4th Feb 2008 07:01
Randgold Resources Ld04 February 2008 RANDGOLD RESOURCES LIMITEDIncorporated in Jersey, Channel IslandsReg. No. 62686LSE Trading Symbol: RRSNasdaq Trading Symbol: GOLD("Randgold Resources" or the "Company") STRONG FINISH TO '07 FOR RANDGOLD RESOURCES AS TONGON PROJECT GETS GO-AHEAD London, 4 February 2008 (LSE:RRS)(Nasdaq:GOLD) - Randgold Resources todayannounced that its board had approved the development of a new gold mine atTongon in the Cote d'Ivoire, subject to the conclusion of a mining conventionwith the Government. Reporting its results for the fourth quarter of 2007 and the year to December,the company also said a strong performance from its Loulo operations in Mali hadboosted Q4 net profit to US$14.5 million, up 26% on the previous quarter and 34%up on the comparable quarter in 2006. A dividend of 12 US cents, up 20% on2006, was declared for the year. Attributable gold production for the year of 444 573 ounces was in line withforecast, due in part to Loulo's increased contribution of 264 467 ounces at atotal cash cost of US$372/oz (2006: 241 575 ounces at US$328/oz). Thiscompensated for the shortfall in production at Morila, which delivered 449 815ounces at a total cash cost of US$332/oz against a forecast of 475 000 ounces.The company said the shortfall was attributable to operational problems relatedto planning, grade control and plant lock-up. Net profit for the year was down from US$50.9 million to US$45.6 million as aresult of a tax adjustment of US$3.2 million at the Morila joint venture; a riseof US$7.1 million in exploration and corporate expenditure, mainly as a resultof increased spending on Tongon; and costs associated with a programme toimprove Loulo's operational flexibility. The company said its annual profitwould have exceeded the previous year's had it not been for these exceptionalitems. The company also announced today that Randgold Resources (Mali) was taking overthe operational responsibility for Morila from its joint venture partnerAngloGold Ashanti. AngloGold Ashanti has advised Randgold Resources that it isconsidering the disposal of its 40% stake in Morila and the two companies haveagreed that in the circumstances it would be best for all stakeholders ifRandgold Resources assumed the operatorship as soon as possible, given itscontinuing presence in and commitment to the region. At Tongon, a Type 3 feasibility study was concluded and on the strength of thisthe Randgold Resources board has given the green light for mine development toproceed. An initial draft of a proposed mining convention has been submitted tothe Cote d'Ivoire's Ministry of Mines and Energy. Subject to agreement on this,construction of the mine will start at the end of 2008 with first goldproduction scheduled for the fourth quarter of 2010. Funding for Tongon hasalready been secured through last year's successful US$240 million privateplacement of shares. Meanwhile the development of the Yalea underground mine at Loulo has continuedto make steady progress, with the shaft advancing by a record 260 metres inJanuary. Development ore should be accessed later this quarter with the firstmining faces established by mid-year. It has been decided to replace theraiseboring shaft with an additional decline shaft to extend access to theorebody. On the exploration front, Massawa in Senegal has emerged as a significant newdrilling target. RAB drilling has returned high-grade results, confirmingcontinuous mineralisation over a 2.8 kilometre strike length. A 5 000 metrediamond drilling programme is scheduled to start this quarter. Chief executive Mark Bristow said at a time when the gold industry was facedwith declining output and a dearth of quality projects, Randgold Resources wasgearing up to grow production and profits. With Loulo targeting production of400 000 ounces per year by 2010 and Tongon stepping in to replace the decliningMorila, group attributable production was set to increase by 50% to 600 000ounces per year by 2011. In addition, a robust exploration project portfolioled by Massawa offered additional organic growth potential. "We're strong in equity and cash and so also well placed to make the most of anycorporate opportunities that meet our profit criteria and fit in with our puregold strategy," he said. RANDGOLD RESOURCES ENQUIRIES:Chief Executive Financial Director Investor & Media RelationsDr Mark Bristow Graham Shuttleworth Kathy du Plessis+44 788 071 1386 +44 779 614 4438 +44 20 7557 7738+44 779 775 2288 +44 20 7557 7730 Email: [email protected]+223 675 0122Website: www.randgoldresources.com ----------------------------------------------------REPORT FOR THE QUARTER AND YEAR ENDED 31 DECEMBER 2007 * Net profit up 26% quarter on quarter* Gold production, supported by increased ounces from Loulo, in line with forecast* Dividend increased by 20%* US$240 million private placement secures financing for Tongon* Board approves Tongon mine development* Loulo underground redesign allows early access to ore* Randgold Resources to assume operatorship at Morila* Massawa in Senegal grows into significant drill target Randgold Resources Limited had 76.1 million shares in issue as at 31 December2007 SUMMARISED FINANCIAL INFORMATIONUS$000 Unaudited Unaudited Unaudited Unaudited Unaudited quarter quarter quarter 12 months 12 months ended ended ended ended ended 31 Dec 30 Sep 31 Dec 31 Dec 31 Dec 2007 2007 2006 2007 2006 Gold sales# 89 855 70 701 68 857 289 841 262 717Total cash costs* 47 093 38 189 38 125 158 318 132 540Profit from mining 42 762 32 512 30 732 131 523 130 177activity*Exploration and 12 933 7 872 7 412 35 920 28 805corporate expenditureProfit before income 22 323 18 319 15 763 66 901 73 973taxNet profit 14 492 11 540 10 790 45 628 50 876Net profit 13 385 11 474 9 980 42 041 47 564attributable toequity shareholdersNet cash generated 31 741 2 262 8 645 62 233 70 410from operationsCash and financial 343 133 131 086 143 356 343 133 143 356assetsAttributable 119 736 110 247 116 821 444 573 448 242production+ (ounces)Group total cash 393 346 326 356 296costs per ounce*+(US$)Group cash operating 347 305 288 315 258costs per ounce*+(US$) # Gold sales do not include the non-cash profit/(loss) on the roll forward ofhedges.* Refer to explanation of non-GAAP measures provided.