2nd Aug 2007 07:01
Randgold Resources Ld02 August 2007 RANDGOLD RESOURCES LIMITEDIncorporated in Jersey, Channel IslandsReg. No. 62686LSE Trading Symbol: RRSNasdaq Trading Symbol: GOLD RECORD PRODUCTION FROM LOULO BOOSTS Q2 GOLD SALES REVENUE London, 2 August 2007 - The continuing increase in gold production at RandgoldResources' Loulo mine in Mali, together with the rolling out of hedges, boostedthe company's gold sales revenue for the June quarter to US$66.2 million - up onthe March quarter (US$63 million) and the comparable quarter in 2006 (US$63.4million) - in spite of a lower contribution from its Morila joint venture. Profit from mining of US$28.2 million was marginally up on the previous quarterbut once-off costs related to the restructuring of the Loulo project financefacility, increased exploration expenses at the Tongon project, now at finalfeasibility stage, and non-cash hedge restructuring charges impacted the bottomline. Net profit was US$6.8 million against the previous quarter's US$12.7million and Q2 2006's US$14.6 million. Total cash costs rose to US$361 per ounce (Q1: US$321; Q2 2006: US$270)reflecting the weaker dollar, higher oil prices, lower production at Morila andthe unscheduled utilisation of stockpiled ore at Loulo, necessitated byequipment breakdowns, which resulted in the reversing of previously deferredcosts. The company said production and net profit were expected to increase in thesecond half of the year when higher-grade ore will be accessed at Morila. In Q2Loulo achieved record production of 70 660 ounces (Q1: 67 908oz; Q2 2006: 51233oz) as a result of steady throughput at slightly higher grade and recoveryrates. Mining tonnages were lower than planned owing to prolonged breakdowns ofthe mining contractor's excavators, requiring mill feed to be supplemented bystockpiled ore. The CIL expansion project was completed and commissioned during the quarter,which should ensure sustained recovery rates. Work on the tailings thickenerand clarifier project, due for completion by the end of this year, continued onschedule. Meanwhile, development of the twin underground declines for the Yaleaunderground mine reached a distance of 400 metres from surface at a verticaldepth of 75 metres. Yalea is scheduled to deliver its first ore fromunderground to the plant during the last quarter of this year. At Gara, thesecond underground mine due to be developed at Loulo, further drilling hasoutlined an additional inferred resource of 400 000 ounces at 4.9g/t. Followingfurther infill drilling, the mine's design will be extended to exploit thisadditional ore, which represents an 18% increase in Gara's underground resource. As anticipated, production at Morila was down to 86 832 ounces (Q1: 103 224oz;Q2 2006: 135 387oz) as a consequence of lower grade and recoveries. Minemanagement are confident that they will meet the planned production scheduledfor the second half of the year and are pursuing strategies to make up theproduction shortfall incurred during the first half of the year. At the Tongon project in the Cote d'Ivoire, the feasibility study drillingprogramme made good progress. The study is scheduled to be at bankable level bythe end of next year and, if all goes according to plan, Tongon will pour itsfirst gold two years later. The feasibility study includes a re-scoping studyin the third quarter of this year which will review the capacity of the plannedprocessing facility in the light of the promising results received to date fromthe ongoing drilling programme. On the exploration front, the company had 10 drill rigs operating in fivecountries - Mali, Cote d'Ivoire, Senegal, Burkina Faso and Tanzania. Chief executive Mark Bristow said the challenges of the past quarter had beendealt with effectively and, on balance, the company was satisfied with theresults that had been achieved. "Loulo is doing exceptionally well and production at Morila is scheduled to getback on track in the latter half of the year. The Yalea underground developmentis making rapid progress and Tongon is increasingly shaping up as our third newmine. Meanwhile the quality of the results we're getting from our explorationprogrammes continues to underline the value of our sustained and substantialinvestment in organic growth," Bristow said. "The conversion of the Loulo project finance into a US$60 million corporaterevolving credit facility involved an upfront cost but has significant benefits:a lower interest rate, saving in political risk insurance, flexibility in termsof using the funds and dealing with the hedge book, and longer-datedavailability." RANDGOLD RESOURCES ENQUIRIES:Chief Executive Financial Director Investor & Media RelationsDr Mark Bristow Graham Shuttleworth Kathy du Plessis+44 779 775 2288 +44 20 7557 7730 +44 20 7557 7738+44 788 071 1386 +44 779 614 4438 Email: [email protected] Website: www.randgoldresources.com -------------------------------------------------------REPORT FOR THE QUARTER AND SIX MONTHS ENDED 30 JUNE 2007 * Loulo achieves record gold production* Loulo increases underground resources by 18% at Gara* Continued good drill results at Tongon enhance Randgold Resources' next development project* New corporate facility reduces costs and increases financial flexibility* Bambadji joint venture enlarges Randgold Resources' exploration footprint adjacent to Loulo infrastructure* Exploration results from Senegal, Burkina Faso and Ghana reward ongoing investment in organic growth Randgold Resources Limited had 68.9 million shares in issue as at 30 June 2007 SUMMARISED FINANCIAL INFORMATION US$000 Unaudited Unaudited Unaudited Unaudited Unaudited quarter quarter quarter 6 months 6 months ended ended ended ended ended 30 Jun 31 Mar 30 Jun 30 Jun 30 Jun 2007 2007 2006 2007 2006Gold sales# 66 220 63 065 63 441 129 285 130 682Total cash costs* 38 029 35 007 28 448 73 036 61 911Profit from mining activity* 28 191 28 058 34 993 56 249 68 771Exploration and corporate expenditure 8 594 6 521 6 938 15 115 14 625Profit before income tax 10 034 16 225 21 486 26 259 39 908Net profit 6 848 12 748 14 573 19 596 27 340Net profit attributable toequity shareholders 5 764 11 418 13 754 17 182 25 299Net cash generated from operations 14 663 13 567 21 418 28 230 43 947Cash and cash equivalents 137 313 139 407 151 531 137 313 151 531Attributable production+(ounces) 105 393 109 198 105 388 214 591 224 377Group total cash costs per ounce*+(US$) 361 321 270 340 276Group cash operating costs perounce*+ (US$) 321 284 231 302 238 # Gold sales does not include the non-cash profit/(loss) on the roll forward of hedges.