7th Aug 2006 07:00
Randgold Resources Ld07 August 2006 RANDGOLD RESOURCES LIMITEDIncorporated in Jersey, Channel IslandsReg. No. 62686LSE Trading Symbol: RRSNasdaq Trading Symbol: GOLD REPORT FOR THE QUARTER AND SIX MONTHS ENDED 30 JUNE 2006 * Loulo doubles group profit from mining and gold production for six months year on year * Group gold production for the quarter sustained under challenging circumstances * Loulo makes first capital repayment of project loan * Morila delivers a solid performance * Loulo hard rock crusher successfully commissioned * Drilling extends Loulo 0 orebody at depth and progresses exploration across the lease * First boreholes drilled in tactical drilling programme at Tongon * Exploration programmes across Africa produce promising results Randgold Resources Limited has 68.3 million shares in issue as at 30 June 2006 SUMMARISED FINANCIAL INFORMATION AND OPERATING RESULTS Quarter 6 months ended ended Quarter Quarter 30 Jun 30 Jun ended ended 2005 6 months 2005 30 Jun 31 Mar (Re- 30 Jun (Re-US$000 2006 2006 stated)+ 2006 stated)+ Gold salesrevenue* 63 441 67 241 27 963 130 682 59 949 Total cashcosts* 28 448 33 463 11 224+ 61 911 25 345+ Profit fromminingactivity* 34 993 33 778 16 739+ 68 711 34 604+ Profit fromoperations* 23 093 21 127 9 049+ 44 220 18 495+ Net profit 14 573 12 767 7 536+ 27 340 18 812+ Net profit(as previouslyreported) n/a n/a 7 122 n/a 19 242 Net profitattributableto equityshareholders 13 754 11 545 7 536+ 25 299 18 812+ Net cashgeneratedfromoperations 21 418 22 529 14 105 43 947 10 891 Bank and cash 151 531 158 139 56 556 151 531 56 556 Attributableproduction**(ounces) 105 388 118 989 66 144 224 377 133 052 Group totalcash costsper ounce** *(US$) 270 281 170+ 276 190+ Group cashoperatingcosts perounce* (US$) 231 245 140+ 238 160+ * 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 * Gold sales revenue for the six months ended 30 June 2006 showed a significant increase compared with the corresponding period in 2005 which reflects the inclusion of the Loulo operation from November 2005, as well as higher received gold prices in 2006. * With the addition of the Loulo operation and the improved gold price, profit from mining activity for the six months has doubled compared to the corresponding period in 2005. * Total cash costs of US$61.9 million for the six months ended 30 June 2006 are up by some US$37 million which reflects the inclusion in 2006 of costs for Loulo, which commenced full production in November 2005. Apart from this, total cash costs are largely in line with the previous year. * Cash generated from operations climbed from US$11 million to US$44 million for the six month period. * Gold sales revenue and profits for the June 2006 quarter compared to the same period in 2005 more than doubled with the start up of Loulo and the higher gold prices. * Cash costs per ounce are higher than the corresponding quarter in 2005 when Morila was the only operation and was producing at a relatively high grade of 5.9g/t. * Cash generated from operations was US$21 million compared to US$14 million for the corresponding 2005 quarter. * Comparing gold sales revenue for the current quarter with the previous quarter shows a decrease of US$3.8 million mainly as a result of lower production at the Loulo mine, partially offset by the higher gold price. The lower production is the result of the commissioning of the hard rock crushing circuit. * Total cash costs of US$28.4 million for the quarter ended 30 June 2006 are down by approximately US$5 million compared to the March quarter. This is the result of certain costs going into inventory with the build up of stockpiles due to lower production levels at Loulo with the commissioning of the hard rock crushing circuit. It is also due to slightly lower costs per ounce at both operations. * Despite the lower production, lower costs and higher received gold prices resulted in an increase in profit from mining. This also impacted the net profit for the quarter which was up by US$1.8 million on the previous quarter to US$14.6 million. * Cash generated from operations was US$21.4 million in the quarter. However, bank and cash has reduced by US$6.5 million in the quarter due to capital spending of US$18.6 million on completion of the hard rock crushing circuit and underground equipment at Loulo and US$10 million in loan repayments. OPERATIONS LOULO While throughput was affected by the commissioning of the hardrock crusher,which