6th May 2008 07:02
Randgold Resources Ld06 May 2008 RANDGOLD RESOURCES LIMITEDIncorporated in Jersey, Channel IslandsReg. No. 62686LSE Trading Symbol: RRSNasdaq Trading Symbol: GOLD ANOTHER SOLID QUARTER FROM RANDGOLD RESOURCES WITH PROFIT UP MATERIALLY DESPITEINDUSTRY COST PRESSURES London, 6 May 2008 - Randgold Resources today reported a net profit of US$18.2million for the March quarter, up 25% on the previous quarter and 42% on thecorresponding quarter in 2007, in spite of intensifying industry-wide costpressures, notably the sharp rise in the oil price. Attributable production of 103 649 ounces was down 13% on the previous quarterwhile total cash cost of US$440/oz was up 12% but both were in line with planconsidering the oil price. Chief executive Mark Bristow said the company'sproduction and cost profile was expected to show improvement in the latter halfof the year when the new high grade Yalea underground mine at its Loulo complexin Mali comes on stream. The Yalea orebody has been intersected and the new mine has already deliveredits first development ore to the Loulo plant. A second underground mine, Gara,is at final planning stage. Loulo's two existing open-pit operations produced63 249 ounces at a total cash cost of US$470/oz during the quarter and the mineis on track to meet its full-year target of 265 000 ounces. The undergroundoperations are scheduled to increase this annual output to 400 000 ounces by2010. Elsewhere in Mali, Randgold Resources took over operational responsibility forthe Morila mine from its joint-venture partner AngloGold Ashanti during thequarter. Following the change, a multi-disciplinary review team from both sidesidentified a number of operational issues which require rectification.Corrective action is being taken. "As Morila continues to move to lower-grade ore and eventually to stockpileretreatment, plant efficiency and effective grade control will be paramount.Our first priority has been to ensure the maximum availability of the plant andwe've made good progress on this and other fronts. We've also had to reconcilesome discrepancies between the grade control and ore reserve models, as a resultof which we have reduced Morila's forecast production for 2008 from 465 000 to430 000 ounces," Bristow said. Morila produced 101 000 ounces at a total cash cost of US$393/oz during thequarter against the previous quarter's 129 193 ounces at US$334/oz. In Cote d'Ivoire, site preparation is underway at Tongon where the company'sthird mine is scheduled for development. Infill drilling increased Tongon'sprobable reserves by 52% to 2.44 million ounces during the past quarter andBristow said continued drilling was likely to upgrade more resources to thereserve category. He noted that development of the mine was proceeding intandem with a steady improvement in the political climate in Cote d'Ivoire,where general elections have been scheduled for 30 November this year. The acquisition of a further 5% participation interest in Tongon has increasedRandgold Resources' stake in the project to 81%. As in the case of Loulo,Randgold Resources will now be able to consolidate 100% of Tongon and showminority interest separately. On the exploration front, three advanced targets - Massawa in Senegal, Tiasso inCote d'Ivoire and Kiaka in Burkina Faso - are scheduled for drill-testing in thecurrent quarter. The company's exploration teams are active in six West andEast African countries, constantly feeding new prospects into its pipeline. "We're also looking closely at a number of external growth opportunities,including joint ventures, which offer us the potential of creating real valuethrough the application of our skills. Such opportunities will, of course, haveto meet the same return and other investment criteria we require from ourorganically generated projects," Bristow said. RANDGOLD RESOURCES ENQUIRIES: Chief Executive Financial Director Investor & Media RelationsDr Mark Bristow Graham Shuttleworth Kathy du Plessis+44 788 071 1386 +44 779 614 4438 +44 20 7557 7738+44 779 775 2288 +44 1534 735 333 Email: [email protected]: www.randgoldresources.com ------------------------------------------------------------------------------ REPORT FOR THE QUARTER ENDED 31 MARCH 2008 - Net profit up 25% on previous quarter in spite of industry cost pressures.- Morila delivers satisfactory performance but reduces production guidance for the year.- Loulo delivers strong production to support annual group forecast.- Yalea underground development intersects orebody and first development ore delivered to plant.- Continued infill drilling at Tongon delivers a 52% increase in reserves.- Equity participation in Tongon project increased to 81%.- Initial results from a 7 000 metre drilling programme confirm significant mineralisation at Massawa.- Exploration drilling to focus on three advanced targets. Randgold Resources Limited had 76.2 million shares in issue as at 31 March 2008 SUMMARISED FINANCIAL INFORMATIONUS$000 Quarter Quarter Quarter 12 ended ended ended months 31 Mar 31 Dec 31 Mar ended 2008 2007 2007 31 Dec 2007Gold sales# 87 002 89 855 63 065 289 841Total cash costs* 45 579 47 093 35 007 158 318Profit from mining activity* 41 423 42 762 28 058 131 523Exploration and corporate expenditure 13 952 12 933 6 521 35 920Profit before income tax 25 489 22 323 16 225 66 901Net profit 18 155 14 492 12 748 45 628Net profit attributable to equity 15 966 13 385 11 418 42 041shareholdersNet cash generated from operations 17 096 31 741 13 567 62 233Cash and financial assets 336 801 343 133 139 407 343 133Attributable production+ (ounces) 103 649 119 736 109 198 444 573Group total cash costs per ounce*+ (US$) 440 393 321 356Group cash operating costs per ounce*+ (US$) 392 347 284 315 # Gold sales do not include the non-cash profit/(loss) on the roll forward of hedges.* Refer to explanation of non-GAAP measures provided.