* Refer to explanation of non-GAAP measures provided.+ Randgold Resources consolidates 100% of Loulo and 40% of Morila. COMMENTS Gold sales revenue for the June 2007 quarter was up on the March 2007 quarter aswell as the corresponding quarter in 2006. This was due to a continuedimprovement in Loulo's gold production both quarter on quarter by 4% and a 38%increase from the June 2006 quarter compared to the June 2007 quarter. Theincrease in the average price received at Loulo also contributed to the increasein the gold sales revenue. This was due to 42% less ounces being delivered intothe hedge during the quarter compared to the previous quarter, as a result ofthe roll forward of hedged ounces into 2010. This was partially offset by adrop in ounces produced at Morila, mainly influenced by a decrease in grade andrecoveries over the comparable periods. Total cash costs are higher for the June 2007 quarter compared to the quarterended 31 March 2007, as well as to the corresponding quarter in 2006. Costs forthe current quarter were negatively impacted by the weaker dollar and higher oilprices plus the impact of lower production at Morila and the unscheduledutilisation of stockpiled ore due to equipment breakdowns at Loulo with theresult that previously deferred costs were reversed. The significant differencebetween the current quarter and the comparative quarter in 2006 is attributableto the introduction of blasting and increased consumable costs associated withthe commissioning of the hard rock crusher at Loulo in July 2006. Increasedconsumable costs at Morila as well as stockpile and gold inventory movements atMorila and Loulo also added to the increased total cash costs. Total cash costsfor the six months ended 30 June 2007 were also up from the six months ended 30June 2006, while profit from mining for the current quarter was in line withlast quarter and down from the June 2006 quarter, due to the reasons givenabove. Exploration and corporate expenditure increased from US$6.5 million to US$8.6million quarter on quarter, largely due to increased expenditure on the Tongonproject. The company will continue to expense the Tongon project costs, untilcompletion of the feasibility study. Costs incurred on hedge restructuring (US$2.8 million), the increased Tongonproject costs (US$2 million), as well as the debt restructuring (US$0.8 million)which took place during the quarter, resulted in a reduced net profit of US$6.8million versus US$12.7 million in the March 2007 quarter and US$14.6 millionduring the June 2006 quarter. Similarly net profits for the six months ending 30 June 2007 were down from the six months ended 30 June 2006. Production and net profit are forecast to increase in the second half of theyear as higher grade ore is accessed at Morila. Gold sales revenue for the six months ended 30 June 2007 was in line with thecorresponding period in 2006. Cash and cash equivalents at 30 June 2007amounted to US$137 million, compared to US$143 million at 31 December 2006.During the six months ended 30 June 2007, in addition to the US$8.6 millionspent on exploration and corporate the group incurred capital expenditure ofUS$26.5 million. This was spent on the decline development and purchase ofunderground equipment, the completion of four additional carbon in leach tanksand expenditure on the thickener and clarifier at Loulo. The Loulo project finance facility was replaced in early May with a US$60million corporate revolving credit facility to Randgold Resources. The facilityis with NM Rothschild, Societe Generale, Fortis and Barclays. It carriesinterest at rates of between LIBOR + 1.4% and LIBOR + 1.6%. The final repaymentdate is 1 May 2011. Only US$40.8 million of the US$60 million facility has beendrawn. Should no further draw down on the outstanding facility be required, thenew corporate facility allows for repayments to be scheduled as follows: 2007to 2009 - nil; 2010 - US$16.8 million and 2011 - US$24 million. Compared to theproject finance facility the corporate facility offers a lower interest rate,saving in political risk insurance, flexibility in terms of the usage of thefunds, flexibility in dealing with the hedge book and longer dated availability. OPERATIONS LOULO A very satisfactory performance was achieved by the Loulo operation with recordgold production of 70 660 ounces as a result of steady throughput at slightlyhigher grade and recovery rates. This was despite mining operations beingadversely affected during the quarter by prolonged breakdowns experienced by themining contractor with their Liebherr 994B excavators, resulting in lower thanplanned mined tonnages. Total gold sales revenue increased significantly due to higher ounces sold andan improvement in the average gold price received, resulting in higher profitfrom mining activity. This was due to 42% less ounces being delivered into thehedge during the quarter compared to the previous quarter, as a result of theroll forward of hedged ounces into 2010 and an increase in the spot pricereceived (refer to forward commodity contracts section for more detail). Thiswas partly offset by increased costs resulting from higher diesel prices and theweaker dollar as well as stockpile movements as a result of the lower ore tonnesmined. Due to the lack of excavator availability, mill feed had to besupplemented with ore taken from stockpiles with a resultant increase inaccounting charges. The carbon in leach expansion project was completed and commissioned during thequarter which should ensure sustained recovery levels. Work on the tailingsthickener and clarifier project progressed according to schedule with all themajor equipment having arrived on site and it is expected to be complete by yearend. Development of the Yalea twin underground declines by Shaft Sinkersreached a vertical depth of 75 metres and 400 metres from the surface by the endof the quarter and it is anticipated that the first ore from the undergroundmine will be delivered to the plant during the last quarter of this year. LOULO RESULTS Quarter Quarter Quarter 6 months 6 months ended ended ended ended ended 30 Jun 31 Mar 30 Jun 30 Jun 30 Jun 2007 2007 2006 2007 