+ Randgold Resources consolidates 100% of Loulo and 40% of Morila. COMMENTSGold sales of US$89.9 million for the quarter increased by 27% from the previousquarter and by 30% from the corresponding quarter in 2006. This is mainly theresult of the higher average gold price received and increased ounces producedat Loulo. Gold sales for the year of US$289.8 million increased by 10.3%compared to the previous year. This is attributable to a year on year increasein the average gold price received of US$652 from US$586 in 2006 and an increasein gold production of 23 072 ounces at Loulo, partially offset by a decrease inattributable production at Morila of 26 741 ounces. Total cash costs for the quarter of US$47.1 million were up 23% compared to boththe previous quarter and the corresponding quarter in 2006. At Loulo, totalcash costs increased by 28.5% quarter on quarter mainly as a result of increasedmining contractor costs associated with the mining of 3.3 million additionaltonnes, in line with the agreed catch up programme to improve the operationalflexibility of the mine. Higher oil prices and the effect of the weaker USdollar against the euro also impacted costs during the quarter. Theattributable total cash costs at Morila increased by approximately 12% mainlydue to higher mining contractor costs, also driven by the weakening US dollaragainst the euro and higher diesel costs. Cash operating cost and total cashcost per ounce for the quarter increased by 14% from the previous quarter mainlydue to the increase in costs described above, partially offset by an 8.6%increase in ounces produced. Year on year the total cash costs increased byapproximately 19%, attributable to higher mining contractor costs at bothoperations as well as the impact of higher diesel prices, the effect of the weakUS dollar on the euro-based component of the operational costs, the increasedroyalties payable resulting from the higher average gold price received andgeneral cost increases in other commodities and consumables. Consequently, thetotal cash cost and cash operating cost per ounce of US$356/oz and US$315/ozincreased by 20% and 22% year on year respectively. The higher gold sales, partially offset by the increases in costs as explainedabove, resulted in an increase in profit from mining activity of approximately32% quarter on quarter and 39% when compared to the corresponding quarter in2006. Profit from mining activities increased by 1% year on year, as a resultof the higher average gold price received offset by the higher costs asdescribed above. Net profit of US$14.5 million was 26% higher compared to the previous quarterand 34% higher on the comparable quarter in 2006. Profit would have beensignificantly higher had it not been for a tax adjustment of US$3.2 million atMorila included in other expenses. Exploration and corporate expenditure forthe quarter increased by US$5.1 million mainly as a consequence of the increasedexpenditure on the Tongon project and bonus accruals which were increased inline with the company's share price performance. The group's net profit for theyear was US$45.6 million compared to US$50.9 million in 2006. This would havebeen in excess of the previous year's profit but for the exceptional itemsdescribed above. OPERATIONSLOULOAt Loulo profit from mining was up 44% quarter on quarter and 10% year on year. The mine produced 68 059 ounces of gold during the quarter at a total cash costof US$436/oz (cash operating cost of US$399/oz), compared to last quarter'sproduction of 58 020 ounces at US$398/oz (cash operating cost US$363/oz). Yearon year, Loulo increased its gold production by 9.6% to 264 647 ounces at atotal cash cost of US$372/oz (cash operating cost US$337/oz), compared to theprevious year's production of 241 575 ounces at US$328/oz (cash operating costUS$294/oz). The additional equipment mobilised by the mining contractor at the beginning ofthe quarter resulted in tonnes mined increasing to 7.5 million from 4.2 millionin the previous quarter. While this impacted negatively on the cash operatingcost by US$5.1 million for the quarter, it has improved the operationalflexibility of the mine. Higher fuel prices and the effect of the weaker USdollar against the euro during the quarter also impacted negatively on the cashoperating cost. Lower recoveries in the quarter, which resulted from a higherproportion of Yalea sulphide feed, have now been ameliorated by adjusting thereagents in the plant. The higher mining costs will continue in the first quarter of 2008 when it isexpected that the mining contractor will have eliminated the contractual backlogin the mining volumes, leaving the operation in a position to meet itsthroughput targets during the 2008 wet season. LOULO RESULTS Quarter Quarter Quarter 12 months 12 months ended ended ended ended ended 31 Dec 30 Sep 31 Dec 31 Dec 31 Dec 2007 2007 2006 2007 2006MiningTonnes mined (000) 7 476 4 202 4 953 20 978 18 362Ore tonnes mined (000) 710 547 610 2 431 2 547MillingTonnes processed (000) 686 599 655 2 654 2 595Head grade milled (g/t) 3.5 3.2 3.7 3.3 3.2Recovery (%) 89.4 94.9 95.2 93.2 93.9Ounces produced 68 059 58 020 68 501 264 647 241 575Average price received+ 695 605 546 612 556(US$/oz)Cash operating costs* (US$/oz) 399 363 293 337 294Total cash costs* (US$/oz) 436 398 326 372 328Profit from mining activity 17 472 12 079 15 268 63 598 57 534* (US$000)Gold sales*+ (US$000) 47 175 35 191 37 592 162 154 136 765 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 19 254 ounces for the quarter (quarter ended 31December 2006: 27 158 ounces) delivered into the hedge at US$439/oz (quarterended 31 December 2006: US$434/oz). Also includes the impact of 90 836 ouncesfor the year ended 31 December 2007 (31 December 2006: 66 925 ounces) deliveredinto the hedge at US$436/oz (year ended 31 December 2006: US$435/oz). MORILAAt Morila, profit from mining was up 23% to US$63.2 million for the quarter anddown 7% to US$169.8 million for the year. The mine had a difficult quarter completing a disappointing year. In thequarter, 129 193 ounces were produced, only slightly less than in the previousquarter but considerably less than the amount required to attain the recentforecast of 475 000 ounces for the year. Gold production for 2007 was 449 815 ounces at a total cash cost of US$332/oz.The second half of the year did however significantly improve over the firsthalf, with 259 759 ounces produced from July to December as opposed to 190 056ounces in the first half of the year. The main reason for the failure toachieve forecast in the last quarter can be attributed to operational problemsinvolving planning, grade control and plant lockup. These problems contributed to higher costs which were also affected byworld-wide inflation in the key inputs of fuel, steel and transport. The minehas taken steps to contain the mining costs by utilising in-pit waste dumping,thereby reducing haul distances. MORILA RESULTS Quarter Quarter Quarter 12 months 12 months ended ended ended ended ended 31 Dec 30 Sep 31 Dec 31 Dec 31 Dec 2007 2007 2006 2007 2006MiningTonnes mined (000) 6 700 6 765 4 585 23 859 21 512Ore tonnes mined (000) 1 681 1 609 911 5 016 5 242MillingTonnes processed (000) 1 026 1 030 1 086 4 163 4 138Head grade milled (g/t) 4.3 4.3 3.7 3.7 4.2Recovery (%) 91.7 91.2 92.5 91.6 91.9Ounces produced 129 193 130 568 120 801 449 815 516 667Average price received 797 692 623 710 609(US$/oz)Cash operating costs* 279 241 282 282 215(US$/oz)Total cash costs* (US$/ 337 289 327 332 258oz)Profit from mining 63 224 51 083 38 660 169 810 181 607activity* (US$000)Attributable (40%proportionatelyconsolidated)Gold sales (US$000) 42 680 35 511 31 265 127 687 125 952Ounces produced 51 677 52 227 48 320 179 926 206 667Profit from mining 25 290 20 433 15 464 67 925 72 643activity* (US$000) * Refer to explanation of non-GAAP measures provided. MORILA RESOURCE BASE (as at 31 December 2007) Category Tonnes Tonnes Grade Grade Gold Gold Attributable (Mt) (Mt) (g/t) (g/t) (Mozs) (Mozs) gold 2007 2006 2007 2006 2007 2006 (40%) (Mozs) Measured 18.95 20.54 1.90 2.27 1.16 1.50 Indicated 4.00 9.50 3.57 3.34 0.46 1.02Sub-total Measured and 22.95 30.03 2.19 2.61 1.62 2.52 0.65 indicated Inferred 0.83 3.09 3.05 3.31 0.08 0.33 0.03 Cut-off grade for resources = 1g/t.Resources are reported within the US$700/oz pit shell. There has been a considerable drop in the quantity of mineral resource availableafter depletion