Randgold and Xstrata provide fillip for mining shares and FTSE

02/08/2010 (6 h 13 m ago)

Mining groups have given the market a bright start to the week after a couple of positive updates and a rebound in commodity prices. Randgold Resources is leading the way, up 315p to £45.24 as the West African gold miner announced a 79% jump in full year profits. It is also bringing forward the target date for the first production from its recently acquired Kibali project in the Democratic Republic of Congo to January 2014. Investec analysts said: These are a strong set of results in our view driven by good progress at all of the exploration and development projects and a solid final quarter of the year during which cash costs per ounce declined by 8% to $525 an ounce. This was principally due to the impact of improvements to the underground Yalea mine at the company's 80% owned Loulo operation in Mali that accounted for 351,000 ounces of Randgold's production. We believe that the shares are oversold at their current level and therefore move from hold to buy and increase our target price from 5162p to 5220p. Xstrata is 48.7p higher at 998.7p after it restarted dividend payments after an expected 41% fall in full year profits and a positive outlook for commodity prices. Anglo American added 48p to £23.22 after its subsidiary Anglo Platinum announced a $1.63bn rights issue to help pay off debt. Miners in general were also lifted by rising metal prices following recent weakness. Copper for example is up around 3% on a combination of a weaker dollar and some bargain hunting. With the help of the miners, the FTSE 100 is now 47.07 points higher at 5107.97. But there is still some nervousness around the state of various European economies. Philip Shaw at Investec said: Attention will still focus on Southern Europe's budgetary problems. In this context, note that Euro area fourth quarter GDP figures are due at the end of the week. In the UK, Wednesday's Bank of England Inflation Report is the key macro event, with last week's announcement by the monetary policy committee appearing relatively downbeat with respect to recovery prospects. Elsewhere International Power has moved 10.9p higher to 324.8p on revived talk of interest from France's GDF Suez. Randgold Resources Xstrata Anglo American International Power Nick Fletcher guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds

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