Shaft Sinkers Holdings Plc surged the most in three weeks in London trading after announcing the start of work on the main shaft at a Randgold Resources Ltd. gold mine in the Democratic Republic of Congo.
The shares rose 4.8 percent to 21.75 pence by the close, the biggest gain since Oct. 17. The South African company started work on a 760-meter (2,500-foot) vertical shaft at the Kibali mine, it said in a statement today. It won the contract, with a value of about 82.2 million pounds ($132 million), last year and seeks to complete it in November 2017.
“Today’s update on the Kibali project is reassuring, but does not prompt any changes to our estimates,” Kevin Fogarty, an analyst at Westhouse Securities Ltd. in London, said in a note to investors. “We retain our buy recommendation and 52 pence target price.”
The shares have tumbled almost 50 percent this year amid mining strikes in South Africa, where Shaft Sinkers built its business. Chief Executive Officer Alon Davidov sees growing demand outside the country for vertical shafts to supplement existing open-pit operations, he said in the statement.
Kibali, which started production in September, will be one of the largest gold mines in Africa when it reaches its annual output target of 600,000 ounces after the underground mine is completed, Randgold’s Chief Executive Officer Mark Bristow said in the statement. Randgold and AngloGold Ashanti Ltd. each own 45 percent of the mine.
The company in August was named as the preferred bidder for a $75 million contract to build a shaft for Kazchrome JSC in Kazakhstan.