6th Jan 2006 13:00
Randgold Resources Ld06 January 2006 RANDGOLD RESOURCES LIMITEDIncorporated in Jersey, Channel IslandsReg. No. 62686LSE Trading Symbol: RRSNasdaq Trading Symbol: GOLD SOMILO PUTS LOULO CONTRACTOR ON NOTICE Bamako, Mali, 6 January 2006 (LSE:RRS)(Nasdaq:GOLD) - Societe des Mines deLoulo SA (Somilo), owner of the Loulo gold mine currently being completed inMali, has advised plant and infrastructure contractor MDM Ferroman that MDM hasdefaulted on its construction and commissioning contract. Loulo has been in production since September last year but the second phase ofthe plant, the hard rock crushing circuit, still has to be completed. (The mineis currently running on soft ore.) MDM was due to complete all works by 16December 2005 but has not done so and is not able to provide Somilo with anexact new completion date. In addition, its indebtedness to Somilo, arisingfrom advance payments made by Somilo to ease MDM's cash flow problems and tokeep the project on track, has exceeded the securities that have been providedand MDM has not been able to provide satisfactory additional securities for itsincreased indebtedness. It has also become apparent to Somilo that MDM ishaving difficulties in paying its creditors on the Loulo project. Somilo said today it had been aware since the middle of 2005 that MDM wasexperiencing financial difficulties which could compromise its ability tocomplete the Loulo project. On a number of occasions, Somilo was obliged tointervene through additional financing for MDM and negotiation with itscreditors. Late last year Somilo learned that the delivery of the criticallyimportant crushers for the hard rock circuit had been cancelled by the supplierbecause of non-payment by MDM. Somilo had to step in to take over the contractand make payment directly to the supplier. The crushers are being shipped tosite immediately which will prevent further delays. Randgold Resources, Somilo's major shareholder and the project sponsor, had aseries of meetings with MDM in the course of November and December to discussthe increasingly unsatisfactory position at Loulo. At these meetings, MDMstated their belief that they were capable of completing the project - albeitlate - and that given the opportunity, they would recover from their currentfinancial problems and repay their debt to Somilo. To date acceptable confirmation of these assurances has not been provided.Consequently Somilo has decided to take back the project and call in the varioussecurities. With the assistance and support of Randgold Resources' capitalprojects team, the mine will complete the project under its direct management.Steps will also be taken to recover the monies owed by MDM to Somilo andRandgold Resources. MDM are at present still working on site and are obliged under their contractwith Somilo to cooperate and assist with an orderly handover process. Randgold Resources chief executive Dr Mark Bristow said he would update themarket on new schedules and new completion dates over the next few weeks. "At this stage we do not believe that this development should materially impacton our operational plans for 2006, but there will probably be additional costsif MDM are unable to repay their debt. In the meantime, should it becomenecessary, Somilo has made contingency plans to continue running the plant onsoft and semi-soft ore until the hard rock circuit has been completed," he said. RANDGOLD RESOURCES ENQUIRIES:Chief ExecutiveDr Mark Bristow+44 779 775 2288 Investor & Media RelationsKathy du Plessis+27 11 728 4701Cell: +27 83 266 5847Email: [email protected] : 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 2004 which was filed with the United Statessecurities and exchange commission (The 'SEC') on 29 June 2005. RandgoldResources sees no obligation to update information in this release. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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