Randgold’s first half produced EPS that was 17% above average forecasts, total production well past the half-way point of annual guidance and a decent cash cost reduction to comfortably below the low end of the target range. The stock responded in kind with a 4% rise.
Against a strengthening financial and operational backdrop, with free cash flow rising to $573.8m in the first half, “despite the payment of the 2016 dividend of $94”, as Randgold’s own statement puts it, anticipation of an increased shareholder payment of some kind may be playing a part in lifting the stock further out of its doldrums for the year.
Randgold (LON:RRS) shares lag the price return of fellow London precious metals miners Hochschild (LON:HOCM), Fresnillo (LON:FRES) and Centamin (LON:CEY) over the year to date, possibly due to a discount predicted on the particularly dicey geopolitical and labour backdrop of Mali where Randgold has the bulk of its operations. The group itself appears to hint that some form of enhanced cash return has at least been considered. Having demonstrated its ability to achieve and maintain a tight operation with its solid half-year results, Randgold’s rating is now less commensurate with its place below the peer mean. The group could certainly afford to remedy the disparity in the current year.
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