8th May 2006 07:01
Randgold Resources Ld08 May 2006 RANDGOLD RESOURCES LIMITEDIncorporated in Jersey, Channel IslandsReg. No. 62686LSE Trading Symbol: RRSNasdaq Trading Symbol: GOLD REPORT FOR THE QUARTER ENDED 31 MARCH 2006 * Solid profits and stronger cashflow on back of increased profit from mining* Loulo maintains production and progresses with Phase 2 completion* Loulo underground project on track* Drilling highlights potential for extensions to Loulo and Yalea as well as new deposits* Morila delivers on budget and exploration initiative produces first results* Group initiates return to Tongon and increases groundholding in Cote d'Ivoire* Group set to drill in seven project areas in five countries Randgold Resources Limited has 68.2 million shares in issue as at 31 March 2006 SUMMARISED FINANCIAL INFORMATION 12 Quarter Quarter months ended ended ended 31 Dec 31 Mar 31 Dec Quarter 2005 2005 2005 ended (Re- (Re- (Re- 31 Mar stated) stated) stated)US$000 2006 + + + Gold sales revenue 67 241 60 553 31 986 151 502Total cash costs* 33 463 29 820+ 14 121+ 65 939+Profit from miningactivity* 33 778 30 733+ 17 865+ 85 563+Profit from operations* 21 127 18 717+ 9 446+ 49 604+Net profit 12 767 17 009+ 11 276+ 47 856+Net profit (aspreviously reported) n/a 12 426 12 120 40 887Net profit attributableto equity shareholders 11 545 14 660+ 11 276+ 45 507+Net cash generated fromoperations 22 529 13 486 1 317 29 736Bank and cash 158 139 152 452 69 426 152 452Attributable production**(ounces) 118 989 126 404 66 908 328 428Group total cash costsper ounce** * (US$) 281 236+ 211+ 201+Group cash operatingcosts per ounce* (US$) 245 204+ 179+ 169+ * Refer to explanation of non-GAAP measures provided.** Randgold Resources consolidates 40% of Morila and 100% of Loulo+ Restated due to change in accounting policy relating to deferred stripping. See note on accounting policies.n/a Not applicable COMMENTS * Total attributable production for the quarter was 118 989 ounces at totalcash costs of US$281/oz. This compares to 66 908 ounces at total cash costs ofUS$211/oz in the March 2005 quarter. The increase in production and cash costsis due to the additional ounces from Loulo's first full quarter of production.These results are in accordance with SEC's EITF 04-06 on deferred stripping. * The results for 2005 have also been restated due to a change in accountingpolicy relating to discontinuing accounting for deferred stripping (seeaccounting policies section). * Gold sales revenue increased by US$35.3 million over the corresponding 2005quarter as a result of Loulo coming on stream and the increased gold price. * Total cash costs of US$33.5 million for the quarter ended 31 March 2006include US$20.9 million in respect of Loulo, which is the main reason for theincrease from US$14.1 million for the corresponding quarter in 2005. * Profit from mining activity for the quarter ended March 2006 is US$15.9million higher than the corresponding quarter in 2005, mainly as a result ofLoulo's profit of US$16.7 million, partially offset by an increase in costs atMorila which is largely due to lower grades processed in line with the mineplan. * Net profit attributable to equity shareholders is calculated after deductingUS$1.2 million attributable to Loulo minority shareholders. * Total attributable ounces produced were down slightly compared to the 126 404ounces produced in the December 2005 quarter. The decrease is due to theexpected grade decline at Morila as well as the lower grade at Loulo which ispart of the revised short term plan relating to the installation of the hardrock crushing circuit. This also pushed up unit costs per ounce. * Higher gold prices received in the March quarter offset the lower productionand resulted in a 10% increase in profit from mining. * Net profit in the current quarter was US$12.8 million. This is the first fullquarter of tax for Morila which ended its tax holiday in November 2005. Netprofit for the quarter ended 31 December 2005 was US$17 million (US$12.5 millionbefore restatement). OPERATIONS Loulo The quarter ended 31 March 2006 is the first full quarter of production sincethe mine became operational on 8 November 2005. Throughput at 722 000 tonnes,represents a significant achievement considering the challenges the managementteam had to contend with as a result of the delay in completing the Phase 2crushing circuit. The higher throughput served to offset the lower head grade at 2.9g/t which is,as per the revised short term feed strategy designed to minimise the impact of adelay in starting the hard rock crushing circuit caused by the defaultingconstruction contractor. Recovery and production are in line with expectations. The average gold price received was US$556/oz for