Randgold proposes buyback (July 09, 2001)

It’s not the kind of thing that happens often in the gold industry, but Johannesburg-based Randgold Resources has proposed a mandatory buyback of part of its issued capital.

The company is offering to repurchase up to 11.8 million shares at US$7. The buyback, which would cost US$82.8 million, represents just over 34% of the issued shares.

Randgold’s board is seeking shareholder approval of the buyback at the company’s annual meeting, on July 23. Mining house Randgold & Exploration (RANGY-Q), which owns 61.3% of Randgold Resources, is voting its shares in favour of the proposal. The parent company, which is looking to pay back a US$48-million convertible bond issue in September, would get about US$50 million in cash from the buyback.

Randgold Resources itself had just over US$68 million in cash at the end of March. There were US$36.6 million in gold and receivables. Payables and other current liabilities were US$30.7 million. The company plans to finance the share purchase from existing cash and from a new loan facility.

Randgold’s Morila mine in western Mali, which the company holds in a joint venture with AngloGold (AU-N) and the government of Mali, has accumulated US$44 million in cash since it opened in October 2000.

With lenders’ completion tests under way, Randgold expects to receive a cash distribution before the end of the year.