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 RANDGOLD RESOURCES DOUBLES PROFIT AS LOULO PRODUCTION GETS INTO GEAR London, 7 August 2006 - (LSE:RRS) (Nasdaq:GOLD) - London and Nasdaq listed goldminer Randgold Resources doubled its year-on-year profit from mining to US$68.8million in the six months to June with the contribution from its new Loulo minein Mali boosting attributable production to 224 377 ounces from 133 052 for thecomparable half-year in 2005. These results were achieved in spite of tough operating conditions at Loulo,where management has had to complete the plant left unfinished by a defaultingcontractor. With the recent commissioning of the hard-rock crushing circuit,the plant is now substantially complete but production interruptions caused bythe commissioning process, the transition to the new mix of ore types and theonset of the rainy season had a restraining impact on throughput in the secondquarter, when the mine produced 51 233 ounces against the previous quarter's 64677 ounces. Chief executive Dr Mark Bristow said with the operation now moving to a steadystate, Loulo was successfully overcoming the disruption caused by the delay inthe plant's completion. Cash operating costs for the second quarter were US$277/oz, which compared favourably with the first quarter's US$288. "In the face of some considerable challenges Randgold has delivered materialincreases in profits and production in the first half of this year, underliningthe importance of Loulo's contribution as well as the effectiveness of theorganic growth strategy which brought Loulo on stream in time to benefit fromthe surge in the gold price," he said. He noted that Loulo had repaid the firsttranche of its project finance during the past quarter. The company also announced today that Shaft Sinkers had been appointed todevelop the underground mine at Yalea, a project which will significantlyenhance the value and extend the life of the Loulo complex. Site preparation forthe twin decline system has already started and the boxcut and portalconstruction will soon commence with shaft sinking scheduled to begin in thelast quarter of this year. Capital expenditure on the underground projecttotalled US$8 million in the six months ended June. The results of the deepdrilling programme at the Loulo 0 orebody continue to add to the undergroundpotential. Elsewhere in Mali, Randgold's Morila joint venture delivered a solidsecond-quarter performance, with production of 135 387 ounces in line with theprevious quarter's at a slightly lower total cash cost of US$229/oz. In the Cote d'Ivoire, a 10-hole tactical drilling programme, which will form thebasis for the final feasibility drilling, was initiated at the company's currentTongon project. The prefeasibility-stage project was put on hold at theoutbreak of political unrest in that country, but Bristow said recent high-levelmeetings with all the parties concerned had confirmed Randgold's confidence inits ability to work there. Subject to the country's return to stability, thenext drilling stage will start in 2007. Bristow said in terms of exploration the latest field season had been thebusiest in the company's history. Drilling took place at six project areas infour countries and will shortly start in a fifth, Tanzania. Randgold now has aportfolio of 168 targets on 65 permits covering 20 000km(2) in six countries. "Looking ahead at the rest of the year, the after-effects of the Loulo plantdelay will still be felt in July but we should be completely back on track bythe fourth quarter. Whichever way you look at it, the business is in goodshape, with strong cash generators, great exploration prospects and a robustbalance sheet, and we continue to pursue opportunities for creating valueorganically, through discovery and development, as well as through corporateactivity," he said. "Costs are a concern, however. The depreciating dollar, rising oil prices andinflation concerns have driven the gold price upward - but for the miningindustry these same factors also have a steep downside: their impact on capitaland operating costs. Senior producer breakeven costs have risen significantly,from an actual US$310/oz in 2003 to an actual US$381/oz in 2005. Currentexpectations for 2006 and 2007 are US$426/oz and US$415/oz." "Energy costs are a particularly big issue for those companies, such as RandgoldResources, which operate in remote regions and therefore have to generate theirown power as well as to transport all their requirements over long distances.Diesel fuel for power generation typically accounts for some 20% of the totaloperating costs of such mines." "Randgold has risen to the challenge of increased input costs by continuouslystriving to improve its own efficiency as well as that of its suppliers. Welike to see our mines produce at a cash cost of below US$350 per ounce. In thelonger run, therefore, our fundamental response to the cost challenges we faceis to invest aggressively in the hunt for more high-quality low-cost ounces." RANDGOLD RESOURCES ENQUIRIES:Chief Executive Financial Director Investor & Media RelationsDr Mark Bristow Roger Williams Kathy du Plessis+44 779 775 2288 +44 791 709 8939 +27 11 728 4701+223 675 0122 Fax: +27 11 728 2547 Cell: +27 83 266 5847 Email: [email protected] Website: www.randgoldresources.com DISCLAIMER: Statements made in this document with respect to Randgold Resources'current plans, estimates, strategies and beliefs and other statements that arenot historical facts are forward-looking statements about the future performanceof Randgold Resources. These statements are based on management's assumptionsand beliefs in light of the information currently available to it. RandgoldResources cautions you that a number of important risks and uncertainties couldcause actual results to differ materially from those discussed in theforward-looking statements, and therefore you should not place undue reliance onthem. The 2005 annual report notes that the financial statements do not reflectany provisions or other adjustments that might arise from the claims and legalprocess initiated by Loulo against MDM. Other potential risks and uncertaintiesinclude risks associated with: fluctuations in the market price of gold, goldproduction at Morila, the development of Loulo and estimates of resources,reserves and mine life. For a discussion on such other risk factors refer 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