the quarter, representing asubstantial increase when compared to the quarter ended 31 December 2005. The significant impact on cost per ounce was the lower grade and additionalrehandling and mobile crushing costs resulting from the short term feedstrategy. Cash operating and total cash costs for the quarter were neverthelessin line with forecast and are expected to improve after the commissioning ofPhase 2 and as the operation settles down. Production statistics are: 12 Quarter Quarter Quarter months ended ended ended ended 31 Mar 31 Dec 31 Mar 31 DecLoulo results 2006 2005 2005 2005MiningTonnes mined (000) 4 041 4 149 - 12 096Ore tonnes mined (000) 379 537 - 1 213MillingTonnes processed (000) 722 551 - 551Head grade milled (g/t) 2.9 4.5 - 4.5Recovery (%) 93.2 94.3 - 94.3Ounces produced 64 677 67 984 - 67 984Average price received(US$/oz) 556 499 - 499Cash operating costs*(US$/oz) 288 137 - 137Total cash costs*(US$/oz) 323 165 - 165Profit from miningactivity* (US$000) 16 725 19 485 - 19 485Gold revenue (US$000) 37 618 30 688 - 30 688 Randgold Resources owns 80% of Loulo with the Government of Mali owning 20%.Randgold Resources consolidates 100% of Loulo and then adjusts the incomestatement for the minority interest. * Refer to explanation of non-GAAP measures provided. The prior period results for Loulo have not been affected by the change inaccounting policy relating to deferred stripping as there have been no transfersto deferred stripping since the mine became operational. As reported last quarter Somilo S.A. continues to believe it is entitled torecover the funds referred to in the note to the balance sheet contained in ourfinancial report for the quarter and year ended 31 December 2005. Recovery ofthe full amount and other legal claims from MDM Foreman (Pty) Ltd ("MDM") isdependent on the liquidation process and the successful conclusion of the legalaction referred to in the same note, of which there can be no assurance. Thecourt has postponed considering the case for the order of final liquidation ofMDM until 20 June 2006. The mine has had to deal with many unfinished construction items, and withnumerous challenges relating to structural construction delays due to requiredsite alterations and repairs caused by inadequacies found in some of theoriginal contractor material. Nevertheless, the Phase 1 circuit of the projectis, subject to a few re-design issues relating to the CIL circuit, nowsubstantially complete. All aspects of the plant are now performing well and thecompletion of Phase 2 on time is the key focus. The hard ore circuit representing Phase 2 has seen excellent progress despitethe disruption caused by taking back the contract from the main contractor. Thesecondary and tertiary crushers have been installed and the primary crusher ison site awaiting installation once the civil works are finished. These arescheduled for completion in the second quarter. The tailings return water pipeline has also been installed, allowing for there-circulation of water back to the plant area. Although challenging, the schedule still remains on track for the commissioningof Phase 2 towards the end of the second quarter. Updating of the underground feasibility study allowed the conversion of 3.82million more resource ounces into reserves. Loulo Attri- butable Tonnes Grade Gold gold (Mt) (g/t) (Mozs) (80%)Reserves Category 2005 2005 2005 (Mozs) Proven 13.75 3.48 1.54 Probable 24.82 5.07 4.05Sub-total Proven and probable 38.57 4.50 5.59 4.47 Attri- butable Tonnes Grade Gold gold (Mt) (g/t) (Mozs) (80%)Resources Category 2005 2005 2005 (Mozs) Measured and indicated 61.86 4.54 9.03 7.22 Inferred 9.82 2.87 0.90 0.72 * Full details of the group's reserves and resources are contained in theannual report for the year ended 31 December 2005. Morila Morila made a good start to the year with plant throughput averaging 349 000tonnes per month over the first quarter, in line with the design capacity of 350000 tonnes. This 11% increase in throughput partially made up for the expecteddecrease in grade, and gold production for the quarter was 135 779 ounces. Costsdecreased compared to the previous quarter's which were impacted bynon-recurring accounting adjustments. Total cash costs for the quarter wereUS$231/ounce. Morila results 12 Quarter Quarter months ended ended ended Quarter 31 Dec 31 Mar 31 Dec ended 2005 2005 2005 31 Mar (Restat- (Restat- (Restat- 2006 ed)+ ed)+ ed)+MiningTonnes mined (000) 6 059 6 798 7 815 24 554Ore tonnes mined (000) 1 478 2 199 1 646 7 041MillingTonnes processed (000) 1 048 946 857 3 763Head grade milled (g/t) 4.4 5.2 6.6 5.9Recovery (%) 92.1 90.8 92.4 91.7Ounces produced 135 779 146 049 167 272 651 110Average price received(US$/oz) 560 485 428 449Cash