8th May 2007 07:02
Randgold Resources Ld08 May 2007 RANDGOLD RESOURCES LIMITEDIncorporated in Jersey, Channel IslandsReg. No. 62686LSE Trading Symbol: RRSNasdaq Trading Symbol: GOLD LOULO DRIVES PROFIT INCREASE AS GARA AND TONGON DRILLING RETURNS PROMISINGRESULTS London, 8 May 2007 - Another good production performance from its Loulooperation in Mali boosted London and Nasdaq listed gold miner RandgoldResources' quarter-on-quarter net profit for the three months to March by 18% toUS$12.7 million. Loulo sustained the momentum generated in the previous quarter, with higherplant throughput and a steady feed grade delivering 67 908 ounces at a totalcash cost of US$320/oz. The company's overall attributable production of 109198 ounces was down from the previous quarter's 118 821 ounces, mainly becauseof lower output at its Morila joint venture in line with the 2007 mine plan.Both Loulo and Morila turned in satisfactory unit cost performances. Meanwhile work on the Loulo underground development has continued to advancesteadily. At Yalea, the first of the two underground mines to be developed, theboxcut construction and excavation work has been completed and the twin declinesleading from the boxcut were well established by the end of the quarter. Thedesign of Gara, the second of the mines, has been updated, resulting in thedoubling of its underground reserve to 1.65 million ounces. Chief executive Mark Bristow said the potential for the further expansion ofreserves at Gara continued to grow with the identification of new high gradezones at Gara South. "Drilling during the past quarter has confirmed the geological model of a blindhigh grade target at Gara South and all intersections indicate that themineralised QT unit - which forms the main Gara orebody - is open both alongstrike to the south and down dip. A number of drill holes have returnedintersections with an average grade of over 10g/t and work is continuing toinfill between these encouraging results, further defining high grade pods. Theextension of the QT target at Gara South has been tested up to 400 metres southof the existing wireframe and holds significant potential for the addition ofhigh grade ounces to the Gara operation," he said. Also on the Loulo permit, further drilling at the Faraba target where a resourceof 567 000 ounces has been inferred, has so far not extended mineralisationbeyond the currently defined 360 metres. However, with every hole intersectingsulphide mineralisation and strong alteration with anomalous gold values,Faraba's footprint has been extended and further drilling is planned. AtBaboto, diamond drilling is testing the continuity of the mineralised structuresidentified within the five kilometre target area. At the company's Tongon project in the Cote d'Ivoire, considerable progress isbeing made on a 30 000 metre drilling programme which will form the basis for afinal feasibility study. Infill drilling along a 1.5 kilometre long structurein the northern zone during the past quarter, has confirmed continuity of thegeology and mineralisation. Bristow noted that the first set of resultscovering some 600 metres of the strike had shown continuity and good grades overwidths of between 20 and 30 metres, underlining the exciting potential of thenorthern zone. He also said the improving political situation in Cote d'Ivoireaugured well for the future of Tongon and paved the way for the development ofother opportunities in the region. Elsewhere in Africa, additional drilling continued to define a broad zone of lowgrade mineralisation at the Kiaka target in Burkina Faso, while in Senegal theRAB drilling programme has also returned positive results. Diamond drilling isplanned for the new target Massawa, where over three kilometres of bedrockmineralisation has been identified, as well as for Delya, Sofia, Bambaraya andother targets which may be identified by RAB drilling. In Tanzania, a new jointventure agreement has been concluded with African Eagle on the Miyabi goldproject located in the south western part of the Lake Victoria Gold Belt. Randgold Resources also announced that Kankou Moussa, its Malian gold bankinitiative, had been officially launched. The bank - a partnership betweenRandgold Resources, the Malian government and the Malian gold companies, notablyLoulo - has been designed to provide local jewellers with easy access to refinedgold. RANDGOLD RESOURCES ENQUIRIES: Chief Executive - Dr Mark Bristow, +44 779 775 2288, +44 788 071 1386Investor & Media Relations - Kathy du Plessis, +27 11 728 4701, Cell: +27 83 2665847, Email: [email protected]: www.randgoldresources.com------------------------------------------------------- REPORT FOR THE QUARTER ENDED 31 MARCH 2007 * Higher throughput and improved costs at Loulo lead to an 18% increase ingroup profits quarter on quarter * Attributable reserves increase by 16% year on year * Strong cash balance after dividend payout * High grades intercepted in Gara extension drilling * Good progress made with feasibility at Tongon - significant results returnedfrom northern zone * Drilling in Burkina Faso confirms bulk low grade mineralisation and newdiamond drill targets defined in Senegal * Randgold Resources invests in a partnership with Malian gold jewelleryindustry SUMMARISED FINANCIAL INFORMATIONUS$000 Quarter Quarter Quarter 12 months ended ended ended ended 31 Mar 31 Dec 31 Mar 31 Dec 2007 2006 2006 2006Gold sales# 63 065 68 857 67 241 262 717Total cash costs* 35 007 38 125 33 463 132 540Profit from mining activity* 28 058 30 732 33 778 130 177Profit before income tax 16 225 15 763 18 422 73 973Net profit 12 748 10 790 12 767 50 876Net profit attributable to 11 418 9 980 11 545 47 564equity shareholdersNet cash generated from 13 567 8 645 22 529 70 410operationsCash and cash equivalents 139 407 143 356 158 139 143 356Attributable production(S) 109 198 116 821 118 989 448 242Group total cash costs per 321 326 281 296ounce*(S) (US$)Group cash operating costs 284 288 245 258per ounce*(S) (US$) # Gold sales does not include the non-cash profit/(loss) on the roll forward ofhedges.