impacted negatively on the ounces produced, cash operating costs of US$277per ounce after stockpile adjustments compare favourably to the US$288 per ouncefor the previous quarter. The higher gold price of US$577 per ounce compared to US$556 per ounce for theprevious quarter contributed to sustaining the profits from mining activities. Production statistics are: Quarter Quarter Quarter 12 months 6 months ended ended ended ended ended 30 Jun 31 Mar 30 Jun 30 Jun 30 JunLOULO RESULTS 2006 2006 2005 2006 2005 MiningTonnes mined (000) 3 934 4 041 - 7 975 - Ore tonnes mined(000) 724 379 - 1 103 - MillingTonnes processed(000) 630 722 - 1 352 - Head grade milled(g/t) 2.8 2.9 - 2.9 - Recovery (%) 91.9 93.2 - 92.4 - Ounces produced 51 233 64 677 - 115 910 - Average pricereceived+ (US$/oz) 577 556 - 565 - Cash operatingcosts* (US$/oz) 277 288 - 283 - Total cash costs*(US$/oz) 313 323 - 319 - Profit from miningactivity*(US$000) 14 416 16 725 - 31 141 - Gold revenue(US$000) 30 445 37 618 - 68 063 - Randgold Resources owns 80% of Loulo with the Government of Mali owning 20%.Randgold Resources consolidates 100% of Loulo and then shows the minorityinterest separately. * Refer to explanation of non-GAAP measures provided. + Includes the impact of 17 012 ounces hedged at US$434 per ounce. The second quarter has been characterised by the transition from treating thesofter oxide and transition ore types to the less weathered and hard sulphidetype ores, including the hard Loulo 0 oxide ore. This required mobile crushingand rehandling operations, as was the case in the first quarter, to satisfy thefeed requirements, which had the effect of increasing unit operating costs.Transition ore reporting to the hard rock crushers is currently limitingthroughput. The situation is envisaged to be temporary whilst the Loulo 0 miningfaces are established which will result in a greater proportion of fresh rockreporting to the hard rock crushing circuit. The hard rock crushing circuit representing Phase 2 of the project has beensuccessfully commissioned. Whilst all critical areas are satisfactorilyoperational, there are still some items which require completing such as; thesteelwork surrounding the stockpile, which will ensure completion of the fullstockpile capacity, the CIL expansion and the Phase 2 punch list. These itemshave no adverse effect on the mine's production capability. There will now be a period of consolidation as the various disciplines settleinto a steady operational mode with minimal distraction from construction andcommissioning activities. Looking ahead at the rest of the year, theafter-effects of the Loulo plant delay will still be felt in July but we shouldbe completely back on track by the 4th quarter. Judgment granting a final order of liquidation of MDM Ferroman (Pty) Ltd ("MDM")was given on 2 August 2006. This opened the way for the company to proceed withadditional claims against MDM for amounts advanced to MDM in excess of the lumpsum contract. MORILA Morila delivered a solid performance producing 135 387 ounces at a total cashcost of US$229/oz, matching last quarter's output at a slightly lower cost.Higher head grades at a slightly better recovery compensated for the lower plantthroughput which was caused by longer than expected mill down-time. Profit frommining was up due to better average received prices, highlighting Morila'sgearing to the gold price. Quarter 6 months ended ended Quarter Quarter 30 Jun 6 months 30 Jun ended ended 2005 ended 2005MORILA RESULTS 30 Jun 31 Mar (Re- 30 Jun (Re-(100%) 2006 2006 stated)+ 2006 stated)+ MiningTonnes mined(000) 6 006 6 059 6 964 12 065 14 779 Ore tonnesmined (000) 1 591 1 478 2 002 3 069 3 612 MillingTonnes processed(000) 998 1 048 951 2 046 1 808 Head grade milled(g/t) 4.6 4.4 5.9 4.5 6.2 Recovery (%) 92.3 92.1 92.0 92.2 92.2 Ounces produced 135 387 135 779 165 359 271 166 332 631 Average pricereceived (US$/oz) 628 560 430 594 427 Cash operatingcosts* (US$/oz) 187 193 140+ 190 160+ Total cash costs*(US$/oz) 229 231 170+ 230 190+ Profit from miningactivity*(US$000) 51 443 42 630 41 848+ 94 073 86 510+ Attributable(40% proportionatelyconsolidated) Gold revenue(US$000) 32 996 29 624 27 963 62 620 59 949 Ounces produced 54 155 54 312 66 144 108 467 133 052 Profit fromminingactivity (US$000) 20 577 17 052 16 739+ 37 629 34 604+ * Refer to explanation of non-GAAP measures provided. + Restated due to change in accounting policy related to deferred stripping. See