operating costs*(US$/oz) 193 282+ 179+ 178+Total cash costs* (US$/oz) 231 319+ 211+ 210+Profit from miningactivity* (US$000) 42 630 28 120+ 44 663+ 158 185+Attributable(40% proportionatelyconsolidated)Gold revenue (US$000) 29 624 29 865 31 986 120 814Ounces produced 54 312 58 420 66 908 260 444Profit from miningactivity (US$000) 17 052 11 248+ 17 865+ 66 078+ * Refer to explanation of non-GAAP measures provided. + Restated due to change in accounting policy related to deferred stripping. See note on accounting policies. As indicated in the previous quarter, much of the depletion of the resourcewhich occurred in 2005 from mining activities was replaced by year end as aresult of infill drilling. This reflects in the ore reserve statement as at end2005, based on the current orebody model. Morila Attri- butable Tonnes Grade Gold gold (Mt) (g/t) (Mozs) (40%)Reserves Category 2005 2005 2005 (Mozs) Proven 15.95 3.21 1.65 Probable 6.19 3.63 0.72Sub-total Proven and probable 22.14 3.33 2.37 0.95 Attri- butable Tonnes Grade Gold goldRe- (Mt) (g/t) (Mozs) (40%)sources Category 2005 2005 2005 (Mozs) Measured and indicated 34.07 2.84 3.11 1.24 Indicated 3.78 3.19 0.39 0.16 * Full details of the group's reserves and resources are contained in the annual report for the year ended 31 December 2005. The gold price at which pit optimisation has been run, has increased from US$375/ounce to US$400/ounce, but this has been offset by increases in input costssuch as diesel, transport and steel balls. The success of the infill and resource extension drilling has led to theidentification of an additional 510 000 ounces of reserves, partially replacingthe 715 000 ounces delivered to the mill during 2005. Higher density drilling has also led to the proportion of reserves in the higherconfidence proven category increasing from 50% to 70%. It is currently estimated that mining activities will cease during 2008 subjectto no additional reserves being added to the mine plan, with processing ofstockpiles continuing until 2013. Over the period 2006-2008 it is expected thatproduction will be in excess of 500 000 ounces per year. At current gold prices,it is possible that additional existing mineral resources could be converted tomining reserves, thereby impacting positively on production and/or mine life. As discussed last quarter, resource extension drilling in the south of the pitwas responsible for a significant part of the additional mineral resourceidentified during the year. A detailed follow-up drilling programme hascontinued and has yielded a number of significant results which suggestcontinuity of the Morila orezone beyond the tonalite intrusion. The 40 000 metre regional drilling programme has made good progress this quarterwith a focus on the south westerly extension of the high grade axis identifiedin the pit. Low grade anomalous values have been returned for several of thedrillholes and REG003, which is situated one kilometre south west along strikeof the high grade zone, returned a value of 34.89g/t over 4.43 metres from adepth of 400 metres below surface. Follow up drilling on this target willinvolve close spaced drilling as well as a programme designed to connect thetonalite extension of the orebody with the intersection in REG003. PROJECTS AND EVALUATION Loulo Gold Mine - Underground development Further progress has been made during the quarter on finalising plans for thedevelopment of the Yalea underground mine: * A detailed mine design and production scheduling has been completed. * A twin decline system for underground access (4.5 metres high by 4.5 metreswide) has replaced the previous single decline access. One decline will beequipped with a conveyor belt for rock transport and the other decline will beused for vehicle access. This design is expected to bring about advantages insafety, ventilation and timing of the project. * The mine ventilation design has been completed. * The boxcut and portal design is in the process of being completed and portalconstruction for the conveyor decline is expected to start in the third quarterof 2006. * The conveyor decline development will start in the fourth quarter of 2006 andaccessing of first development ore is expected in 2007. First stoping ore isexpected by the end of 2007. * The heavy vehicle fleet for Yalea has been finalised and a delivery scheduleset for 2006 and 2007. * The selection process to appoint a suitable development contractor for Yaleais in progress and the contract is expected to be awarded during June. The underground development plan for Loulo 0 is also currently being revised.Work is in progress to further review the plan to integrate ore tonnages fromthe opencast and underground sources. This will form the basis of a