2006MiningTonnes mined (000) 3 616 5 707 3 934 9 323 7 975Ore tonnes mined (000) 517 657 724 1 174 1 103Milling Tonnes processed (000) 683 687 630 1 370 1 352Head grade milled (g/t) 3.3 3.2 2.8 3.2 2.9Recovery (%) 94.6 93.8 91.9 94.2 92.4Ounces produced 70 660 67 908 51 233 138 568 115 910Average price received (US$/oz)+ 605 543 577 575 565Cash operating costs* (US$/oz) 304 287 277 296 283Total cash costs* (US$/oz) 340 320 313 330 319Profit from mining activity (US$000)* 18 711 15 337 14 416 34 048 31 141Gold sales (US$000)*+ 42 755 37 034 30 445 79 789 68 063 Randgold Resources owns 80% of Loulo with the Government of Mali owning 20%.The Government's share is not a free carried interest. Randgold Resources hasfunded the Government portion of the investment in Loulo by way of shareholderloans and therefore controls 100% of the cash flows from Loulo until theshareholder loans are repaid. Randgold Resources consolidates 100% of Loulo and shows the minority interestseparately. * Refer to explanation of non-GAAP measures provided.+ Includes the impact of 19 247 ounces for the quarter (quarter ended 31 March 2007: 33 081 ounces) delivered into the hedge at US$433/oz (quarter ended 31 March 2007: US$434/oz). MORILA Morila produced 86 832 ounces of gold during the quarter at a total cash cost ofUS$403/ounce. Production was down on the previous quarter due to the advance ofthe mining faces available not being sufficient to expose the planned highergrade blocks. While the plant throughput was again satisfactory, lowerrecoveries negatively affected production. The increase in total cash costs andoperating cash costs per ounce is mainly due to the lower ounces produced. Unitcosts were similar to last quarter with some escalation caused by unfavourabledollar to euro exchange rate fluctuations and higher oil prices. MORILA RESULTS Quarter Quarter Quarter 6 months 6 months ended ended ended ended ended 30 Jun 31 Mar 30 Jun 30 Jun 30 Jun 2007 2007 2006 2007 2006MiningTonnes mined (000) 5 379 5 015 6 006 10 394 12 065Ore tonnes mined (000) 791 935 1 591 1 726 3 069MillingTonnes processed (000) 1 052 1 055 998 2 107 2 046Head grade milled (g/t) 2.8 3.4 4.6 3.3 4.5Recovery (%) 91.3 92.2 92.3 91.8 92.2Ounces produced 86 832 103 224 135 387 190 056 271 166Average price received (US$/oz) 668 652 628 659 594Cash operating costs* (US$/oz) 355 278 187 313 190Total cash costs* (US$/oz) 403 322 229 359 230Profit from mining activity (US$000)* 23 700 31 803 51 443 55 503 94 073Attributable (40%proportionatelyconsolidated)Gold sales (US$000) 23 465 26 031 32 996 49 496 62 620Ounces produced 34 733 41 290 54 155 76 023 108 467Profit from mining activity (US$000)* 9 480 12 721 20 577 22 201 37 629 * Refer to explanation of non-GAAP measures provided. Mine management is confident that they will meet the planned productionscheduled for the second half of the year and is pursuing strategies to recoverthe production shortfall incurred during the first half of the year. PROJECTS AND EVALUATIONLOULO UNDERGROUND DEVELOPMENT PROJECTSYalea The main development of the Yalea underground mine at Loulo is well underway.The sinking of the twin decline system started as per the schedule agreed towith the development contractor Shaft Sinkers. This development continuedthroughout the quarter and achieved a total of 526 linear metres. This meansthat each decline has now achieved a distance of 400 metres from surface, at avertical depth of 75 metres. Other construction work also continued apace, with the concrete tunnelconstruction inside the boxcut starting off and the office and workshop complexnearing completion. The training of the Malian workforce progressed well during the quarter with thefirst Malian safety and training officer being trained and appointed. Inaddition, the project also finished the quarter without any Lost Time Injuriessince its inception in August 2006. A new underground mine design and scheduling for Yalea was completed during thisquarter. It was realised that the previous development design, layout andschedule was not optimum in exploiting the big increase in reserves declared for2006. The new Yalea design incorporates many improvements, most notably interms of ventilation, stope access as well as waste and ore handling. Gara As a result of drilling carried out in the Gara South area, an additionalinferred resource of 400 000 ounces at 4.9g/t has been outlined in this area.On completion of further infill drilling, the mine design, incorporating theinnovations of the new Yalea design, will be extended to exploit this additionalore. TONGON PROJECT The feasibility study drilling programme has progressed well and details aregiven in the section on exploration activities. Geotechnical data is beingcollected and samples have been taken for metallurgical testing. Theenvironmental and social impact assessment for the mine has commenced and willbe compiled by Digby Wells & Associates. They have made an initial visit andwill be carrying out the work in association with local consultants approved byAgence National de l'Environment. Randgold Resources has planned to complete the feasibility study to a bankablelevel by the end of next year. The company believes the people and governingstructures in Cote d'Ivoire are committed to peace and if all proceeds accordingto plan, Randgold Resources will produce gold from its third gold mine in late2010. A significant part of the feasibility study schedule is a re-scoping study whichis planned for the forthcoming quarter. This will focus on reviewing the designcapacity of the planned processing facility given the promising results receivedto date from the ongoing drilling programmes. It will also assist withscheduling the ordering of "long lead items". EXPLORATION ACTIVITIES It was a very busy quarter in exploration with 10 drill rigs operating in fivecountries. While Loulo has always been Randgold Resources' most prospectiveregion, and continues to be so, it is now getting some serious competition fromother areas in the company's portfolio, namely Senegal, Burkina Faso, Tanzaniaand most importantly the Cote d'Ivoire. At Gara South, deep drilling continued and has outlined additional undergroundresources of 400 000 ounces at 4.9g/t and the orebody has now been confirmed tovertical depths of almost 700 metres below the surface and is still open. Gara South: deep drillhole