* Refer to explanation of non-GAAP measures provided.(S) Randgold Resources consolidates 100% of Loulo and 40% of Morila. COMMENTSNet profit for the group of US$12.7 million was 18% up on the December 2006quarter's US$10.8 million and in line with March 2006 quarter's US$12.7 million.This is mainly due to another good production quarter at Loulo along withsatisfactory unit cost performance at both Loulo and Morila. The improved netprofit was despite lower attributable production of 109 198 ounces compared tothe last quarter's 116 821 ounces and the March 2006 quarter's 118 989 ounces.Lower exploration and corporate costs compared to the December quarter and alsoa lower tax charge resulting from the production mix contributed to the improvednet profit. Loulo's relatively high proportion of production, which isexonerated from corporate tax and Morila's lower profit from mining, which istaxable, resulted in a reduction in the tax charge for the quarter. Although the spot price of gold was approximately US$30/oz higher in the March2007 quarter than the December quarter, the received gold price was onlyslightly higher at US$585/oz compared to US$581/oz. This was due to deliveringinto 33 081 ounces of the Loulo hedge at US$434/oz. 66 922 ounces weredelivered into forward contracts in the December quarter but the effect of thiswas reduced by higher unhedged Morila production in that quarter. The lower gold production was primarily the result of lower production at Moriladue to lower mined grade and slightly lower throughput. The lower production atMorila is in line with the 2007 mine plan which forecasts improved grades andgold production in the second half of the year. Loulo production was in linewith last quarter and up on the March quarter largely because of betterthroughput compared to the December quarter and higher grades compared to theMarch 2006 quarter. Costs at Loulo and Morila have been well controlled during the quarter withLoulo posting a consistent performance and Morila delivering a satisfactoryperformance in spite of the planned decrease in grade. OPERATIONSLOULOIt was another good production quarter at Loulo with the team sustaining themomentum generated during the last quarter of 2006. The crusher and plantcircuit operated well and resulted in a quarterly production of 67 908 ounces ata total cash cost of US$320/oz, fuelled by a slightly higher plant throughputand steady feed grade. Mining moved a total of 5.7 million tonnes at a strip ratio of 7.7:1 and showedimproved fleet availabilities on primary equipment. A total of 33 081 ounces of gold were delivered against the hedge at US$434/ozwhich resulted in an overall average received gold price of US$543/oz. Whileincreased mining volumes during the quarter impacted on the overall costs, unitcosts were well contained. Production statistics are:LOULO RESULTS Quarter Quarter Quarter 12 months ended ended ended ended 31 Mar 31 Dec 31 Mar 31 Dec 2007 2006 2006 2006MiningTonnes mined (000) 5 707 4 953 4 041 18 362Ore tonnes mined (000) 657 610 379 2 547MillingTonnes processed (000) 687 655 722 2 595Head grade milled (g/t) 3.2 3.7 2.9 3.2Recovery (%) 93.8 95.2 93.2 93.9Ounces produced 67 908 68 501 64 677 241 575Average price received (US$/oz)+ 543 546 556 556Cash operating costs*(US$/oz) 287 293 288 294Total cash costs*(US$/oz) 320 326 323 328Profit from mining activity 15 337 15 268 16 725 57 534(US$000)*Gold sales (US$000)*+ 37 034 37 592 37 618 136 765 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 then shows the minorityinterest separately. * Refer to explanation of non-GAAP measures provided.+ Includes the impact of 33 081 ounces delivered into the hedge at US$434/ozfor the quarter ended 31 March 2007 and 66 922 ounces at US$434/oz for the yearended 31 December 2006. Resource and Reserve UpdateLoulo resource and reserve updates to December 2006, incorporating miningdepletion were released this quarter in the 2006 annual report. Despite miningdepletion of 262 604 ounces, total resources increased by 1.42 million ounces to11.35 million ounces from extensions to both the Gara and Yalea orebodies aswell as the addition of Faraba, which contributed 570 000 inferred ounces. The reserves have also seen a significant increase following the conversion ofthe increased resource ounces to reserves through updated mine designs andoptimisations of the open pits and underground sections. Including depletion,reserves increased from 5.6 million ounces to 6.8 million ounces, attributablemostly to the expansion of the Gara underground reserve. Proved and Probable Ore ReservesCategory Tonnes Tonnes Grade Grade (Mt) (Mt) (g/t) (g/t) 2006 2005 2006 2005Proved 11.21 13.75 3.47 3.48Probable 37.93 24.82 4.54 5.07Total 49.14 38.57 4.30 4.50 Category Gold Gold Attribu- (Mozs) (Mozs) table 2006 2005 gold (80%) (Mozs)Proved 1.26 1.54Probable 5.54 4.05Total 6.80 5.59 5.44 MORILAMorila produced 103 224 ounces of gold in the first quarter of the year at atotal cash cost of US$322/oz. Production for the March 2007 quarter was closeto expectations as the mine plan indicated that lower grades would be accessedin the pit during the first half of the year. Improvements are expected duringthe second half of the year as higher grades are planned to be mined andprocessed. The plant performed satisfactorily and to some extent made up forthe shortfall in grade. MORILA RESULTS Quarter Quarter Quarter 12 months ended ended ended ended 31 Mar 31 Dec 31 Mar 31 Dec 2007 2006 2006 2006MiningTonnes mined (000) 5 015 4 585 6 059 21 512Ore tonnes mined (000) 935 911 1 478 5 242MillingTonnes processed (000) 1 055 1 086 1 048 4 138Head grade milled (g/t) 3.4 3.7 4.4 4.2Recovery (%) 92.2 92.5 92.1 91.9Ounces produced 103 224 120 801 135 779 516 667Average price received (US$/ 652 623 560 609oz)Cash operating costs* (US$/ 278 282 193 215oz)Total cash costs* (US$/oz) 322 327 231 258Profit from mining activity 31 803 38 660 42 630 181 607(US$000)*Attributable (40%proportionatelyconsolidated)Gold sales (US$000) 26 031 31 265 29 624 125 952Ounces produced 41 290 48 320 54 312 206 667Profit from mining activity 12 721 15 464 17 052 72 643(US$000)* * Refer to explanation of non-GAAP measures provided. The reserve base for Morila as at end 2006 is tabulated below with a comparisonto figures as at the end of 2005. Category Tonnes Tonnes Grade Grade (Mt) (Mt) (g/t) (g/t) 2006 2005 2006 2005Proved 15.36 15.95 2.50 3.21Probable 11.35 6.19 2.47 3.63Total 26.71 22.14 2.49 3.33 Category Gold Gold Attri- (Mozs) (Mozs) butable 2006 2005 gold (40%) (Mozs)Proved 1.23 1.65Probable 0.90 0.72Total 2.13 2.37 0.85 As a result of the increased gold price more of the marginal stockpile materialcan now be treated economically. Therefore, despite depletion, ore reserveshave been partially replaced. PROJECTS AND EVALUATIONLOULO UNDERGROUND DEVELOPMENT PROJECTYaleaThe main sink in the Yalea boxcut continued as planned and the final highwallposition was established during January 2007, completing the boxcut blast andexcavation work. The master arches were installed on both decline positions andspiled in place, allowing the initial development on both declines to commence. By quarter end, both declines were well established and development commencedaccording to the development schedule agreed with Shaft Sinkers. Other construction work continued through the quarter with the office andworkshop complex nearing completion. Additional boreholes have been drilled andthe section is now self sufficient in terms of both service and drinking watersupply. US$7 million was spent on the underground project in the quarter, US$3 millionof which was on drilling. Gara As reported in the last quarterly, a new mine design and schedule has beencompleted for the Gara underground mine, resulting in an increase in the Garareserves. The main features of the conceptual design for Gara are as follows: * The design has been based on the Yalea design with the exception that thetwo declines will both be developed from the open pit instead of a boxcut.* The twin declines will form part of a twin ramp system, one towards thenorth and the other towards the south, dividing the underground mine in twoseparate mining and ventilation districts.* Waste passes will be developed from inside the pit to facilitate backfill.* The Reverse Avoca mining method is planned to reduce ore lock up in pillars. Various mining methods are being investigated in order to mine the flatdipping section in the southern portion of the orebody. An optimisation of the completed design resulted in an increase in the Garaunderground reserve to 13.14Mt at 3.91g/t for 1.65Moz. The deep drilling beingcompleted at Gara will likely require a further optimisation exercise to beundertaken during the year. TONGON PROJECTThe 30 000 metre drilling programme which is presently underway at Tongon andwhich forms the basis for the feasibility study, has the following mainobjectives:* To achieve a 50 x 50 metre drilling grid to enable clearer definition of thevalue distribution within the deposits.* Refinement of the geological, density and geotechnical models.* Updating of the resource model.* To obtain sufficient information for moving the inferred resources toindicated and measured categories (JORC compliant) and the subsequent conversionto reserves on completion of optimised pit designs. The feasibility team has now been constituted and meets regularly as the otheraspects of the feasibility study are advanced. More details of the drillingprogramme are given in the exploration section. EXPLORATION ACTIVITIESDuring the quarter the exploration teams have been busy advancing theirprogrammes in line with Randgold Resources' strategic objectives. At Gara South, deep drilling has confirmed the presence of high grade goldmineralisation up to 400 metres south of the orebody wireframe and from depthsvarying between 425 and 675 metres below the surface. The results for thequarter, which are presented in the table below, confirm the geological model:gold mineralisation is controlled by a blind antiformal fold of the host quartztourmaline unit. Hole ID From To Inter- True Grade Including (m) (m) section width (g/t) width (m) (m)L0CP120 757.40 763.20 5.80 4.58 9.16 2.90 metres at 16.66g/t from 759.10 metresL0CP121 841.90 852.60 10.70 8.76 1.90 4.35 metres at 3.38g/t from 846.45 metres 861.57 867.86 6.29 5.15 3.39L0CP123 692.43 699.47 7.04 5.00 1.98L0CP124 551.75 558.75 7.00 5.35 17.95 1.80 metres at 59.56g/t from 556.00 metresL0CP125 975.14 806.70 11.56 8.41 1.53 820.35 826.50 6.15 4.51 11.22L0CP126 566.25 581.53 15.28 10.81 2.25 0.83 metres at 28.10g/t from 566.25 metres 591.80 598.20 6.40 4.53 10.37 1.15 metres at 31.90g/t from 592.75 metres 619.70 621.60 1.90 1.34 2.41L0CP128 726.60 735.10 8.50 6.99 1.81L0CP129 835.90 849.10 13.20 9.38 4.80 3.50 metres at 14.09g/t from 845.60 metresL0CP129 860.00 866.30 6.30 4.48 4.08 2.07 metres at 8.71g/t from 864.23 metres Also on the Loulo permit, drilling at Faraba has so far not been able to extendmineralisation beyond the currently defined 360 metres, where an inferredresource of 567 000 ounces at 2.60g/t has been calculated. However, every holedid intersect sulphide mineralisation and strong alteration with anomalous goldvalues, which extends the footprint of the Faraba target. A ground InducedPolarisation (IP) geophysical survey has been completed, covering a fourkilometre strike length of the 10 kilometre Faraba corridor. The