decision toincrease plant capacity to 300 000 tonnes per month from the current nameplatedesign of 200 000 tonnes per month. Tongon Project Interaction with mines ministry and other relevant parties in Cote d'Ivoire hascontinued in advance of re-starting work on the project. By the end of thequarter the new project team was on site preparing the field camp and localoffices for the commencement of a 10 drillhole, 2 000 metre programme designedto fill in gaps in the northern zone and extend coverage in depth at thesouthern zone. A drilling contract has been finalised and drilling is expectedto start during June and be complete by the onset of the rainy season. Thistactical programme will be used to design a further 27 000 metre drillingprogramme which will form the basis of the final feasibility study for theproject. Given a satisfactory outcome to the planned elections in October, the companyaims to complete the feasibility study within two years. EXPLORATION ACTIVITIES Exploration within the Loulo region continued to highlight the potential forfurther extensions to the known orebodies as well as identifying new deposits. Drilling at Yalea concentrated on delineating the high grade zone as well astesting the northern and southern extensions of the orebody. Borehole YDH256 at4.15 metres at 6.48g/t confirmed the presence of economic mineralisation belowand to the north of our existing scheduled levels. At Loulo 0 an explorationprogramme to test the strike extensions of the orebody was successful, with holeL0CP66 returning 22.6 metres at 8.2g/t located 600 metres south of the existingwireframe. Two rigs have been mobilised to Loulo 0 to further test high gradeextensions to the orebody at depth. On the Loulo permit at the Faraba target, 26 RC holes for 3 385 metres completedthe first phase of reconnaissance drilling and confirmed bedrock mineralisationover a 2.7 kilometre strike length. Results received during the quarter include:FARC002 - 39 metres at 2.15g/t including 3 metres at 7.8g/t; FARC008 - 51 metresat 2.26g/t including 3 metres at 12g/t; FARC010 - 109 metres at 0.77g/t; FARC030- 49 metres at 1.27g/t; FARC031 - 25 metres at 1.46g/t including 4 metres at3.7g/t; and FARC032 - 27 metres at 1.25g/t including 2 metres at 6.28g/t.Mineralisation is developed within a north-south shear zone associated withtourmaline-iron carbonate-silica alteration, and disseminated pyrite andarsenopyrite. A four hole diamond drill programme is underway as a preliminaryfollow-up to the RC drilling. The first hole (FDH04) drilled in the north ofFaraba below FARC030 and FARC031 returned 12.6 metres at 4.03g/t from 225.3metres. At P64, additional results have been received from the first phase of drillingand include: P64RC03 - 7 metres at 1.47g/t and 4 metres at 1.03g/t; P64RC04 - 29metres at 1.03g/t including 2 metres at 8.80g/t and 5 metres at 4.18g/t; andP64RC07 - 5 metres at 2.31g/t. Diamond drilling is currently in progress. At Selou to the South of Loulo, the Boulandissou target is returning positivetrench results (BNT02: 28 metres at 3.31g/t) along an eight kilometre anomalousshear corridor. While at Sinsinko a broad low grade mineralised envelope hasbeen defined over a 1.3 kilometre strike length (trench BET05 returned 76 metresat 0.83g/t). Reconnaissance diamond drilling is planned during the next quarter. At Sitakily, eight diamond holes for 1 407 metres were drilled, testing threesub-parallel corridors of porphyry dykes. The results, in general, returnednarrow low grade (less than 1g/t) gold intercepts, apart from SDDH002 whichreturned 6.60 metres at 115.50g/t associated with visible gold in a 1 centimetrequartz vein. RC drilling is planned to follow-up this intersection. At Morila, the 40 000 metre regional drilling programme commenced and hasinitially concentrated on the extension of the high grade axis approximately onekilometre to the southwest of the pit. Mine infrastructure including waste dumpslimits closer access. Results return a broad halo anomalous in gold similar tothe footprint around the Morila orebody within which locate higher gradeintercepts including REG003: 4.43 metres at 34.89g/t. The style ofmineralisation, alteration and structural setting are similar to the maindeposit. The drilling is currently widely spaced 250 metres by 500 metres. In South Mali, a 3 000 metre regional diamond drilling programme has beenapproved to cover permits in the Morila region and test a range of targets,while providing essential structural information across the area. In particularthe holes will test areas where there are either shallow dipping foliatedsediments or broad open folds. In addition a 3 000 metre aircore drillingprogramme is underway testing 11 targets on the Diamou