We have watched this stock for some time hoping to identify a suitable entry point but for various reasons we have not made a purchase. However, we could see two factors conspire to present us with a bargain buying opportunity; firstly the summer doldrums are now upon us and secondly Randgold’s share price is deteriorating.
This is what Randgold say about themselves:
Randgold Resources Limited is a gold focused mining and exploration business incorporated in the Channel Islands in 1995 and listed on the London Stock Exchange (RRS) in 1997 and on Nasdaq (GOLD) in 2002. Its focus is on the creation of value for all its stakeholders by discovering world-class gold deposits and converting them into profitable mines.
Major discoveries to date include the 7.5 million ounce Morila deposit in southern Mali, the 7 million plus ounce Yalea deposit at Loulo in western Mali and the 4 million plus ounce Tongon deposit in the Côte d'Ivoire.
Randgold Resources financed and developed the Morila mine, which was commissioned in October 2000 and since then has produced approximately 4.85 million ounces of gold as well as distributing more than US$1.2 billion to its stakeholders.
It also financed and developed the Loulo project, which went into production in November 2005 with two open pit mines. Two underground mines are being developed on the site - the first, at the Yalea deposit, has started delivering ore to the plant and the second, at the Gara deposit, is at final planning stage. Loulo is on track to meet its full year target of 265 000 ounces in 2008 and the underground operations are scheduled to increase this annual output to 400 000 ounces by 2010.
The company recently decided to proceed with the development of a mine at its Tongon project. First gold production is scheduled for the fourth quarter of 2010.
Randgold Resources has an extensive portfolio of organic growth prospects, constantly replenished by its wide-ranging exploration programmes in the major gold regions of Mali, Senegal, Burkina Faso, Côte d'Ivoire, Ghana and Tanzania.
A quick look at the management team shows us that the team has a lot of experience coupled with an abundance of high-level academic qualifications such as MA’s and PhDs in Geology, Finance and Economics and is lead by Philippe Lietard, Chairman and Mark Bristow, Chief Executive Officer. A good quality line up as we would expect from a company of this size and stature.
Randgold has a market capitalisation of $3.20 billion, a P/E ratio of 74.87 and an F P/E ratio of 25.34 with 76.19 million shares outstanding. The average volume of shares traded is 594,000 per day. This stock has a 52 week high of $56.15 and a 52 week low of $20.83.
Latest News Release:
London, 6 May 2008 - Randgold Resources today reported a net profit of US$18.2 million for the March quarter, up 25% on the previous quarter and 42% on the corresponding quarter in 2007, in spite of intensifying industry-wide cost pressures, notably the sharp rise in the oil price.
Attributable production of 103 649 ounces was down 13% on the previous quarter while total cash cost of US$440/oz was up 12% but both were in line with plan considering the oil price. Chief executive Mark Bristow said the company’s production and cost profile was expected to show improvement in the latter half of the year when the new high grade Yalea underground mine at its Loulo complex in Mali comes on stream.
Chief executive Mark Bristow had this to say:
“We’re also looking closely at a number of external growth opportunities, including joint ventures, which offer us the potential of creating real value through the application of our skills. Such opportunities will, of course, have to meet the same return and other investment criteria we require from our organically generated projects,”
So this company would appear to be on the acquisition trail in an attempt to increase reserves, which is good news for investors as we are all aware of the difficulties in finding new deposits.
After a terrific run we can now see that a double top has been formed and the stock price has then deteriorated along with the price of gold. The technical indicators are close to the bottom of their respective ranges in an oversold situation rendering the stock tempting as a buy.
This is a gold producer that we will be happy to own as part pf our core position in this bull market. It is now trading close to its 200dma so we now view the downside as being limited so buying at this time could pay off handsomely. However the stock could go lower still, which we have decided to wait for and also bear in mind that gold itself has made three highs since March, each being lower than the previous highs. We are hunting for a bargain here and therefore run the risk of missing the boat, a risk that we are prepared to take. But, the final decision is as always all yours.
Have a good one.
Randgold Resources Limited trades on the NASDAQ under the symbol of GOLD and on the London Stock Exchange under the symbol of RRS.
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