Randgold Sees Possible Deals as Smaller Miners Get ‘Fried’
“Junior explorers are busy being fried by the market and it’s a cheap way to do exploration,” Chief Executive Officer Mark Bristow said today in an interview in London. “There are a lot of people in a lot of difficulty at the moment so it’s natural that we look at these things.”
Gold producers, many of which have struggled to raise funds for mines while paying higher operating costs, have seen their valuations drop as investors abandon stocks in favor of physical bullion and exchange-traded funds. Gold shares in the Standard & Poor’s/TSX Composite Index (STGOLD) have fallen 28 percent in a year.
Randgold said it would only look at projects with reserves of more than 3 million ounces of gold and able to return 20 percent on money invested at a price of $1,000 an ounce. The Jersey, Channel Islands-based producer hasn’t bought a company since acquiring Moto Goldmines Ltd. in 2009.
“M&A is not our core business, but it’s definitely on our radar,” Bristow said. “We keep a database of all juniors and we monitor them.”
Randgold earlier today said second-quarter profit rose 3.7 percent to $117.5 million after gold output increased to 210,534 ounces. The company is on schedule to meet the mid-range of its 825,000-to-865,000-ounce full-year target, Bristow said.
Randgold rose 1.6 percent to 6,290 pence by the close in London trading, the highest in more than four months.
Cash costs declined to $703 an ounce in the second quarter from $751 an ounce in the prior three months, Randgold said. Costs for 2012 will average $650 an ounce as it mines higher- grade ore at Mali’s Loulo mine in the second half, and will be in the “500s” by year-end, Bristow said.
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