and Seriba-Sobara permitswhich are part of the OMRD Diamou joint venture agreement. The company is speeding up the evaluation of targets in Senegal, which currentlystand at 34. A 6 000 metre RAB contract has been signed and is due to commenceshortly, testing seven targets. Diamond drill motivations are being prepared tofurther test Bambaraya, where 800 metres of bedrock mineralisation have beendefined by trenching, and Sofia, a plus three kilometre anomalous structure, aswell as new targets: Mansa, Deliya, Matiba and additional targets which arecurrently being defined. In Burkina Faso, trenching on the Kiaka North target has defined a very broad,low grade envelope of bedrock mineralisation over a one kilometre strike length.Trench results include: KAT03 - 36 metres at 0.94g/t (including 20 metres at1.25g/t), 88 metres at 0.86g/t (including 10 metres at 1.92g/t), 20 metres at4.89g/t (including 10 metres at 9.07g/t) and 10 metres at 0.97g/t; and KAT04 -56 metres at 0.82g/t (including eight metres at 1.12g/t) and 52 metres at 1.14g/t (including eight metres at 2.63g/t). Early stage exploration has commenced on the newly acquired portfolio of permitsin Ghana. On the Central Goldfields permit, a stream sediment sampling programmehas returned anomalous gold values along a seven kilometre segment of a regionalshear, developed at the contact between sedimentary and volcanic rocks. In the Cote d'Ivoire a team is on the ground in Korhogo and at the Tongonproject site, preparing for a 2 000 metre diamond drill programme. A rig hasbeen sourced and drilling is planned to start in early June. The team iscurrently supervising maintenance on the Korhogo office and Tongon field campand drill platforms are being prepared. Elsewhere in the Cote d'Ivoire, two newpermits in the south of the country have been granted and early phasereconnaissance exploration work has commenced. The Apouasso permit (1 000 km2)locates on the extension of the Sefwi Belt from Ghana, along strike fromNewmont's Ahafo project. The Dignago permit (1 000 km2) locates in southwestCote d'Ivoire on a major regional structure at the contact between basementgneisses and Birimian volcanics. A four hole reconnaissance diamond drill programme has been completed atKiabakari in Tanzania. This programme provided detailed information on bedrockgeology, structure, alteration and mineralisation to enable a betterunderstanding of the Kiabakari system. The drilling indicates a wide zone ofheterogeneous deformation in gabbro and along more discreet mylonite zones inmafic volcanic units. The sulphide alteration and deformed zones observed in thecore indicates a large hydrothermal system. A best intercept of 12 metres at3.29g/t was returned. In addition, two new zones were identified north of theknown mineralisation. CONSOLIDATED INCOME STATEMENT 12 Quarter Quarter months ended ended ended Quarter 31 Dec 31 Mar 31 Dec ended 2005 2005 2005 31 Mar (Restat- (Restat- (Restat-US$000 2006 ed)+ ed)+ ed)+REVENUESGold sales 67 241 60 553 31 986 151 502OTHER INCOMEInterest income 2 049 1 067 325 2 064Exchange gains 2 056 25 365 413Other income 16 194 1 602 1 303Total other income 4 121 1 286 2 292 3 780Total revenue 71 362 61 839 34 278 155 282COSTS AND EXPENSESMine production costs 27 411 26 822 15 860 66 612Movement in productioninventory and orestockpile (1 296) (3 882)+ (5 410)+ (18 744)+Transfer from/(to)deferred stripping - -+ -+ -+Depreciation andamortisation 4 964 4 733 2 595 11 910General andadministration expenses 2 874 2 724 1 442 7 438Mining and processingcosts 33 953 30 397+ 14 487+ 67 216+Transport and refinerycosts 153 162 67 360Royalties 4 321 3 994 2 162 10 273Exploration andcorporate expenditure 7 687 7 283 5 824 24 049Loss/(gain) on forwardgold sales(S) 3 227 - - (45)Exchange losses 1 896 416 - 2 487Other expenses - 1 536 - 801Unwind of discount onprovisions forrehabilitation 84 (125) 117 254Interest expense 1 619 997 345 1 861Profit before incometax 18 422 17 179+ 11 276+ 48 026+Income tax expense (5 655) (170)+ - (170)+Net profit 12 767 17 009+ 11 276+ 47 856+Attributable to:Equity shareholders 11 545 14 660+ 11 276+ 45 507+Minority shareholders 1 222 2 349 - 2 349 12 767 17 009+ 11 276+ 47 856+Basic earnings pershare (US$) 0.17 0.22+ 0.19+ 0.74+Fully diluted earningsper share (US$) 0.16 0.22+ 0.18+ 0.71+Average shares in issue(000) 68 131 65 311 59 394 61 702 The results have been prepared in accordance with International FinancialReporting Standards (IFRS). + Restated due to change in accounting policy relating to deferred stripping.See note on accounting policies. (S) During the quarter, 36 666 ounces of the Loulo forward sales were rolledout longer-dated. Although the revenue was received at the spot price, becausewe