Jersey, Channel Islands -- (MARKET WIRE) -- February 5, 2007 --
RANDGOLD RESOURCES LIMITED
Incorporated in Jersey, Channel Islands
Reg. No. 62686
LSE Trading Symbol: RRS
Nasdaq Trading Symbol: GOLD
RANDGOLD RESOURCES POSTS 54% INCREASE IN PROFIT BEFORE TAX, DECLARES DIVIDEND
London, 5 February 2007 - LSE and Nasdaq listed gold miner Randgold Resources
today reported a 54% increase to US$74 million in profit before tax for the 12
months to 31 December 2006, fuelled by the first full-year contribution from its
Loulo operation in Mali and a higher gold price.
Net profit was up 6% at US$51 million against 2005's restated figure. This was
in spite of a tax charge of US$23.1 million, the company's share of its Morila
joint venture's first full year of corporate taxation. Earnings per share were
70 cents. Attributable production rose for the third successive year from 314
831 ounces in 2005 to 399 927 ounces (448 242 ounces assuming 100% of Loulo
production). Total cash costs for the year averaged US$296 per ounce, up from
2005's US$201, mainly due to the lower grade, but were still well below the
industry average of US$350.
The company ended the year with cash of US$143 million after expenditure of
US$29 million on exploration and corporate costs, US$32 million on the
completion of the Loulo plant and additions, US$18 million on the Yalea
underground development and another US$19 million on repaying the first third of
the Loulo project finance.
In view of the strong cash flows from operations and the company's robust
balance sheet, the board decided to declare a dividend of 10 cents per share,
totalling a pay-out of US$6.9 million.
Chief executive Mark Bristow said the initiation of dividend payments was a
major milestone in the development of Randgold Resources as a profitable
business.
Loulo finished the year with an excellent quarter, increasing production by 20%
from the previous quarter's level on the back of continued operational
improvements. Despite delays caused by the late commissioning of the hard rock
crushing circuit, production for the year was only marginally below target at
241 575 ounces. The higher average gold price received of US$601 per ounce was
partly offset by the effect of delivering 66 922 ounces into the hedge at US$434
per ounce. Profit from mining activity for the first full year of production
was US$57.5 million and net profit was US$16.2 million.
"All in all, it's been a very satisfactory year for Loulo, thanks to outstanding
performances by our capital and operational teams. The operation has settled
down to a solid state and the focus now is on achieving further efficiencies and
improving cost control," Bristow said. Production at Loulo is scheduled to
exceed 250 000 ounces in 2007 from its two open-pit mines.
In the meantime, the development of the Yalea underground mine at Loulo is
progressing rapidly. Construction of the boxcut is almost complete and decline
development started with the first blast into hard rock on 22 December last
year. First ore is expected to be accessed towards the end of this year, with
full production scheduled for 2009. Development of Gara, Loulo's second
underground mine, is due to start at the beginning of 2009 with first ore
delivered to the plant by the end of that year. The recently completed redesign
of Gara has doubled its reserve. The two underground mines are expected to not
only extend Loulo's life but to boost its annual production to more than 400 000
ounces by 2011.
Elsewhere in Mali, Morila produced 516 667 ounces for the year, below 2005's
level as a result of lower grades, but in line with expectations. After some
operational problems in the second and third quarters, a record throughput was
achieved in October and the plant is currently operating at its full expanded
capacity. Morila is slated to produce around the 500 000 ounce level again in
2007. Morila has no debt and no hedging.
In Cote d'Ivoire, a 30 000 metre drilling programme which will form the basis
for a feasibility study on the development of a mine is underway at the
company's 3 million ounce Tongon project.
On the exploration front, Randgold Resources now has 128 targets on 20 414km(2)
in six countries in West and East Africa. In addition to the work being done at
Loulo and Tongon, the company plans to drill advanced targets in Burkina Faso,
Senegal and Tanzania. It has recently also established a generative team to
assess the countries in which the company does not already have a presence with
a view to identifying opportunities there.
"The substantial profit and production increases of the past year reflect the
continuing success of our organic growth strategy. With two established and
robust operations, one underground mine in development and another waiting in
the wings, a feasibility stage project at Tongon and a pipeline of quality
prospects, we are strongly placed to sustain our business in 2007 and beyond,"
Bristow said.
"In the year ahead we'll be looking to extract the maximum benefit from Loulo
and Morila while progressing the Yalea underground development and advancing our
other projects and prospects. We'll also be keeping a close eye on costs.
Pressures produced by the weak dollar, high oil and steel prices and rising
contract mining costs are currently being felt throughout the industry. As far
as Randgold Resources in particular is concerned, our mines are in remote areas
and have to generate their own power from diesel-fired generators, and the rise
in the diesel price means that this now accounts for 25% of our total production
costs. Keeping these costs under control through improved efficiencies, good
housekeeping and tight management will therefore be a key focus for 2007."
RANDGOLD RESOURCES ENQUIRIES:
Chief Executive - Dr Mark Bristow, +44 779 775 2288, +223 675 0122
Financial Director - Roger Williams, +44 791 709 8939, +223 675 0109
Investor & Media Relations - Kathy du Plessis, +27 11 728 4701,
Fax: +27 11 728 2547, Cell: +27 83 266 5847, Email: randgoldresources@dpapr.com
Website: www.randgoldresources.com
------------------------------------------------------------------
REPORT FOR THE QUARTER AND YEAR ENDED 31 DECEMBER 2006
* Profit before tax up 54% year on year
* Net profit up at US$51m despite first year full tax
charge of US$23m
* Loulo mine delivers robust results with an increase in gold
production and starts Yalea underground development
* Mine redesign doubles Gara underground reserves
* Morila weighs in with another solid contribution for the
year but down on the quarter and year on year production
* Tongon moves to bankable feasibility on the back of an
aggressive drilling programme
* Exploration adds ounces in Mali and produces results out of
Burkina Faso
* Board declares dividend
SUMMARISED FINANCIAL INFORMATION
Unaudited
Unaudited Unaudited quarter
quarter quarter ended
ended ended 31 Dec
31 Dec 30 Sept 2005
US$000 2006 2006 Restated)+
Gold sales# 68 857 63 178 60 553
Total cash costs* 38 125 32 504 29 820+
Profit from mining activity* 30 732 30 674 30 733+
Profit before income tax 15 763 18 302 17 179+
Net profit 10 790 12 746 17 009+
Net profit (as previously reported) n/a n/a 12 426
Net profit attributable
to equity shareholders 9 980 12 285 14 660+
Net cash generated from operations 8 645 17 818 13 486
Cash and cash equivalents 143 356 155 320 152 452
Attributable production(S) 116 821 107 002 126 404
Group total cash costs
per ounce*(S) (US$) 326 304 236+
Group cash operating
costs per ounce*(S) (US$) 288 265 204+
SUMMARISED FINANCIAL INFORMATION (cont'd)
Unaudited
Unaudited 12 months
12 months ended
ended 31 Dec
31 Dec 2005
US$000 2006 (Restated)+
Gold sales# 262 717 151 502
Total cash costs* 132 540 65 939+
Profit from mining activity* 130 177 85 563+
Profit before income tax 73 973 48 026+
Net profit 50 876 47 856+
Net profit (as previously reported) n/a 40 887
Net profit attributable to equity shareholders 47 564 45 507+
Net cash generated from operations 70 410 29 736
Cash and cash Equivalents 143 356 152 452
Attributable production(S) 448 242 328 428
Group total cash costs per ounce*(S) (US$) 296 201+
Group cash operating costs per ounce*(S) (US$) 258 169+
# Gold sales does not include the non-cash profit/(loss)
on the roll forward of hedges.