note on accounting policies. Resource extension and infill drilling continued in both the southern "tonalite"area as well as the eastern margin area. Considerable progress was made this quarter in modelling the pre- and post-mineralisation metamorphic and structural processes which could have led to theformation of the Morila orebody and any analogues. This work has drawn on bothdetailed mapping inside the pit as well as core logging of drillholes completedas part of the 40 000 metre regional drilling programme. PROJECTS AND EVALUATION LOULO GOLD MINE - UNDERGROUND DEVELOPMENT The boxcut and portal design and development plan for the Yalea underground minehave been completed. Site clearing for the boxcut has commenced andconstruction is scheduled for this quarter with sinking scheduled to start nextquarter. * Following a tender process, Shaft Sinkers have been appointed as the preferred contractor for the development of the Yalea underground mine. The project team is mobilising to site and the underground fleet has been ordered and first units are expected in October. * The results of a deep drilling programme currently underway at Loulo 0 continue to add to the potential of this underground mine. Of the thirteen holes drilled, nine have returned intersection grades greater than our current underground cut-off of 3.0g/t. Holes L0CP68: 7.4 metres at 8.04g/t and L0CP94: 7.2 metres at 5.25g/t confirm the south west plunging high-grade shoot to a depth of 540 metres below surface. Furthermore, five holes; L0CP79: 19.09 metres at 5.71g/t; L0CP84: 9.98 metres at 7.28g/t; L0CP83: 5.35 metres at 18.65g/t; L0CP102: 1.52 metres at 12.09g/t and L0CP109: 4.66 metres at 5.40g/t have delineated a high-grade zone between 400 and 540 metres below surface in the centre of the main orebody over a strike length of 280 metres. The orebody will be re-evaluated in light of this drilling and will form the basis of a new development plan for the mine. DIAMOND DRILLING - MINERALISED INTERSECTIONS AT LOULO Ore intersectionHole Id From To Width Grade L0CP69 451.50 456.20 4.70 4.84L0CP77 247.81 254.42 6.61 1.23L0CP78 452.97 458.00 5.03 1.11L0CP75 391.20 409.65 18.45 2.68L0CP81 683.76 691.17 7.41 8.04L0CP76 317.80 334.04 16.24 4.91L0CP72 309.20 331.75 22.55 1.76L0CP80 184.72 187.92 3.20 7.30L0CP82 709.05 715.20 6.15 2.57L0CP74 685.30 705.98 20.68 3.11L0CP83 122.30 139.84 17.54 4.53L0CP83 644.30 649.65 5.35 18.64 L0CP84 583.10 593.08 9.98 7.28L0CP79 545.80 566.55 20.75 5.25 L0CP73 592.00 610.90 18.90 2.65L0CP94 735.00 742.40 7.20 5.25 IncludingHole Id From To Width Grade L0CP69L0CP77L0CP78L0CP75 391.20 399.72 8.52 4.61L0CP81 688.20 691.17 2.97 14.56L0CP76 324.58 325.38 0.80 57.50L0CP72L0CP80L0CP82L0CP74 686.30 687.90 1.60 7.70L0CP83 136.54 139.84 3.30 6.83L0CP83 647.90 649.65 1.75 48.84 647.90 648.70 0.80 78.00L0CP84 583.10 584.25 1.15 54.00L0CP79 553.14 555.20 2.06 20.73 562.00 566.55 4.55 7.67L0CP73 601.35 605.00 3.65 8.46L0CP94 735.20 737.00 1.80 18.51 TONGON PROJECT A 10 drillhole, 2 000 metre drilling programme is currently underway and willform the basis for the design of the final feasibility drilling programme. Recent high level meetings and a visit to the project with representatives ofthe government of Cote d'Ivoire and interested and affected parties haveconfirmed our confidence in our ability to work in this region. We are followingthe political progress and subject to a satisfactory outcome to the process, weexpect to mobilise the next drilling programme in the new year. EXPLORATION ACTIVITIES The current quarter brings to an end another West African field season as theannual rains commence and field activities close. In terms of exploration, ithas certainly been the busiest period in the company's history. We can now boasta portfolio of 168 targets, on 65 permits, covering just over 20 000 squarekilometres, across six African countries. The exploration teams have continuedto advance their programmes in line with our strategic objectives and during thequarter drilling took place on six project areas across four countries, and veryshortly drilling will begin in a fifth country, Tanzania. In the Cote d'Ivoire, following negotiations between the Government and ForcesNouvelles, we have temporarily recommenced field activities on the Tongonproject in the north of the country. A 10 hole, 2 000 metre strategic drillingprogramme is underway and will form the basis for the design of the finalfeasibility study. At the time of