, the largest acquisition in its history.
Revenue rose 26pc to £1.05bn in the period and it raised its interim dividend by 5pc to 3.05p a share. Cobham shares rose 6.6pc, or 17.2p, to 279.7p.
Temporary power supplier Aggreko, following a profit warning last month, said that its markets were likely to remain difficult next year and shares lost power again, down 57p to 1130p.
Property agent Savills raised its dividend yesterday as it brushed off weakness in the UK housing market due to the General Election. First half revenues rose 27pc to £547m with profits up 7pc to £26.4m. The interim dividend was raised 7pc to 4p a share and the stock rose 1p to 984p.
AIM-listed AFH, which has been on a spending spree snapping up IFA, wealth managers and advisers since it listed this year, has bought Davisons Financial Management for £2.9m.
AFH has so far paid £1.07m for Davisons from its cash and will issue 71,915 of new shares at 146p each on August 11 to fund the deal. AFH shares rose 4.5p to 150.5p.