+ Randgold Resources consolidates 100% of Loulo and 40% of Morila. COMMENTS Net profit for the group of US$18.2 million increased by 25% compared to theDecember 2007 quarter of US$14.5 million and by 42% compared to the March 2007quarter of US$12.7 million. This is mainly due to higher gold prices achievedduring the quarter, which averaged US$841/oz compared to the prior quarter ofUS$721/oz, offset by lower production. The reduction in other expenses quarteron quarter, as well as savings in interest expenditure due to the repayment ofthe corporate facility in December 2007 also increased net profit. Profit from mining at US$41 million was in line with the December 2007 quarterand up 48% from the March 2007 quarter. Attributable ounces produced for thequarter of 103 649 were down 13% from the December 2007 quarter and down 5% fromthe corresponding March 2007 quarter but in line with the plan. Total cash costper ounce of US$440/oz for the quarter was up 12% from the December 2007 quarterand up 37% from the March 2007 quarter. This is mainly due to a decrease in theaverage grade mined and milled at both mines and in line with the life of mineplans. Production plans at Loulo estimate an increase in the grade during thesecond half of the year when the underground production comes on stream,significantly increasing ounces produced at Loulo. Industry wide costpressures, especially the sharp increase in oil prices (up 9% in the pastquarter and 71% in the past 12 months), continued weakening of the dollar and anincrease in general consumables and commodities also impacted negatively oncosts during the quarter, especially in comparison with the first quarter of2007. Exploration and corporate expenditure increased from US$12.9 million for theDecember 2007 quarter and US$6.5 million in the March 2007 quarter to US$13.9million in the current quarter. The increase is due to a US$5.5 millionincrease in bonus accruals in line with the 35% increase in the company's shareprice over the quarter. This was partially offset by a decrease in explorationexpenditure resulting from the decision taken by the board on 31 January 2008 todevelop the Tongon mine. Accordingly, all expenditure incurred directly on theproject has been capitalised with effect from February 2008. A total of US$2.5million relating to the Tongon project was capitalised during the quarter.Finance costs for the quarter of US$0.3 million were significantly lowercompared to the previous quarter's US$1.4 million and the March 2007 quarter ofUS$0.8 million, due to the repayment of the corporate facility of US$40.8million in December 2007. Finance income was broadly in line with the previousquarter, at US$2.6 million, reflecting the higher average cash balancesfollowing the equity issue in December 2007, offset by a drop in interest ratesbut higher than the corresponding quarter in 2007. OPERATIONS LOULO Loulo produced 63 249 ounces of gold during the quarter at a total cash cost ofUS$470/oz (cash operating cost of US$429/oz) compared to last quarter'sproduction of 68 059 ounces at US$436/oz (cash operating cost US$399/oz). Thedrop in production, as a result of a decrease in the average grade of ore minedand processed, was in line with the current mine plan. After additional equipment was mobilised by the mining contractor at thebeginning of the fourth quarter in 2007, the mine continued to improve itsoperational flexibility with additional tonnes being moved over and above themine plan similar to the previous quarter. This should ensure the operation isin a position to meet its targeted throughput during the coming midyear rainyseason. The higher gold prices received during the quarter also corresponded with higherfuel prices and a weaker US dollar, which impacted negatively on consumables andother commodity prices and resulted in a negative impact on the cash operatingcosts. Randgold Resources continues to remain focused on the quantities of thecommodities consumed in the production process in order to keep costs undercontrol. LOULO RESULTS Quarter Quarter Quarter 12 ended ended ended months 31 Mar 31 Dec 31 Mar ended 2008 2007 2007 31 Dec 2007MiningTonnes mined (000) 7 846 7 476 5 707 20 978Ore tonnes mined (000) 869 710 657 2 431MillingTonnes processed (000) 701 686 687 2 654Head grade milled (g/t) 3.1 3.5 3.2 3.3Recovery (%) 90.9 89.4 93.8 93.2Ounces produced 63 249 68 059 67 908 264 647Average price received+ (US$/oz) 787 695 543 612Cash operating costs* (US$/oz) 429 399 287 337Total cash costs* (US$/oz) 470 436 320 372Profit from mining activity* (US$000) 19 876 17 472 15 337 63 598Gold sales*+ (US$000) 49 589 47 175 37 034 162 154 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 hasfunded the Government portion of the investment in Loulo by way of shareholderloans and therefore controls 100% of the cash flows from Loulo until theshareholder loans are repaid. Randgold Resources consolidates 100% of Loulo and shows the minority interestseparately. * Refer to explanation of non-GAAP measures provided.+ Includes the impact of 17 499 ounces delivered into the hedge at US$429/ozin the quarter ended 31 March 2008, 19 254 ounces delivered at US$439/oz in thequarter ended 31 December 2007, 19 254 ounces delivered at US$439/oz in thequarter ended 31 March 2007 and 90 836 ounces delivered at US$426/oz for theyear ended 31 December 2007. Resource and Reserve Update During the quarter, the group released its annual resource and reservedeclaration and the relevant extract relating to the Loulo reserves is shown inthe table below, including a comparison with 2006 figures: Loulo Ore Reserves Category Tonnes Tonnes Grade Grade Gold Gold Attribut- (Mt) (Mt) (g/t) (g/t) (Mozs) (Mozs) able 2007 2006 2007 2006 2007 2006 gold (80%) (Mozs)Proved 8.95 11.21 3.36 3.47 0.97 1.26 0.77Probable 45.47 37.93 4.40 4.54 6.43 5.54 5.15Total 54.42 49.14 4.23 4.30 7.40 6.80 5.92 MORILA Morila had a satisfactory production performance during the first quarter. Atotal of 101 000 ounces were produced at a total cash cost of US$393/oz (cashoperating cost of US$334/oz) compared to last quarter's production of 129 193ounces at US$337/oz (cash operating cost US$279/oz). Processed grades were up on plan, which compensated for the lower than plannedthroughput caused by poor plant availability and utilisation. MORILA RESULTS Quarter Quarter Quarter 12 ended ended ended months 31 Mar 31 Dec 31 Mar ended 2008 2007 2007 31 Dec 2007MiningTonnes mined (000) 5 701 6 700 5 015 23 859Ore tonnes mined (000) 1 531 1 681 935 5 016MillingTonnes processed (000) 1 008 1 026 1 055 4 163Head grade milled (g/t) 3.4 4.3 3.4 3.7Recovery (%) 91.3 91.7 92.2 91.6Ounces produced 101 000 129 193 103 224 449 815Average price received (US$/oz) 926 797 652 710Cash operating costs* (US$/oz) 334 279 278 282Total cash costs* (US$/oz) 393 337 322 332Profit from mining activity* (US$000) 53 868 63 224 31 803 169 810Attributable (40% proportionatelyconsolidated)Gold sales (US$000) 37 413 42 680 26 031 127 687Ounces produced 40 400 51 677 41 290 179 926Profit from mining activity* (US$000) 21 547 25 290 12 721 67 925 * Refer to explanation of non-GAAP measures provided. The reserve base for Morila as at end 2007 is tabulated below with a comparisonto figures as at the end of 2006: MORILA Ore ReservesCategory Tonnes Tonnes Grade Grade Gold Gold Attribut- (Mt) (Mt) (g/t) (g/t) (Mozs) (Mozs) able 2007 2006 2007 2006 2007 2006 Gold (40%) (Mozs)Proved 13.11 15.36 2.21 2.50 0.93 1.23 