While I was on vacation I used the downtime to write posts on some of the earnings results that I missed during the very busy second quarter earnings season. This post was written on August 20
The relentless downward trend in the price of gold took a big bite out of shares of Randgold Resources (GOLD) in the second quarter.
The company reported a drop of 15.8% in total revenue year over year. Diluted earnings per share were 54 cents against 88 cents in the second quarter of 2017 and missed Wall Street projections by 5 cents a share.
And this in spite of an increase in gold production of 9% from the first quarter of 2018 and a drop in total cash cost per ounce of 3% to $698 an ounce. Gold sales climbed 5% from the first quarter even in the face of lower gold prices.
A work stoppage at the company’s Tongon mine certainly didn’t help and although that stoppage is now over and Randgold is restarting mining, the time it will take to bring the mine back to full production remains uncertain.
When I added Randgold Resources to my long-term 50 Stock Portfolio on May 14, I said that the goal was to re-establish a gold presence in the portfolio in the light of forecasts that showed rising inflation in the United State and (slowly) in the EuroZone.
And I picked Randgold to re-establish gold in that portfolio because unlike almost all other gold mining companies Randgold pay a significant dividend–2.63% as of the close on August 10. That means I get paid to wait for the turn in gold prices.
However, the downward trend in gold is certainly testing that decision. Shares of Randgold are down 12.44% since I added them to the 50 Stocks Portfolio on May 14. I expect the third quarter to be better especially with the start of the Tongon mine.