as the open pit design is now insensitive to increases in goldprice and recent underground scoping studies have indicated that the resourceavailable at present is too small to warrant such underground development atcurrent gold prices and costs. Morila has received OHSAS 18001 certification following a safety audit carriedout near the end of the year. AngloGold Ashanti has notified Randgold Resources that it is considering thedisposal of its 40% interest in Morila. The disposal process to be followed byAngloGold Ashanti will be in accordance with the Morila joint venture agreement.As part of this process the partners have agreed that, given RandgoldResources' ongoing presence in and commitment to the region, it will be in thebest interest of all stakeholders for Randgold Resources to assume operatorshipof the Morila mine as soon as possible. AngloGold Ashanti has assured Randgold Resources that in the event of it beingunable to realise acceptable value through a sale of its interest in Morila, itwill retain its interest as a supportive stakeholder with Randgold Resources asthe operator. PROJECTS AND EVALUATIONLOULO UNDERGROUND DEVELOPMENT PROJECTSYaleaAt the end of the fourth quarter 2007, the twin declines at Yalea undergroundmine were advanced for a distance of 520 metres from surface and a verticaldepth of 100 metres below surface. A total of 1 030 metres of development wascompleted at this stage. The advance of the declines was somewhat hampered bythe intersection of poor ground conditions. However both declines progressedthrough the worst of these conditions and normal development continued at theend of the fourth quarter, with the declines reaching 620 metres from surface atthe end of January. The first development ore is expected to be deliveredtowards the end of March 2008, with first stoping ore scheduled for the secondquarter in 2008. It is expected that this section will build up to fullproduction of 90 000 tonnes per month from the fourth quarter. During the latter half of 2007 it became clear that the plan for raiseboringventilation and backfill passes at the P125 pit needed to be reviewed.Different methods of establishing ventilation and backfill access were evaluatedand a decision was taken to sink a third decline in the P125 pit. This will notonly serve as backfill and ventilation access to the underground workings butwill also have numerous other benefits to the underground section, including anadditional point of entry as well as the possibility of additional stopingblocks in the area directly above the dyke in the pit, which was previouslyexcluded from the mine plan. GaraGara underground mine is scheduled to start development in January 2009. Theorders for the underground long lead time heavy vehicle fleet have been placedand the first units are expected on site towards the end of 2008. Gara isexpected to be delivering first ore towards the end of 2009 and build up to fullproduction in 2014. TONGON PROJECTResults from more than 20 000 metres of diamond drilling, remodelling of theorebodies and ongoing feasibility studies discussed and presented at the end ofthe last quarter have been compiled into a Type 3 feasibility document. Theboard has given approval to proceed with the development of the mine as per thefeasibility study and to initiate site establishment and ordering of the longlead time items. Further study work has been progressed in the quarter and includes:* more than 14 000 metres of diamond drilling in order to infill the drillinggrid and allow conversion of the bulk of the inferred resource to indicatedresource;* a site visit by the capital projects team, SENET Engineering and EpochResources in early December. This led to a revised onsite infrastructurallayout which markedly reduced the footprint of the affected areas allowing forshorter haul distances of waste for the earthworks programme;* receipt of metallurgical testwork results which continue to guide plantdesign and is being effected by SENET in collaboration with our capital projectsteam. Epoch have been contracted to carry out tailings storage facilityinvestigation and design;* the continuation of the environmental and social impact assessment by DigbyWells & Associates who have concluded a detailed census and survey of allinhabitants of the closest affected villages plus the smaller hamlets in themine area; and* the initiation of the public participation process which involves publicmeetings in the most affected villages, the major town of the sub-prefecture,Mbengue, as well as in Abidjan, which is expected to be completed in May. The initial draft of the proposed mining convention has been tabled with theMinistry of Mines and Energy. The team is addressing the critical (short term)aspects of the project ahead of the main construction programme to ensureRandgold Resources is ready to start the project once the final contracts areawarded, which is expected to be in the fourth quarter of 2008. These aspectsinclude:* upgrade of access road;* improvement of site access;* construction of water storage facility;* aggregate and sand preparation;* camp establishment;* ordering of long lead time items; and* preparation of construction tenders. Subject to the final conclusion of a mining convention with the State of Coted'Ivoire, construction start-up is planned towards the end of the year withfirst gold production scheduled for the fourth quarter of 2010. EXPLORATION ACTIVITIESThe quarter brought to an end a very busy and productive year in exploration andcontinued to place the company in a very good position to continue its strategyof development through organic growth. Randgold Resources has a qualitygroundholding of 12 723km2 across some of the most prospective gold belts inAfrica and a portfolio of 171 targets, ranging from the regional level toreserve definition. In Senegal, at Massawa, 2 436 metres of infill RAB drilling has been completedand returned high grade results from 3 metre composite samples, includingMWRAB102 -24 metres at 8.58g/t (including 3 metres at 58.70g/t), MWRAB106 - 39metres at 10.60g/t (including 3 metres at 36.40g/t and 9 metres at 30.95g/t),MWRAB109 - 30 metres at 11.01g/t (including 3 metres at 44.60g/t, 3 metres at26.90g/t and 3 metres at 33.30g/t), MWRAB111 - 20 metres at 4.09g/t, MWRAB132 -15 metres at 2.60g/t and MWRAB156 - 27 metres at 3.03g/t. This drilling has nowinfilled the surface work to 200 metre line spacing and confirmed continuousmineralisation over 2.8 kilometres of strike length in a northeast orientationand open in all directions. Geologically the target is underlain by a sequenceof interbedded sediments and volcanics, which have been intruded by felsicdykes, gabbros and granitic bodies. The rock units have been affected bynortheast shearing, associated with the main transcurrent shear zone which inturn has been reactivated dextrally by north-south belt discordant structures,resulting in dilation and mineralisation. There are varying degrees to theintensity of alteration (silica-carbonate-sericite-pyrite-arsenopyrite) andlocally brecciation and brittle fracturing are associated with the goldmineralisation. A 5 000 metre plus diamond drilling programme will commenceduring Q1. At Loulo, drilling in the gap area between the main and northern zones at Farabacontinues to extend mineralisation, with drill holes