* Refer to explanation of non-GAAP measures provided.
(S) Randgold Resources consolidates 100% of Loulo and 40%
of Morila.
+ Restated due to change in accounting policy relating to
deferred stripping. See note on accounting policies.
n/a Not applicable.
COMMENTS
The figures for the year reflect the successful progression of the company's
growth strategy. Profit before tax was up from US$48 million to US$74 million
for the year. This was the first full year of corporate tax at Morila and the
group incurred an income tax charge of US$23.1 million for the year (2005:
US$0.2 million). The tax charge was however offset by the increased profit from
mining activity. Net profit for the year of US$50.9 million was up by 6% when
compared to the prior year (restated). The main factors in the improved profit
were the first full year of production at Loulo and higher gold prices. These
elements were partially offset by lower grades resulting in lower production at
Morila and increased costs, as has been experienced by most of the industry this
year. Gold prices averaged US$604/oz compared to US$445/oz in 2005.
Attributable production (taking 80% of Loulo) was up for the third successive
year at 399 927 ounces in 2006, (448 242 million ounces assuming 100% of Loulo
production) compared to 314 831 ounces in 2005 and 204 194 ounces in 2004.
Earnings per share of 70 cents is in line with the 74 cents of 2005 (restated)
and up on 32 cents in 2004.
Cash operating costs for the group were US$258/oz up from US$169/oz in 2005
(restated). After royalties, total cash costs for the group were US$296/oz for
the year compared to US$201/oz in 2005 (restated). This compares to an average
for the industry which is now over US$350/oz. Industry wide cost pressures have
continued this year resulting from the weak dollar, high diesel and steel prices
and contract mining costs. The company's mines are in particularly remote
locations and the mines produce power from diesel fired generators. This, with
the diesel required for the mining fleet, meant that diesel comprised 25% of the
production costs in the year. Contract mining costs make up over 30% of
production costs and have also experienced inflationary pressures as demand for
mining equipment has led to a supply deficit which has pushed up costs. Despite
these cost pressures, costs have been well controlled at both locations and the
lower grade processed is the main factor in the increased cost per ounce.
Grades have decreased from 5.9g/t in 2005 at Morila to 4.2g/t this year, and at
Loulo from 4.5g/t to 3.2g/t as per the respective Life of Mine plans.
Expenditure on exploration and corporate costs continues to be an important
investment with US$29 million being spent in the year compared to last year's
US$24 million. Extensive drilling programmes were undertaken in all countries
in which we operate except for Ghana.
The company's cash position remains very healthy with U$143 million cash on the
balance sheet and debt of US$53 million. Net funds have improved from last year
despite the significant expenditure on exploration and corporate costs, US$31.7
million being spent on completion of the Loulo capital project, US$28.8 million
on exploration and corporate costs and US$17.6 million being spent on
underground equipment and the commencement of the decline shaft sinking at
Loulo. US$19.2 million of the US$60 million project financing was paid back
during the year.
The board has declared a dividend for the 2006 year of US$6.9 million or 10
cents per share. A separate announcement is being issued simultaneously with
these results.
The results for the fourth quarter of 2006 were impacted by a number of items:
Loulo finished the year with an excellent quarter increasing production by 20%
compared to the previous quarter, mainly due to operational improvements. This
was partially offset by lower production due to lower grades from Morila.
Total cash costs were impacted by a provision of US$1.3 million against slow
moving Loulo and Morila debtors relating to reimbursable indirect taxes which
have been discounted to reflect the expected settlement dates. These provisions
increased total cash costs for the group by US$11/oz for the quarter.
Cash costs were reduced at Loulo from US$350/oz during the previous quarter to
US$326/oz during the final quarter due to the productivity improvements and the
higher grade which was 3.7g/t up from 3.2g/t.
At Morila, cash costs were up from US$251/oz to US$327/oz due to lower grades
and the year end provisions for slow-moving debts which have been discounted
that amounted to US$23/oz.
OPERATIONS
Loulo
Despite the delays caused by the late commissioning of the hard rock crushing
circuit throughput was maintained at levels above the design specification.
This resulted in production of 241 575 ounces for the year, only marginally
below expectations, mainly as a result of not being in a position to feed as
much of the originally planned higher grade harder ore stream.
The higher average spot gold price received of US$601 offset by the effect of
delivering 66 922 ounces into the hedge at an average US$434 per ounce resulted
in revenue of US$136.8 million for the year. Cash operating costs of US$294/oz
for the year are up from the previous year which reflected only two months of
oxide operations. This resulted in profit from mining of US$57.5 million for
the first full year of operation at Loulo and a net profit of US$16.2 million
after deducting depreciation, financing costs and exploration.
The Loulo operation has settled down to a steady state during the year and the
focus in 2007 will be on the optimisation of the process and improving cost
control given the cost pressures impacting the industry particularly with
respect to grinding media, reagents and power generation consumables.
The mining contractor moved a total of 18.4 million tonnes at a strip ratio of
6.2:1 waste to ore during the year after problems with loading equipment were
attended to in the last six months of the year. As part of an exercise to
curtail the effect of rising contractor costs, all rise and fall formulae will
be reviewed to ensure that these only take into account inflationary amounts and
not contractor inefficiencies.
Production statistics are:
Loulo results
Quarter Quarter Quarter
ended ended ended
31 Dec 30 Sept 31 Dec
2006 2006 2005
Mining
Tonnes mined (000) 4 953 4 830 4 149
Ore tonnes mined (000) 610 784 537
Milling
Tonnes processed (000) 655 588 551
Head grade milled (g/t) 3.7 3.2 4.5
Recovery (%) 95.2 95.2 94.3
Ounces produced 68 501 57 123 67 984
Average price received (US$/oz) 546 548 499
Cash operating costs*(US$/oz) 293 317 137
Total cash costs* (US$/oz) 326 350 165
Profit from mining activity(US$000)* 15 268 11 125 19 485
Gold sales*+ 37 592 31 110 30 688
Loulo results (cont'd)
12 months 12 months
ended ended
31 Dec 31 Dec
2006 2005
Mining
Tonnes mined (000) 18 362 12 096
Ore tonnes mined (000) 2 547 1 213
Milling
Tonnes processed (000) 2 595 551
Head grade milled (g/t) 3.2 4.5
Recovery (%) 93.9 94.3
Ounces produced 241 575 67 984
Average price received (US$/oz) 556 499
Cash operating costs*(US$/oz) 294 137
Total cash costs* (US$/oz) 328 165
Profit from mining activity (US$000)* 57 534 19 485
Gold sales*+ 136 765 30 688
Randgold Resources owns 80% of Loulo with the Government of Mali owning 20%.
