Randgold share price falls on rating downgrade

on Dec 21, 2013
Updated: Oct 21, 2019

iNVEZZ.com, Saturday, December 21: Mark Bristow, chief executive officer of Randgold Resources (LON:RRS), has told Bloomberg that he disagrees with the opinion of analysts at Liberum Capital that the Africa-focused gold miner faces “serious risks” in the Democratic Republic of Congo with the country’s 2016 elections approaching.

Randgold, which operates the Kibali gold project in Congo, may see the country destabilised by an attempt by President Joseph Kabila to change the constitution to seek a third term, while an opposition victory may put at risk titles held by some miners, Liberum said in a report last month. The London-based investment bank “assumes” Kabila, who was re-elected to a second and final term in 2011, will amend the constitution to run again but if he doesn’t, “whether his voluntary exit would ensure stability is another matter entirely.”

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The broker also said: “The risks are firmly to the downside, the newsflow will be increasingly negative and the very act of constitutional change could cause destabilisation.”
Commenting on Liberum’s report, Bristow told Bloomberg that it was “sensational and it’s out of context.”
“If you look at the changes on the ground … in eastern DRC, it’s a very different place today than in 2002” when the country was still at war, he said. According to Bristow, the recent successful offensive of government and United Nations forces against the M23 rebel movement in Congo’s distant east in November is a sign of progress.

Since then, hopes have risen that the defeat of M23 could be a first step toward ending two decades of conflict in eastern Congo fuelled by ethnic tensions and rivalry for control of rich mineral deposits, gold included. Further boosting such hopes, Congo’s government signed a peace deal with the M23 rebel movement earlier this month.

According to Bristow, the 2016 elections shouldn’t impact Randgold’s operations in DRC. “Our business is structured in such a way that we’ll survive political change,” Randgold told Bloomberg.
Kibali poured its first gold in September, well ahead of the original target date, and has since started commercial production from its open pit mine. It is expected to exceed its 30,000 ounce production forecast for the fourth quarter of this year and is on track to meet its target of 550 000 ounces for 2014.

**Analysts on Randgold Resources**
Randgold Resources’ share price fell yesterday following a downgrade by research analysts at Canaccord Genuity. The bank lowered its rating to “hold” from “buy” and cut its price target on the stock to 4,100p from 5,700p. Analysts at Citigroup also cut their price target on Randgold’s stock yesterday to 3,545p from 4,254p and maintained their ‘sell’ recommendation.
Randgold’s share price yesterday closed 1.21 percent lower at 3,765p, valuing the gold miner focused on Sub-Saharan Africa at £3.47 billion.
**As of Friday, buy Randgold shares at 3,759p.**
**As of Friday, sell Randgold shares at 3,757p.**
Trade stocks with Hargreaves Lansdown from £5.95 per deal.
Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.


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