0.37Probable 9.95 11.35 2.01 2.47 0.64 0.90 0.26Total 23.06 26.71 2.13 2.49 1.57 2.13 0.63 As a result of AngloGold Ashanti's notification to Randgold Resources that itwas considering the disposal of its 40% share of Morila, it was agreed thatRandgold Resources assume the operatorship of the mine. This was effected on 15February 2008. On assumption of operatorship, a multi-disciplinary teamcomprising Randgold Resources and AngloGold Ashanti representatives performed anon-site audit of the current situation. Several operational issues were identified as requiring rectification. Theseincluded: - lack of short interval controls;- poor maintenance; and- poor communication with suppliers of critical equipment. Consequently we have instituted corrective action and have also identified thepossibility of increasing plant throughput which we will investigate further toevaluate the options and possible benefits. An investigation was launched into the discrepancy between results from thegrade control model and the life of mine ore reserve model (October 2007), whichwas returning lower tonnes and grade. A new hybrid model, incorporating theadditional drilling from October 2007, was compiled. This has shown lowertonnages and grades due to wireframe changes based on geological interpretation,increased amounts of internal waste as well as the increased variability of theorezones on the fringes of the orebody. As a result of these changes, we have reduced the forecast production for 2008from the previous guidance of 465 000 ounces to a total of 430 000 ounces.Randgold Resources will continue to look for ways of increasing productionduring the year and is reviewing any impact on future years' production.Advanced grade control has been prioritised with a second rig being brought tosite. PROJECTS AND EVALUATION LOULO UNDERGROUND DEVELOPMENT PROJECTS Yalea The development of the Yalea underground mine at Loulo in Mali continued at thepace set in January and a total advance of 735 metres was achieved during thefirst quarter of 2008. The twin declines have now reached 800 metres from surface at a vertical depthof 130 metres. The development of the return airway break-away accessintersected the orebody in April. A total advance of 1 651 metres has been recorded by the section to date. Work also progressed on the third portal from the previously mined out P125 pit.The portal structure has been completed and development within the orebody isprogressing. Gara The design for the Gara underground project is currently being finalised.Studies are in progress for optimising the portal position, with the aim ofbalancing conveying distance, development metres and ground conditions in such away that capital and operating costs are minimised for the life of the project.In the final design many of the Yalea experiences and design improvements willbe incorporated. The development of the declines will start in January 2009. In its currentdesign, the mine has probable reserves of 17.08 million tonnes at 3.91g/t and itis expected to produce 100 000 tonnes per month when in full production. Thisoutput target is expected to be realised in early 2011. TONGON PROJECT Following the publication of the ore reserve statement in Randgold Resources'annual report, revised ore reserve estimates were calculated during the quarterbased on the drilling completed to the end of 2007. In addition, an agreementwas concluded with Randgold Resources' joint venture partners in Cote d'Ivoire,New Mining CI, to increase Randgold's interest in the joint venture to 90%.Consequently, Randgold Resources now owns an effective 81% interest in theTongon project, which is reflected in the table below: TONGON MINERAL RESOURCES Category Tonnes Grade Ounces Attribut- (Mt) (g/t) (Moz) able ounces (81%) (Moz)Northern zoneOpen pittable Indicated 9.78 2.46 0.77 0.63 Inferred 0.49 3.34 0.05 0.04Underground Inferred 5.02 2.65 0.43 0.35Southern zoneOpen pittable Indicated 32.18 2.34 2.42 1.96 Inferred 7.48 2.45 0.59 0.48Total indicated 41.96 2.37 3.20 2.59Total inferred 12.99 2.56 1.07 0.87 Based on pit optimisation at a gold price of US$550/oz and practical pit designsthe following in pit reserves have been declared as of April 2008: TONGON ORE RESERVE ESTIMATE Tonnes Grade Gold Attribut- (Mt) (g/t) (Moz) able ounces (81%) (Moz)Northern zoneProbable 5.59 2.40 0.43 0.35Southern zoneProbable 27.17 2.30 2.01 1.63Total probable 32.76 2.32 2.44 1.98 Revised pit designs and the increased participation in the project have resultedin a 61% increase in the attributable reserve from 1.23 million ounces to 1.98million ounces. Total probable reserves have increased 52%, from the 1.61million ounces reported in the Type 3 Feasibility to 2.44 million ounces. There is, in addition, potentially mineable material of 0.37Mozs within the pitdesign as tabulated below: TONGON POTENTIALLY MINEABLE RESOURCE Tonnes Grade Gold Attribut- (Mt) (g/t) (Moz) able ounces (81%) (Moz)Southern zoneTotal 5.46 2.13 0.37 0.30 - During the quarter an additional 13 000 metres of drilling has beencompleted, mainly infill of the southern zone which is designed to convert mostof the inferred resources within the pit to indicated resources. Results fromthis infill phase are now being incorporated into the feasibility resourcemodelling. - Sterilisation drilling has commenced to cover the areas planned for the mineinfrastructure which has been finalised subject to geotechnical testwork. - Eight mining contractor companies have pre-qualified in the tender processand will shortly visit site prior to submission of tenders. - Plant design is being progressed by SENET and the long lead items for theplant have been ordered. - Environmental studies are in the process of being finalised. - Meetings were held in all of the 'Most Affected Villages' as part of the PPP(Public Participation Process) and all inhabitants were briefed on theimplications of the mining development. Their concerns were noted and a villageconsultative council was established which holds regular meetings. - The pre-construction budget has been approved and the site is gearing up toprepare infrastructure that will allow work to continue through the wet season. Discussions continue with the State regarding the conclusion of a MiningConvention. The Government has recently announced that the first round of elections would beheld on 30 November 2008. EXPLORATION ACTIVITIES The first quarter of 2008 has seen the exploration teams making the most of thedry season across both West and East Africa by advancing their projects as perthe strategic objectives. In Senegal, at Massawa, a new phase of diamond drilling confirmed the continuityof mineralisation