The Government's share is not a free carried interest. Randgold Resources has
funded the Government portion of the investment in Loulo by way of shareholder
loans and therefore controls 100% of the cash flows from Loulo until the
shareholder loans are repaid.
Randgold Resources consolidates 100% of Loulo and then shows the minority
interest separately.
* Refer to explanation of non-GAAP measures provided.
+ Includes the impact of 27 158 ounces delivered into the
hedge at US$434/oz for the quarter ended 31 December 2006
and 66 922 ounces at US$434/oz for the year ended
31 December 2006.
Morila
Morila produced 516 667 ounces of gold for the year, below 2005's production as
expected as a result of moving to lower grade areas of the pit. Mining
production dropped in the second half of the year as a result of poor fleet
availability but remedial action had been put in place by the year end. Plant
monthly throughput in the second and third quarters slipped to levels below
design capacity but production levels have now been restored and in the October
month a record throughput of 372 463 tonnes was achieved and the plant is now
operating at full expanded capacity.
Costs were reasonably well contained given prevailing increases in input costs.
Cash operating costs, before adjusting for exceptional costs relating to
provisions on indirect taxes, were US$215/oz up from last year's costs of US$178
/oz (restated). Total cash costs were US$327/oz for the quarter and US$258/oz
for the year after the adjustments discussed above.
Morila results
Quarter
Quarter Quarter ended
ended ended 31 Dec
31 Dec 30 Sept 2005
2006 2006 (Restated)+
Mining
Tonnes mined (000) 4 585 4 862 6 798
Ore tonnes mined (000) 911 1 261 2 199
Milling
Tonnes processed (000) 1 086 1 007 946
Head grade milled (g/t) 3.7 4.2 5.2
Recovery (%) 92.5 90.8 90.8
Ounces produced 120 801 124 698 146 049
Average price received (US$/oz) 623 622 485
Cash operating costs* (US$/oz) 282 206 282+
Total cash costs* (US$/oz) 327 251 319+
Profit from mining activity(US$000)*38 660 48 872 28 120+
Attributable (40% proportionately
consolidated)
Gold sales 31 265 32 068 29 865
Ounces produced 48 320 49 879 58 420
Profit from mining activity(US$000)*15 464 19 549 11 248+
Morila results (cont'd)
12 months 12 months
ended ended
31 Dec 31 Dec
2006 2005
Mining
Tonnes mined (000) 21 512 24 554
Ore tonnes mined (000) 5 242 7 041
Milling
Tonnes processed (000) 4 138 3 763
Head grade milled (g/t) 4.2 5.9
Recovery (%) 91.9 91.7
Ounces produced 516 667 651 110
Average price received (US$/oz) 609 449
Cash operating costs* (US$/oz) 215 178+
Total cash costs* (US$/oz) 258 210+
Profit from mining activity (US$000)* 181 607 165 195+
Attributable (40% proportionately consolidated)
Gold sales 125 952 120 814
Ounces produced 206 667 260 444
Profit from mining activity (US$000)* 72 643 66 078+
* Refer to explanation of non-GAAP measures provided.
+ Restated due to change in accounting policy related to
deferred stripping. See note on accounting policies.
The resource base for Morila as at end 2006 is tabulated below with a comparison
to figures as at end 2005. After resource depletion as a result of mining
activities during the year, remaining resources are less than last year's as a
result of changes to the orebody model.
An updated reserve statement will be published as part of the group's annual
resource/reserve tabulation at the end of the first quarter of 2007.
Morila Resources - 31 December 2006
Measured, indicated and inferred mineral resources
Tonnes Tonnes Grade
(Mt) (Mt) (g/t)
Category 2006 2005 2006
Measured 20.54 20.06 3.44
Indicated 9.50 14.01 3.34
Sub-total Measured and Indicated 30.04 34.07 3.41
Inferred 3.09 3.78 3.31
(cont'd)
Attribut-
able
Grade Gold Gold gold
(g/t) (Mozs) (Mozs) (Mozs)
Category 2005 2006 2005 (40%)
Measured 2.73 1.50 1.76
Indicated 3.00 1.02 1.35
Sub-total Measured and
Indicated 2.84 2.52 3.11 1.01
Inferred 3.19 0.33 0.39 0.13
PROJECTS AND EVALUATION
LOULO UNDERGROUND DEVELOPMENT PROJECT
Yalea
Excavation and construction of the boxcut for the Yalea underground development
made good progress during the quarter. The inauguration ceremony for the Yalea
underground mine was held on 17 October 2006. Bedrock was exposed during
November and the first blast into solid rock initiated the twin decline
development on 22 December.
Most of the underground heavy vehicle fleet equipment has been delivered to
site. A maintenance agreement was reached with Manutention Africaine (the local
Caterpillar dealership) for a service contract for 2007.
Gara
During the quarter, the proposed mine was redesigned and a mining schedule was
prepared for the Gara underground mine based on the increase of resources by 800
000 ounces. The latest resource totals 25 million tonnes at 4.11g/t for 3.3
million ounces.
The redesign for Gara has been based on the Yalea design with a production rate
increase to 100 000 tonnes per month (previously 60 000 tonnes per month).
A twin ramp system, developed from the open pit instead of a boxcut, one towards
the north and the other towards the south, will divide the underground mine in
two separate mining and ventilation districts. A conveyor belt system will be
used to transport ore and waste out of the mine rather than the conventional
truck transport and waste passes will be developed from inside the pit to
facilitate backfill.
Based on the enlarged resource and this re-design, the total underground ore
reserve for Gara now amounts to 11.12Mt at a grade of 3.87g/t for total gold of
1.38 million ounces an increase of 720 000 ounces over the previous reserve. It
is currently expected that the development of the Gara underground mine will
commence early in 2009 with first ore delivered to the plant at the end of 2009.
TONGON PROJECT
The team is progressing with the implementation of a 30 000 metre drilling
programme at the Tongon project which will form the basis for a feasibility
study on the development of the mine. A further suite of metallurgical sampling
has been scheduled in order to better characterise the ore and develop the
detailed flow sheet and plant design required for the bankable feasibility
study.
EXPLORATION ACTIVITIES
The quarter brought to an end a very busy and fruitful year in exploration,
which resulted in a continual addition of resources at Loulo, reactivation of
field activities in the Cote d'Ivoire on the 3 million ounce Tongon project, a
promising target in Burkina Faso and a pipeline of exploration targets across
six African countries.