reporting, three holes had been completed, twoin the northern zone and one in the southern zone. Results have been receivedfor the two northern holes, TND050: 1 metre at 12.70g/t (from 146 metres) and13 metres at 1.25g/t (from 154 metres), TND051: 9 metres at 1.55g/t (from 38metres) and 10 metres at 2.40g/t (from 124 metres) and are in line withexpectations. Elsewhere in the Cote d'Ivoire, reconnaissance mapping, stream sediment and soilgeochemistry have commenced on two new permits in the south of the country. TheApouasso permit (1 000km(2)) locates on the extension of the Sefwi Belt fromGhana, along strike from Newmont's Ahafo project. The Dignago permit (1 000km(2)) locates in southwest Cote d'Ivoire on a major regional structure at thecontact between basement gneisses and birimian volcanics. With the successful completion of construction at Loulo, exploration turns itsfocus to the replacement of ounces in the known deposits and discovery of newdeposits, by exploring targets both in the north and south of the permit.Anomalous gold intercepts have now been returned almost 1.5 kilometres south ofthe Loulo 0 pit, and although not economic, highlight the continuation of themineralised system and the possibility of narrow high-grade payshoots. At Loulo's Faraba target, which has a strike length of 2.6 kilometres, a fourhole first pass reconnaissance diamond drilling programme was completed. Onehole was previously reported FADH004: 12.6 metres at 4.03g/t. New holes toreport are FADH002: 10.6 metres at 1.07g/t, 7.7 metres at 9.64g/t and 3.4 metresat 6.44g/t. The mineralised zone in FADH001 was faulted out by a late brittlefault and FADH003: drilled in the far south of the target did not intersectmineralisation. RC drilling is currently in progress, testing the continuationof mineralised structures below transported regolith. At P64, also at Loulo, two reconnaissance diamond drill holes totalling 529metres were completed. P64DH01 returned three mineralised zones: 28 metres at1.72g/t, 16.2 metres at 4.41g/t and 11.8 metres at 1.44g/t. P64DH02 returned twomineralised zones: 5.8 metres at 3.43g/t and 8.2 metres at 6.51g/t, including4.4 metres at 9.55g/t. Mineralisation in both holes is associated with chloriteand magnetite rich metasediments and is bounded by a hangingwall and footwallshear which trend north-south and dip sub-vertically. In the north of the Loulo permit trenching at Baboto South has now definedcontinuity of mineralisation over a 1.3 kilometre strike at an average width of24 metres and a grade of 1.5g/t. At Selou, immediately south and adjacent to Loulo, reconnaissance diamonddrilling has been completed at both the Boulandissou and Sinsinko targets. AtBoulandissou, hole BND001 returned 6.6 metres at 1.28g/t beneath trench BNT02(28 metres at 3.31g/t). While at Sinsinko, hole SND001 returned 5.7 metres at1.71g/t, 4 metres at 3.11g/t, 1.8 metres at 2.77g/t and 4.2 metres at 7.10g/tall within a 21 metre mineralised envelope drilled below trench BET05 (76 metresat 0.83g/t). At Morila, drilling continued as part of the 40 000 metre regional drillingprogramme, although failing to intersect further high grades, the resultscontinue to define the low-grade footprint. In South Mali, a 3 000 metre regional diamond drilling programme is nearcompletion to cover the permits and test a range of targets, whilst providingessential structural information across the area. In particular, the holes haveconfirmed areas of shallow dipping foliated sediments with broad open folds andhigh-grade metamorphism. In addition, a 3 000 metre aircore drilling programmehas been completed testing 11 targets on the Diamou and Seriba-Sobara permits,which are part of the OMRD Diamou joint venture agreement. The results confirmthat gold anomalies are associated with narrow quartz veins and felsicintrusives, hosted by isoclinally folded pelitic schists. In Senegal, diamond drilling has commenced on four targets, while the RABdrilling has been postponed until November due to the early onset of the annualrains. A new high-grade target, Delya has been identified initially by trenching- DLT003: 11.15 metres at 9.60g/t, DLT004: 4 metres at 1.60g/t, DLT005: 4.5metres at 7.54g/t, DLT006: 7.45 metres at 1.98g/t and 6.2 metres at 7.59g/t,DLT008: 18 metres at 0.68g/t and DLT009: 2 metres at 5.69g/t and later confirmedby drilling - DLDDH001: 9.83 metres at 1.80g/t, DLDDH002: 12 metres at 5.07g/tincluding 7 metres at 8.19g/t. In Burkina Faso, a 