Option Trade 
Randgold Resources Ltd. (ADR) (NASDAQ:GOLD) Calls 
Wednesday, 11th May, 2016

** OPTION TRADE: Buy the GOLD Sept 2016 95.000 call at approximately $3.90. Place a pre-determined sell at $7.80.

Note: No protective stop losses added -- but if you wish to do so make it $1.55.

by Ian Harvey

May 11, 2016

The FTSE 100 mining sector has been one of the best performaers YTD with returns of almost 30%. And Randgold Resources Ltd. (ADR) (NASDAQ: GOLD), a London-based gold miner with operating gold mines and exploration projects in Mali, Côte d'Ivoire, Democratic Republic of Congo ("DRC") and Senegal, has been one of the most impressive having added over 50% to its’ valuations.

Randgold has been riding on the coat-tails of a bullish gold story. Gold futures had their best quarterly performance since 1986, gaining more than 16% during the first quarter of 2016.

Usually, a strong performance in gold filters through to gold miners like Randgold as it improves margins.

The price of gold may be the most important factor as miners understandably generate larger revenues when commodity prices are higher. However, the efficiency of each mine plays an important role too. The lower the cash cost of operating each mine, the better the margins. This was evident during Rangold's most recent quarterly earnings report, released May 4, as total cash costs dropped 8% from the previous quarter to $648/oz.

The standout performer was Randgold's flagship operation in Loulo-Gounkoto, Mali, which helped offset the technical and commission issues at its other operations, namely the Kibali mine, in the Democratic Republic of Congo and the Tongon Mine, in Côte d'Ivoire. Loulo's outstanding quarter, which includes a 29% reduction in cash cost per ounce, compared to a year earlier, helped boost Randgold's earnings to $0.58.

There is plenty of optimism that Randgold can deliver another period of double-digit capital gains with a continued rally in gold prices based on their ability the company to continue improving its cash costs at key operations.

Randgold's CEO, Mark Bristow, reiterated that the miner can continue delivering at current or even lower gold price levels. Randgold has declared a 10% increase in its annual dividend from $0.60 to $0.66 per share; and currently having a multiple of 42 times earnings.

Randgold Resources has a 12-month low of $54.88 and a 12-month high of $101.60. The firm has a market cap of $7.96 billion and a P/E ratio of 42.47. The firm’s 50-day moving average price is $92.57 and its 200 day moving average price is $76.47.

Randgold Resources Ltd.‘s stock had its “hold” rating reissued by stock analysts at Deutsche Bank in a note issued to investors on Monday.

Also, Randgold Resources Limited had its price objective upped by Numis Securities Ltd from GBX 6,000 ($86.41) to GBX 6,500 ($93.61) in a research report released last Thursday morning.

As well, Randgold Resources Limited‘s stock had its “hold” rating reissued by stock analysts at Jefferies Group in a report issued last Thursday.

Harvey’s Options Volatility Indicator

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

** OPTION TRADE: Buy the GOLD Sept 2016 95.000 call at approximately $3.90. Place a pre-determined sell at $7.80.

Note: No protective stop losses added -- but if you wish to do so make it $1.55.

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.



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