At Loulo, reconnaissance drilling at the Gara deposit, up to 400 metres south of
the current wireframe, has confirmed gold mineralisation associated with a blind
antiformal fold closure. L0CP117: 5.80 metres at 3.18g/t from 333 metres;
L0CP118: 4.76 metres at 0.64g/t from 409 metres and 6.15 metres at 1.39g/t
(including 1.20 metres at 3.70g/t) from 459 metres.
Also on the Loulo mining permit, Faraba is part of a 10 kilometre anomalous
structural corridor at surface. Drilling has so far tested a 3 kilometre strike
and identified two mineralised pods; a main zone of 360 metres long with an
average thickness of 43 metres and an average grade of 2.6g/t to vertical depths
of between 100 and 200 metres below the surface. An inferred resource of 6.8
million tonnes at a grade of 2.6g/t for 567 000 ounces has been outlined. The
northern zone is 600 metres long, 12 metres wide and an average grade of 2.2g/t.
Drilling is planned in 2007 to further test the north and main zones together
with an evaluation of the 10 kilometre corridor where an additional 14 dilation
zones have been mapped.
During December, a 23 hole, 2 368 metre RC drilling programme was completed over
a strike length of 1.3 kilometres at Baboto South, in the north of the Loulo
permit. Gold mineralisation is associated with both massive and disseminated
pyrite and is hosted in silica/carbonate altered sandstones between hangingwall
and footwall shears. The results delineated mineralisation over the strike
length, with an average width of 15 metres and grade of 1.8g/t to vertical
depths of 95 metres.
The Baboto structure is part of a large plus 5 kilometre mineralised structure
which hosts the known targets of Baboto South, Central and North. The targets
are open in all directions and combined air and core drilling methods will be
employed during 2007 to test the strike extensions as well as the potential for
plunging high-grade shoots.
To increase the company's knowledge and understanding of the Loulo mineralised
district a three year PhD research thesis is being undertaken in conjunction
with Kingston University, London, England.
At Morila the regional drilling completed 89 holes for 44 045 metres. The
results, although failing to identify an additional deposit, have so far
intersected the low-grade (plus 0.1g/t) footprint to the deposit. This data
will be used as a vector for follow-up holes to target for higher-grade
mineralisation.
Drilling at the Samacline target, approximately 500 metres to the west of the
pit and some 400 metres below surface, has also continued during the year. On
completion of the current drilling programme a scoping study designed to test
amenability of the deposit to a small underground mining operation will be
completed.
A six month post doctoral research project has been set up through the Geology
Department of the Australian National University and the Research School of
Earth Sciences. The aim of this study is to understand the relationship of gold
mineralisation to high-grade metamorphism and partial melting of the surrounding
sediments. Preliminary results indicate an ore genesis related to the contact
thermal aureole of an igneous intrusive.
In Mali South, a 40 by 40 kilometre ground gravity survey has been completed,
centred over the Morila deposit. The results return an arcuate anomaly
immediately south of the deposit and both to the northeast and northwest of the
grid. Modelling is attempting to estimate the depth and type of geological body
responsible for these results.
In Senegal, a 10 000 metre RAB drilling programme has commenced to evaluate 12
targets. This will help in prioritising additional targets to Delya, Bambaraya
and Sofia for diamond drilling later in the year.
In Ghana, good progress has been made with the completion of first pass regional
exploration programmes over Randgold Resources' portfolio of four permits; three
of these permits are in the process of being relinquished following
unprospective results while the remaining one, Bole in the north of the country,
has returned a 14 kilometre long anomalous, in gold, corridor associated with a
major regional shear at the contact between granite and greenstone.
Burkina Faso is showing promise following further drilling at Kiaka which has
identified a 3 kilometre long mineralised system, within which locates a 1.2
kilometre continuous zone of gold mineralisation, 800 metres of which is 100 to
200 metres wide, grading at 0.8g/t to 1.6g/t and has been drill tested to
vertical depths of 200 metres; it is open in all directions. The best intercept
returned to date is from KDH05: 73 metres at 2.14g/t (from 41 metres) including
11 metres at 3.40g/t (from 44 metres) and 14 metres at 3.00g/t (from 58 metres).
Infill and step out drilling are planned to commence in February. Elsewhere
on our 2 000km(2) permit portfolio, regional programmes are identifying targets
for follow-up work in the coming year.
In the Cote d'Ivoire, with the political situation remaining calm preparations
are nearly complete to commence the 30 000 metres feasibility drilling in
February.
In Tanzania, generative work is the driver to build a new portfolio of projects;
the team is relooking at the Southern Lake Victoria Goldfield, the Proterozoic
mobile belts and new greenstone belts within the Craton.
To help stimulate the 'next discovery', a dedicated 'African hunting team' has
been established and commenced a review of the potentially prospective and newly
emerging countries on the African continent.
In summary, the company has a quality portfolio of exploration projects in both
West and East Africa. It is in a good position to continue its business
strategy of organic growth through exploration and its primary objective of
discovery and development of world class gold mining projects with the potential
for significant returns. This strategy is attested to by Randgold Resources'
discovery and development track record, which includes the Morila and Yalea
deposits, both operating mines in Mali and the plus three million ounce Tongon
project, which is commencing final feasibility stage in the Cote d'Ivoire.