intersecting anapproximately 100 metre (true width) envelope of strong shearing, alteration andzones of gold mineralisation. Results include: FADH026 - 13.10 metres at 3.08g/t from 246 metres and 4.55 metres at 9.11g/t. At Baboto, RAB drilling hascontinued to delineate the geometry of surface mineralisation and has returnedencouraging results at the central target with hole BARAB58 intersecting 30metres at 2.15g/t and BARAB59 - 21 metres at 2.93g/t. At Loulo 3, three diamondholes confirmed a north-south structural control to the mineralisation and anarrow high grade sulphide unit was intersected in two of the holes. L3DH27 -6.80 metres at 0.72g/t, L3DH28 - 14.70 metres at 5.95g/t, including 0.8 metresat 88.10g/t, L3DH29 - 3 metres at 10.82g/t. All the data is currently beingintegrated, modelled and the economic potential for a small open pit evaluated. Following the consolidation of a 1 327km(2) land package in the Loulo district,straddling the highly prospective Senegal-Mali shear zone, both in Mali andSenegal, a helicopter borne VTEM electromagnetic survey is now being flown overthis entire land package. This data will update the geological and structuralmodel and prioritise targets for follow up work. At Morila, four diamond holes (MEX1-4) were drilled, to an average depth of 610metres, for a total of 2 441 metres, testing the northern and easterlyextensions of the orebody. Results for the two northern holes (MEX1-2) confirmthe termination of the orebody, while MEX 3 intersected a broad zone of lowgrade gold mineralisation along the eastern pit-margin (0.45g/t over 45 metres,which included 1.27g/t over 8 metres from 565 metres drilled depth) associatedwith a moderate to steeply dipping structure, which is in sharp contrast to thegeneral flat lying nature of the orebody. The potential for this structure toflatten creating zones of dilation is considered to be a high priority targetfor follow-up work. In Mali South, work has focused on the reconnaissance of the Bagoe East andBagoe West permits held in joint venture with African Gold Group (AGG). Thesepermits cover prospective Morila-type settings along the Banifin shear zone inclose proximity to the Morila deposit. Preparations are underway to completeRAB drilling programmes over gold in soil geochemical anomalies within thepermit. In Burkina Faso, a review of all the geological and structural data confirmsthat a northeast plunging anticline hosts the Kiaka main zone. Also significantis that the last diamond hole drilled to the north returned 166 metres at 1.26g/t indicating the system is still open. A corresponding syncline hosts a narrow,but higher grade, zone of hangingwall mineralisation, which has not beenevaluated and therefore has the potential to add to the upside of this target.An additional programme of diamond drilling is being planned to test these twotargets. Elsewhere in the permit portfolio the team are developing targets fordrilling in the 2008 field season. In Ghana, on the Bole NE concession field mapping combined with logging oftrenches and the interpretation of geological and structural data have defined alarge scale anticline fold adjacent to the main Bole-Bolgatanga regionalstructure. It is apparent that when the gold results from the soil sampling areoverlain on the fold, anomalous values correlate clearly with parasitic folds onthe limbs of this large regional fold. A programme of RAB drilling is beingplanned to commence testing this large target area. In Cote d'Ivoire, excellent progress continued at Tongon and Randgold Resourcesfinished the year having completed 181 holes for 33 973.44 metres of diamonddrilling. During the quarter, 87 holes for 13 566.44 metres were completed.While the exploration team has been focused on drilling out the resources,trenching has also commenced on two targets, namely Tongon South and TongonEast, in preparation for reconnaissance diamond drilling in 2008. Tongon northern zone: Diamond Drill results Q4 2007Hole ID Intersection Including From To Interval Au (m) (m) (g/t)TND 133 43.15 68.07 24.92 6.22 1.92m @ 24.47g/t 1.17m @ 47.30g/tTND 134 14.00 17.85 3.85 1.19 21.50 45.95 24.45 1.84 2.95m @ 6.32g/t 74.85 75.75 0.90 1.82TND 135 40.25 44.85 4.60 1.21 50.00 57.55 7.55 1.60 58.56 60.68 2.12 1.07TND 136 33.70 65.55 31.85 3.67 4.55m @ 11.14g/tTND 137 73.30 74.30 1.00 11.40TND 138 2.49 18.50 16.01 1.49 23.84 32.44 8.60 1.01TND 139 72.40 117.40 45.00 1.99 14.10m @ 4.14g/tTND 143 131.26 149.08 17.82 2.31 1.68m @ 9.95g/tTND 144 86.45 109.90 23.45 3.63 5.15m @ 10.36g/t Tongon southern zone: Assay results Q4 2007Hole ID Intersection Including From To Interval Au (m) (m) (g/t)TND 157 52.40 54.70 2.30 4.96 58.65 61.00 2.35 1.73 80.16 85.26 5.10 1.81TND 159 14.41 32.83 18.42 3.77 4.03m @ 6.99g/t from 14.41m 3.41m @ 9.24g/t from 29.42m 44.47 46.66 2.29 3.00 173.75 174.72 0.97 4.01TND 160 111.06 111.98 0.96 2.50 121.98 122.94 0.96 1.16TND 161 84.77 89.00 4.23 1.59TND 169 8.60 50.21 41.61 5.51 5.20m @ 19.66g/t from 11.80m 6.10m @ 13.40g/t from 35.49m 59.49 61.63 2.14 1.75TND 170 9.30 33.40 24.10 1.73 37.63 51.55 13.92 2.71 3.63m @ 5.69g/t from 42.27mTND 171 28.07 47.00 18.93 1.41 56.75 61.93 5.18 1.92 68.00 81.98 13.98 3.89 93.73 100.75 7.02 2.35TND 172 3.19 4.50 1.31 2.60 33.20 47.30 14.10 2.26 49.15 55.44 6.29 5.42TND 173 No mineralised intersection returnedTND 174 1.28 10.50 9.22 0.56TND 175 30.44 36.00 5.56 1.08 71.96 79.34 7.38 0.94 96.45 98.30 1.85 1.84 145.96 151.74 5.78 0.81 177.00 179.00 2.00 1.06TND 176 14.08 20.50 6.42 2.10 32.88 37.37 4.49 5.33 41.44 42.28 0.84 6.39 45.95 52.52 6.57 1.96 98.00 105.20 7.20 1.94 1.14m @ 9.60g/t from 104.06m 116.70 124.44 7.74 3.29 137.73 158.00 20.27 2.89 162.50 167.90 5.40 1.18 179.80 180.65 0.85 1.71 182.56 185.68 3.12 1.76 188.63 195.10 6.47 1.20TND 177 45.75 51.75 6.00 1.90 72.82 78.58 5.76 1.83 88.58 90.58 2.00 3.57 93.58 94.58 1.00 1.89TND 179 23.30 35.73 12.43 6.82 7.62m @ 10.52g/t from 28.11m 52.13 59.70 7.57 5.19 2.51m @ 13.78g/t from 55.57m 64.22 67.35 3.13 1.79 98.10 110.78 12.68 1.01 118.38 126.66 8.28 1.83 143.10 150.50 7.40 1.40 162.58 175.44 12.86 0.90TND 180 13.00 24.12 11.12 10.74 4.50m @ 22.19g/t from 13.00m 34.47 42.00 7.53 0.50 50.00 53.00 3.00 0.97 63.76 64.57 0.81 18.20 68.29 93.00 24.71 3.02 1.83m @ 8.40g/t from 70.17m 4.00m @ 6.44g/t from 86.16m 126.56 134.20 7.64 3.38 1.74m @ 9.69g/t from 128.46m 139.54 151.85 12.31 2.75 159.35 167.53 8.18 1.30TND 181 104.56 112.00 7.44 3.74 1.68m @ 13.05g/t from 109.47m 160.03 182.33 22.30 2.27 3.97m @ 4.91g/t from 161.03mTND 182 3.44 9.00 5.56 5.39 0.76m @ 17.80g/t from 5.33m 28.72 36.33 7.61 1.11 60.45 76.49 16.04 2.68TND 187 32.10 39.00 6.90 2.62 87.85 90.17 2.32 3.12 95.80 98.20 2.40 3.83 104.56 108.70 4.14 3.13TND 188 91.49 96.02 4.53 2.18 103.80 111.95 8.15 1.17 143.75 145.75 2.00 1.56TND 189 95.00 96.00 1.00 1.21 In Cote d'Ivoire, we have a portfolio of six permits covering 4 880km(2) in boththe north and south of the country. In the south, first pass reconnaissanceexploration has been completed on the Apouasso and Dignago permits. On theApouasso permit, located in the southeast of the country close to the Ghanaborder, a 1 000 metre by 200 metre regional soil sampling programme has returneda 10 kilometre plus 10ppb regional gold anomaly, including a maximum value of925ppb associated with the contact between a volcano-sedimentary belt andgranite. On