resultsconfirm the continuity of both the geological units and structures which hostthe known mineralisation. An additional four diamond holes are planned tofurther test this target. At Baboto South, two diamond drill holes tested the continuation of themineralised structure to vertical depths of 250 metres and returned thefollowing results: BDH020 - 9.20 metres at 5.28g/t and BDH021 - 1.20 metres at4.00g/t. A ground Induced Polarisation (IP) geophysical survey has beencompleted, covering the entire five kilometre Baboto target area. The resultsdefine separate, sub-parallel structures hosting the Baboto South, Central andNorth targets. An additional four diamond holes spaced approximately 500 metresapart are testing the continuation of these mineralised structures. At Morila, further research has confirmed mineralisation in a multistageintrusion related gold system. The regional drilling programme is complete andalthough the next Morila evades detection the mine is currently integrating allthe layers of information: geology, structure and assay results, to generate athree dimensional exploration model with vectors to drive future drillprogrammes. In southern Mali, Randgold Resources has recently been granted three newexploration authorisations (Tiko, Korona and Gonsitou) following a generativetargeting exercise by its regional teams. In Senegal, positive results are being returned from RAB drilling andpreparations are underway for a 3 000 to 5 000 metre diamond drilling programme.Massawa is showing promise with bedrock intersections over a 3 kilometrestrike length, with a best result of 27 metres at 4.90g/t. At Delya, anintercept of 30 metres at 4.66g/t has been returned two kilometres south of theknown mineralisation. As well as these two targets, diamond drilling will becompleted at Sofia, Bambaraya and additional targets dependent on pending RABresults. In Cote d'Ivoire, two diamond drill rigs have commenced the 30 000 metrefeasibility drilling programme. By quarter end, 22 holes for 3 114.50 metres onthe northern zone and 8 holes for 2 378 metres on the southern zone had beencompleted. The main shear zone in the northern zone has been defined over a 2.2kilometre strike, trends 250 degrees - 260 degrees and dips 080 degrees - 070degrees northwest. It is represented by wide zones of pervasively foliated andaltered mafic volcaniclastics. The mineralisation locates on the immediatehanging wall of the main graphitic shear zone and is associated with increasedsilicification, sulphidation and fine brecciation. Previously drilling waswidely spaced (200 metres between drill lines), recent drilling has tested a 1.5kilometre segment of this structure, infilling to 100 metre spaced lines. Theresults received to date for the northern zone, presented in the table below,confirm continuity of the geology and mineralisation. Hole ID From To Inter- Grade Including (m) (m) section (g/t) width (m)TND058 40.70 74.03 33.33 3.87 10.30 metres at 7.73g/t from 40.70 metresTND059 87.40 125.24 37.84 2.14 6.21 metres at 6.19g/t from 92.54 metresTND060 45.20 50.50 5.30 1.70 50.50 51.30 0.80 520.00 51.30 80.66 29.36 2.47 11.57 metres at 4.25g/t from 66.43 metresTND061 104.32 119.12 14.80 2.23 121.84 137.45 15.61 4.36TND062 102.30 123.35 21.05 3.27 4.44 metres at 6.20g/t from 105.00 metresTND063 40.00 43.40 3.40 17.35 1.10 metres at 48.20g/t from 40.00 metres 46.55 49.55 3.00 2.04 53.32 78.28 24.96 2.24TND064 114.10 128.91 14.81 4.12 3.20 metres at 9.96g/t from 115.0 metres One result has been returned from the southern zone: TND077 - 4.05 metres at2.92g/t from 132.37 metres and 18.97 metres at 4.65g/t from 174.34 metres. In Burkina Faso additional drilling continues to define the broad zone of lowgrade mineralisation at Kiaka, over a strike length of 1.2 kilometres. A bestintersection has been returned from KDH14 - 200 metres at 1.52g/t including 18metres at 3.29g/t (from 159 metres), 21 metres at 2.74g/t (from 207 metres) and20 metres at 4.19g/t (from 239 metres). Results received to date are presentedbelow, with a further four holes pending. Hole ID From To Inter- Grade Including (m) (m) section (g/t) width (m)KDH10 131.00 136.00 5.00 1.43 140.00 143.00 3.00 0.67KDH11 142.00 274.00 133.00 0.58 23 metres at 1.04g/t from 224 metresKDH12 46.00 83.00 38.00 0.87 165.00 169.00 4.00 1.35 177.00 199.00 22.00 0.94KDH13 129.00 157.00 28.00 0.87 11 metres at 1.27g/t from 146 metres 192.00 199.00 7.00 1.93 217.00 225.00 8.00 0.90 320.00 323.00 3.00 1.56KDH14 18 metres at 3.29g/t from 159 metres 86.00 286.00 200.00 1.52 21 metres at 2.74g/t from 207 metres 20 metres at 4.19g/t from 239 metres In Ghana, follow-up work has confirmed a bedrock source to the 14 kilometreregional gold in soil anomaly on the Bole northeast permit. Pitting hasreturned values up to 1.18g/t in strongly sheared and altered(iron-carbonate-kaolin-sericite-chlorite) sediments over a 600 metre width.Infill soil sampling (400 metre by 50 metre) is in progress to better define thegold anomaly. In addition, a new permit (Fanoma) has been issued to RandgoldResources, located on the Sefwi Belt in the western region of the country and anagreement has been concluded with Satemkom, a Ghanaian company, relating to apermit on the Ashanti belt to the south of the Prestea mine. In Tanzania, a busy quarter has had the team reviewing a number of newopportunities. A new joint venture agreement has been concluded with AfricanEagle on their Miyabi gold project located in the south western part of the LakeVictoria Gold Belt. Previous exploration has identified a total JORC compliantmineral resource of 12.4Mt at a grade of 1.3g/t, containing 520 000 ounces ofgold at a 0.5g/t cut-off. Randgold Resources has the right to earn a 50%interest in the project by completing and funding a full feasibility, shouldAfrican Eagle elect not to