Prime Markets sees substantial upside potential at gold miner Randgold Resources following the company's fourth-quarter report on Monday.

The firm unveiled a 16% increase in full-year profit to $511m for 2012, with gold production up 15% year-on-year to 794,844 ounces. The dividend was also raised by 25% to 50 cents per share.

Even its Loulo-Goukoto mine in Mali, where French Malian forces are battling against al Qaeda-linked Islamists in the north of the country, managed to exceed its full-year production target. Meanwhile, its Tongon mine which was hit by a fire in December, has been resorted to full production.

"As the FTSE 100's pure gold play, not only has Randgold Resources had to battle with a languishing Gold price, but it is still facing potential disruption at its flagship Loulo-Gounkoto mine in Mali as the French forces battle with al Qaeda-linked Islamists, and production at its Tongon mine in December as a result of a fire," said Richard Curr, the head of dealing at Prime Markets.

"All things considered, to produce a 16% increase in profits is a testament to the organisational skills of the management team led by very able CEO Mark Bristow. Given that the share price falls since October have arguably factored in the uncertainty over Mali conflict, the reassurance from Bristow and his team that Randgold is on target to produce 1.2m ounces of gold by 2015 is good enough for Prime Markets."

Curr said that as long as the shares close above the benchmark 200-day moving average (currently at 6,248p), a push higher to test the "November and December triple high" of 6,550p is likely in the next seven to 10 days.

Shares were up 5.01% at 6,390p by 14:52 on Monday.

BC

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