the Dignago permit, located in the southwest of the countryregional soil sampling has defined a 5 by 2 kilometre plus10ppb regional soilanomaly, reconnaissance work continues on both permits. The Boundiali permits, (1 314km(2)) located in the north of the country andapproximately 100 kilometres west of Nielle, hosts the advanced target ofTiasso, and although no fieldwork was completed in 2007 preparations areunderway to drill test. Previous trenching confirmed 2 kilometres of sub-surfacemineralisation in saprolite with a best intersection of 25 metres at 4.39g/t. In Tanzania, at Miyabi, all the Phase 1 drilling assays were received and nowide zones of deformation, alteration or mineralisation were intersected. Thebest intersections are 3.00 metres at 1.21g/t, (MBDH-35) and 25.50 metres at0.59g/t, (MBDH-47). Mineralisation is controlled by folded banded iron formationand the intersection of northeast trending structures. Exploration is nowconcentrating on a 20 kilometre long northwest trending, weakly anomalousstructural corridor, with RAB drilling planned for Q1. Randgold has shifted some of its exploration emphasis to the mobile beltssurrounding the Archaean Cratons in Tanzania. Gold mineralisation is hosted inhighly deformed and silicified metamorphosed rock units above a major thrust.The units consist of thinly bedded impure marble and biotite gneiss/granulite.Early stage exploration has commenced on reconnaissance permits in the Morogoroarea. CONSOLIDATED INCOME STATEMENTUS$000 Unaudited Unaudited Unaudited Unaudited Audited quarter quarter quarter 12 months 12 months ended ended ended ended ended 31 Dec 30 Sep 31 Dec 31 Dec 31 Dec 2007 2007 2006 2007 2006REVENUESGold sales on 96 708 75 478 73 777 313 421 274 907spotLoss on matured (6 853) (4 777) (4 920) (23 580) (12 190)hedgesNon-cash (loss)/ (2 277) (2 152) 287 (7 036) (4 413)profit on rollforward of hedgesTotal revenues 87 578 68 549 69 144 282 805 258 304Other income 764 692 64 967 1 168Total income 88 342 69 241 69 208 283 772 259 472COSTS ANDEXPENSESMine production 40 921 33 146 29 067 136 312 115 217costsMovement in (4 427) (2 895) (852) (11 534) (13 373)productioninventory and orestockpilesDepreciation and 3 421 5 673 6 532 20 987 22 844amortisationOther mining and 4 309 3 097 5 229 13 638 13 006processing costsMining and 44 224 39 021 39 976 159 403 137 694processing costsTransport and 736 316 253 1 595 711refinery costsRoyalties 5 554 4 525 4 428 18 307 16 979Exploration and 12 933 7 872 7 412 35 920 28 805corporateexpenditureOther expenses 3 950 - 2 015 5 008 3 667Total costs 67 397 51 734 54 084 220 233 187 856Finance income 2 748 2 456 2 066 9 167 8 723Finance costs (1 370) (1 644) (1 427) (5 805) (6 366)Finance income - 1 378 812 639 3 362 2 357netProfit before 22 323 18 319 15 763 66 901 73 973income taxIncome tax (7 831) (6 779) (4 973) (21 273) (23 097)expenseNet profit 14 492 11 540 10 790 45 628 50 876Attributable to:Equity 13 385 11 474 9 980 42 041 47 564shareholdersMinority 1 107 66 810 3 587 3 312shareholders 14 492 11 540 10 790 45 628 50 876Basic earnings 0.19 0.17 0.15 0.60 0.70per share (US$)Diluted earnings 0.19 0.16 0.14 0.60 0.69per share (US$)Average shares in 71 591 69 082 68 695 69 589 68 392issue (000) The results have been prepared in accordance with International FinancialReporting Standards (IFRS) as issued by the IASB on a basis consistent with theannual financial statements. On 5 February 2007, the board of directors declared an annual dividend of 10cents per share which resulted in an aggregate dividend payment of US$6.9million. The dividend was paid in March 2007. On 31 January 2008, the board of directors approved an annual dividend of 12cents per share which will result in an aggregate dividend payment of US$9.1million and is expected to be paid in March 2008. CONSOLIDATED BALANCE SHEETUS$000 Unaudited Audited at at 31 Dec 31 Dec 2007 2006AssetsNon-current assetsProperty, plant and equipment 269 896 241 300Cost 347 422 297 839Accumulated depreciation and amortisation (77 526) (56 539)Deferred taxation 2 163 2 993Long term ore stockpiles 43 190 41 614Receivables 22 823 13 702Total non-current assets 338 072 299 609Current assetsInventories and stockpiles 57 410 34 200Receivables 42 104 34 999Available-for-sale financial assets 48 950 -Cash and cash equivalents 294 183 143 356Total current assets 442 647 212 555Total assets 780 719 512 164Shareholders' equity 598 799 336 063Minority interest 8 294 4 707Total equity 607 093 340 770Non-current liabilitiesLong term borrowings 2 773 25 666Loans from minority shareholders in subsidiaries 3 096 2 773Deferred taxation 1 451 462Financial liabilities - forward gold sales 51 953 39 969Provision for rehabilitation 11 074 8 842Total non-current liabilities 70 347 77 712Current liabilitiesFinancial liabilities - forward gold sales 33 672 27 525Current portion of long term borrowings 3 647 24 818Accounts payable and accrued liabilities 63 330 39 461Taxation payable 2 630 1 878Total current liabilities 103 279 93 682Total equity and liabilities 780 719 512 164 Property, plant and equipment increased significantly year on year, mainly dueto expenditure incurred on the underground development at Loulo, including thedevelopment of the twin shafts and the acquisition of the underground fleet, thecompletion of the four CIL tanks and expenditure on the thickener and tailingsdam. Long term receivables increased by US$9.1 million over the year due mainly to anincrease in the TVA balance at Morila. The non-current receivables of US$22.8million are those parts of the MDM and Malian Government receivables which,whilst legally payable immediately, are anticipated to be reimbursed after morethan 12 months. Short term receivables increased mainly as a result of anincrease in trade debtors due to the timing of gold shipments at year end atboth mines. The increase in inventories and ore stockpiles is due to the increased demandfor supplies and insurance spares at Loulo with the development of theunderground mine and increased production, as well as an increase in thestockpiles at Morila in line with the life of mine plan. This was partiallyoffset by a decrease in the stockpiles at Loulo due to the problems experiencedwith the contractor during the rainy season, resulting in reduced productionover this period. As previously indicated, mining at Morila will stop during2009, after which the lower grade stockpiles will be processed until 2013. The increase in cash and cash equivalents is mainly the result of the equityplacing which closed in December 2007 and raised US$231.7 million net ofexpenses. Cash and cash equivalents also increased year on year with cashgenerated from operations of US$62.2 million. This was partially offset by theunderground capital expenditure at Loulo of US$47.9 million, the repayment ofthe corporate revolving credit facility of US$40.8 million and a transfer ofcash currently held in asset-backed securities from cash and cash equivalents toavailable-for-sale financial assets amounting to US$49 million, due to thetemporary illiquid nature of the investments held. Long term borrowings and the current portion of long term borrowings decreasedsignificantly year on year as a result of the full repayment of amountsoutstanding under the corporate facility, which replaced the Loulo projectfacility in May 2007, and prior to repayment in December 2007 stood at US$40.8million. This corporate facility remains in place should we have a need to useit. The financial instruments liability also increased, following the increase inthe gold price, and reflects the marked-to-market valuation of the hedged ouncesat the year end spot price of US$836.50/oz. During the year the companydelivered 90 836 gold ounces into its hedge positions, which reduced thefinancial instruments liability, given the higher gold price. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Number of Share Share Other Accum- ordinary Capital premium reserves ulated shares US$000 US$000 US$000 profits US$000 Balance - 31 Dec 2005 68 072 864 3 404 208 582 (41 000) 130 836Movement on cash flowhedges -Transfer to income - - - 17 256 -statementFair value movement on - - - (36 603) -financial instrumentsNet income recognised - - - (19 347) -directly in equityNet profit - - - - 47 564Total recognised income/ - - - (19 347) 47 564(loss)Share-based payments - - - 2 369 -Share options exercised 633 867 34 3 619 - -Exercise of options - - 650 (650) -previously expensedunder IFRS 2Shares vested# 56 830 2 802 (802) -Balance - 31 Dec 2006 68 763 561 3 440 213 653 (59 430) 178 400Movement on cash flowhedges -Transfer to income - - - 30 371 -statementFair value movement on - - - (41 712) -financial instrumentsNet income recognised - - - (11 341) -directly in equityNet profit - - - - 42 041Total recognised income/ - - - (11 341) 42 041(loss)Share-based payments - - - 2 847 -Share options exercised 545 667 28 4 353 - -Exercise of options - - 1 297 (1 297) -previously expensedunder IFRS 2Shares vested# 10 102 - 170 (170) -Dividend relating to - - - - (6 874)2006Capital raising 6 821 000 341 240 099 - -Costs associated with - - (8 758) - -capital raisingBalance - 31 Dec 2007 76 140 330 3 809 450 814 (69 391) 213 567 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued) Total Minority Total attributable interest equity to equity US$000 US$000 shareholdersBalance - 31 Dec 2005 301 822 1 395 303 217Movement on cash flow hedges -Transfer to income statement 17 256 - 17 256Fair value movement on financial instruments (36 603) - (36 603)Net income recognised directly in equity (19 347) - (19 347)Net profit 47 564 3 312 50 876Total recognised income/(loss) 28 217 3 312 31 529Share-based payments 2 369 - 2 369Share options exercised 3 653 - 3 653Exercise of options previously expensed under IFRS 2 - - -Shares vested# 2 - 2Balance - 31 Dec 2006 336 063 4 707 340 770Movement on cash flow hedges -Transfer to income statement 30 371 - 30 371Fair value movement on financial instruments (41 712) - (41 712)Net income recognised directly in equity (11 341) - (11 341)Net profit 42 041 3 587 45 628Total recognised income/(loss) 30 700 3 587 34 287Share-based payments 2 847 - 2 847Share options exercised 4 381 - 4 381Exercise of options previously expensed under IFRS 2 - - -Shares vested# - - -Dividend relating to 2006 (6 874) - (6 874)Capital raising 240 440 - 240 440Costs associated with capital raising (8 758) - (8 758)Balance - 31 Dec 2007 598 799 8 294 607 093 # 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 Unaudited Audited 12 months 12 months ended ended 31 Dec 31 Dec 2007 2006Profit before income tax 66 901 73 973Adjustment for non-cash items 31 747 29 636Effects of changes in operating working capital (24 178) (18 415)itemsReceivables (23 289) (9 640)Inventories and ore stockpiles (24 786) (19 428)Accounts payable and accrued liabilities 23 897 10 653Income tax paid (12 237) (14 784)Net cash generated from operating activities 62 233 70 410Acquisition of property, plant and equipment (47 905) (61 508)Financing of contractors - 105Acquisition of available-for-sale financial assets (48 950) -Net cash used by investing activities (96 855) (61 403)Proceeds from issue of ordinary shares 236 063 3 653Decrease in long term loans (43 740) (21 756)Dividends paid to company's shareholders (6 874) -Net cash generated by financing activities 185 449 (18 103)Net increase/(decrease) in cash and cash 199 777 (9 096)equivalentsCash and cash equivalents at beginning of year 143 356 152 452Cash and cash equivalents at end of the year 294 183 143 356 NON-GAAP MEASURESTotal 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$000 Quarter Quarter Quarter 12 12 ended ended ended months months 31 Dec 30 Sep 31 Dec ended ended 2007 2007 2006 31 Dec 31 Dec 2007 2006Gold sales on spot 96 708 75 478 73 777 313 421 274 907Loss on matured (6 853) (4 777) (4 920) (23 580) (12 190)hedgesGold sales 89 855 70 701 68 857 289 841 262 717Mine production 40 921 33 146 29 067 136 312 115 217costsMovement in production inventory (4 427) (2 895) (852) (11 534) (13 373)and ore stockpilesTransport and refinery costs 736 316 253 1 595 711Royalties 5 554 4 525 4 428 18 307 16 979Other mining and processing costs 4 309 3 097 5 229 13 638 13 006Total cash costs 47 093 38 189 38 125 158 318 132 540Profit from mining activity 42 762 32 512 30 732 131 523 130 177 FORWARD COMMODITY CONTRACTS The group's hedging position at 31 December 2007 is summarised below: Maturity date Forward Forward sales sales ounces average US$/ozYear ended 2008 80 496 429.23Year ended 2009 84 996 434.90Year ended 2010 41 748 500.38Total 207 240 445.89 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 19% of the planned production at Loulo and 13% of thegroup's attributable production for the period. PROSPECTSThe current mine plan at Morila anticipates production for 2008 to beapproximately 465 000 ounces. Morila, which will be under Randgold Resources'operatorship, continues to be a significant cash generator. Loulo's 2008 production is expected to be in line with 2007 production. Theunderground development at Yalea is well underway and should access first oreduring the first quarter of 2008 with full production due in 2009. Yalea is thefirst of the two Loulo underground mines and is currently a bigger orebody withhigher grades than the Gara deposit. The underground mines are expected to notonly add life to Loulo but to increase levels of annual production to in excessof 400 000 ounces in 2010. Total cash costs for the group are estimated to increase year on year between10% and 15% depending on oil price and euro-dollar exchange rate assumptions,which have a material impact on operating costs. As indicated earlier, following completion of the Tongon Type 3 feasibilitystudy, Randgold Resources has commenced site establishment at the Tongonproject. The company is still confident that, absent any disruptions in Coted'Ivoire, the planned mine will be in production by late 2010. Detailed designand engineering studies are expected to be completed by mid year, which willform the basis for the tender process and provide an update on the projectparameters. In the coming year, exploration expenditure is expected to remain high, withsignificant drill programmes anticipated across the portfolio, especially inSenegal, Mali and the Cote d'Ivoire. The group's annual reserve statements will be published with the release of theannual report at the end of March 2008. Whilst the company continues to retain its focus on organic growth throughdiscovery and development of world class orebodies, it will also continue toactively engage in reviewing corporate and asset acquisition opportunities. Thefocus