and the presence of coarse visible gold, while further surfaceexploration including soil sampling and RAB drilling has extended the targetfrom 2.8 kilometres to over 6 kilometres in strike length. Geologically thetarget is underlain by a sequence of overturned sediments and volcanics, whichhave been intruded by felsic dykes, gabbros and granitic bodies. Mineralisationlocates in various lithologies (sediments and porphyries) but is structurallycontrolled with a prominent hangingwall and footwall structure, exploitingcarbonaceous sedimentary units. There are varying degrees to the intensity ofalteration (silica-carbonate-sericite-pyrite-arsenopyrite) and locallybrecciation and brittle fracturing are associated with the gold mineralisation.The table below details the results received from the latest phase of diamonddrilling, which has so far concentrated along a 1 kilometre segment of theoverall 6 kilometre mineralised structure: MASSAWA DRILL RESULTSHole ID From To Intersection (m) (m) Interval (g/t)MWDDH008 86.30 89.20 2.90 6.90 98.40 105.70 7.30 31.04 109.50 125.00 15.50 1.93MWDDH009 70.70 121.00 50.30 1.42 253.35 259.20 5.85 1.55MWDDH010 88.80 94.00 5.20 3.40 113.10 119.90 6.80 4.70 123.00 142.25 19.25 1.50MWDDH011 69.50 73.50 4.00 4.20MWDDH012 48.70 49.70 1.00 4.15MWDDH013 46.00 53.00 7.00 1.13 97.00 103.00 6.00 2.00 129.00 137.00 8.00 1.09 140.00 141.00 1.00 10.20 183.50 193.06 9.56 1.09 In addition to Massawa in Senegal, exploration work has been continuing onadjacent satellite targets within the Bakan Corridor where RAB drilling on theTiwana target has defined a continuous zone of low grade gold mineralisationalong a 2.2 kilometre strike. At Sofia, RAB drilling has now defined twoapproximately 2 kilometre long targets for additional diamond drilling. At Loulo the first quarter has been relatively quiet as the airborne EM surveywas flown over the 1 400km2 consolidated groundholding in the Loulo district.The data is now being processed and modelled. Early observations of the rawdata indicate that the survey provides a more detailed structural and geologicalframework, clearly defines the Senegal-Mali shear zone, folding, theintersection of north east and north south structures, which play a key role incontrolling gold mineralisation, and a number of large intrusives. The data iscurrently with external consultants to complete a detailed interpretation andthree dimensional modelling which will incorporate all of the geological anddrill data; this will enable a detailed target generation study, which willdrive future exploration programmes. At Morila, Randgold Resources' team has started reviewing and validating all ofthe exploration and mining data in order to develop an exploration model fordrill testing in Q4. This recent work reveals the orebody relates to a northwest shear system and the development of an overturned fold at the contactbetween fine and coarser grained sediments. These may be unconformable andmarked by a mafic volcanic unit as defined by the geochemical and petrographicstudies. Granodiorite and tonalitic igneous intrusions played a key role increating the heat flow and driving the hydrothermal cell. The extension of thistarget to the east is considered to be a high priority. In Mali South, work has focused on reconnaissance RAB drilling of the Bagoe Eastand Bagoe West permits held in joint venture with African Gold Group (AGG).These permits cover prospective Morila-type settings along the Banifin shearzone in close proximity to the Morila deposit. Gold mineralisation isassociated with splay structures from the main shear, anticlinal folds andgranitic intrusions. In Burkina Faso at Kiaka, preparations are underway to drill test the possibleextension to mineralisation along the axis of a plunging anticline to the northwhere the last diamond hole KDH013 returned 166 metres at 1.26g/t. In addition,a 10 000 metre RAB drilling programme is underway to evaluate regional targets.Of these Limsega is the most advanced where exploration has identified a 3.4kilometre long anomalous gold in soil structural corridor. Trenching hasreturned a best intercept of 22 metres at 2.27g/t, including 10 metres at 3.71g/t. In Ghana, work on the Bole NE concession has identified five targets forfollow-up work. All targets are associated with parasitic folds on the limbs ofa much larger regional anticline and shear structures have been mapped along thefold limbs. Gold mineralisation concentrates in the hinge zone of the folds andwithin the shears associated quartz veins and silica-sericite alteration zones.Trenching is underway in preparation for RAB drilling during Q2. In Cote d'Ivoire, great progress has been made at Tongon in the conversion of inpit resources to reserves. While this programme continues, deeper drilling onboth deposits is also underway to test the continuation of high grade plungingshoots. Randgold Resources also has drill motivations prepared for Tongon East,South and Poungbe satellite targets within the Nielle permit and preparationsare underway to re-establish a base at the Boundiali permit, 100 kilometres tothe west of Nielle, where Randgold Resources has the advanced target of Tiassowaiting to be drilled. This target is characterised by a 2 kilometre long goldin soil anomaly which was previously tested by five trenches. Of these, threereturned encouraging results: TAT001 - 25 metres at 4.39g/t; TAT003 - 8 metresat 2.78g/t; TAT004 - 14 metres at 2.66g/t, 4 metres at 25.98g/t and 10 metres at1.49g/t. In Tanzania, RAB drilling has been completed on targets along a 20 kilometrenorth west trending structural corridor at Miyabi, a joint venture with AfricanEagle, where results are pending. Following the granting of permits in theProterozoic mobile belt surrounding the Archaean craton soil sampling andmapping have been completed. Gold mineralisation is hosted in highly deformedand silicified metamorphosed rock units above a major thrust. The units consistof thinly bedded impure marble and biotite gneiss/granulite. CONSOLIDATED INCOME STATEMENTUS$000 Quarter Quarter Quarter 12 ended ended ended months 31 Mar 31 Dec 31 Mar ended 2008 2007 2007 31 Dec 2007REVENUESGold sales on spot 95 841 96 708 70 483 313 421Loss on matured hedges (8 839) (6 853) (7 418) (23 580)Non-cash (loss)/profit on roll forward of - (2 277) 235 (7 036)hedgesTotal revenues 87 002 87 578 63 300 282 805Other income 1 499 764 167 967Total income 88 501 88 342 63 467 283 772COSTS AND EXPENSESMine production costs 42 825 40 921 31 445 136 312Movement in production inventory and ore (6 049) (4 427) (3 740) (11 534)stockpilesDepreciation and amortisation 5 695 3 421 6 072 20 987Other mining and processing