10 000 metre RAB and 1 000 metre RC drilling programme hascommenced on the Kiaka permit to test three targets including the Kiaka targetwhere previous work has defined a very broad, low-grade envelope of bedrockmineralisation over a one kilometre strike length. The first RAB results haveconfirmed the previous work and extend the known mineralisation by a further 200metres. In Ghana, exploration is well underway to complete the first level ofinvestigation including mapping, stream sediment sampling, soil geochemistry androck sampling. This work will lead to the identification of targets for the baseof the resource triangle. On the Central Goldfields joint venture permit, a 400metre by 100 metre soil sampling programme has been completed to follow-upanomalous stream sediment gold values. The results have returned five anomalousareas associated with three sub-parallel shears located within the volcanic/sedimentary belt. In Tanzania, activities in general were restricted to data capture and theinterpretation of results as the annual wet season restricted field work.Kiabakari is proving to be an interesting project with the mineralisationidentified to date being part of a much bigger hydrothermal system and not justrestricted to the old colonial mine. Currently we are modelling multiple shearzones in different rock types and designing drill programmes to further evaluatethese targets. Trenching across the Mara fault has defined a three kilometrelong east-west trending anomalous corridor which will be tested by RC drillingduring the next quarter. Finally the company has its first entry, with theaddition of four new permits, into the newly identified Singida-Dodomagreenstone belt, following an agreement with Barrick. The board has authorised a US$1.8 million increase in the budgeted expenditurefor 2006 for additional drilling at Loulo and elsewhere. CONSOLIDATED INCOME STATEMENT Quarter 6 months ended ended Quarter Quarter 30 Jun 6 months 30 Jun ended ended 2005 ended 2005 30 Jun 31 Mar (Re- 30 Jun (Re-US$000 2006 2006 stated)+ 2006 stated)+REVENUES Gold sales onspot 66 684 67 241 27 963 133 925 59 949 Realised losson closingout of hedges (3 243) - - (3 243) - Non-cash realisedloss on rollforward ofhedges (2 050) (3 227) - (5 277) - Total 61 391 64 014 27 963 125 405 59 949 OTHER INCOME Interest income 1 754 2 049 364 3 803 689 Exchange gains 1 552 2 056 - 3 608 365 Other income 164 16 - 180 1 602 Total otherincome 3 470 4 121 364 7 591 2 656 Total revenue 64 861 68 135 28 327 132 996 62 605 COSTS AND EXPENSES Mine productioncosts 29 066 27 411 12 674 56 477 28 534 Movement inproductioninventory andore stockpiles (7 697) (1 296) (5 108)+ (8 993) (10 518)+ Transfer from/(to) deferredstripping - - -+ - -+ Depreciationand amortisation 4 962 4 964 2 307 9 926 4 902 General andadministrationexpenses 2 824 2 874 1 637 5 698 3 079 Mining andprocessingcosts 29 155 33 953 11 510+ 63 108 25 997+ Transport andrefinery costs 126 153 62 279 129 Royalties 4 129 4 321 1 959 8 450 4 121 Exploration andcorporate expenditure 6 938 7 687 5 383 14 625 11 207 Exchange losses 1 406 1 896 1 460 3 302 1 460 Unwind of discounton provisions forrehabilitation 84 84 117 168 234 Interest expense 1 537 1 619 300 3 156 645 Profit beforeincome tax 21 486 18 422 7 536+ 39 908 18 812+ Income taxexpense (6 913) (5 655) - (12 568) - Net profit 14 573 12 767 7 536+ 27 340 18 812+ Attributable to: Equityshareholders 13 754 11 545 7 536+ 25 299 18 812+ Minorityshareholders 819 1 222 - 2 041 - 14 573 12 767 7 536+ 27 340 18 812+ Basic earningsper share (US$) 0.20 0.17 0.13+ 0.37 0.32+ Fully dilutedearnings pershare (US$) 0.20 0.16 0.12+ 0.36 0.30+ Average sharesin issue (000) 68 266 68 131 59 481 68 275 59 448 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. CONSOLIDATED BALANCE SHEET At At 31 Dec 30 Jun At At 2005 2005 30 Jun 31 Mar (Re- (Re-US$000 2006 2006 stated)+ stated)+ Assets Non-current assets Property, plant andequipment 228 426 214 716 202 636 178 449 Cost 272 047 253 375 236 331 205 136 Accumulated depreciationand amortisation (43 621) (38 659) (33 695) (26 687) Deferred strippingcosts - - -+ -+ Deferred taxation 2 385 2 866 2 957+ - Long-term ore stockpiles 26 841 24 710 22 176+ 21 195+ Total non-current assets 257 652 242 292 227 769+ 199 644+ Current assets Deferred stripping costs - - -+ -+ Inventories and stockpiles 39 956 30 495 34 210+ 9 404+ Receivables 49 554 49 907 47 918 41 949 Cash and cash equivalents 151 531 