of these new business initiatives will be in West and East Africa,however, we continue to evaluate a number of opportunities in other countrieswhere we can export our management philosophy and skills, manage underlyingrisks and create value for shareholders. D M Bristow G P ShuttleworthChief Executive Financial Director4 February 2008 -------------------------------------------------------RANDGOLD RESOURCES NEWS UPDATES TONGON GETS GREEN LIGHT The board of Randgold Resources has given the go-ahead for the development of anew mine at Tongon in the Cote d'Ivoire, subject to the conclusion of a miningconvention with the government. The mine - which will be the third to be developed by the company, after Morilaand Loulo, both in Mali - is scheduled to produce its first gold in the lastquarter of 2010, with construction due to start towards the end of this year. Meanwhile, the political process in the West African country continues to makesteady progress. During a recent visit to the Korhogo region, President Gbagbowas briefed on the current status and future plans for Tongon and Prime MinisterSoro has also been given a full update on the progress and proposed programme.Minister of Mines Leon Emmanuel Monnet has visited Tongon for a first-hand lookat the project. "We are increasingly upbeat about this project. All the ingredients for successare in place: solid orebody assets with considerable upside, a relatively simpleextraction process and good infrastructure," says chief executive Mark Bristow. "We persevered in the Cote d'Ivoire when most companies pulled out because webelieved in the ability of the country's people to sort out their differences.Recent developments are bearing out that belief. Of course, we also view thecountry as the most underexplored piece of gold-bearing real estate in WestAfrica and we see further opportunities here beyond Tongon." FINAL DIVIDEND FOR 2007 - ELECTION FOR STERLING DIVIDEND Randgold Resources has declared an annual dividend for the period ended 31December 2007 of US$0.12 per share. The dividend payment will be made on 6March 2008 to shareholders on the register on 15 February 2008. The United States dollar is the company's main economic and reporting currency.It is therefore the natural currency in which to determine dividends.Nevertheless, shareholders wishing for the conversion of dividend payments intosterling may do so by contacting Computershare Investor Services (ChannelIslands) Limited (Tel: +44 1534 825265) or by completing a sterling electionform which is available on the company's website (www.randgoldresources.com) andposting it back to the transfer secretaries by Thursday 14 February 2008. YALEA UNDERGROUND DEVELOPMENT ACCELERATES The development of the Yalea underground mine at Loulo in Mali has picked upspeed after exiting the weathered zone intersected in the previous quarter andis set to access first ore towards the end of this quarter. Underground manager Thinus Strydom says while progress was slowed in the latterhalf of 2007 by the need to proceed carefully through the unstable zone, therate of development is now back on track, achieving 260 metres in Januaryagainst a low of 28 metres last November, taking the decline to a distance of620 metres from surface. "This is a tribute to a fine effort by the development crew, who were undauntedby the challenges and resolutely stuck to their task," Strydom says. This same spirit of enterprise is evident, Strydom notes, in the team's solutionfor the difficulties encountered in establishing backfill and ventilation accessfor the northern extent of the orebody. After evaluating various options, ithas been decided to sink a third decline from the previously mined-out P125 pit.This will not only provide the required access but also a number of bonusbenefits, including faster time to stoping operations, an additional point ofentry and possibly additional stoping blocks in the northern part of Yalea. SENEGAL - PERSEVERANCE PAYS Massawa in Senegal has been categorised as a significant new drill target aftersome 2 500 metres of infill drilling had returned high-grade results. A +5 000metre diamond drilling programme will start this quarter, along withmetallurgical test work and an economic scoping study. Massawa, which was discovered last year, is located in the Main TranscurrentShear Zone (MTZ) of the Kedougou-Kenieba Inlier and is characterised by a 3.5kilometre long and 100 to 400 metre wide +50ppb gold in soil anomaly.Preliminary RAB and reconnaissance drilling returned positive results and afurther round of closer-spaced RAB drilling, completed in the last quarter of2007, showed high-grade gold intersections and surface mineralisation over 2.8kilometres. Geologically the target is underlain by a sequence of interbeddedsediments and volcanics, which have been intruded by felsic dykes, gabbros andgranitic bodies. The rock units have been affected by northeast shearingassociated with the MTZ which in turn has been reactivated dextrally bynorth-south belt discordant structures, resulting in dilation andmineralisation. Exploration manager Paul Harbidge says even at this early stage Massawa isshowing similarities to such multi-million ounce deposits as Yalea and Tongon. "Not only do we have gold grade but the other ingredients which indicate aworld-class deposit are there in abundance: structure, alteration and variationsin rock types, creating rheological contrasts," he says. "We have always believed in the prospectivity of the Kedougou-Kenieba Inlier andwe persevered with our exploration even though the early results were not thatencouraging. The fact that our continuing work has now delivered a verypromising target in the form of Massawa shows that exploration success requirestenacity as well as skill." The all-Senegalese exploration team is headed by Mouhamed David Mbaye, who hasbeen with Randgold Resources for 12 years. "David has a wealth of knowledgeappropriate for this project, having worked on both Morila and Loulo duringtheir exploration phases," says Harbidge. RIDING HIGH IN THE PERFECT STORM At a strategic review in 2006, the Randgold Resources team foresaw a loomingsituation they dubbed "the Perfect Storm." In this scenario, a high gold pricewould be accompanied by rising production costs, the resurgence of inflation, anoil price at around US$100 per barrel, a weak US dollar, the threat of US-ledglobal inflation and a general scarcity of new gold. To meet this challenge, they focused the company's strategy on increasing itsresource ounces and strengthening its cost controls. New business initiativeswere intensified, the development of the Tongon project was fast-tracked,procurement policies were tightened and overhead costs pruned. The governmentsof the countries in which Randgold Resources operates were engaged indiscussions on energy and other cost-reduction measures as well as on access tonew ground. The Perfect Storm envisaged two years ago has since become a reality. The goldprice soared by 31% in 2007 and at the same time operating costs in the miningindustry have increased substantially. Gold output has fallen to a 10-year low;in South Africa - until very recently the world's largest producer - productionhas halved over the past 12 years. The oil price has touched US$100 per barrel.Geopolitical jitters, the credit meltdown, mounting