intersections Q2 - 2007 Hole Id From To Width Grade True Including (m) (m) (m) (g/t) width (m)L0CP122 82.00 88.90 6.90 7.21 4.13 434.50 450.95 16.45 4.05 12.74 6.72m @ 7.44g/tLOCP127 562.70 572.22 9.52 6.69 8.22 3.07m @ 17.02g/tLOCP129 835.90 849.10 13.20 4.80 9.38 3.50m @ 14.09g/t 860.00 866.30 6.30 4.08 4.48LOCP130 741.00 744.80 3.80 2.42 2.45 752.15 756.40 4.25 1.44 3.49LOCP132 656.30 660.20 3.90 17.92 2.96 1.20m @ 58.80g/t At Faraba, also on the Loulo permit, drilling in the gap area between the mainand northern zones has returned multiple mineralised intercepts, the best ofwhich includes FADH015: 13.32 metres at 3.96g/t and 10.55 metres 8.68g/t andFADH019: 4.28 metres at 8.67g/t. Drill hole FADH018 drilled at Bandankoto, some1.5 kilometres south of the main zone, on the same structure returned, amongstother intercepts, 24.12 metres at 2.16g/t. The drilling has extended thebedrock footprint of mineralisation to 3 kilometres and work is progressing toconnect these zones, which are still separated due to the sheer size of thestructure. Further afield in the Faraba area, a regional RAB programme hastargeted surface gold anomalies and conceptual targets associated withprospective structures along the Faraba-P64 shear corridor. This programme hasso far returned anomalous intersections at nine different targets and resultsare still being received. Elsewhere in the Loulo permit, additional diamond drilling at Baboto isdeveloping the structural and geological framework. At Yalea South, diamonddrilling on conceptual targets intersected gold mineralisation associated withfractured quartzites with YSDH06 returning 5 metres at 4.86g/t. Diamonddrilling along the P125 to Baboto structure returned 6 metres at 8.66g/t closeto surface and at 185.90 metres a 44 metre wide zone of sheared silica-carbonatealtered breccia returned 7 metres at 2.91g/t from 208 metres in borehole L3DH26. In Senegal, 9 203 metres of RAB drilling was completed, testing eight targets,and has been followed up by 2 660 metres of diamond drilling on three targets.The positive RAB results at Massawa have been confirmed by seven diamond holeswhich have now delineated bedrock mineralisation over three kilometres. Theresults are presented in the table on the following page. Mineralisation locatesin various lithologies (sediments, mafic volcanics and porphyries) but isstructurally controlled with a prominent hangingwall and footwall structure,often graphitic. There are varying degrees to the intensity of alteration(silica-carbonate-sericite-pyrite-arsenopyrite) and locally brecciation andbrittle fracturing are associated with the gold mineralisation. Massawa: diamond drillhole results Q2 - 2007Hole Id From To Width Grade Including (m) (m) (m) (g/t)MWDDH001 67.02 82.45 15.43 1.59 118.55 122.90 4.35 6.71 132.93 138.50 5.57 8.80MWDDH002 108.20 112.20 4.00 1.47 135.94 148.10 12.16 2.90MWDDH003 78.00 87.30 9.30 3.80 94.04 100.00 5.96 5.47 131.80 140.50 8.70 2.60MWDDH004 140.62 143.70 3.08 1.60MWDDH005 102.00 105.40 3.40 2.70 137.00 146.52 9.52 6.90 2.07m @ 28.40g/tMWDDH006 104.50 115.09 10.59 1.68 132.45 148.58 16.13 4.10 176.50 178.50 2.00 2.45 240.05 262.00 21.95 1.74 7.45m @ 3.31g/tMWDDH007 156.00 183.32 27.32 5.80 1.00m @ 95.50g/t 1.10m @ 32.30g/t 217.20 237.00 19.80 1.15 306.00 308.00 2.00 3.59 At Bambaraya, drilling did not confirm the potential of this target and nofurther work will be carried out there. Further diamond drilling was postponedat Sofia and Delaya pending RAB drilling on the two respective corridors. Ajoint venture has been concluded with IAMGOLD on their 343km2 Bambadji permit,adjacent to Loulo and consolidates our groundholding in that region. RandgoldResources has the option to earn a 51% stake in the project by funding andcompleting a prefeasibility study. Following the prefeasibility study, IAMGOLDcan retain a 49% stake in the project by co-funding a full feasibility study ordilute to a 35% stake. A team is on the ground completing geological traversesto develop an interpretation of the Senegal - Malian structural corridor andincludes a 25 by 5 kilometre gold in soil anomaly which has seen very littledrilling. This will lead on to a target generation phase and the design offield programmes for commencement in the final quarter of the year. In Burkina Faso, on the Kiaka target a geological estimate of 2 million ouncesat approximately 1g/t has been calculated confirming the large tonnage, lowgrade, bulk mineable nature of the target. New results for the quarter includeKDH015: 202 metres at 0.76g/t, KDH016: 201 metres at 0.81g/t and KDH017: 166metres at 1.26g/t. An economic scoping study is being completed includingmetallurgy, pit optimisations and financial analysis. In Ghana, Randgold Resources now has an established portfolio of defined gold insoil and gold in rock targets. Follow-up work on the Bole permit has returnedmultiple 1 to 5 kilometre long gold in soil anomalies along a 14 kilometrestructural corridor. The team is now busy with preliminary trenching prior topossible RAB drilling in the final quarter of the year. In Cote d'Ivoire, Randgold Resources continues to make progress with thefeasibility drilling at Tongon and by quarter end an additional 39 diamond drillholes for 9 150 metres had been completed (24 holes for 4 100 metres in thenorthern zone and 15 holes for 5 030 metres in the southern zone). This bringsthe total drilling to 69 holes for 14 600 metres out of the planned 30 000 metreprogramme. Drilling will continue during July, but will then break for twomonths due to the annual wet season. This will enable the completion of theupdated scoping study, including new geological and resource models. The main shear zone in the northern zone has now been defined over a 2.2kilometre strike, trends 250 degrees - 260 degrees and dips 80 degrees - 70degrees northwest. It is represented by wide zones of pervasively foliated andaltered mafic volcaniclastics. The mineralisation locates between a hangingwalland footwall shear which are both commonly graphitic. The mineralised zone isassociated with increased silicification, sulphidation and fine brecciation.The results received during the quarter are presented in the table below. Inaddition four deep holes are in the process of being drilled to test for depthcontinuity, at this stage to 250 vertical metres; the first hole cut 50 metresof mineralisation