CONSOLIDATED INCOME STATEMENT
Unaudited
Unaudited Unaudited Quarter
Quarter Quarter ended
ended ended 31 Dec
31 Dec 30 Sept 2005
US$000 2006 2006 (Restated)+
REVENUES
Gold sales on spot 73 777 67 205 60 553
Loss on matured hedges (4 920) (4 027) -
Non-cash profit/(loss)
on roll forward of hedges 287 577 -
Total 69 144 63 755 60 553
OTHER INCOME
Interest income 1 692 1 889 1 067
Other income 64 550 194
Total other income 1 756 2 439 1 261
Total income 70 900 66 194 61 814
COSTS AND EXPENSES
Mine production costs 29 067 29 673 26 822
Movement in production inventory
and ore stockpiles (852) (3 528) (3 882)+
Depreciation and amortisation 6 532 6 386 4 733
General and administration expenses 5 229 2 079 2 724
Mining and processing costs 39 976 34 610 30 397+
Transport and refinery costs 253 179 162
Royalties 4 428 4 101 3 994
Exploration and corporate
expenditure 7 412 6 768 7 283
Other losses/(gains) - net 330 323 -
Exchange losses/(gains) - net 1 311 296 391
Other expenses - - 1 536
Unwind of discount on
provisions for rehabilitation 289 84 (125)
Interest expense 1 138 1 531 997
Profit before income tax 15 763 18 302 17 179+
Income tax expense (4 973) (5 556) (170)+
Net profit 10 790 12 746 17 009+
Attributable to:
Equity shareholders 9 980 12 285 14 660+
Minority shareholders 810 461 2 349
10 790 12 746 17 009+
Basic earnings per share (US$) 0.15 0.18 0.22+
Fully diluted earnings per
share (US$) 0.14 0.18 0.22+
Average shares in issue (000) 68 695 68 474 65 311
CONSOLIDATED INCOME STATEMENT (cont'd)
Unaudited
Unaudited 12 months
12 months ended
ended 31 Dec
31 Dec 2005
US$000 2006 (Restated)+
REVENUES
Gold sales on spot 274 907 151 502
Loss on matured hedges (12 190) -
Non-cash profit/(loss) on roll forward
of hedges (4 413) -
Total 258 304 151 502
OTHER INCOME
Interest income 7 384 2 064
Other income 1 168 1 303
Total other income 8 552 3 367
Total income 266 856 154 869
COSTS AND EXPENSES
Mine production costs 115 217 66 612
Movement in production inventory
and ore stockpiles (13 373) (18 744)+
Depreciation and amortisation 22 844 11 910
General and administration expenses 13 006 7 438
Mining and processing costs 137 694 67 216+
Transport and refinery costs 711 360
Royalties 16 979 10 273
Exploration and corporate expenditure 28 805 24 049
Other losses/(gains) - net 653 (45)
Exchange losses/(gains) - net 970 2 074
Other expenses 705 801
Unwind of discount on provisions for
rehabilitation 541 254
Interest expense 5 825 1 861
Profit before income tax 73 973 48 026+
Income tax expense (23 097) (170)+
Net profit 50 876 47 856+
Attributable to:
Equity shareholders 47 564 45 507+
Minority shareholders 3 312 2 349
50 876 47 856+
Basic earnings per share (US$) 0.70 0.74+
Fully diluted earnings per share (US$) 0.69 0.71+
Average shares in issue (000) 68 392 61 702
The results have been prepared in accordance with
International Financial Reporting Standards (IFRS).
+ Restated due to change in accounting policy relating
to deferred stripping. See note on accounting policies.
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Unaudited
at at at 31 Dec
31 Dec 30 Sept 2005
US$000 2006 2006 (Restated)+
Assets
Non-current assets
Property, plant and equipment 241 300 237 168 202 636
Cost 297 839 287 175 236 331
Accumulated depreciation
and amortisation (56 539) (50 007) (33 695)
Deferred stripping costs - - -+
Deferred taxation 2 993 2 696 2 957+
Long-term ore stockpiles 41 614 29 522 22 176+
Receivables 13 702 - -
Total non-current assets 299 609 269 386 227 769+
Current assets
Deferred stripping costs - - -+
Inventories and stockpiles 34 200 40 473 34 210+
Receivables 34 999 52 169 47 918
Cash and cash equivalents 143 356 155 320 152 452
Total current assets 212 555 247 962 234 580+
Total assets 512 164 517 348 462 349+
Shareholders' equity 336 063 328 911 301 822+
Minority interest 4 707 3 897 1 395
Total equity 340 770 332 808 303 217+
Non-current liabilities
Long-term borrowings 25 666 36 777 49 538
Loans from minority shareholders
in subsidiaries 2 773 2 663 2 483
Deferred taxation 462 - -+
Financial liabilities -
forward gold sales 39 969 40 128 34 151
Provision for rehabilitation 8 842 9 751 9 480
Total non-current liabilities 77 712 89 319 95 652
Current liabilities
Financial liabilities - forward
gold sales 27 525 22 982 8 939
Current portion of long-term
borrowings 24 818 24 730 22 991
Accounts payable and accrued
liabilities 39 461 42 575 28 813
Taxation payable 1 878 4 934 2 737
Total current liabilities 93 682 95 221 63 480
Total equity and liabilities 512 164 517 348 462 349+
+ Restated due to change in accounting policy relating to
deferred stripping. See note on accounting policies.
Property, plant and equipment increased significantly year on year, mainly due
to the completion of the Loulo capital project and funds being spent on
underground equipment and the decline shaft sinking at Loulo.
The increase in long-term stockpiles relates to Morila, where the current life
of mine plan envisages a build up of stockpiles until mining of the pit stops in
2009. After this, the lower grade stockpiles will be processed.
Significant balances include advances to the main contractor at Loulo, MDM
Ferroman (Pty) Ltd (in liquidation) ("MDM"). MDM was the contractor responsible
for construction of the Loulo mine ("MDM contract"). At the end of 2005, the
company determined that MDM was unable to perform its obligations under the MDM
contract, at which time the company enforced a contractual remedy which allowed
it to act as its own general contractor and to complete the remaining work on
the Loulo project that was required under the MDM contract. As a result of
MDM's failure to perform under the MDM contract, the company believes that it is
entitled to recover from MDM all amounts paid in excess of the lump sum
contract. This comprises payments totalling US$32 million, which have been
capitalised as part of the cost of the project, US$9 million in respect of
damages arising from the delayed completion of the project, and loan agreements
signed by MDM of US$12.1 million included in Receivables. As part of the
company's efforts to recoup the monies owed to it, MDM was liquidated followed
by a South African Companies Act Section 417 investigation into the business
activities of MDM.
Significant uncertainties exist as to the recoverability of the amounts due by
MDM to the company. The directors believe that the group will be able to
recover in full the US$12.1 million included in Receivables. This is dependent
on the amounts which can be recovered from the performance bonds, personal
guarantees and other assets provided as security and, if these amounts prove to
be insufficient, the outcome of the liquidation of MDM. The aggregate amount
which will ultimately be recovered can not presently be determined. The
financial statements do not reflect any additional provision that may be
required if the US$12.1 million cannot be recovered in full.
Recovery of the other US$41 million is dependent on the extent to which the
group's claim is accepted by the liquidator and the outcome of the liquidation
of MDM. The ultimate outcome of this claim cannot presently be determined. The
financial statements do not reflect any reduction to the cost of the Loulo
development that may arise from the claim, any additional income that may arise
from the claim for damages, or any charge that may arise from MDM's inability to
settle amounts that are determined to be payable by MDM to the group in respect
of the Loulo development.
As in the previous year, this significant uncertainty will be the subject of an
emphasis of matter in the auditors' report on the financial statements.
Receivables also includes US$20.3 million relating to reimbursable fuel duties
and TVA owing by the Government of Mali to Morila and Loulo. A provision of
US$1.3 million based on an estimate of the time value of money given the
slow-moving nature of these amounts has been raised this year.
Accounts payable has increased significantly in the year due to the build up of
stores to a normal operating level at Loulo.
The non current receivables of US$13.7 million are those parts of the MDM and
Malian Government receivables which, whilst legally payable immediately, are
anticipated to be reimbursed after more than 12 months.