have changed the initial delivery date, these contracts are now deemedspeculative. This gives rise to a non-cash charge to the income statementcalculated as the difference between the spot price and the strike price of thecontract. CONSOLIDATED BALANCE SHEET At 31 Dec At 2005 At 31 Mar (Restat- 31 MarchUS$000 2006 ed)+ 2005AssetsNon-current assetsProperty, plant and equipment 214 716 202 636 148 375Cost 253 375 236 331 172 755Accumulated depreciationand amortisation (38 659) (33 695) (24 380)Deferred stripping costs -+ -+ -+Deferred taxation 2 866 2 957+ -Long-term ore stockpiles 24 710 22 176+ 16 606+Total non-current assets 242 292 227 769+ 164 981+Current assetsDeferred stripping costs - -+ -+Inventories and stockpiles 30 495 34 210+ 7 856+Receivables 49 907 47 918 33 549Cash and cash equivalents 158 139 152 452 69 426Total current assets 238 541 234 580+ 110 831+Total assets 480 833 462 349+ 275 812+Shareholders' equity 294 049 301 822+ 190 086+Minority interest 2 617 1 395 (954)Total equity 296 666 303 217+ 189 132+Non-current liabilitiesLong-term borrowings 48 786 49 538 55 798Loans from minority shareholdersin subsidiaries 2 533 2 483 2 452Financial liabilities -forward gold sales 48 710 34 151 13 583Provision for rehabilitation 9 571 9 480 3 829Total non-current liabilities 109 600 95 652+ 75 662Current liabilitiesFinancial liabilities -forward gold sales 18 158 8 939 395Current portion oflong-term borrowings 23 504 22 991 1 171Accounts payable and accruedliabilities 28 500 28 813 9 452Taxation payable 4 405 2 737 -Total current liabilities 74 567 63 480 11 018Total equity and liabilities 480 833 462 349+ 275 812+ + Restated due to change in accounting policy relating to deferred stripping.See note on accounting policies. Main balance sheet movements for the quarter ended 31 March 2006 were asfollows: * An increase in property, plant and equipment due to the development of Phase2 at Loulo, including work on the crushing plant. * The increase in financial liabilities relating to forward gold sales reflectsan increase in the negative marked-to-market valuation of contracts held at 31March 2006. The impact is due to the sharp rise in the gold price, which wasUS$582 at 31 March 2006. * The increase in taxation payable relates to income taxes at Morila followingthe end of the five year tax holiday in November 2005. CONSOLIDATED CASHFLOW STATEMENT 12 3 months months ended ended 3 months 31 Mar 31 Dec ended 2005 2005 31 Mar (Restat- (Restat-US$000 2006 ed)+ ed)+Profit before income tax 18 422 11 276+ 48 026+Adjustment for non-cash items 8 969 3 220 25 564Working capital changes (4 862) (13 179)+ (43 854)+Net cash generated from operations 22 529 1 317 29 736Additions to property, plant andequipment (17 044) (21 116) (73 217)Financing of contractors (156) (4 534) (11 276)Net cash utilised in investingactivities (17 200) (25 650) (84 493)Ordinary shares issued 548 547 105 248(Decrease)/increase inlong-term borrowings (190) 14 972 23 721Net cash generated by financingactivities 358 15 519 128 969Net increase/(decrease) in cash andcash equivalents 5 687 (8 814) 74 212Cash and cash equivalentsat beginning of period 152 452 78 240 78 240Cash and cash equivalentsat end of period 158 139 69 426 152 452 + Restated due to change in accounting policy relating to deferred stripping. See note on accounting policies. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Number of Share Share Other ordinary capital premium reserves shares US$000 US$000 US$000 Balance - 31 Dec 2004(as previously reported) 59 226 694 2 961 102 342 (14 347)(S)Change in accountingpolicy - - - -Balance - 31 Dec 2004 59 226 694 2 961 102 342 (14 347)March 2005 Net income - - - -Movement on cash flowhedges - - - 1 690Total recognized income - - - 1 690Share-based payments - - - 288Share options exercised 176 800 9 538 -Balance - 31 Mar 2005 59 403 494 2 970 102 880 (12 369)Balance - 31 Dec 2005(as previously reported) 68 072 864 3 404 208 582 (41 000)Change in accountingpolicy - deferredstripping cost - - - -Balance - 31 Dec 2005 68 072 864 3 404 208 582 (41 000)March 2006 Net income - - - -Movement on cashflow hedges- realized - - - 3 227- unrealized - - - (23 778)Total recognized income - - - (20 551)Share-based payments - - - 685Share options exercised 168 700 8 540 -Shares vested# 6 830 - 108 (108)Balance - 31 Mar 2006 68 248 394 3 412 209 230 (60 974) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (cont'd) Total attri- butable Accumu- to lated equity Minority Total profits share- Interest equity US$000 holders US$000 US$000Balance - 31 Dec 2004(as previously report 100 213(S) 191 169 (954) 190 215Change in accountingpolicy (14 884)+ (14 884)+ - (14 884)+Balance - 31 Dec 2004 85 329+ 176 285+ (954) 175 331+March 2005 Net income 11 276+ 11 276+ - 11 276+Movement on cash flowhedges - 1 690 - 1 690Total recognized income 11 276+ 12 966+ - 12 966+Share-based payments - 288 - 288Share options exercised - 547 - 547Balance - 31 Mar 2005 96 605+ 190 086+ (954) 189 132+Balance - 31 Dec 2005(as previously reported) 138 751 309 737 1 395 311 132Change in accountingpolicy - deferredstripping cost (7 915)+ (7 915)+ - (7 915)+Balance - 31 Dec 2005 130 836+ 301 822+ 1 395 303 217+March 2006 Net income 11 545 11 545 1 222 12 767Movement on cash flowhedges- realized - 3 227 - 3 227- unrealised - (23 778) - (23 778)Total recognized income 11 545 (9 006) 1 222 (7 784)Share-based payments - 685 - 685Share options exercised - 548 - 548Shares vested# - - - -Balance - 31 Mar 2006 142 381 294 049 2 617 296 666 # 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. (S) Reflects adoption of IFRS 2: Share-based payment. + Restated due to change in accounting policy relating to deferred stripping.See note on accounting policies. NON-GAAP MEASURES Total cash costs and cash cost per ounce are non-GAAP measures. Total cash costsand total cash costs per ounce are calculated using guidance issued by the GoldInstitute. The Gold Institute was a non profit industry association comprised ofleading gold producers, refiners, bullion suppliers and manufactures. Thisinstitute has now been incorporated into the National Mining Association. Theguidance was first issued in 1996 and revised in November 1999. Total cashcosts, as defined in the Gold Institute's guidance, include mine production,transport and refinery costs, general and administrative costs, movement inproduction inventories and ore stockpiles, transfers to and from deferredstripping where relevant, and royalties. Under the company's revised accountingpolicies, there are no transfers to and from deferred 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 costs andtotal 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 as 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 believe that total cash costs per ounce are useful indicatorsto investors and management of a mining company's performance as it provides anindication of a company's profitability and efficiency, the trends in cash costsas the company's operations mature, and a benchmark of performance to allow forcomparison 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 theperiod presented. Profit from mining activity is calculated by subtracting total cash costs fromgold sales revenue for all periods presented. Profit from operations is calculated by subtracting depreciation andamortisation charges and exploration and corporate expenditure, as well asshare-based payment from profit from mining activity. The following table reconciles total cash costs, as a non-GAAP measure, to theinformation provided in the income statement, determined in accordance withIFRS, for each of the periods set out below: 12 Quarter Quarter months ended ended ended Quarter 31 Dec 31 Mar 31 Dec ended 2005 2005 2005 31 Mar (Restat- (Restat- (Restat-US$000 2006 ed)+ ed)+ ed)+Gold sales revenue 67 241 60 553 31 986 151 502Mine production costs 27 411 26 822 15 860 66 612Movement in productioninventory and ore stockpiles (1 296) (3 882)+ (5 410)+ (18 744)+Transfer from deferredstripping - -+ -+ -+Transport and refinerycosts 153 162 67 360Royalties 4 321 3 994 2 162 10 273General andadministration expenses 2 874 2 724 1 442 7 438Total cash costs 33 463 29 820+ 14 121+ 65 939+Profit from miningactivity 33 778 30 733+ 17 865+ 85 563+Depreciation andamortisation 4 964 4 733 2 595 11 910Exploration and corporateexpenditure 7 687 7 283 5 824 24 049Profit from operations 21 127 18 717+ 9 446+ 49 604+ + Restated due to change in accounting policy relating to deferred stripping. See note on accounting policies. ACCOUNTING POLICIES The financial information in this report has been prepared in accordance withthe group's accounting policies, which comply with IFRS and are consistent withthe prior period, except as noted below. Joint ventures are those investments in which the group has joint control andare accounted for under the proportional consolidation method. Under thismethod, the proportion of assets, liabilities, income and expenses and cashflows of each joint venture attributable to the group are incorporated in theconsolidated financial statements under appropriate headings. Inter-companyaccounts and transactions are eliminated on consolidation. The directors have changed the group's accounting policy on deferred strippingcosts, under both IFRS and US GAAP in the current period. Previously, costs ofproduction stage waste stripping in excess of the expected pit life averagestripping ratio were