between two graphitic shears, results are pending. Tongon northern zone: diamond drillhole results Q2 - 2007Hole Id From To Width Grade Including (m) (m) (m) (g/t)TND 065 73.92 79.39 5.47 2.21TND 066 123.17 130.07 6.90 1.43TND 067 93.03 94.87 1.84 2.96TND 068 101.61 109.41 7.80 1.27 121.00 125.00 4.00 4.58 128.43 134.21 5.78 1.10TND 069 138.36 141.33 2.97 18.99TND 070 39.50 46.00 3.60 1.18 56.50 67.09 10.59 1.60 79.07 81.40 2.33 3.66 94.94 100.00 5.06 2.03 105.77 110.00 4.23 0.76TND 071 26.50 32.00 5.50 1.11 37.35 47.02 9.67 0.90 51.00 53.00 2.00 2.26 61.75 68.15 6.40 0.51TND 072 86.72 93.09 6.37 1.59 95.78 108.09 12.31 2.84TND 074 90.00 112.20 22.20TND 075 46.00 50.00 4.00 1.47 67.00 82.95 15.95 1.25TND 103 47.50 57.36 9.86 2.16 77.83 86.34 8.51 1.09 120.02 125.77 5.75 1.17TND 104 135.50 158.20 22.70 3.00 8.71m @ 5.47g/tTND 105 126.05 141.69 15.64 3.27 3.60m @ 9.62g/tTND 106 99.48 115.55 16.07 0.91TND 107 98.06 114.63 16.57 3.26TND 108 92.69 113.24 20.55 3.46TND 109 83.35 109.05 25.70 3.39 7.30m @ 5.61g/tTND 110 137.32 160.30 22.98 1.41 164.00 178.00 14.00 1.77 The southern zone is more geologically complex with multiple zones trending in a45 degrees - 50 degrees direction with variable dips from 75 degrees - 60degrees to the northwest. Drilling has confirmed continuous mineralisation overa 2 kilometre strike length which is open in all directions. The ore zonesappear lensoid in shape and thus their strike and depth continuity are variable.The mineralised zones are hosted within quartz and shear bounded, northwestdipping, brecciated volcaniclastic zones. The results received during the quarter are presented in the table below. Tongon southern zone: diamond drillhole results Q2 - 2007Hole Id From To Width Grade Including (m) (m) (m) (g/t)TND 078 92.67 106.11 13.44 1.63 5.12m @ 3.12g/t 120.15 124.56 4.41 2.71 133.25 136.60 3.35 22.77 1.20m @ 62.00g/t 175.10 214.55 39.45 2.12TND 079 192.43 203.81 11.38 2.49TND 080 84.55 87.16 2.61 1.10 139.00 141.12 2.12 5.64 182.50 184.25 1.75 8.49 189.48 198.95 9.47 2.09 202.21 206.60 4.39 1.11 209.62 216.17 6.55 2.30 228.66 232.43 3.77 8.70TND 081 224.85 239.44 14.59 1.46TND 082 106.15 113.86 7.71 3.01 134.10 137.14 3.04 0.99 251.19 253.37 2.18 5.91 259.80 261.71 1.91 2.11TND 083 150.36 155.21 4.85 2.80 233.16 239.95 6.79 5.52 4.39m @ 8.13g/t 249.55 255.10 5.55 4.86TND 085 164.14 165.40 1.26 5.30 190.84 194.24 3.40 1.38 205.65 216.58 10.93 3.14 220.11 228.96 8.85 1.57 239.84 243.14 3.30 7.72 278.10 282.15 4.05 8.46 296.10 297.70 1.60 2.91TND 086 140.42 143.60 3.18 2.00 153.66 205.77 52.11 3.91 14.76m @ 4.98g/t 24.12m @ 4.47g/t 221.40 226.71 5.31 4.67 235.98 259.31 23.33 3.98 8.08m @ 5.98g/t 303.91 307.04 3.13 5.58 317.37 333.48 16.11 3.05 8.52m @ 4.62g/tTND 087 134.04 140.40 6.36 1.24 151.80 154.61 2.81 1.87 161.30 165.55 4.25 2.09 180.20 188.30 8.10 1.29 253.80 266.86 13.06 2.48TND 091 96.00 107.65 11.65 4.45 9.00m @ 5.20g/t 119.00 121.00 2.00 0.10 132.10 144.60 12.50 3.06 159.08 170.10 11.02 4.14 204.00 209.00 5.00 1.50 259.30 268.60 9.30 2.52TND 092 110.15 118.30 8.15 2.48 154.20 162.10 7.90 1.97 184.00 189.40 5.40 1.01 250.00 262.30 12.30 2.53 274.00 292.60 18.60 2.26 In addition to the feasibility drilling a review of 19 targets within the Niellepermit has been completed and highlighted 12 targets for follow up work. TongonEast is the highest priority; the target is characterised by a strong surfacegold geochemical anomaly, 1 kilometre long at plus 500ppb and so far has beentested by two trenches; TST002: 16 metres at 8.37g/t and TST004: 6 metres at2.06g/t, 2 metres at 12.86g/t and 4 metres at 2.10g/t. In Tanzania following the conclusion of the Miyabi joint venture with AfricanEagle, diamond drilling commenced on the first of two regional lines across a 7by 2 kilometre northeast trending soil anomaly, which already hosts resources of520 000 ounces at 1.3g/t. Results are pending. CONSOLIDATED INCOME STATEMENTUS$000 Unaudited Unaudited Unaudited Unaudited Unaudited quarter quarter quarter 6 months 6 months ended ended ended ended ended 30 Jun 31 Mar 30 Jun 30 Jun 30 Jun 2007 2007 2006 2007 2006REVENUESGold sales on spot 70 752 70 483 66 684 141 235 133 925Loss on matured hedges (4 532) (7 418) (3 243) (11 950) (3 243)Non-cash (loss)/ profit on rollforward of hedges (2 842) 235 (2 050) (2 607) (5 277)Total 63 378 63 300 61 391 126 678 125 405OTHER INCOMEInterest income 1 779 1 829 1 754 3 608 3 803Other income 255 167 164 422 180Total other income 2 034 1 996 1 918 4 030 3 983Total income 65 412 65 296 63 309 130 708 129 388COSTS AND EXPENSESMine production costs 30 800 31 445 29 066 62 245 56 477Movement in productioninventory and orestockpiles (472) (3 740) (7 697) (4 212) (8 993)Depreciation and amortisation 5 821 6 072 4 962 11 893 9 926General and administrationexpenses 3 214 3 018 2 824 6 232 5 698Mining and processing costs 39 363 36 795 29 155 76 158 63 108Transport and refinery costs 296 247 126 543 279Royalties 4 191 4 037 4 129 8 228 8 450Exploration and corporateexpenditure 8 594 6 521 6 938 15 115 14 625Exchange losses/ (gains) - net 989 624 (146) 1 613 (306)Unwind of discount on provisions forrehabilitation 96 96 84 192 168Interest expense 1 849 751 1 537 2 600 3 156Profit before income tax 10 034 16 225 21 486 26 259 39 908Income tax expense (3 186) (3 477) (6 913) (6 663) (12 568)Net profit 6 848 12 748 14 573 19 596 27 340Attributable to:Equity shareholders 5 764 11 418 13 754 17 182 25 299Minority shareholders 1 084 1 330 819 2 414 2 041 6 848 12 748 14 573 19 596 27 340Basic earnings per share (US$) 0.08 0.17 0.20 0.25 0.37Fully diluted earnings per share(US$) 0.08 0.16 0.20 0.24 0.36Average shares in 68 863 68 820 68 266 68 842 68 275issue (000) The results have been prepared in accordance with International FinancialReporting Standards (IFRS). CONSOLIDATED BALANCE SHEETUS$000 Unaudited Unaudited Audited Unaudited at at at at 30 Jun 31 Mar 31 Dec 30 Jun 2007 2007 2006 2006AssetsNon-current assetsProperty, plant and equipment 255 941 245 443 241 300 228 426Cost 324 373 308 054 297 839 272 047Accumulated depreciation and amortisation (68 432) (62 611) (56 539) (43 621)Deferred taxation 1 041 2 654 2 993 2 385Long-term inventories and ore stockpiles 45 724 43 915 41 614 26 841Receivables 14 568 13 856 13 702 -Total non-current assets 317 274 305 868 299 609 257 652Current assetsInventories and stockpiles 35 839 35 161 34 200 39 