costs 3 134 4 309 3 018 13 638Mining and processing costs 45 605 44 224 36 795 159 403Transport and refinery costs 742 736 247 1 595Royalties 4 927 5 554 4 037 18 307Exploration and corporate expenditure 13 952 12 933 6 521 35 920Other expenses - 3 950 712 5 008Total costs 65 226 67 397 48 312 220 233Finance income 2 527 2 748 1 917 9 167Finance costs (313) (1 370) (847) (5 805)Finance income - net 2 214 1 378 1 070 3 362Profit before income tax 25 489 22 323 16 225 66 901Income tax expense (7 334) (7 831) (3 477) (21 273)Net profit 18 155 14 492 12 748 45 628Attributable to:Equity shareholders 15 966 13 385 11 418 42 041Minority shareholders 2 189 1 107 1 330 3 587 18 155 14 492 12 748 45 628Basic earnings per share (US$) 0.21 0.19 0.17 0.60Diluted earnings per share (US$) 0.21 0.19 0.16 0.60Average shares in issue (000) 76 173 71 591 68 820 69 589 The results have been prepared in accordance with International FinancialReporting Standards (IFRS) as issued by the IASB on a basis consistent with theannual financial statements. CONSOLIDATED BALANCE SHEETUS$000 At At At 31 Mar 31 Dec 31 Mar 2008 2007 2007AssetsNon-current assetsProperty, plant and equipment 278 499 269 896 245 443Cost 361 720 347 422 308 054Accumulated depreciation and amortisation (83 221) (77 526) (62 611)Deferred taxation 2 009 2 163 2 654Long term ore stockpiles 46 422 43 190 43 915Receivables 24 390 22 823 13 856Total non-current assets 351 320 338 072 305 868Current assetsInventories and stockpiles 61 029 57 410 35 161Receivables 44 669 42 104 35 803Available-for-sale financial assets 48 950 48 950 -Cash and cash equivalents 287 851 294 183 139 407Total current assets 442 499 442 647 210 371Total assets 793 819 780 719 516 239Shareholders' equity 604 711 598 799 342 110Minority interest 10 483 8 294 6 037Total equity 615 194 607 093 348 147Non-current liabilitiesLong term borrowings 2 228 2 773 24 739Loans from minority shareholders in subsidiaries 3 394 3 096 2 801Deferred taxation 1 451 1 451 462Financial liabilities - forward gold sales 45 943 51 953 46 693Provision for rehabilitation 11 171 11 074 8 938Total non-current liabilities 64 187 70 347 83 633Current liabilitiesFinancial liabilities - forward gold sales 42 162 33 672 20 010Current portion of long term borrowings 3 495 3 647 24 819Accounts payable and accrued liabilities 66 082 63 330 39 630Taxation payable 2 699 2 630 -Total current liabilities 114 438 103 279 84 459Total equity and liabilities 793 819 780 719 516 239 The financial instruments liability increased following the increase in the goldprice and reflects the marked-to-market valuation of the hedged ounces at 31March 2008, calculated at the spot price as at that date of US$933.50/oz.During the quarter, the company delivered 17 499 gold ounces into its hedgepositions, which reduced the financial instruments liability, given the highergold price. The decrease in the non-current financial liabilities is due to theeffect of lower US dollar interest rates on forward gold prices, as well as areduction in the total hedged ounces outstanding. CONSOLIDATED CASHFLOW STATEMENTUS$000 3 3 12 months months months ended ended ended 31 Mar 31 Mar 31 Dec 2008 2007 2007Profit before income tax 25 489 16 225 66 901Adjustment for non-cash items 7 519 6 410 31 747Effects of changes in operating working capital items (10 743) (4 285) (24 178)Receivables (3 978) (619) (23 289)Inventories and ore stockpiles (6 851) (3 262) (24 786)Accounts payable and accrued liabilities 86 (404) 23 897Income tax paid (5 169) (4 783) (12 237)Net cash generated from operating activities 17 096 13 567 62 233Acquisition of property, plant and equipment (14 298) (10 215) (47 905)Financing of contractors - - -Acquisition of available-for-sale financial assets - - (48 950)Net cash used by investing activities (14 298) (10 215) (96 855)Proceeds from issue of ordinary shares 423 470 236 063Decrease in long term loans (399) (897) (43 740)Dividends paid to company's shareholders (9 154) (6 874) (6 874)Net cash generated by financing activities (9 130) (7 301) 185 449Net (decrease)/increase in cash and cash equivalents (6 332) (3 949) 150 827Cash and cash equivalents at beginning of period 294 183 143 356 143 356Cash and cash equivalents at end of period 287 851 139 407 294 183 The changes in receivables are mainly due to higher contractor costs at Loulo asa result of the fuel price increase which impacted transport costs and fuel paidon behalf of contractors, as well as an increase in TVA balances at Morila. The increase in inventories and ore stockpiles is the result of a build up ofstockpiles at Morila and an increase in inventories at Loulo due to theincreased demand resulting from the development of the underground mines. The board of directors approved an annual dividend of 12 US cents per share on31 January 2008. This resulted in an aggregate dividend payment of US$9.1million which was made in March 2008. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Number Share Share Other Accum- Total Minority Total of capital pre- res- ulated attri- interest equity ordinary US$000 mium erves profits butable US$000 shares US$000 US$000 US$000 to equity US$000 share- hold- ersBalance - 31 68 763 561 3 440 213 653 (59 430) 178 400 336 063 4 707 340 770December 2006Movement on cashflow hedges -Transfer to - - - 7 183 - 7 183 - 7 183income statementFair value - - - (6 627) - (6 627) - (6 627)movement onfinancialinstrumentsNet income - - - 556 - 556 - 556recogniseddirectly inequityNet profit - - - - 11 418 11 418 1 330 12 748Total recognised - - - 556 11 418 11 974 1 330 13 304income/(loss)Share-based - - - 477 - 477 - 477paymentsShare options 71 500 4 466 - - 470 - 470exercisedExercise of - - 111 (111) - - - -optionspreviouslyexpensed underIFRS 2Shares vested# 10 102 - 170 (170) - - - -Dividend relating - - - - (6 874) (6 874) - (6 874)to 2006Balance - 31 68 845 163 3 444 214 400 (58 678) 182 944 342 110 6 037 348 147March 2007Balance - 31 76 140 330 3 809 450 814 (69 391) 213 567 598 799 8 294 607 093December 2007Movement on cashflow hedges -Transfer to - - - 8 839 - 8 839 - 8 839income statementFair value - - - (11 319) - (11 319) - (11 319)movement onfinancialinstrumentsNet income - - - (2 480) - (2 480) - (2 480)recogniseddirectly inequityNet profit - - - - 15 966 15 966 2 189 18 155Total recognised - - - (2 480) 15 966 13 486 2 189 15 675income/(loss)Share-based - - - 1 157 - 1 157 - 1 157paymentsShare options 39 500 2 421 - - 423 - 423exercisedExercise of - - 132 (132) - - - -optionspreviouslyexpensed underIFRS 2Shares vested# 6 594 - 160 (160) - - - -Dividend relating - - - - (9 154) (9 154) - (9 154)to 2007Balance - 31 76 186 424 3 