contribute. CONSOLIDATED INCOME STATEMENT US$000 Quarter Quarter Quarter 12 months ended ended ended ended 31 Mar 31 Dec 31 Mar 31 Dec 2007 2006 2006 2006REVENUESGold sales on spot 70 483 73 777 67 241 274 907Loss on matured hedges (7 418) (4 920) - (12 190)Non-cash profit/(loss) on 235 287 (3 227) (4 413)roll forward of hedgesTotal 63 300 69 144 64 014 258 304OTHER INCOMEInterest income 1 829 1 692 2 049 7 384Other income 167 64 16 1 168Total other income 1 996 1 756 2 065 8 552Total income 65 296 70 900 66 079 266 856COSTS AND EXPENSESMine production costs 31 445 29 067 27 411 115 217Movement in production (3 740) (852) (1 296) (13 373)inventory and ore stockpilesDepreciation and amortisation 6 072 6 532 4 964 22 844General and administration 3 018 5 229 2 874 13 006expensesMining and processing costs 36 795 39 976 33 953 137 694Transport and refinery costs 247 253 153 711Royalties 4 037 4 428 4 321 16 979Exploration and corporate 6 521 7 412 7 687 28 805expenditureOther losses/(gains) - net - 330 - 653Exchange losses/(gains) - net 624 1 311 (160) 970Other expenses - - - 705Unwind of discount on 96 289 84 541provisions for rehabilitationInterest expense 751 1 138 1 619 5 825Profit before income tax 16 225 15 763 18 422 73 973Income tax expense (3 477) (4 973) (5 655) (23 097)Net profit 12 748 10 790 12 767 50 876Attributable to:Equity shareholders 11 418 9 980 11 545 47 564Minority shareholders 1 330 810 1 222 3 312 12 748 10 790 12 767 50 876Basic earnings per share 0.17 0.15 0.17 0.70(US$)Fully diluted earnings per 0.16 0.14 0.16 0.69share (US$)Average shares in issue (000) 68 820 68 695 68 131 68 392 The results have been prepared in accordance with International FinancialReporting Standards (IFRS). CONSOLIDATED BALANCE SHEET US$000 At At At 31 Mar 31 Dec 31 Mar 2007 2006 2006AssetsNon-current assetsProperty, plant and equipment 245 443 241 300 214 716Cost 308 054 297 839 253 375Accumulated depreciation and (62 611) (56 539) (38 659)amortisationDeferred taxation 2 654 2 993 2 866Long-term ore stockpiles 43 915 41 614 24 710Receivables 13 856 13 702 -Total non-current assets 305 868 299 609 242 292Current assetsInventories and stockpiles 35 161 34 200 30 495Receivables 35 803 34 999 49 907Cash and cash equivalents 139 407 143 356 158 139Total current assets 210 371 212 555 238 541Total assets 516 239 512 164 480 833Shareholders' equity 342 110 336 063 294 049Minority interest 6 037 4 707 2 617Total equity 348 147 340 770 296 666Non-current liabilitiesLong-term borrowings 24 739 25 666 48 786Loans from minority shareholders 2 801 2 773 2 533in subsidiariesDeferred taxation 462 462 -Financial liabilities - forward 46 693 39 969 48 710gold salesProvision for rehabilitation 8 938 8 842 9 571Total non-current liabilities 83 633 77 712 109 600Current liabilitiesFinancial liabilities - forward 20 010 27 525 18 158gold salesCurrent portion of long-term 24 819 24 818 23 504borrowingsAccounts payable and accrued 39 630 39 461 28 500liabilitiesTaxation payable - 1 878 4 405Total current liabilities 84 459 93 682 74 567Total equity and liabilities 516 239 512 164 480 833 The increase in property, plant and equipment is due to capital spend on thedecline development and purchase of underground equipment at Loulo. The decrease in cash and cash equivalents is due to the dividend payment ofUS$6.9 million during the quarter, offset by cash generated from operations. CONSOLIDATED CASHFLOW STATEMENT US$000 3 months 3 months 12 months ended ended ended 31 Mar 31 Mar 31 Dec 2007 2006 2006Profit before income tax 16 225 18 422 73 973Adjustment for non-cash items 6 410 8 969 29 636Effects of changes in operating working (4 285) (4 862) (18 415)capital itemsIncome tax paid (4 783) - (14 784)Net cash generated from operating activities 13 567 22 529 70 410Additions to property, plant and equipment (10 215) (17 044) (61 508)Financing of contractors - (156) 105Net cash used by investing activities (10 215) (17 200) (61 403)Ordinary shares issued 470 548 3 653Decrease in long-term loans (897) (190) (21 756)Dividends paid to company's shareholders (6 874) - -Net cash (used by)/generated from financing (7 301) 358 (18 103)activitiesNet (decrease)/increase in cash and cash (3 949) 5 687 (9 096)equivalentsCash and cash equivalents at beginning of year 143 356 152 452 152 452Cash and cash equivalents at end of year 139 407 158 139 143 356 NON-GAAP MEASURESTotal 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 associationcomprised of 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 revised accounting policies, there are no transfers to and fromdeferred stripping. 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: US$000 Quarter Quarter Quarter 12 months ended ended ended ended 31 Mar 31 Dec 31 Mar 31 Dec 2007 2006 2006 2006Gold sales on spot 70 483 73 777 67 241 274 907Loss on matured hedges (7 418) (4 920) - (12 190)Gold sales 63 065 68 857 67 241 262 717Mine production costs 31 445 29 067 27 411 115 217Movement in production inventory (3 740) (852) (1 296) (13 373)and ore stockpilesTransport and refinery costs 247 253 153 711Royalties 4 037 4 428 4 321 16 979General and administration 3 018 5 229 2 874 13 006expensesTotal cash costs 35 007 38 125 33 463 132 540Profit from mining activity 28 058 30 732 33 778 130 177 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Number Share Share Other of capital premium reserves ordinary US$000 US$000 US$000 sharesBalance - 31 December 2005 68 072 864 3 404 208 582 (41 000)March 2006Net income - - - -Movement on cash flow hedges -realised - - - 3 227unrealised - - - (23 778)Total recognised income/ - - - (20 551)(loss)Share-based payments - - - 685Share options exercised 168 700 8 540 -Shares vested# 6 830 - 108 (108)Balance - 31 March 2006 68 248 394 3 412 209 230 (60 974)Balance - 31 December 2006 68 763 561 3 440 213 653 (59 