956Receivables 40 416 35 803 34 999 49 554Cash and cash equivalents 137 313 139 407 143 356 151 531Total current assets 213 568 210 371 212 555 241 041Total assets 530 842 516 239 512 164 498 693Shareholders' equity 359 174 342 110 336 063 303 123Minority interest 7 121 6 037 4 707 3 436Total equity 366 295 348 147 340 770 306 559Non-current liabilitiesLong-term borrowings 45 226 24 739 25 666 37 593Loans from minority shareholders insubsidiaries 2 829 2 801 2 773 2 633Deferred taxation 462 462 462 -Financial liabilities - forward gold sales 42 277 46 693 39 969 50 261Provision for rehabilitation 9 033 8 938 8 842 9 661Total non-current liabilities 99 827 83 633 77 712 100 148Current liabilitiesFinancial liabilities - forward gold sales 16 636 20 010 27 525 24 168Current portion of long-term borrowings 3 496 24 819 24 818 24 779Accounts payable and accrued liabilities 44 219 39 630 39 461 36 077Taxation payable 369 - 1 878 6 962Total current liabilities 64 720 84 459 93 682 91 986Total equity and liabilities 530 842 516 239 512 164 498 693 The increase in property, plant and equipment from 31 December 2006 is due tocapital expenditure of US$26.5 million. This was spent on the declinedevelopment and purchase of underground equipment, the completion of 4 CIL tanksand expenditure on the thickener and clarifier at Loulo. The group has the following capital commitments:Contracted capital expenditure US$11.1 millionAuthorised but not contracted US$6.7 million The increase in receivables is mainly due to an increase in trade debtors,resulting from gold shipment made on the last day of the quarter and an increasein reimbursable indirect taxes owing to Morila. The increase in long-term borrowings and corresponding decrease in the currentportion of long-term borrowings is due to the new corporate facility replacingthe original project finance facility. The original project finance facilityrequired a repayment of US$21.3 million in 2007. In May 2007, the facility was replaced by a US$60 million corporate revolvingcredit facility which is repayable by 1 May 2011. The maximum amountsoutstanding under the facility are: prior to 1 November 2009 - US$60 million; upto 1 May 2010 - US$48 million; up to 1 November 2010 - US$36 million; up to 1May 2011 - US$24 million. The security package includes a pledge over Randgold Resources' shareholding inthe Loulo and Morila mines and intermediate shareholding companies, firstranking pledge over the existing and any future hedging arrangements andupstream guarantees from the companies which hold Randgold Resources interest inthe Loulo and Morila mine. The increase in accounts payable and accrued liabilities is mainly the result ofan increase in supplier balances at Loulo, due to the timing of payments. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Number Share Share Other of capital premium reserves ordinary US$000 US$000 US$000 shares Balance - 31 Dec 2005 68 072 864 3 404 208 582 (41 000)Net income - - - -Movement on cash flowhedges - Transfer to income statement - - - 5 277 Fair value movement on financial instruments - - - (31 339)Total recognised income/(loss) - - - (26 062)Share-based payments - - - 1 313Share options exercised 222 700 11 740 -Shares vested# 6 830 - 108 (108)Balance - 68 302 394 3 415 209 430 (65 857)30 Jun 2006Balance - 31 Dec 2006 68 763 561 3 440 213 653 (59 430)Net income - - - -Movement on cash flowhedges - Transfer to income statement - - - 2 453 Fair value movement on financial instruments - - - 8 581Total recognised income/(loss) - - - 11 034Share-based payments - - - 929Share options exercised 102 000 5 835 -Exercise of options previously expensedunder IFRS 2 - - 226 (226)Shares vested# 10 102 - 170 (170)Dividend relating to 2006 - - - -Balance - 30 Jun 2007 68 875 663 3 445 214 884 (47 863) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued) Accumulated Total Minority Total Profits attributable interest equity US$000 to US$000 US$000 equity shareholders US$000Balance - 31 Dec 2005 130 836 301 822 1 395 303 217Net income 25 299 25 299 2 041 27 340Movement on cash flowhedges - Transfer to income statement - 5 277 - 5 277 Fair value movement on financial instruments - (31 339) - (31 339)Total recognised income/(loss) 25 299 (763) 2 041 1 278Share-based payments - 1 313 - 1 313Share options exercised - 751 - 751Shares vested# - - - -Balance - 30 Jun 2006 156 135 303 123 3 436 306 559Balance - 31 Dec 2006 178 400 336 063 4 707 340 770Net income 17 182 17 182 2 414 19 596Movement on cash flow hedges - Transfer to income statement - 2 453 - 2 453 Fair value movement on financial instruments - 8 581 - 8 581Total recognised income/(loss) 17 182 28 216 2 414 30 630Share-based payments - 929 - 929Share options exercised - 840 - 840Exercise of options previously expensedunder IFRS 2 - - - -Shares vested# - - - -Dividend relating to 2006 (6 874) (6 874) - (6 874)Balance - 30 Jun 2007 188 708 359 174 7 121 366 295 # 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. CONSOLIDATED CASHFLOW STATEMENTUS$000 6 months 6 months ended ended 30 Jun 30 Jun 2007 2006Profit before income tax 26 259 39 908Adjustment for non-cash items 15 620 16 699Effects of changes in operating working capital items (7 577) (8 996)Income tax paid (6 072) (3 664)Net cash generated from operating activities 28 230 43 947Additions to property, plant and equipment (26 534) (35 716)Financing of contractors - 105Net cash used by investing activities (26 534) (35 611)Ordinary shares issued 840 751Decrease in long-term loans (1 705) (10 008)Dividends paid to company's shareholders (6 874) -Net cash used by financing activities (7 739) (9 257)Net decrease in cash and cash equivalents (6 043) (921)Cash and cash equivalents at beginning of year 143 356 152 452Cash and cash equivalents at end of year 137 313 151 531 NON-GAAP MEASURES Total cash costs and cash cost per ounce are non-GAAP measures. Total cashcosts and total cash costs per ounce are calculated using guidance issued by theGold Institute. The Gold Institute was a non profit industry 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 accounting policies, there are no transfers to and from deferredstripping. Total cash costs per ounce are calculated by dividing total cash costs, asdetermined using the Gold Institute guidance, by gold ounces produced for theperiods presented. Total cash costs and total cash