811 451 527 (71 006) 220 379 604 711 10 483 615 194March 2008 # Restricted shares were issued to directors as remuneration. The transferbetween "other reserves" and "share premium" in respect of the shares vestedrepresents the cost calculated in accordance with IFRS 2. NON-GAAP MEASURES Total cash costs and cash cost per ounce are non-GAAP measures. Total cashcosts and total cash costs per ounce are calculated using guidance issued by theGold Institute. The Gold Institute was a non-profit industry associationcomprising leading gold producers, refiners, bullion suppliers andmanufacturers. This institute has now been incorporated into the NationalMining Association. The guidance was first issued in 1996 and revised inNovember 1999. Total cash costs, as defined in the Gold Institute's guidance,include mine production, transport and refinery costs, general andadministrative costs, movement in production inventories and ore stockpiles,transfers to and from deferred stripping where relevant and royalties. Underthe company's accounting policies, there are no transfers to and from deferredstripping. Total cash costs per ounce are calculated by dividing total cash costs, asdetermined using the Gold Institute guidance, by gold ounces produced for theperiods presented. Total cash costs and total cash costs per ounce arecalculated on a consistent basis for the periods presented. Total cash costsand total cash costs per ounce should not be considered by investors as analternative to operating profit or net profit attributable to shareholders, asan alternative to other IFRS or US GAAP measures or an indicator of ourperformance. The data does not have a meaning prescribed by IFRS or US GAAP andtherefore amounts presented may not be comparable to data presented by goldproducers who do not follow the guidance provided by the Gold Institute. Inparticular depreciation, amortisation and share-based payments would be includedin a measure of total costs of producing gold under IFRS and US GAAP, but arenot included in total cash costs under the guidance provided by the GoldInstitute. Furthermore, while the Gold Institute has provided a definition forthe calculation of total cash costs and total cash costs per ounce, thecalculation of these numbers may vary from company to company and may not becomparable to other similarly titled measures of other companies. However,Randgold Resources believes that total cash costs per ounce are usefulindicators to investors and management of a mining company's performance as itprovides an indication of a company's profitability and efficiency, the trendsin cash costs as the company's operations mature, and a benchmark of performanceto allow for comparison against other companies. Cash operating costs and cash operating cost per ounce are calculated bydeducting royalties from total cash costs. Cash operating costs per ounce arecalculated by dividing cash operating costs by gold ounces produced for theperiods presented. Gold sales is a non-GAAP measure. It represents the sales of gold at spot andthe gains/losses on hedge contracts which have been delivered into at thedesignated maturity date. It excludes gains/losses on hedge contracts whichhave been rolled forward to match future sales. This adjustment is consideredappropriate because no cash is received/paid in respect of these contracts. Profit from mining activity is calculated by subtracting total cash costs fromgold sales for all periods presented. The following table reconciles total cash costs and profit from mining activityas non-GAAP measures, to the information provided in the income statement,determined in accordance with IFRS, for each of the periods set out below: NON-GAAPUS$000 Quarter Quarter Quarter 12 ended ended ended months 31 Mar 31 Dec 31 Mar ended 2008 2007 2007 31 Dec 2007Gold sales on spot 95 841 96 708 70 483 313 421Loss on matured hedges (8 839) (6 853) (7 418) (23 580)Gold sales 87 002 89 855 63 065 289 841Mine production costs 42 825 40 921 31 445 136 312Movement in production inventory and ore (6 049) (4 427) (3 740) (11 534)stockpilesTransport and refinery costs 742 736 247 1 595Royalties 4 927 5 554 4 037 18 307Other mining and processing costs 3 134 4 309 3 018 13 638Total cash costs 45 579 47 093 35 007 158 318Profit from mining activity 41 423 42 762 28 058 131 523 FORWARD COMMODITY CONTRACTS The group's hedging position at 31 March 2008 is summarised below:Maturity date Forward Forward sales sales Ounces average US$/ozYear ended 2008 62 997 429.28Year ended 2009 84 996 434.90Year ended 2010 41 748 500.38Total 189 741 447.44 The forward contracts all relate to Loulo with Morila's production beingcompletely exposed to spot gold prices. The remaining portion of the hedge bookrepresents approximately 18% of the planned production at Loulo and 13% of thegroup's production for the period. UPDATED RESOURCES AND RESERVES Depleted to December 2007, including latest Tongon figures: At 30 April 2008 (abridged) MINE/ Category Tonnes Grade Gold Attribut-PROJECT (Mt) (g/t) (Moz) able MINERAL goldRESOURCES (Moz) Loulo 80% Measured and indicated 63.95 4.62 9.51 7.61 Inferred 25.90 2.92 2.43 1.95Morila 40% Measured and indicated 22.95 2.19 1.62 0.65 Inferred 0.83 3.05 0.08 0.03Tongon 81% Measured and indicated 41.96 2.37 3.20 2.59 Inferred 12.99 2.56 1.07 0.87Total 128.86 3.46 14.32 10.84measured andindicatedTotal 39.72 2.81 3.58 2.84inferred ORE RESERVESLoulo 80% Proved and probable 54.42 4.23 7.40 5.92Morila 40% Proved and probable 23.06 2.13 1.57 0.63Tongon 81% Probable 32.76 2.32 2.44 1.98Total proved 110.23 3.22 11.42 8.53and probable Randgold Resources reports its mineral resources and ore reserves in accordancewith the JORC code. The reporting of ore reserves is also in accordance withSEC Industry Guide 7. Pit optimisation is carried out at a gold price of US$550 per ounce, except forMorila which was run at US$525 per ounce; underground reserves are also based ona gold price of US$550 per ounce. Dilution and ore loss are incorporated intothe calculation of reserves. Cautionary note to US investors: the United States Securities and ExchangeCommission (the "SEC") permits mining companies, in their filings with the SEC,to disclose only those mineral deposits that a company can economically andlegally extract or produce. Randgold Resources uses certain terms in thisreport, such as "resources" that the SEC guidelines strictly prohibit thecompany from including in its filings with the SEC. GENERAL The company continues to evaluate various opportunities both at corporate,project and joint venture levels. Production is planned to increase in the second half of the year as highergrades are accessed in