CONSOLIDATED CASHFLOW STATEMENT
Unaudited
Unaudited 12 months
12 months ended
ended 31 Dec
31 Dec 2005
US$000 2006 (Restated)+
Profit before income tax 73 973 48 026+
Adjustment for non-cash items 29 636 14 367+
Effects of changes in operating
working capital items (18 415) (32 267)+
Income tax paid (14 784) (390)
Net cash generated from operating activities 70 410 29 736
Additions to property, plant and equipment (61 508) (73 217)
Financing of contractors 105 (11 276)
Net cash used by investing activities (61 403) (84 493)
Ordinary shares issued 3 653 105 248
(Decrease)/increase in long-term loans (21 756) 23 721
Net cash (used by)/generated from
financing activities (18 103) 128 969
Net (decrease)/increase in cash and
cash equivalents (9 096) 74 212
Cash and cash equivalents at
beginning of year 152 452 78 240
Cash and cash equivalents at end of year 143 356 152 452
+ Restated due to change in accounting policy relating to
deferred stripping. See note on accounting policies.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Number of Share Share Other
ordinary capital premium reserves
Shares US$000 US$000 US$000
Balance - 31 Dec 2004
(as previously reported) 59 226 694 2 961 102 342 (14 347)
Change in accounting
policy - - - -
Balance - 31 Dec 2004 59 226 694 2 961 102 342 (14 347)
Net income - - - -
Movement on cash flow
hedges -
Transfer to income
statement - - - (45)
Fair value movement
on financial instruments - - - (27 422)
Total recognised
income/(loss) - - - (27 467)
Share-based payments - - - 2 243
Share options exercised 617 260 31 1 838 -
Shares vested# 103 910 6 1 429 (1 429)
Capital raising 8 125 000 406 109 281 -
Costs associated with
capital raising - - (6 308) -
Balance - 31 Dec 2005 68 072 864 3 404 208 582 (41 000)
Net income - - - -
Movement on cash
flow hedges -
Transfer to income
statement - - - 17 256
Fair value movement
on financial instruments - - - (36 603)
Total recognised
income/(loss) - - - (19 347)
Share-based payments - - - 2 369
Share options exercised 633 867 34 3 619 -
Exercise of options
previously expensed under
IFRS2 - - 650 (650)
Shares vested# 56 830 2 802 (802)
Balance - 31 Dec 2006 68 763 561 3 440 213 653 (59 430)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (cont'd)
Total
attribu-
Accum table
ulated to equity Minority Total
profits Share interest equity
US$000 holders US$000 US$000
Balance - 31 Dec 2004
(as previously reported) 100 213 191 169 (954) 190 215
Change in accounting
policy (14 884)+ (14 884)+ - (14 884)+
Balance - 31 Dec 2004 85 329+ 176 285+ (954) 175 331+
Net income 45 507+ 45 507+ 2 349 47 856+
Movement on cash flow
hedges -
Transfer to income
statement - (45) - (45)
Fair value movement
on financial instruments - (27 422) - (27 422)
Total recognised
income/(loss) 45 507+ 18 040 2 349 20 389
Share-based payments - 2 243 - 2 243
Share options exercised - 1 869 - 1 869
Shares vested# - 6 - 6
Capital raising - 109 687 - 109 687
Costs associated with
capital raising - (6 308) - (6 308)
Balance - 31 Dec 2005 130 836+ 301 822+ 1 395 303 217+
Net income 47 564 47 564 3 312 50 876
Movement on cash flow
hedges -
Transfer to income
statement - 17 256 - 17 256
Fair value movement
on financial instruments - (36 603) - (36 603)
Total recognised
income/(loss) 47 564 28 217 3 312 31 529
Share-based payments - 2 369 - 2 369
Share options exercised - 3 653 - 3 653
Exercise of options
previously expensed
under IFRS2 - - - -
Shares vested# - 2 - 2
Balance - 31 Dec 2006 178 400 336 063 4 707 340 770
# Restricted shares were issued to directors as remuneration.
The transfer between "other reserves" and "share premium"
in respect of the shares vested represents the cost
calculated in accordance with IFRS 2.
+ Restated due to change in accounting policy relating to
deferred stripping. See note on accounting policies.
NON-GAAP MEASURES
Total cash costs and cash cost per ounce are non-GAAP measures. Total cash
costs and total cash costs per ounce are calculated using guidance issued by the
Gold Institute. The Gold Institute was a non profit industry association
comprised of leading gold producers, refiners, bullion suppliers and
manufacturers. This institute has now been incorporated into the National
Mining Association. The guidance was first issued in 1996 and revised in
November 1999. Total cash costs, as defined in the Gold Institute's guidance,
include mine production, transport and refinery costs, general and
administrative costs, movement in production inventories and ore stockpiles,
transfers to and from deferred stripping where relevant, and royalties. Under
the company's revised accounting policies, there are no transfers to and from
deferred stripping.
Total cash costs per ounce are calculated by dividing total cash costs, as
determined using the Gold Institute guidance, by gold ounces produced for the
periods presented. Total cash costs and total cash costs per ounce are
calculated on a consistent basis for the periods presented. Total cash costs
and total cash costs per ounce should not be considered by investors as an
alternative to operating profit or net profit attributable to shareholders, as
an alternative to other IFRS or US GAAP measures or an indicator of our
performance. The data does not have a meaning prescribed by IFRS or US GAAP and
therefore amounts presented may not be comparable to data presented by gold
producers who do not follow the guidance provided by the Gold Institute.
In particular depreciation, amortisation and share-based payments would be
included in a measure of total costs of producing gold under IFRS and US GAAP,
but are not included in total cash costs under the guidance provided by the Gold
Institute. Furthermore, while the Gold Institute has provided a definition for
the calculation of total cash costs and total cash costs per ounce, the
calculation of these numbers may vary from company to company and may not be
comparable to other similarly titled measures of other companies. However,
Randgold Resources believes that total cash costs per ounce are useful
indicators to investors and management of a mining company's performance as it
provides an indication of a company's profitability and efficiency, the trends
in cash costs as the company's operations mature, and a benchmark of performance
to allow for comparison against other companies.
Cash operating costs and cash operating cost per ounce are calculated by
deducting royalties from total cash costs. Cash operating costs per ounce are
calculated by dividing cash operating costs by gold ounces produced for the
periods presented.
Gold sales is a non-GAAP measure. It represents the sales of gold at spot and
the gains/losses on hedge contacts which have been delivered into at the
designated maturity date. It excludes gains/losses on hedge contracts which
have been rolled forward to match future sales. This adjustment is considered
appropriate because no cash is received/paid in respect of these contracts.
Profit from mining activity is calculated by subtracting total cash costs from
gold sales revenue for all periods presented.