costs per ounce arecalculated on a consistent basis for the periods presented. Total cash costsand total cash costs per ounce should not be considered by investors as analternative to operating profit or net profit attributable to shareholders, asan alternative to other IFRS or US GAAP measures or an indicator of ourperformance. The data does not have a meaning prescribed by IFRS or US GAAP andtherefore amounts presented may not be comparable to data presented by goldproducers who do not follow the guidance provided by the Gold Institute. Inparticular depreciation, amortisation and share-based payments would be includedin a measure of total costs of producing gold under IFRS and US GAAP, but arenot included in total cash costs under the guidance provided by the GoldInstitute. Furthermore, while the Gold Institute has provided a definition forthe calculation of total cash costs and total cash costs per ounce, thecalculation of these numbers may vary from company to company and may not becomparable to other similarly titled measures of other companies. However,Randgold Resources believes that total cash costs per ounce are usefulindicators to investors and management of a mining company's performance as itprovides an indication of a company's profitability and efficiency, the trendsin cash costs as the company's operations mature, and a benchmark of performanceto allow for comparison against other companies. Cash operating costs and cash operating cost per ounce are calculated bydeducting royalties from total cash costs. Cash operating costs per ounce arecalculated by dividing cash operating costs by gold ounces produced for theperiods presented. Gold sales is a non-GAAP measure. It represents the sales of gold at spot andthe gains/losses on hedge contracts which have been delivered into at thedesignated maturity date. It excludes gains/losses on hedge contracts whichhave been rolled forward to match future sales. This adjustment is consideredappropriate because no cash is received/paid in respect of these contracts. Profit from mining activity is calculated by subtracting total cash costs fromgold sales for all periods presented. The following table reconciles total cash costs and profit from mining activityas non-GAAP measures, to the information provided in the income statement,determined in accordance with IFRS, for each of the periods set out below: US$000 Quarter Quarter Quarter 6 months 6 months ended ended ended ended ended 30 Jun 31 Mar 30 Jun 30 Jun 30 Jun 2007 2007 2006 2007 2006Gold sales on spot 70 752 70 483 66 684 141 235 133 925Loss on matured hedges (4 532) (7 418) (3 243) (11 950) (3 243)Gold sales 66 220 63 065 63 441 129 285 130 682Mine production costs 30 800 31 445 29 066 62 245 56 477Movement in productioninventory and orestockpiles (472) (3 740) (7 697) (4 212) (8 993)Transport and refinery costs 296 247 126 543 279Royalties General and administration 4 191 4 037 4 129 8 228 8 450expenses 3 214 3 018 2 824 6 232 5 698Total cash costs 38 029 35 007 28 448 73 036 61 911Profit from mining activity 28 191 28 058 34 993 56 249 68 771 FORWARD COMMODITY CONTRACTS The group's hedging position at 30 June 2007 appears below: Maturity date Forward sales Forward sales Ounces average US$/ozYear ended 2007 38 507 439Year ended 2008 80 496 429Year ended 2009 84 996 435Year ended 2010 41 748 500Total 245 747 445 The forward contracts all relate to Loulo with Morila's production beingcompletely exposed to spot gold prices. The remaining portion of the hedge bookrepresents approximately 21% of planned production at Loulo and 14% of thegroup's attributable production for the period. During the quarter, the company delivered into 19 247 ounces of its hedge bookat an average price of US$433/oz. The company rolled out to 2010 a portion ofits 2007 forward sales contracts in order to achieve some price protection overthe period of the Loulo underground capital programme. A total of 41 748 ounceswere moved from a previous average price of US$444/oz to US$500/oz in 2010. Themark-to-market loss on the hedges at the time of the roll out will impact theincome statement in the current year, and the portion pertaining to the Junequarter amounts to US$3.9 million. GENERAL The company continues to evaluate value creating opportunities throughexploration, discovery and development, as well as the leverage from acquisitionopportunities. Despite the lower results from Morila, Randgold Resources' management remainsconfident that it will achieve the group's production forecast for the year. DM Bristow GP ShuttleworthChief executive Financial director 2 August 2007 -------------------------------------------------------RANDGOLD RESOURCES UPDATES GOING FOR PURE GOLD In a presentation to the Prospectors and Developers Association Conference inToronto in March this year, National Bank Financial managing director and mininggroup head Gordon J Bogden said that a dearth of merger and acquisitionopportunities combined with "a shortage of decent projects" could force puregold companies to diversify into other metals. He pointed out that the globalproject pipeline would start to peter out after 2009 and that in the meantimemarginal assets were being promoted as real mining prospects. Substantial increases in base metal prices over the past four years have thusfar favoured companies with mixed asset bases. During that time the copperprice, for example, has increased fivefold in US dollar terms while the goldprice has only doubled. However, it is doubtful whether this scenario issustainable - the future of base metal prices may be more uncertain while theprospects for precious metals remain intact. Significantly, the rapid growth in the popularity of exchange traded gold funds(ETFs) strongly suggests that there is a demand from investors for pure goldexposure. Gold ETFs, which trade on stock exchanges worldwide, are a form ofsecuritised gold investment which has been designed to track the gold pricealmost exactly. Unlike derivative products, they are 100% backed by physicalgold. The world's gold ETFs, which number around 10, held gold amounting tomore than 650 tonnes and worth more than US$13 billion at the end of 2006. In their March 2007 report on intermediate gold producers, Arbuthnot Securitiespoint to the rapid growth in ETFs as evidence that the market expectslonger-term gold price increases. Yet gold