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Randgold Resources and Acacia Mining both ‘buys’. Here's why...

Published: 10:14 20 Feb 2017 GMT

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UBS analysts have drilled into gold plays Randgold and Acacia Mining

There was a boost for both Randgold Resources Ltd (LON:RRS) and Acacia Mining plc (LON:ACA) following notes from the heavyweight resources team at UBS.

Both remain on the ‘buy’ list, with the latter benefiting from a 20% hike to the price target, which rises to 600p a share from 500p.

It stands to benefit from a stronger gold price and exploration ‘upside’ at the Mara North project in Tanzania, UBS said.

Of the ten analysts logged as following Acacia by the Brokerforecasts site, seven have ‘buy’ recommendations on the stock.

UBS’s note on Randgold, meanwhile, gave the Swiss bank’s thoughts on the potential payout from what has essentially become a cash cow of a gold investment.

It thinks the market is still underestimating the firm’s ability to boost shareholder returns.

Currently City analysts are predicting a 50%-plus hike to the dividend. Maintaining the current US$500mln the miner has in the bank, Randgold has the capacity to double the divi payment from free cash flow, according to USB.

It repeated its ‘buy’ stance, but raised its price target £10 a share to £85.

“We believe Randgold could sustain a dividend yield greater than 5% medium term,” the broker said in a note to clients. 

“In our view, this differentiates Randgold versus most of the global gold majors, which are likely to have to lift capex to sustain production, preventing a material increase in dividends.”

Ten of the 12 analyst following the company are ‘buyers’ of the stock. The consensus price target currently sits at just above £80 a share

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