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Randgold Resources Limited Reports a Profit Increase of 259% for 2011

Randgold Resources Limited (GOLD) is an African focused gold play engaged in gold mining, exploration and related activities in Africa with the company listing on both the London Stock Exchange and Nasdaq. Major discoveries to date include the 7.5 million ounce Morila deposit in southern Mali, the 7 million ounce Yalea deposit and the 5 million ounce Gounkoto deposit, both in western Mali, the 4 million ounce Tongon deposit in the Côte d’Ivoire and the 3 million ounce Massawa deposit in eastern Senegal.

Mark Bristow has been the chief executive since the incorporation of Randgold Resources, which was founded on his pioneering exploration work in West Africa. Has subsequently led the company’s growth through the discovery and development of world-class assets into a major gold mining business with a market capitalization of more than U.S. $10 billion. He also played a major part in promoting the emergence of a sustainable mining industry in West Africa. A qualified geologist with a PhD from Natal University, South Africa, Mark has held board positions at a number of global mining companies and is currently a non-executive director of Rockwell Resources International.

Randgold CEO Mark Bristow commented as follows on their recent results:

the record results represented a significant achievement, particularly when seen against the background of the major developmental projects and issues the company had to handle during the year. These included the expansion programmes at Loulo and Tongon, the commissioning of Gounkoto and the rapid advance of the giant Kibali project in the Democratic Republic of Congo.

“Randgold’s long-term strategy of building sustainably profitable gold mining businesses through discovery and development continues to pay off,” he said. “In 2011 we benefited from our investment in growth in previous years, just as the development work we are doing now will reward our stakeholders in years to come.”

Highlights for 2011 as listed below:

Powered by increased production at all its operating complexes, Randgold Resources’ profit soared by 259% to US$433.4 million for 2011. Profit for the fourth quarter of US$136.2 million was up 323% on the corresponding quarter in 2010 and was also higher than the company’s annual profit in any preceding year. The board has proposed a US$0.40 annual dividend, up 100% on 2010 on the back of the substantial increase in earnings.

Production for the year rose by 58% to 696 023 ounces, reflecting increased contributions from the Loulo complex in Mali (which includes the new Gounkoto mine), Tongon in Côte d’Ivoire and the Morila joint venture, also in Mali. Morila, now a dump treatment operation, passed the 6 million ounce total production mark during the fourth quarter. Group cash operating costs for the year of US$641 per ounce were in line with those of the previous year.

Bristow said the company was forecasting production growth in each of the next five years, with group production for 2012 estimated to be 825 000 to 865 000 ounces – a 19% increase over 2011 at the lower end of the range.  This growth is projected to be driven by better throughput and grade at the Loulo/Gounkoto complex. Management is targeting total cash costs per ounce, after royalties, of under US$650/oz for 2012, while costs are forecast to reduce to between US$500/oz and US$550/oz over the next five years.

(Note the low cash costs of this operation which are targeted to go yet lower, to the $550/oz level, which will be some achievement.)

Total capital expenditure for 2012 will remain high at approximately US$660 million, which will be invested in the anticipated start-up of construction at Kibali, the programmes to unlock more capacity at Loulo and Tongon and in exploration across the group. Despite 2011’s substantial investment in capital projects, cash in hand increased by 33% to US$487.6 million year on year. 

The last time we did an update on Randgold, May 25th 2011, we wrote the following:

Taking a quick look at the chart we can see that Randgold appears to have turned the corner and is heading higher. Also note that the 50dma is moving higher and could crossover the 200dma shortly which would be positive for this stock. The MACD now looks set to experience a crossover which bodes well for future progress. The RSI and the STO are also heading north from fairly low levels so we would expect Randgold to trade higher in the short term.

The above comments were accompanied by the following chart:


Note that 50dma has since crossed over the 200dma, sometimes referred to as the golden cross, and in this case it boded well for Randgold which has since moved up from a stock price of $78.92 to close yesterday at $118.01.

Although we do not own this stock at the moment we have made good profits trading it in the past and continue to monitor its progress with the view to snapping up a bargain or finding a suitable options trade.

Randgold Resources Limited has a market capitalization of $10.08 billion with the volume of shares traded ranging between 400,000 to 1000,000 per day. This stock has a 52 week high of $120.73 and a 52 week low of $70.18, a P/E Ratio of 37.33 and an EPS of 3.16.

Randgold Resources Limited trades on the NASDAQ under the symbol of GOLD and on the London Stock Exchange under the symbol of RRS.

Regarding We are off to a good start closing two of trades in January, the first gave us a profit of 71.58% and the second gave us a profit of 33.97%.

It was nice to bag a couple of winners before January ended and hopefully 2012 will continue in a successful manner. We do have a number of ideas on the drawing board which we are looking to execute shortly, but only when the risk/reward environment is firmly in our favour.

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Our performance stats have now been updated as follows:

Our model portfolio is up 446.55% since inception

An annualized return of 98.38%

Average return per trade of 36.68%

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Average trade open for 50.48 days


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