158 139 152 452 56 556 Total current assets 241 041 238 541 234 580+ 107 909 Total assets 498 693 480 833 462 349+ 307 553+ Shareholders' equity 303 123 294 049 301 822+ 198 486+ Minority interest 3 436 2 617 1 395 (954) Total equity 306 559 296 666 303 217+ 197 532+ Non-current liabilities Long-term borrowings 37 593 48 786 49 538 68 755 Loans from minorityshareholders insubsidiaries 2 633 2 533 2 483 2 441 Financial liabilities -forward gold sales 50 261 48 710 34 151 12 993 Provision forrehabilitation 9 661 9 571 9 480 8 872 Total non-currentliabilities 100 148 109 600 95 652 93 061 Current liabilities Financial liabilities -forward gold sales 24 168 18 158 8 939 1 037 Current portion oflong-term borrowings 24 779 23 504 22 991 1 692 Accounts payable andaccrued liabilities 36 077 28 500 28 813 14 231 Taxation payable 6 962 4 405 2 737 - Total current liabilities 91 986 74 567 63 480 16 960 Total equity andliabilities 498 693 480 833 462 349+ 307 553+ + Restated due to change in accounting policy relating to deferred stripping. See note on accounting policies. Main balance sheet movements for the six months ended 30 June 2006 were asfollows: * Property, plant and equipment increased due to work performed on Phase 2 at Loulo, as well as the commencement of construction of the underground mine at Yalea at Loulo. * Inventories and stockpiles increased due to higher gold stock on hand compared to December, due to the timing of gold shipments. Warehouse inventories also increased in line with the stocking policy during the wet season. * Receivables remained constant, however an agreement was reached with the Government of Mali on a repayment plan of fuel taxes and VAT at Morila. Judgment granting a final order for the liquidation of MDM Ferroman (Pty) Ltd ("MDM") was given on 2 August 2006. This opened the way for the company to proceed with additional claims against MDM for amounts advanced to MDM in excess of the lump sum contract. * The decrease in long-term borrowings mainly reflects the first payment made of US$8.4 million on the Loulo project finance loan, as well as payments made on the Loulo CAT finance lease. * The increase in financial liabilities of forward gold sales is due to an increase in the negative marked-to-market valuation of contracts held at 30 June 2006. The gold price was US$613.50 at 30 June 2006. * The increase in accounts payable and accrued liabilities reflects increased drilling activity during the period at Loulo as well as the procurement of equipment and materials for the underground project at Loulo. * Taxation payable relates to income taxes at Morila following the end of the five year tax holiday in November 2005. CONSOLIDATED CASHFLOW STATEMENT 6 months ended 6 months 30 Jun ended 2005 30 Jun (Re-US$000 2006 stated)+ Profit before income tax 39 908 18 812+ Adjustment for non-cash items 16 699 9 573+ Working capital changes (12 660) (17 494) Net cash generated from operations 43 947 10 891 Additions to property, plantand equipment (35 716) (48 580) Financing of contractors 105 (13 071) Net cash utilised in investingactivities (35 611) (61 651) Ordinary shares issued 751 637 (Decrease)/increase in long-termborrowings (10 008) 28 439 Net cash generated by financingactivities (9 257) 29 076 Net decrease in cash and cashequivalents (921) (21 684) Cash and cash equivalents atbeginning of period 152 452 78 240 Cash and cash equivalents atend of period 151 531 56 556 + 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$000Balance - 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) Mar 2005 QuarterNet income - - - - Movement on cash flowhedges - - - 1 690 Total recognised income - - - 1 690 Share-based payments - - - 288 Share options exercised 176 800 9 538 - Jun 2005 Quarter Net income - - - - Movement on cash flowhedges - - - (52) Total recognisedincome/(loss) - - - (52) Share-based payments - - - 823 Share options exercised 35 400 2 88 - Restricted shares issued asremuneration# 161 735 8 - - Treasury shares held bycompany# (107 825) (5) - - Shares vested# - - 735 (735) Balance - 30 Jun 2005 59 492 804 2 975 103 703 (12 333) 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) Mar 2006 Net income - - - - Movement on cash flow hedges - realised - - - 3 227 - unrealised - - - (23 778) Total recognised income/(loss) - - - (20 551) Share-based payments - - - 685 Share options exercised 168 700 8 540 - Shares vested# 6 830 - 108 (108) Jun 2006 Net income - - - - Movement