Gold mining company Randgold Resources last week reaffirmed its intention to increase its final dividend for the year ended December 31, 2016.
Since its first dividend in its 2006 financial year, the yearly dividends have increased by 900% over the ten-year period.
In its annual report published last week, the company, headed by CEO Dr Mark Bristow, states that the board has proposed a 52% year-on-year dividend increase to $1 a share for the year ended December 31, 2016.
This will be presented for approval at the company’s May 2 annual general meeting.
The dividend will be paid in cash, with no scrip alternative being made available.
Now that it has reached its $500-million cash target, going forward, Randgold intends to continue paying a yearly dividend that takes profitability, cash flow and the wider capital requirements into account, including expected cross-cycle operating cash flows and its cross-cycle capital expenditure requirements.
The company will seek to maintain a net cash position of $500-million to provide financing flexibility should a new mine development or other growth opportunity be identified.
But, to the extent that Randgold has surplus capital, it intends returning that excess to shareholders, Randgold CFO Graham Shuttleworth says.
“The increase in dividends validates the business model and reflects the profitability and financial strength of the group,” he says in a release to Creamer Media’s Mining Weekly.
After its record-breaking performance last year, Randgold is positioned to sustain profitable production, and continue delivering value to all stakeholders, well into the future, Bristow states in the company’s 2016 annual report.
Henotes that, after a slow start to the year, Randgold has increased production to a new high of 1.25-million ounces to achieve its yearly guidance.
The flagship Loulo-Gounkoto operation, in Mali, posted particularly good results, to which all the operations contributed.
Besides exceeding its $500-million net cash target, it also remained debt-free in 2016, when profit rose by 38% and its lost-time injury frequency rate fell to its lowest level ever.
It continued to replenish attributable group reserves and progressed towards identifying three new potential gold projects that fit its investment criteria.
The Kibali gold project in the Democratic Republic of Congo is on track for completion of the underground shaft facility this year, the development of a super pit at the Gounkoto mine, in Mali, is going ahead and the Massawa project, in Senegal, is reportedly looking increasingly viable as the next Randgold mine.
The company’s ten-year business plan ensures profitability at a long-term gold price of $1 000/oz on production of 1.2-million ounces of gold a year.
Its big capital projects are nearing completion and its cost profile is trending down, auguring well for the governments and people of Randgold’s host countries.
“It’s their support and cooperation that make it possible for us to build and operate mines in some of the remotest parts of the world. We have proved over the years that we are there not to exploit these countries but to unlock the value of their mineral resources so that all may benefit,” says Bristow.
Randgold chairperson Christopher Coleman highlights the strong emphasis that the company places on the entrenchment of its social licence, which, he says, is regarded by the company as an essential requirement for business success in Africa.