430)Net income - - - -Movement on cash flow hedges -Transfer to income statement - - - 7 183Fair value movement on - - - (6 627)financial instrumentsTotal recognised income/ - - - 556(loss)Share-based payments - - - 477Share options exercised 71 500 4 466 -Exercise of options - - 111 (111)previously expensed underIFRS 2Shares vested# 10 102 - 170 (170)Dividend relating to 2006 - - - -Balance - 31 March 2007 68 845 163 3 444 214 400 (58 678) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - continued Accum- Total Minority Total ulated attributable interest equity profits to equity US$000 US$000 US$000 shareholdersBalance - 31 December 130 836+ 301 822+ 1 395 303 217+2005March 2006Net income 11 545 11 545 1 222 12 767Movement on cash flowhedges -realised - 3 227 - 3 227unrealised - (23 778) - (23 778)Total recognised income/ 11 545 (9 006) 1 222 (7 784)(loss)Share-based payments - 685 - 685Share options exercised - 548 - 548Shares vested# - - - -Balance - 31 March 2006 142 381 294 049 2 617 296 666Balance - 31 December 178 400 336 063 4 707 340 7702006Net income 11 418 11 418 1 330 12 748Movement on cash flowhedges -Transfer to income - 7 183 - 7 183statementFair value movement on - (6 627) - (6 627)financial instrumentsTotal recognised income/ 11 418 11 974 1 330 13 304(loss)Share-based payments - 477 - 477Share options exercised - 470 - 470Exercise of options - - - -previously expensed underIFRS 2Shares vested# - - - -Dividend relating to 2006 (6 874) (6 874) - (6 874)Balance - 31 March 2007 182 944 342 110 6 037 348 147 # Restricted shares were issued to directors as remuneration. The transferbetween 'other reserves' and 'share premium' in respect of the shares vestedrepresents the cost calculated in accordance with IFRS 2. + Restated due to change in accounting policy relating to deferred stripping.See note on accounting policies. FORWARD COMMODITY CONTRACTS The group's hedging position, which all relates to the Loulo project financing,at 31 March 2007 appears below: Maturity date Forward Forward sales sales ounces average US$/ozYear ended 2007 99 502 440Year ended 2008 80 496 431Year ended 2009 84 996 437Total 264 994 436 The remaining portion of the hedge book represents approximately 32% of plannedproduction at Loulo for the period and 20% of the group's attributableproduction. In the current gold price environment, it is the company'sintention to roll out to 2010 some of the 2007 forward sales contracts toprovide some protection during the Loulo underground capital programme. Theroll out will be completed in the second quarter of 2007. Morila's production is completely exposed to spot gold prices. During the quarter, the company delivered into 33 081 ounces of its hedge bookat an average price of US$434/oz and rolled longer-dated 10 752 ounces. ANNUAL RESOURCE AND RESERVE DECLARATIONOre reserves and mineral resources have increased significantly year on year andtotal attributable resources now stand at 12.55 million ounces in the measured,indicated and inferred categories compared with 11.67 million ounces at the endof 2005. Ore reserves attributable to the company have increased from 5.42million ounces to 6.29 million ounces over the year, despite the depletion ofsome 400 000 ounces during 2006. The major contributor to this increase has been the Loulo mine where drilling ofthe underground extensions to the Gara orebody has led to a total resourceinventory increase from 9.93 million ounces to 11.35 million ounces this year.Successful reserve conversion has led to an increase of ore reserves from 5.59million ounces to 6.80 million ounces. 2006 RESOURCE AND RESERVE DECLARATION (abridged) MINE/ PROJECT Category Tonnes Grade Gold Attribut-able gold (Mt) (g/t) (Moz) (Moz) 2006 2006 2006MINERAL RESOURCESMorila 40% Measured and indicated 30.04 2.61 2.52 1.01 Inferred 3.09 3.31 0.33 0.13Loulo 80% Measured and indicated 61.77 4.64 9.22 7.37 Inferred 22.77 2.91 2.13 1.70Tongon 75% Measured and indicated Inferred 35.96 2.69 3.11 2.33Total measured and 91.81 3.98 11.74 8.38indicatedTotal inferred 61.81 2.80 5.57 4.17ORE RESERVESMorila Proved and probable 26.71 2.49 2.13 0.85Loulo Proved and probable 49.14 4.30 6.80 5.44Total proved and 75.85 3.66 8.93 6.29probable * Randgold Resources reports its mineral resources and ore reserves inaccordance with the JORC code. The reporting of ore reserves is also inaccordance with Industry Guide 7.* Reserves are calculated at a gold price of US$475/oz.* Dilution and ore loss are incorporated into the 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. We use certain terms in this report, such as "resources" that the SEC guidelines strictly prohibit us from including in ourfilings with the SEC. GENERALThe company continues to evaluate various opportunities both at corporate andproject levels. Production is planned to increase in the second half of the year as highergrades are exposed at Morila as per the current mine plan. The improved political situation in Cote d'Ivoire bodes well not only for thedevelopment of the Tongon project but also paves the way for opportunities toimprove logistics in the sub-region. On 24 April 2007, the company's Malian jewellery initiative, Kankou Moussa, wasofficially inaugurated in Bamako. Kankou Moussa is a private joint venture, theaim of which is to foster the growth of Malian jewellery manufacture. Itfurther cements Randgold Resources' strong partnership with the government andpeople of Mali. D M Bristow R A WilliamsChief Executive Financial Director 8 May 2007 ------------------------------------------------------- RANDGOLD RESOURCES UPDATES FAQ A new feature in which Mark Bristow answers questions raised by analysts: Q: Yalea will be the first modern mechanised underground mine in Mali and oneof only a few underground gold mines in Africa, outside of South Africa. Howwill you be