The following table reconciles total cash costs, profit from mining activity and
profit from operations as non-GAAP measures, to the information provided in the
income statement, determined in accordance with IFRS, for each of the periods
set out below:
Quarter
Quarter Quarter ended
ended ended 31 Dec
31 Dec 30 Sept 2005
US$000 2006 2006 (Restated)+
Gold sales on spot 73 777 67 205 60 553
Loss on matured hedges (4 920) (4 027) -
Gold sales 68 857 63 178 60 553
Mine production costs 29 067 29 673 26 822
Movement in production
inventory and ore stockpiles (852) (3 528) (3 882)+
Transfer from deferred stripping - - -+
Transport and refinery costs 253 179 162
Royalties 4 428 4 101 3 994
General and administration
expenses 5 229 2 079 2 724
Total cash costs 38 125 32 504 29 820+
Profit from mining activity 30 732 30 674 30 733+
(cont'd)
12 months
12 months ended
ended 31 Dec
31 Dec 2005
US$000 2006 (Restated)+
Gold sales on spot 274 907 151 502
Loss on matured hedges (12 190) -
Gold sales 262 717 151 502
Mine production costs 115 217 66 612
Movement in production inventory
and ore stockpiles (13 373) (18 744)+
Transfer from deferred stripping - -+
Transport and refinery costs 711 360
Royalties 16 979 10 273
General and administration expenses 13 006 7 438
Total cash costs 132 540 65 939+
Profit from mining activity 130 177 85 563+
+ Restated due to change in accounting policy relating to
deferred stripping. See note on accounting policies.
ACCOUNTING POLICIES
The financial information in this report has been prepared in accordance with
the group's accounting policies, which comply with IFRS and are consistent with
the prior period, except as noted below.
Joint ventures are those investments in which the group has joint control and
are accounted for under the proportional consolidation method. Under this
method, the proportion of assets, liabilities, income and expenses and cash
flows of each joint venture attributable to the group are incorporated in the
consolidated financial statements under appropriate headings. Inter-company
accounts and transactions are eliminated on consolidation.
The directors have changed the group's accounting policy on deferred stripping
costs, under both IFRS and US GAAP in the current period. Previously, costs of
production stage waste stripping in excess of the expected pit life average
stripping ratio were deferred and then charged to production when the actual
stripping ratio was below the expected pit life average stripping ratio. Under
the revised accounting policy, all stripping costs incurred during the
production phase of a mine are treated as variable production costs and as a
result are included in the cost of the inventory produced during the period that
the stripping costs are incurred.
Under US GAAP, EITF 04-06 'Accounting for Stripping Costs Incurred during
Production in the Mining Industry' is effective for reporting periods beginning
after 15 December 2005. The consensus does not permit the deferral of any waste
stripping costs during the production phase of a mine, but requires instead that
they should be treated as variable production costs. The directors have decided
to adopt the same treatment under IFRS which will ensure that the accounting
policies applied under IFRS and US GAAP remain in line. With regard to the
conclusions reached by the EITF, the directors believe the revised policy will
mean that the financial statements provide reliable and more relevant
information about the group's financial position and its financial performance.
In accordance with the requirements of IAS 8 "Accounting Policies, Changes in
Accounting Estimates and Errors", the change in the IFRS policy has been applied
retrospectively and hence the 2005 comparatives have been restated.
IFRIC Interpretation 4 "Determining whether an arrangement contains a lease" was
adopted during the year. This resulted in certain contracts being classified as
operating leases.
The change in the IFRS accounting policy has resulted in the following
adjustments to the amounts reported under IFRS:
31 Dec 30 Sept 31 Dec
US$000 2006 2006 2005
Decrease in deferred stripping costs 2 115 - 3 687
Decrease in ore stockpiles 6 324 9 150 8 342
Decrease/(increase) in gold in process 36 (11) 51
Decrease in deferred taxation liability 1 227 - 1 227
(Decrease)/Increase in deferred
taxation asset 2 966 311 2 938
Decrease in opening retained earnings 7 915 14 584 14 884
Quarter Quarter Quarter Year Year
ended ended ended ended ended
31 Dec 30 Sept 31 Dec 31 Dec 31 Dec
US$000 2006 2006 2005 2006 2005
(Decrease)/increase
in net profit (126) 580 4 583 3 633 6 969
Increase/(decrease)
in basic earnings per
share (cents per
share) - 1 7 6 12
Increase in fully
diluted earnings
per share (cents
per share) - 1 7 6 11
FORWARD COMMODITY CONTRACTS
The group's hedging position which all relates to the Loulo project financing,
was as follows at 31 December 2006:
Forward sales Forward sales
Maturity date Ounces average US$/oz
Year ended 2007 132 583 438
Year ended 2008 80 496 431
Year ended 2009 84 996 437
Total 298 075 436
The remaining portion of the hedge book represents approximately 33% of planned
production at Loulo for the period that the project finance is in place and 20%
of the group's attributable production. In the current gold price environment,
it is the company's intention to roll out to 2010 some of the 2007 forward sales
contracts to provide some protection during the Loulo underground capital
programme.
Morila's production is completely exposed to spot gold prices.
During the quarter, the company delivered into 27 158/oz of its hedge book at an
average price of US$434/oz and rolled longer-dated 10 580 ounces.
PROSPECTS
Life of mine scheduling at Morila anticipates production for 2007 to be
approximately 500 000 ounces. Morila continues to be a significant cash
generator with no debt and no hedging.
Loulo's 2007 production is scheduled to exceed 250 000 ounces. The underground
development at Yalea is underway and should access first ore towards the end of
2007 with full production due in 2009. Yalea is the first of the two Loulo
underground mines, and is currently a bigger ore body with higher grades than
the Gara deposit. The underground mines are expected to not only add life to
Loulo but to increase levels of annual production to in excess of 400 000 ounces
in 2011.
Total cash costs for the group are estimated to increase year on year between
10% and 15% depending on diesel price assumptions and gold price which impacts
on Mali Government royalties paid.
The final feasibility study has commenced at Tongon. This will take some 24
months and cost around US$10 million.
In the coming year, the group plans to spend similar amounts to 2006 on its
investment in exploration and corporate.
The company plans to retain its focus on organic growth through discovery and
development of world class orebodies. It will also continue to monitor the
market for value creating and or strategic M&A opportunities.
D M Bristow R A Williams
Chief Executive Financial Director
5 February 2007
---------------------------------------------------------------
RANDGOLD RESOURCES UPDATES
GARA EXTENDS LOULO'S LIFE TO 2004
The redesign of the proposed Gara underground mine, based on a resource increase
of 800 000 ounces produced by deep-drilling exploration, has lifted the Loulo
complex firmly into the world-class category.
Gara, which now has an underground ore reserve of 1.38 million ounces, is
scheduled to produce at 100 000 tonnes per month, with development due to start
at the beginning of 2009. This has extended Loulo's reserve life to 2024 and is
estimated to build production from the current 250 000 ounces per year to more
than 350 000 ounces per year for the seven-year period 2009 - 2015, peaking
above 400 000 ounces in 2011 and 2012.
"Loulo has come a very long way since we started developing it," says Adrian
Reynolds, general manager - exploration and evaluation. "It was initially based
on two open pits, Yalea and Gara (then called Loulo 0) and had a mine life of
just over five years on an ore reserve of 11.7 million tonnes at a grade of
3.77g/t for a total gold content of 1.4 million ounces. But we could see
enormous potential in the strike extensions of the known orebodies and also in
the depth extensions under the open pits. While deep drilling is slow and
expensive, we were confident in the continuity of Loulo's gold mineralisation at
depth, analogous to that of the 100-year Obuasi underground mine in Ghana."
