Market conditions test Randgold Resources
The London-listed gold miner faces challenges in African states where it operates — Mali, DRC and Ivory Coast
London — Randgold Resources’s celebrated ability to operate in Africa is being tested on all fronts, and it is taking a toll on the London-listed gold miner’s stock.
For most of the past decade, Randgold shares were the best performers among gold miners tracked by Bloomberg. Now they are among the worst, sinking 20% so far in 2018.
Randgold made its reputation on its ability to deliver complicated projects in remote locations but recently it has faced challenges in the three countries where it operates.
Industrial action in Ivory Coast forced CEO Mark Bristow to announce on Tuesday that the Tongon project was likely to miss its 2018 production target.
In Mali, the company is in a long-running dispute with the government over a claim of as much as $200m in back taxes. In the Democratic Republic of Congo (DRC), Randgold has been the most prominent opponent of a new mining code, with Bristow often acting as spokesman for the industry, while mining firms with more at stake keep lower profiles.
The share price was "suffering under the effect of the various events", said Hunter Hillcoat, an analyst at Investec in London. "Spearheading the response to the government in the DRC and then having the other problems doesn’t help," he said.
Randgold did not immediately respond to a request for comment.
The company is not the only miner hurt by tough market conditions in the first quarter. Ten of the top 14 gold producers are down in 2018, while the share prices of DRC-focused copper miners such as Ivanhoe Mines have dropped as much as 40% since the start of 2018.
Randgold has more than $700m in the bank and it doubled its dividend in February. In 2017, it increased gold production for a seventh consecutive year and has maintained its forecast for 2018 of 1.3-million to 1.35-million ounces of output, despite the problems in Ivory Coast, said Bristow.
"Randgold is good at working in Africa, at working with government and doing things the right way," Hillcoat said. "It does tend to recover from these things, and hopefully this is the same case."