addressing the shortage of underground mining skills, given theeffect they are having on cash costs, even in North America and Australia? InAfrica, there are examples of this, where the cost of underground mining and ofthe necessary equipment and supplies has been found to be far higher thanoriginally anticipated. A: I don't believe the shortage of skills in itself produces high costs. Theproblem here is the proliferation of new mining operations which are beinghastily developed to cash in on some perceived opportunity, often on the basisof sketchy feasibility studies, which is why the actual numbers then eventuallydon't stand up. At Randgold Resources, on the other hand, we've always beenmeticulously prudent and painstaking about our feasibility studies and if youlook at Morila and Loulo, you can see how spot-on our planning and forecastshave been. In assessing the feasibility of a project, you need a thoroughunderstanding of the cost and supply chain as well as of the orebody. If youtake some recent projects, the problem is not unforeseeable costs, it's thedrive from the corporate centre to deliver on an acquisition promise instead ofdeveloping an operation that matches the nature of the orebody. At Yalea we are developing an underground mine from scratch basing our chosenmining method on the characteristics of the orebody. This will allow us large,low cost mechanised stopes and we will be able to mine efficiently because wehave combined a high volume, low cost mining method with a high volume, low costproven method of transport. Of note is that the conveyor method of transporthas significant advantages over the more conventional truck transport - theseinclude reduced ventilation requirements, reduced reliance on labour, energyefficiency and safety. Another interesting feature is that there will be no compressed air usedunderground - a major source of wastage of most mines' energy supply. Another issue is the proper matching of the scale of the project to the resourceand the potential of the orebody. This is the cause of many good projectsfailing, particularly in remote areas, where critical mass is needed to ensureacceptable payback. Understanding our management of risk in Africa are crucialto getting it right. An important point to note is that we're very experienced in operating at remotesites where there are no readily available skills, even of the most rudimentarykind. We've consequently since our earliest days had to develop very effectivetraining methods. Approximately one third of our national workforces are drawnfrom the local areas surrounding our operations and we've had very good resultswith them. Even up to top management levels, a lot of our people are nationals.Everybody has to be trained - drivers, mechanics, geologists - and whetherthey're going to be working on surface or underground ultimately makes nodifference. Randgold Resources has invested substantially not just in the development ofprofitable operations but also in the development of its intellectual capital.Its management team is generally acknowledged as one the best in the industryand this capability extends down through all the levels of the business. If wedon't have expertise in a particular area, we'll find the best there is. Wedon't have the Achilles heel of a head office that requires us to use in-housetechnologies and technicians and therefore we employ experienced consultants toensure that we are using appropriate technology and methodology. And, ofcourse, many of our managers learned their trade on deep underground mines. Q: Is the plan to continue using contract miners? If so, will they guaranteethe costs and efficiencies you expect? What is the risk associated withcontractors - what, for example, happens if they run into financialdifficulties? A: There are many challenges associated with using contractors but over thepast 10 years we've learned how to cope with these. At Loulo, for example,we're using an integrated combination of skills and services which we managetightly. The control of costs and efficiencies can never be abdicated tocontractors, it remains a key responsibility of management. At Yalea, ShaftSinkers are supplying both labour management and technical expertise to thedevelopment contract. In due course we'll have similar labour managementcontracts for drilling, blasting, loading and hauling of our stoping operations.One of the lessons we've learned is that we have to own all the equipmentourselves, so that's what we do. Our main equipment suppliers - CATUnderground, Atlas Copco and BTI - are all represented in West Africa by JADelmas. Their agents in Mali, Manutention Africaine, not only have veryadvanced workshop and rebuild facilities in Bamako but also have an office andworkshop complex on site at Loulo to ensure on-the-spot support for spares andservice. As far as other supplies are concerned, over the years we've developedvery advanced and sophisticated systems for managing long and complex supplychains. Q: What sort of safety standards is Yalea going to target? A: We're a FTSE 250 company with impeccable governance standards so at Yalea,as elsewhere in our operations, we will aspire to the highest safety andenvironmental criteria, meeting all international industry benchmarks as well asthe requirements of our host countries. Q: How will geotechnical problems such as orebody faulting be tackled? A: Geological expertise is the foundation on which Randgold Resources was builtand which continues to provide its key competitive advantage. In any business,the first requirement is to know your product which in mining is the orebody.The extensive drilling we've done and continue to do at Yalea and Gara plus theexperience gained in the open pit mining has given us a very good understandingof the geometry and value distribution of these orebodies. In general