Tipped - Daily Mail Midas coulmn10 Sep 2017 08:37
MIDAS SHARE TIPS: Why now is the right time to join Russia's gold rush with Randgold, Highland and Polymetal going strong
Stockpickers in search of gold companies with a little more of an edge may like to turn their attention to Russia. The country is the third largest producer of gold in the world, mining more than 2,000 tons of the yellow metal in the past ten years alone.
Government ministers are highly supportive of the industry too, hoping to increase production materially over the next decade.
But a number of large investors worry about the country and fight shy of putting their money into Russian gold miners. Their reluctance is ironic, given that most are perfectly happy to invest in African mining stocks, which have a far greater propensity to suffer from political about-turns.
For shareholders prepared to give Russian gold stocks a go, however, the rewards can be handsome, as producers try to overcome market mistrust by offering particularly generous dividends.
For shareholders prepared to give Russian gold stocks a go, the rewards can be handsome
Highland Gold exemplifies this trend. One of the lowest-cost producers, it has three working mines and a string of future projects. It produced just over 260,000 ounces of gold last year, delivered turnover of $306 million (£234 million), a net profit of $47 million and a dividend of 10p.
The Russian rouble has strengthened by about 15 per cent against the dollar this year, which hits Highland, as most of its costs are in roubles and most of its sales are in the US currency. Nonetheless, chief executive Denis Alexandrov said at the half-year results last week he was confident of meeting full-year guidance and committed to returning cash to shareholders.
Analysts expect turnover to stay broadly flat this year and profits to fall slightly but they have pencilled in another dividend of 10p. With the shares at 157p, that puts the stock on a yield of more than 6 per cent.
Turnover and profit are both set to rebound strongly in 2018, with the dividend likely to rise to at least 11p. Chelsea Football Club owner Roman Abramovich and his cronies are big shareholders in Highland, which scares some investors. But the firm has been listed on Aim since 2002 and should deliver strong profit in coming years.
Read more: http://www.thisismoney.co.uk/money/investing/article-4868340/MIDAS-SHARE-TIPS-join-Russia-s-gold-rush.html#ixzz4sFstMNRP
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