Randgold Boosts Dividend After Light Earnings

For the full year, the company posted adjusted EPS of $2.54 on gold sales of $1.43 billion, compared with EPS of $3.02 on sales of $1.27 billion in 2013. The consensus estimate called for EPS of $2.59 on sales of $1.13 billion.

Randgold’s board proposed raising the company’s annual dividend by 20%, from $0.50 to $0.60. Shareholders must approve the increase, but that is as close to a certainty as we are likely to see.

Total production rose from 910,374 ounces of gold in 2013 to 1.15 million ounces last year. Cash costs per ounce fell from $715 to $698, while the average price received fell from $1,376 per ounce in 2013 to $1,264 in 2014. In the fourth quarter the average price received per ounce was $1,195.

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Randgold’s shares are up more than 20% since the beginning of 2015, and UBS analysts recently downgraded the stock to Neutral primarily because the shares have added about as much as they can based on the company’s management and performance, and any further appreciation will have to come from a rise in the price of gold. Given the geopolitical situation in Greece and Ukraine, that rise may not be all that far away.

Randgold’s CEO said:

Our long standing goal of reaching an annual production of 1.2Moz in 2015 is now comfortably within reach, and we are already looking beyond that to our next big step forward. We remain strongly committed to exploration and our geologists continue to scour the gold fields of West and Central Africa for multi-million ounce deposits. The current stress in the gold mining industry is also generating what may well prove to be transformational growth opportunities and we are closely monitoring this situation

The consensus estimates for 2015 call for EPS of $2.98 on revenues of $1.17 billion. For the first quarter, the estimate calls for EPS of $0.68. Gold traded around $1,242 an ounce Monday morning, down from a peak of around $1,280 last week. Over the past 12 months, COMEX gold has traded at a high of $1,389.

Randgold’s shares were up about 1.2% in premarket trading Monday, at $82.18 in a 52-week range of $58.00 to $89.89. Thomson Reuters had a consensus analyst price target of around $93.00 before the report.

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