theorebodies are 10m to 12m thick and thus far we've found little faulting, justsome structural pinching and swelling which we're confident that accuratemodelling will enable us to anticipate and deal with. DRILL RIGS ACROSS AFRICA DRIVE OUR FUTURE GROWTH While intensive exploration continues at and around Loulo as well as Morila,Randgold Resources' hunt for profitable prospects also extends across five otherAfrican countries and beyond. In Cote d'Ivoire, where the political situation continues to stabilise, twodiamond coring drill rigs have started the feasibility drilling over the Tongondeposit. Results to date confirm our belief that this project could be anotherworld class gold mine in the making for the Randgold Resources stable. In Senegal, scout RAB drilling has identified a new target, Massawa, with over 3kilometres of bedrock mineralisation. This, together with Delya, Bambaraya andSofia, will be the focus of diamond drilling during the next quarter. Further drilling at Kiaka in Burkina Faso continues to define a broad zone oflow grade mineralisation at what is increasingly looking like a very promisingproject. Elsewhere, we continue to develop our portfolio in Ghana while generative workis ongoing in Tanzania and our recently established 'African hunting team'searches for prospects further afield on the continent. NEW HIGH GRADE ZONES IDENTIFIED AT GARA SOUTH The potential for the expansion of reserves at Gara continues to grow as resultsfrom recent drilling at Gara South are received and interpreted. Drilling during the quarter (8 holes/6 361m) has confirmed the geological modelof a blind, high grade target at Gara South and all intersections indicate thatthe mineralised QT unit is continuous and open both along strike to the southand down dip. This target is the same mineralised unit which forms the mainGara orebody. A number of drill holes from this early drilling programme havereturned intersections with an average grade of over 10g/t and work iscontinuing to infill between these exciting results, further defining high gradepods of mineralisation. This extension to the QT target at Gara South has been tested up to 400 metressouth of the existing wireframe at Gara and holds enormous potential for theaddition of high grade ounces to the Gara operation. Within the target zone,high grade pay-shoots which sit on the intersection between the hinges of thefolded QT unit and cross-cutting 040 structures have been intersected and can betraced up-plunge to near-surface, high grade zones in the main Gara deposit.Current drilling aims to extend the known mineralisation down-dip. The target area is adjacent to the existing underground design at Gara which canbe modified to exploit these new high grade zones. KANKOU MOUSSA: THE START OF A DREAM Kankou Moussa, an initiative led by Randgold Resources and supported by theMalian Government, opened its doors on 24 April 2007 in Bamako, Mali. In a country where gold is historically of social, cultural and economicsignificance the contribution of mining companies in discovering and developingorebodies has made Mali one of the four largest producers in Africa. Kankou Moussa is a gold bank for the people of Mali, established to support theMalian jewellery industry by providing gold for commercial use by jewellers,thus giving them easier access to refined gold and the opportunity to sell theirjewellery on international markets. Kankou Moussa, which is a partnership between Randgold Resources, Mali goldmining companies - most significantly Loulo - and the Government of Mali, willsee that gold is delivered to the facility on a regular basis and in a secureenvironment. More than just a simple business, it is the start of a dream to bring gold backto the ordinary people of Mali, a dream that opens opportunities for more tojoin and help develop. RANDGOLD RESOURCES ANNUAL REPORT The 2006 annual report is now available and has been mailed to shareholders. Anelectronic copy can be downloaded from the company website. If you wish toreceive a printed copy please contact Kathy du Plessis atrangoldresources@dpapr.com----------------------------------------------------------------- REGISTERED OFFICE:La Motte Chambers, La Motte Street, St Helier, Jersey JE1 1BJ, Channel Islands REGISTRARS:Computershare Investor Services (Channel Islands) Limited, P.O. Box 83, OrdnanceHouse, 31 Pier Road, St Helier, Jersey JE4 8PW, Channel Islands TRANSFER AGENTS:Computershare Services PLC, P.O. Box 663, 7th Floor, Jupiter House, TritonCourt, 14 Finsbury Square, London EC2A 1BR INVESTOR AND MEDIA RELATIONS:For further information contact Kathy du Plessis on Telephone +27 (11) 728-4701,Fax +27 (11) 728-2547 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 2005 annual report notes that the financial statements do not reflectany provisions or other adjustments that might arise from the claims and legalprocess initiated by Loulo against MDM. Other potential risks and uncertaintiesinclude risks associated with: fluctuations in the market price of gold, goldproduction at Morila, the development of Loulo and estimates of resources,reserves and mine life. For a discussion on such other risk factors refer tothe annual report on Form 20-F for the year ended 31 December 2005 which wasfiled with the United States Securities and Exchange Commission (the 'SEC') on29 June 2006. Randgold Resources assumes no obligation to update information inthis release. Cautionary note to US investors: the 'SEC' permits companies, intheir 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' doesnot 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 ourresources will ever be converted into reserves which qualify as 'proven andprobable 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 ExchangeRelated Shares:
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