deferred and then charged to production when the actualstripping ratio was below the expected pit life average stripping ratio. Underthe revised accounting policy, all stripping costs incurred during theproduction phase of a mine are treated as variable production costs and as aresult are included in the cost of the inventory produced during the period thatthe stripping costs are incurred. Under US GAAP, EITF 04-06 'Accounting for Stripping Costs Incurred duringProduction in the Mining Industry' is effective for reporting periods beginningafter 15 December 2005. The consensus does not permit the deferral of any wastestripping costs during the production phase of a mine, but requires instead thatthey should be treated as variable production costs. The directors have decidedto adopt the same treatment under IFRS which will ensure that the accountingpolicies applied under IFRS and US GAAP remain in line. With regard to theconclusions reached by the EITF, the directors believe the revised policy willmean that the financial statements provide reliable and more relevantinformation about the group's financial position and its financial performance.In accordance with the requirements of IAS 8 'Accounting Policies, Changes inAccounting Estimates and Errors', the change in the IFRS policy has been appliedretrospectively and hence the 2004 comparatives have been restated. The change in the IFRS accounting policy has resulted in the followingadjustments to the amounts reported under IFRS: 31 March 31 March 31 DecUS$000 2006 2005 2005Decrease in deferred strippingcosts 2 300 14 675 3 687Decrease in ore stockpiles 8 625 268 8 342Decrease in gold in process 29 785 51Decrease in deferred taxationliability - - 1 227(Decrease)/increase in deferredtaxation asset (91) - 2 938Decrease in opening retainedearnings 7 915 14 884 14 884 Quarter Quarter Year Quarter ended ended ended ended 31 March 31 March 31 Dec 31 DecUS$000 2006 2005 2005 2005Increase/(decrease) innet profit 1 034 (844) 6 969 4 583Increase/(decrease) inbasic earnings per share(cents per share) 2 (1) 12 7Increase in fully dilutedearnings per share (centsper share) 1 (2) 11 7 FORWARD COMMODITY CONTRACTS The group's hedging position which all relates to the Loulo project financing,was as follows at 31 March 2006: Forward sales Forward salesMaturity date ounces average US$/ozYear ended 2006 83 498 434Year ended 2007 116 004 438Year ended 2008 80 498 431Year ended 2009 85 000 437Total 365 000 435 This represents approximately 37% of planned open pit production at Loulo forthe period that the project finance is in place. In the current gold priceenvironment, it is the company's intention to take advantage of current spotprices and roll out longer dated forward sales contracts at the appropriatetimes. Morila's production is completely exposed to spot gold prices. GENERAL The company continues to evaluate various opportunities both at corporate andproject levels, however it remains focused on generating its own opportunitiesthrough an aggressive exploration and generative programme, concentrating onAfrica's key gold belts. A busy second quarter of 2006 is planned with drilling expected in five Africancountries (Mali, Senegal, Burkina Faso, Cote d'Ivoire and Tanzania). The timetable to commission Phase 2 of the Loulo project is challenging butachievable. Randgold Resources is currently maintaining its guidance for theresults for the year, as published last quarter. D M Bristow R A WilliamsChief Executive Financial Director8 May 2006 Web-site: www.randgoldresources.com Registered office: La Motte Chambers, La Motte Street, St Helier, Jersey JE11BJ, Channel Islands 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 Tel +27 (11) 728-4701, Fax +27 (11) 728-2547, e-mail:[email protected] 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 and a purported counterclaim by MDM.Other potential risks and uncertainties include risks associated with:fluctuations in the market price of gold, gold production at Morila, thedevelopment of Loulo and estimates of resources, reserves and mine life. For adiscussion on such other risk factors refer to the annual report on Form 20-Ffor the year ended 31 December 2004 which was filed in amended form with theUnited States Securities and Exchange Commission (the 'SEC') on 27 October 2005.Randgold Resources assumes no obligation to update information in this release.Cautionary note to US investors: the 'SEC' permits companies, in their filingswith the 'SEC', to disclose only proven and probable ore reserves. We usecertain terms in this release, such as "resources", that the 'SEC' does notrecognise 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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