on cash flowhedges - realised (non-cash) - - - 2 050 - unrealised - - - (7 561) Total recognised income/(loss) - - - (5 511) Share-based payments - - - 628 Share options exercised 54 000 3 200 - Balance - 30 Jun 2006 68 302 394 3 415 209 430 (65 857) Total attribut- able Accumu- to lated equity Minority Total profits share- Interest equity US$000 holders US$000 US$000 Balance - 31 Dec 2004(as previously reported) 100 213(S) 191 169 (954) 190 215 Change in accountingpolicy (14 884)+ (14 884)+ - (14 884)+ Balance - 31 Dec 2004 85 329+ 176 285+ (954) 175 331+ Mar 2005 Quarter Net income 11 276+ 11 276+ - 11 276+ Movement on cash flowhedges - 1 690 - 1 690 Total recognisedincome 11 276+ 12 966+ - 12 966+ Share-based payments - 288 - 288 Share options exercised - 547 - 547 Jun 2005 Quarter Net income 7 536+ 7 536+ - 7 536+ Movement on cash flowhedges - (52) - (52) Total recognised income/(loss) 7 536+ 7 484+ - 7 484+ Share-based payments - 823 - 823 Share options exercised - 90 - 90 Restricted shares issuedas remuneration# - 8 - 8 Treasury shares held bycompany# - (5) - (5) Shares vested# - - - - Balance - 30 Jun 2005 104 141+ 198 486+ (954) 197 532+ Balance - 31 Dec 2005(as previouslyreported) 138 751 309 737 1 395 311 132 Change in accountingpolicy - deferredstripping cost (7 915)+ (7 915)+ - (7 915)+ Balance - 31 Dec 2005 130 836+ 301 822+ 1 395 303 217+ Mar 2006 Net income 11 545 11 545 1 222 12 767 Movement on cash flowhedges - realised - 3 227 - 3 227 - unrealised - (23 778) - (23 778) Total recognised income/(loss) 11 545 (9 006) 1 222 (7 784) Share-based payments - 685 - 685 Share options exercised - 548 - 548 Shares vested# - - - - Jun 2006 Net income 13 754 13 754 819 14 573 Movement on cash flowhedges - realised (non-cash) - 2 050 - 2 050 - unrealised - (7 561) - (7 561) Total recognised income/(loss) 13 754 8 243 819 9 062 Share-based payments - 628 - 628 Share options exercised - 203 - 203 Balance - 30 Jun 2006 156 135 303 123 3 436 306 559 # Restricted shares were issued to directors as remuneration. The transfer between "other reserves" and "share premium" in respect of the shares vested represents the cost calculated in accordance with IFRS 2. (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 cashcosts and total cash costs per ounce are calculated using guidance issued by theGold Institute. The Gold Institute was a non profit industry associationcomprised of leading gold producers, refiners, bullion suppliers andmanufacturers. This institute has now been incorporated into the NationalMining Association. The guidance was first issued in 1996 and revised inNovember 1999. Total cash costs, as defined in the Gold Institute's guidance,include mine production, transport and refinery costs, general andadministrative costs, movement in production inventories and ore stockpiles,transfers to and from deferred stripping where relevant, and royalties. Underthe company's revised accounting policies, there are no transfers to and fromdeferred stripping. Total cash costs per ounce are calculated by dividing total cash costs, asdetermined using the Gold Institute guidance, by gold ounces produced for theperiods presented. Total cash costs and total cash costs per ounce arecalculated on a consistent basis for the periods presented. Total cash costsand total cash costs per ounce should not be considered by investors as analternative to operating profit or net profit attributable to shareholders, asan alternative to other IFRS or US GAAP measures or an indicator of ourperformance. The data does not have a meaning prescribed by IFRS or US GAAP andtherefore amounts presented may not be comparable to data presented by goldproducers who do not follow the guidance provided by the Gold Institute. Inparticular depreciation, amortisation and share-based payments would be includedin a measure of total costs of producing gold under IFRS and US GAAP, but arenot included in total cash costs under the guidance provided by the GoldInstitute. Furthermore, while the Gold Institute has provided a definition forthe calculation of total cash costs and total cash costs per ounce, thecalculation of these numbers may vary from company to company and may not becomparable to other similarly titled measures of other companies. However,Randgold Resources believes that total cash costs per ounce are usefulindicators to investors and management of a mining company's performance as itprovides an indication of a company's profitability and efficiency, the trendsin cash costs as the company's operations mature, and a benchmark of performanceto allow for comparison against other companies. Cash operating costs and cash operating cost per ounce are calculated bydeducting royalties from total cash costs. Cash operating costs per ounce arecalculated by dividing cash operating costs by gold ounces produced for theperiods presented. 