FTSE 100 boosted by miners Xstrata and Randgold shares rising on dividends

Xstrata saw its revenue decline 16 per cent to $23.5 billion in the year ended 31 December, while operating profit fell 38 per cent to $4.47 billion.

Despite the decline Xstrata said it would be paying a dividend to shareholders again for the first time in 18 months. The dividend was set at eight cents per share.

Randgold Resources had a more profitable year, with the company today announcing a profit of $84.3 million, up 79 per cent from the previous year. The rise in profits was attributed to record gold production at its Loulo operation.

The final quarter of 2009 saw Randgold make a profit of $38.7 million, up 185 per cent from the previous quarter and up 315 per cent from the same period the previous year.

The sparkling performance led Randgold to increase its annual dividend by 30 per cent to 17 cents per share.

Both miners saw their shares rise dramatically in early trading. By 10:16 shares in Xstrata were up 3.43 per cent to 981.80 pence per share while Randgold shares were up 5.73 per cent to 4,450.00 pence per share. The FTSE 100 overall was up only 0.37 per cent.

Mark Bristow, Chief Executive of Randgold Resources, said, “The year ahead is going to be another testing one, in which we aim to increase production at Loulo further, pour first gold at Tongon and progress the Kibali, Massawa and Gounkoto projects. We’ll also be maintaining our strong focus on the exploration programmes which have already delivered so much and will continue to be the main driver of our organic growth.”

Mick Davis, Chief Executive of Xstrata, said, “In my opinion, the medium term outlook for commodity demand remains very promising, driven by the ongoing urbanisation and industrialisation of high-growth, populous economies, with China and other industrialising countries taking active steps to rebalance their economies towards domestic consumption-led growth over the next decade. There are a number of risks that must be carefully managed on the path to a sustainable OECD recovery. However, many of the short- and medium-term leading indicators we monitor are showing signs of recovery, notwithstanding the fact that credit expansion in OECD economies remains sluggish. In time, the return to a more normalised level of growth of OECD economies will add further impetus to the growth of the global economy and commodity demand.

“Against this background, the shift of emphasis in Xstrata’s strategy to a phase more dominated by organic growth is timely and coincides with our view that the supply of many commodities will struggle to keep pace with demand growth.