the Yalea underground mine at Loulo, as per the currentmine plan. Despite the lower forecast production at Morila, we believe it isstill possible for Randgold Resources to meet its forecast for the year. The site establishment at Tongon is underway and should ensure that RandgoldResources is in a position to commence construction by the end of the year asplanned. The programme will align well with the continuing improvements in thepolitical situation in Cote d'Ivoire, where presidential elections have beenconfirmed for the end of November 2008. D M Bristow G P ShuttleworthChief Executive Financial Director6 May 2008 ---------------------------------------------------------------RANDGOLD RESOURCES NEWS UPDATES GROWING IN A SHRINKING MARKET Randgold Resources' updated resources and reserves continue to show increases inboth categories. This should enable the company to grow production - at a timewhen industry output is in decline - by 50% over the next four years. Attributable resources rose from 12.55 million ounces at the end of 2006 to 13.7million, while proven and probable reserves increased from 6.29 million ouncesto 8.53 million, (all numbers depleted to the end of December 2007 and includeTongon changes from Q1). The increases are mainly attributable to continuingexploration at the Loulo complex in Mali and at the Tongon project in Coted'Ivoire. Tongon has been grown from an exploration target to a plus 4 millionounce resource, with 2.4 million ounces recently converted to probable reservein two open pits. Backing up the Loulo underground and Tongon developments are a strong projectflow generated by the company's exploration teams operating in six countries inWest and East Africa. This pipeline holds three advanced targets: Massawa inSenegal, Tiasso in Cote d'Ivoire and Kiaka in Burkina Faso, all of whichdemonstrate the key indicators of strong structural controls, large alterationsystems and geological competency contrasts coupled with economic goldintersections. Drill rigs are already spinning at Massawa and the latest results are confirmingthe continuity of the gold mineralisation. This, together with the miningoperation at Loulo, has reinforced the company's belief in the prospectivity ofthe Kedougou-Kenieba Inlier. At Kiaka, the potential for 2 million ounces in abroad, low-grade system of gold mineralisation has already been estimated. Adrill rig is being mobilised to Kiaka to test a model which could significantlyadd to this resource. Tiasso will also be drill tested in the second quarter ofthe year. In the Loulo district, meanwhile, a 1 400km2 groundholding with a significantportfolio of brownfields targets has been consolidated. Top of the list isFaraba, which already has defined inferred resources and plenty of upside alonga 4 kilometre shear. In Cote d'Ivoire, the Nielle permit not only hosts theTongon deposits but also 12 targets for follow-up work. FAQ These are the key questions analysts have recently been asking Mark Bristow, andhis answers. Q: Isn't your commitment to organic growth excluding you from some attractivemerger and acquisition opportunities? A: The fact that we've built this business through discovery and developmentdoesn't mean that we have a blind spot when it comes to external opportunities.We look closely at all of them; we just haven't found one that's good enoughyet. By good enough I mean a deal that will deliver the same rate of return wedemand from our organically generated projects, or that offers a significantstrategic opportunity. It seems self-evident that m&a activity should makecommercial sense but in the mining industry in recent years a lot of it has beendriven purely by a market that wants instant gratification. We find our owngold, so we're not forced to buy ounces at a premium by the demands of a bullmarket. Q: Are you confident that you can continue to grow production from your ownresources? A: We're planning to push up our production by 50% over the next few yearsthrough the development of the Loulo underground mines and Tongon. We're ableto do that because our exploration success has continued to build our resourcebase. At present, every gold mining company is projecting growth, yet totalindustry production keeps going down. One of the reasons for this disparitybetween fact and forecast is that it's easy to promise but tough to deliver.It's hard to discover a decent deposit. Then you have to build a mine, whichcan take anything from five to ten years. And then you have to run itprofitably. We've shown that we can do all three. Q: Is your hunt for growth opportunities going to stay focused on Africa? A: Focused on, yes; limited to, no. Africa is our home turf: we know thecountries and the people well, we have good relationships with theirgovernments, and we have a strong competitive advantage there. But our skillsare eminently exportable and we're a profit-driven company, so we'll go whereverwe can build a profitable gold mining business. Of course, there aren't manyplaces like that: South America maybe, the Pacific Rim and, most notably,Eurasia, which hosts the world's biggest undeveloped gold projects. In anyevent, it's worth noting that some countries in Africa still offer significantlong-term potential, notably Burkina Faso, Cote d'Ivoire and Mali. They're notonly highly prospective, they have business-friendly governments who areaggressively attracting investment. Q: One of the big issues facing the industry at the moment is cost. How doesthis affect you? A: The price of oil has a big impact on our business. We generate all our ownpower using diesel. With the price of oil going up by 71% compared to the March2007 quarter, diesel has increased from 26% to 30% as a percentage of our totalcosts. In addition, everything we use has to be transported to the mines overlong distances - literally thousands of kilometres - by diesel-powered vehicles.Some key consumables, such as explosives, are linked to oil. On top of that,there are the weakness of the dollar and the general rise in inflation. All ofthis means that we have to be a lot more focused on cost control and procurementefficiency. So far, we've been reasonably successful, and we think we can keepcost increases in the 10% to 15% range this year, subject to the oil price.That will enable us to maintain and even improve our operating margin. Q: Another problem seems to be a shortage of skills. How are you coping? A: This is a further instance of how the current short-term mania is damagingthe industry. The proliferation of instant mining companies has squeezed thealready limited supply of skilled people. We're not immune to this pressure,but over the years we've invested