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, profit from mining activity andprofit from operations as non-GAAP measures, to the information provided in theincome statement, determined in accordance with IFRS, for each of the periodsset out below: Quarter 6 months ended ended Quarter Quarter 30 Jun 6 months 30 Jun ended ended 2005 ended 2005 30 Jun 31 Mar (Re- 30 Jun (Re-US$000 2006 2006 stated)+ 2006 stated)+ Gold saleson spot 66 684 67 241 27 963 133 925 59 949 Realised losson closing outof hedges (3 243) - - (3 243) - Gold sales revenue 63 441 67 241 27 963 130 682 59 949 Mine productioncosts 29 066 27 411 12 674 56 477 28 534 Movement inproductioninventory andore stock piles (7 697) (1 296) (5 108)+ (8 993) (10 518)+ Transfer fromdeferredstripping - - -+ - -+ Transport andrefinery costs 126 153 62 279 129 Royalties 4 129 4 321 1 959 8 450 4 121 General andadministrationexpenses 2 824 2 874 1 637 5 698 3 079 Total cashcosts 28 448 33 463 11 224+ 61 911 25 345+ Profit frommining activity 34 993 33 778 16 739+ 68 771 34 604+ Depreciation andamortisation 4 962 4 964 2 307 9 926 4 902 Exploration andcorporateexpenditure 6 938 7 687 5 383 14 625 11 207 Profit fromoperations 23 093 21 127 9 049+ 44 220 18 495+ + 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: 30 Jun 31 Mar 31 Dec 30 JunUS$000 2006 2006 2005 2005 Decrease in deferredstripping costs 3 2 300 3 687 12 011 Decrease in ore stockpiles 9 971 8 625 8 342 2 792 Decrease in gold in process 56 29 51 511 Decrease in deferred taxationliability - - 1 227 - (Decrease)/increase in deferredtaxation asset (481) (91) 2 938 - Decrease in opening retainedearnings - 7 915 14 884 15 728 6 6 Quarter Quarter Quarter months months ended ended ended ended ended 30 Jun 31 Mar 30 Jun 30 Jun 30 JunUS$000 2006 2006 2005 2006 2005 Increase/(decrease)in net profit 1 405 1 034 414 2 439 (430) Increase/(decrease) inbasic earnings per share(cents per share) 2 2 1 4 - Increase in fully dilutedearnings per share (centsper share) 2 1 1 3 1 FORWARD COMMODITY CONTRACTS The group's hedging position which all relates to the Loulo project financing,was as follows at 30 June 2006: Forward Forward sales sales averageMaturity date ounces US$/oz Year ended 2006 66 486 435 Year ended 2007 116 004 438 Year ended 2008 80 498 431 Year ended 2009 85 000 437 Total 347 988 435 The remaining portion of the hedge book represents approximately 37% of plannedopen pit production at Loulo for the period that the project finance is in placeand 22% of the group's attributable production. 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. During the quarter, the company delivered into 17 012 ounces of its hedge bookat an average price of US$434 per ounce. GENERAL The company continues to evaluate value creating opportunities throughexploration, discovery and development, as well as leverage from acquisitionopportunities. Shareholders are reminded of the appointment of two eminent internationalbusiness leaders, Norborne P Cole Jr and Karl Voltaire, as non-executivedirectors during May this year. D M Bristow R A WilliamsChief executive Financial director7 August 2006 Registered office: La Motte Chambers, La Motte Street, St Helier, Jersey JE11BJ, Channel Islands Website: www.randgoldresources.com 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. Other potential risks and uncertaintiesinclude risks associated with: fluctuations in the market price of gold, goldproduction at Morila, the development of Loulo and estimates of resources,reserves and mine life. For a discussion on such other risk factors refer to theannual report on Form 20-F for the year ended 31 December 2005 which was filedwith the United States Securities and Exchange Commission (the 'SEC') on 29 June2006. Randgold Resources assumes no obligation to update information in thisrelease. Cautionary note to US investors: the 'SEC' permits companies, in theirfilings with the 'SEC', to disclose only proven and probable ore reserves. Weuse certain 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:
Randgold Resources