equities have performed relativelypoorly in the best gold market in more than 25 years. In a report titled "Whatis Wrong with Gold Shares?", CIBC World Markets recently examined the reasonsfor this underperformance. These include the fact that the industry is rapidlybecoming ex-growth resulting in the rationale for paying high multiples beingchallenged, that the new project line-up is shrinking and that those on thedrawing board lack internal rate of return (IRR) excitement. The small numberof meaningful new discoveries has limited the Blue Sky component normallyreflected in the share price. And, by no means least, gold companies arederiving more of their cash flow from base metals, thereby contaminating goldwith what has historically been a weaker reward source of revenue. Some players in the industry are aware of the attractiveness of remaininguntainted. Newmont recently announced that it was reverting to a pure goldcompany in order to maximise gold price leverage for its shareholders. In aseparate development, analysts have urged Meridian's shareholders to demand asubstantial premium from Yamana for trading their gold exposure for a blendedgold/copper company. Through all the consolidation and diversification, Randgold Resources hasresolutely remained a pure gold play. While latter-day alchemists are trying topersuade the market that copper is gold, it has continued to invest inexploration programmes that sustain a gold prospect portfolio with few if anypeers in the industry. Thus it continues to offer investors future revenueswhich are 100% exposed to the yellow metal and a better gearing to the goldprice than ETFs. FEASIBILITY TEAM REVS UP AT TONGON Randgold Resources' third potential mine development in less than 10 years israpidly moving ahead at Tongon in the Cote d'Ivoire, where the team responsiblefor the successful feasibility studies at Morila and Loulo has beenreconstituted and tasked with taking the Tongon feasibility study to bankablelevel. In line with Randgold Resources' integrated, in-house approach to feasibilitystudies, the six-man core team includes exploration, evaluation and developmentexperts who between them have some 150 years' experience in the mining industry.External technical experts will be used as necessary in non-core areas suchmetallurgical testing and geotechnical modelling. GM Technical Adrian Reynolds says the big advantage of a team which integratesthe key disciplines is that it can move seamlessly through the various stages ofa project. The team started off with a site visit in the first week of June, accompanied bychief executive Mark Bristow, Randgold Resources' manager for Cote d'IvoireBodiel N'Diaye, the general manager for Mali Mahamadou Samake and the generalmanager of Somilo Amadou Konta. Various infrastructural options were examinedand a timetable for the feasibility study as well as a preliminary projectschedule were agreed. This group subsequently met with the Ivorian primeminister Guillame Soro and the minister of mines Leon-Emmanuel Monnet inAbidjan. "We are aiming to complete the feasibility study by the end of 2008 and, allbeing well, Tongon should pour its first gold two years later," Reynolds said. NEW AUDITORS APPOINTED Randgold Resources has appointed BDO Stoy Hayward as the new auditors to thegroup. It is the UK member firm of BDO International, the world's fifth largestaccountancy network with over 30 000 partners and staff in 600 offices in 100countries. Chief financial officer Graham Shuttleworth said BDO Stoy Hayward had beenselected on the strength of its natural resources team in London, which acts formore than 30 listed mining companies with assets from Alaska to Zambia. "We areconfident that BDO, as a top five global firm, will provide the highest qualityservice that we receive from all our professional advisors and look forward to along-standing relationship. We also believe that the change of auditors willenhance our controls through a fresh look at the group," he said. ----------------------------------------------------------------- Registered office: La Motte Chambers, La Motte Street, St Helier, Jersey JE11BJ, Channel Islands Registrars: Computershare Investor Services (Channel Islands) Limited, P.O. Box83, Ordnance House, 31 Pier Road, St Helier, Jersey JE4 8PW, Channel Islands Transfer agents: Computershare Services PLC, P.O. Box 663, 7th Floor, JupiterHouse, Triton Court, 14 Finsbury Square, London EC2A 1BR Investor and media relations: For further information contact Kathy du Plessison Telephone +44 20 7557 7738, e-mail: [email protected] Website: www.randgoldresources.com DISCLAIMER: Statements made in this document with respect to Randgold Resources'current plans, estimates, strategies and beliefs and other statements that arenot historical facts are forward-looking statements about the future performanceof Randgold Resources. These statements are based on management's assumptionsand beliefs in light of the information currently available to it. RandgoldResources cautions you that a number of important risks and uncertainties couldcause actual results to differ materially from those discussed in theforward-looking statements, and therefore you should not place undue reliance onthem. The potential risks and uncertainties include, among others, risksassociated with: fluctuations in the market price of gold, gold production atMorila, the development of Loulo and estimates of resources, reserves and minelife. For a discussion on such risk factors refer to the annual report on Form20-F for the year ended 31 December 2006 which was filed with the United StatesSecurities and Exchange Commission (the 'SEC') on 25 June 2007. RandgoldResources sees no obligation to update information in this release. Cautionarynote to US investors; the 'SEC' permits companies, in their filings with the 'SEC', to disclose only proven and probable ore reserves. We use certain termsin this release, such as "resources", that the 'SEC' does not recognise andstrictly prohibits us from including in our filings with the 'SEC'. Investorsare cautioned not to assume that all or any parts of our resources will ever beconverted into reserves which qualify as 'proven and probable reserves' for thepurposes of the SEC's Industry Guide number 7. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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