inflationary pressures anda depreciating dollar all contribute to the general turbulence. Chief executive Mark Bristow says the timely measures taken by RandgoldResources have equipped it uniquely well to take full advantage of theopportunities and to manage the difficulties presented by this challengingenvironment. "We've got the people, we've got the production, we've got the projects andwe've got the profits," he said. "Morila is a still a substantial cash flow generator and Loulo has now alsomoved into positive cash flow despite the continuing capex spend there. Theunderground development at Loulo will soon access its first ore. Tongon israpidly shaping up as our next mine and Massawa has grown into a significant newtarget. It's from this solid base that we can confidently forecast organicgrowth in production to 600 000 ounces per year by 2010 at a time when overallindustry output is shrinking. And it's important to note that we can fund allour capital needs, and then some, from our profits." Bristow says growing cost pressures and problems in the banking sector will havea negative effect on the development capacity of junior and mid-cap miners,particularly in the new-world countries where much of the current production isnow being sourced. "In the heat of the bull run, it's been easy to style oneself a gold company onthe basis of some real estate one owns. As the operating environment getstougher, however, capital providers are losing interest in promises andincreasingly want to see production, profits and people capable of managingcosts. Randgold Resources' long-term strategy of building a business throughdiscovery and development has enabled it to deliver the goods at the right time," he says. THE GOLD PRICE - IS THERE STILL UPSIDE?Victor Matfield - Corporate finance manager Gold reached its previous highs in 1980, at a time when Soviet tanks wererolling into Afghanistan, oil prices were being driven up by instability in theMiddle East and the dollar was falling rapidly amid fears of a recession.Panicked investors sought refuge in the ultimate safe haven and the bullionprice reached a record US$850 per ounce. Fast-forward 28 years and it seems to be deja vu all over again: trouble in theMiddle East and South Asia, spiralling oil prices, and fears about the USeconomy and the dollar are all boosting the gold price. Yet despite these similarities, fundamental changes in the gold market mean thatthe two situations cannot be compared. In 1980, after surging from US$450 toUS$850 in just five weeks, bullion prices collapsed to trade as low as US$300 ayear later. This time round, the high price levels could be sustained a lotlonger - and could go even higher. One major difference between now and 1980 is that the current price rise hasbeen slow and constant since 1999, with demand coming not only from traditionalsafe-haven seekers but also from other sources. Long-term investors now againsee gold as a store of value and a hedge against persistent dollar weakness andrising inflation. Their interest is reflected, among other things, in the rapidrise of gold exchange traded funds (ETFs) which after an increase of 34% in 2007now hold 865 tonnes of gold. The gold price is also supported by strongjewellery buying by the rising middle classes in China, India and Turkey. Another key difference is the decreasing supply of gold - output fell by 7%between 2001 and 2006 - and the shortage of substantial new projects as a resultof reduced exploration in 1990s. Rising costs are likely to further constrainthe development of new projects as well as existing production levels. Furthermore, gold is still relatively cheap by historic measures. In realterms, the current record price is less than half 1980 high and would have to bewell above the US$2 000 level to match it. With no end in sight to the pressures that have pushed the gold price upward,the underlying fundamentals for the price therefore remain very positive. SUCCESSFUL US$240M EQUITY PLACING Randgold Resources completed an equity placing in December, raising US$240mprior to expenses. The money has been earmarked for the development of theTongon Project in the Cote d'Ivoire as well as other organic and corporategrowth opportunities. In a tribute to the company's excellent investor relations and strongshareholder communications, all of Randgold Resources' key shareholderssubscribed for shares in the placing. In addition, although the transaction wasexecuted in just 24 hours, the company was able to attract both newinstitutional shareholders and a substantial retail response, and all at adiscount of just 3% from the previous day's close. The shares were placed at US$35.25 and have subsequently performed well in theaftermarket, rising to a new high on 14 January of US$46.38 per share. RandgoldResources' relationship banks, led by HSBC and Citi, its legal team, auditorsand other advisors worked seamlessly with the company's management to prepareand execute the transaction within a short period of time. The company is nowwell positioned to continue its growth in the future. "Our long standing relationships with our lead banks, lawyers, auditors andother advisors allowed us to respond in double quick time once the board hadidentified the equity placing as a key strategic initiative," said chieffinancial officer Graham Shuttleworth. ------------------------------------------------------------- Registered office:La Motte Chambers, La Motte Street, St Helier, Jersey JE1 1BJ, Channel Islands Registrars:Computershare Investor Services (Channel Islands) Limited,P.O. Box 83, Ordnance House, 31 Pier Road, St Helier, Jersey JE4 8PW, ChannelIslands Transfer agents:Computershare Services PLC, P.O. Box 663, 7th Floor,Jupiter House, Triton Court, 14 Finsbury Square, London EC2A 1BR Investor and media relations:For further information contact Kathy du Plessis onTelephone +44 20 7557 7738, e-mail [email protected] DISCLAIMER: Statements made in this document with respect to RandgoldResources' current plans, estimates, strategies and beliefs and other statementsthat are not historical facts are forward-looking statements about the futureperformance of Randgold Resources. These statements are based on management'sassumptions and beliefs in light of the information currently available to it.Randgold Resources cautions you that a number of important risks anduncertainties could cause actual results to differ materially from thosediscussed in the forward-looking statements, and therefore you should not placeundue reliance on them. The potential risks and uncertainties include, amongothers, risks associated with: fluctuations in the market price of gold, goldproduction at Morila and Loulo, the development of Loulo and estimates ofresources, reserves and mine life. For a discussion on such risk factors referto the annual report on Form 20-F for the year ended 31 December 2006 which wasfiled with the United States Securities and Exchange Commission (the 'SEC') on25 June 2007. Randgold Resources sees no obligation to update information inthis release. Cautionary note to US investors; the 'SEC' permits companies, intheir filings with the 'SEC', to disclose only proven and probable ore reserves.We use certain terms in this release, such as "resources", that the 'SEC' doesnot recognise 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