The results of the deep drilling have more than justified this confidence,
increasing the Loulo resource base to more than 10 million ounces and
identifying two underground mines to complement the open-pit operations. The
first of these is Yalea, scheduled to produce at 80 000 tonnes per month, and
Gara will be the second.
Development at Yalea is already well underway, with the first blast in hard rock
in December last year marking the start of the decline.
Thinus Strydom, the manager of underground mining at Loulo, notes that Randgold
Resources is in effect building West Africa's first modern mechanised
underground gold mine at Yalea.
"Installing an underground conveyor belt system is a significant innovation
which will enable us to achieve higher production rates. We are also
introducing a number of other advanced techniques such as Reverse Avoca stoping,
backfill for support and forced ventilation," Strydom says.
"While Mali is known for very successful open-pit operations, its underground
experience is limited to the small-scale Kalana mine. The systems and
technologies which we shall be employing at Loulo will build up the underground
mining expertise in Mali to the point where it can challenge Ghana as the mining
capital of West Africa."
RANDGOLD RESOURCES' STRATEGY: THE COMPASS THAT GUIDES ITS GROWTH
Randgold Resources' continued success, reflected again in its results for 2006,
are attributable to the fact that the business is managed for the long-term and
not with one eye on the next quarter and the other on the whims of the market,
says chief executive Mark Bristow.
"Our central strategy is a straightforward one: to grow organically through
discovery and development, because that is inarguably the best way to create
value," he says. "Of course, nowadays exploration is back in vogue and the
virtues of finding deposits rather than buying them are praised throughout the
industry. The difference is that we've always believed this and we put our
money where our mouth was. The substantial investment we made in exploration in
the lean years, when the industry was generally cutting back, is paying off
handsomely for us now, and it will continue to do so for the foreseeable
future."
The commitment to organic growth is not a blinkered one, however, and the
company watches the market closely for corporate growth opportunities. But,
says Bristow, while Randgold Resources' management has carefully evaluated many
of these, it has yet to find one that is truly value creating. The flurry of
mergers and acquisitions that has characterised the industry in recent years, he
notes, has consolidated but not grown it.
Under the umbrella of its central strategy, Randgold Resources' has
sub-strategies for each aspect of the business. There is an overall exploration
strategy, for example, supported by a series of regional strategies. The
company's constantly replenished prospect pipeline attests to their efficacy.
Corporate finance and marketing are other areas where a grand design is
diligently pursued. Success in these fields is demonstrated by the
effectiveness with which the company has funded and managed its major project
developments, as well as by the quality of its share register and the breadth of
its shareholder base.
All these strategies are regularly and rigorously tested. A strategy should
only be adjusted if there is a compelling reason to do so, however - and for
more than 10 years, says Bristow, Randgold Resources' philosophy of organic
growth has served it very well.
EXPLORATION: MAKING YOUR OWN LUCK
What does it take to find a world-class gold deposit? Science only gets you so
far, says Randgold Resources exploration manager Paul Harbidge, and after that
it becomes a question of experience, intuition and creative thinking.
"Exploration is both a science and an art," explains Harbidge. "We use
painstakingly constructed regional models to find structural and geological
settings that could host major deposits, but even with a high level of
technological expertise and thorough evaluation it's still a bit like hunting
for a needle in a haystack. It takes a sound exploration strategy and talented
people to find those rare and elusive deposits."
Harbidge notes that Randgold Resources' exploration team boasts highly
accomplished geologists who already have two world-class discoveries - Morila
and Yalea - to their credit. However, team members also have a wide range of
other qualifications, such as MBAs, which makes for a well-balanced skills base,
as well as giving the team a broad perspective and strong dash of commercial
acumen.
"Our exploration is strategically driven and constantly tested, and although we
have budgets for each country, the regional teams still have to compete for
drilling dollars to ensure that the best targets get priority," he says.
"You never can tell when you're going to make the next big discovery, but when
you combine hard work, quality skills and experience with tenacity and the
ability to recognise potential, you make your own luck."
Following another busy exploration year, in which it expanded its presence in
West and East Africa's most prospective gold belts, Randgold Resources currently
has 128 targets on holdings of 20 414km(2) in six countries. In addition, it
has recently established a generative team to assess the African countries in
which the company does not already have a presence with a view to identifying
opportunities there.
COMPLIANCE IN A COMPLEX MULTI-JURISDICTIONAL ENVIRONMENT
When Randgold Resources was incorporated in 1995, the board made a strategic
decision to source the company's capital from first-world markets and
consequently listed it on the main board of the London Stock Exchange in 1997.
This meant that the fledgling company had to meet stringent accounting and
corporate governance standards from the outset.
In order to improve the liquidity of its stock, the company also listed on
Nasdaq in 2002 after meeting the rigorous requirements of the US Securities and
Exchange Commission. The fact that it has since also adhered to US reporting
and accounting standards has encouraged North American investors, and some 75%
of its share capital is now traded on Nasdaq.
"While the corporate governance climate has been substantially codified in
recent years, the company has always sought to go beyond the letter of the law
in meeting the highest standards in its relations with our investors. We remain
committed to providing shareholders with accurate and timeous information to
enable them to best evaluate their investment and the company's performance,"
says group finance director Roger Williams.
-----------------------------------------------------------------
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DISCLAIMER: Statements made in this document with respect to Randgold Resources'
current plans, estimates, strategies and beliefs and other statements that are
not historical facts are forward-looking statements about the future performance
of Randgold Resources. These statements are based on management's assumptions
and beliefs in light of the information currently available to it. Randgold
Resources cautions you that a number of important risks and uncertainties could
cause actual results to differ materially from those discussed in the
forward-looking statements, and therefore you should not place undue reliance on
them. The 2005 annual report notes that the financial statements do not reflect
any provisions or other adjustments that might arise from the claims and legal
process initiated by Loulo against MDM. Other potential risks and uncertainties
include risks associated with: fluctuations in the market price of gold, gold
production at Morila, the development of Loulo and estimates of resources,
reserves and mine life. For a discussion on such other risk factors refer to
the annual report on Form 20-F for the year ended 31 December 2005 which was
filed with the United States Securities and Exchange Commission (the 'SEC') on
29 June 2006. Randgold Resources assumes no obligation to update information in
this release. Cautionary note to US investors: the 'SEC' permits companies, in
their filings with the 'SEC', to disclose only proven and probable ore reserves.
We use certain terms in this release, such as "resources", that the 'SEC' does
not recognise and strictly prohibits us from including in our filings with the '
SEC'. Investors are cautioned not to assume that all or any parts of our
resources will ever be converted into reserves which qualify as 'proven and
probable reserves' for the purposes of the SEC's Industry Guide number 7.
This information is provided by RNS
The company news service from the London Stock Exchange