substantially in recruiting, training andretaining competent, committed people, and we've been particularly successful indeveloping local expertise at our operations. In the nurturing of intellectualcapital as in exploration, the long-term approach pays off. Q: Your share price has had a great run over the past year, but at its presentlevels, can it still offer value to new investors? A: There's short-term value and then there's long-term value. RandgoldResources offers a good balance: immediate exposure to pure gold production witha growing margin, as well as the real prospect of participation in futurediscoveries. These will be generated by a constantly replenished projectpipeline which already holds three advanced targets and a host of otherpromising opportunities. Randgold Resources also has a management with a recordof delivery and a commitment to sustained profitability. It has zero debt and astrong balance sheet, which means that it can fund its own growth - aconsiderable advantage at a time when money is becoming very hard to find. BUILDING ON EXPERIENCE AT TONGON John Steele - General manager capital projects In the real estate business, the three most important things are location,location and location. In mine development the key word is layout. A goodlayout saves capital and operating costs and allows room for expansion in thefuture. Layout defines our footprint or how much impact we make on local land users.It's a crucial part of our development process. Time spent upfront on thisaspect has many rewards later in the process. The location of our orebodies is fixed naturally; we can't reposition these.Our other infrastructure though can be optimally positioned around the orebodiesand local natural features. After ore, the next most important natural resource to consider is water. Asalways, the simplest solutions are best. River extraction or local damconstruction is the preferred route. Borehole fields sound like a greatsolution, but inevitably (if the other options are rivers and dams) they tap thesame sources of water as the rivers and dams. Borehole extraction is more suitedto tapping water aquifers in areas without the option of river extraction. It'sbetter to seek a managed solution to water supply with the other water users ina particular region. Creating a local dam has aesthetic benefits as well asproviding insurance for the operation's water and a longer term resource for thecommunity after the mining finishes. Where do we source our skills to build these mines? Obviously, there's a lot ofpressure to recruit locally and particularly from the immediate vicinity of themine where our impact is greatest and this is what we do. There are limits tothis in terms of work that can be done with short-term training, but westructure the development to use local skills and identify suitable candidatesfor operational employment during the construction phase. The overall key is tohave the best operating team available, so we'll pull the most promisingcandidates out of the construction workforce to ensure the best people areavailable to the operating team. The cheapest construction material for tailings storage tends to be the open pitwaste material (if it's suitable), so it pays us to find a site relatively closeto the pits to use this material for wall construction at the tailings storagefacility. The plant is best situated close to the orebody, but there are limits as theorebodies sometimes have extensions and the plant sites have a tendency tobecome new exploration sites when situated close to the orebody. Suitablesterilisation drilling can quickly confirm the potential of a site for theplant, but our first choice is a location within one kilometre of the orebody. Our plant layout must always take heed of any potential for the mine to expand.Upfront construction should allow for the leach train to be extended easily andfor additional milling or crushing plant to be added. Sufficient space has tobe left in the layout to accommodate these ideals. A well laid-out plant shouldfacilitate seamless expansion. When you have all these aspects covered you get a Morila or a Loulo or indeed aTongon, which will be another step forward for Randgold Resources, incorporatingthe lessons we've learned from our previous successful developments. ----------------------------------------------------------------- Registered office: La Motte Chambers, La Motte Street, St Helier, Jersey JE11BJ, Channel Islands, Telephone +44 1534 735 333 Registrars: Computershare Investor Services (Channel Islands) Limited, PO Box83, Ordnance House, 31 Pier Road, St Helier, Jersey JE4 8PW, Channel Islands Transfer agents: Computershare Services PLC, PO Box 663, 7th Floor, JupiterHouse, Triton Court, 14 Finsbury Square, London EC2A 1BR Investor and media relations: For further information contact Kathy du Plessison Telephone +44 20 7557 7738, e-mail [email protected] Website: www.randgoldresources.com DISCLAIMER: Statements made in this document with respect to Randgold Resources'current plans, estimates, strategies and beliefs and other statements that arenot historical facts are forward-looking statements about the future performanceof Randgold Resources. These statements are based on management's assumptionsand beliefs in light of the information currently available to it. RandgoldResources cautions you that a number of important risks and uncertainties couldcause actual results to differ materially from those discussed in theforward-looking statements, and therefore you should not place undue reliance onthem. The potential risks and uncertainties include, among others, risksassociated with: fluctuations in the market price of gold, gold production atMorila and Loulo, the development of Loulo and estimates of resources, reservesand mine life. For a discussion on such risk factors refer to the annual reporton Form 20-F for the year ended 31 December 2006 which was filed with the UnitedStates Securities and Exchange Commission (the 'SEC') on 25 June 2007. RandgoldResources sees no obligation to update information in this release. Cautionarynote to US investors; the 'SEC' permits companies, in their filings with the 'SEC', to disclose only proven and probable ore reserves. We use certain termsin this release, such as "resources", that the 'SEC' does not recognise andstrictly prohibits us from including in our filings with the 'SEC'. Investorsare cautioned not to assume that all or any parts of our resources will ever beconverted into reserves which qualify as 'proven and probable reserves' for thepurposes of the SEC's Industry Guide number 7. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Randgold Resources