Randgold eyes three new mines as higher gold prices boost profit 55%

Shares in Randgold Resources (LON:RSS) were down almost 6.8% right after lunch time in London even though the Africa-focused gold producer reported strong results for the three months to Sep.30 and said it was on the hunt for at least three new mines to adds to its portfolio.

Randgold, which has five operating gold mines across west and central Africa, said third-quarter profit went up by 55% thanks to higher gold prices rose and lower mining costs in the period.

Randgold is now working on its so called as “Three in Five” strategy — the defining or securing of three new projects in the next five years.

The company reported an increase in net income to $65.6 million from $42.3 million a year earlier.

Gold output, however, dropped by 1.4% to 301,163 ounces, on the back of stoppages at its Tongon mine in Ivory Coast and Kibali, in DRC in the second quarter.

But the company “bounced back” in the three months to the end of September, chief executive Mark Bristow said in a statement, adding that it was on track to meet its full-year guidance while keeping costs down.

Unlike its rivals in the mining sector, which were badly hit by a sharp drop in gold prices last year, Randgold managed to remain relatively strong. As a result, the firm has continued investing in exploration, the engine that drives its business, and is now working on its so called as “Three in Five” strategy — the defining or securing of three new projects in the next five years, be they from its won exploration portfolio or from new business initiatives.

Bristow also said that if gold prices stay above $1,250 an ounce, and the firm delivers on its forecasts, Randgold should get close to a $500 million (405 million pound) net cash position by the end of this year, at which point it will review its dividend policy.

The stock was trading down almost 6.8% to 7,041p at 12:40pm, but year to date it has gained over 70%.