7th Aug 2006 07:05
Randgold Resources Ld07 August 2006 RANDGOLD RESOURCES LIMITEDIncorporated in Jersey, Channel IslandsReg. No. 62686LSE Trading Symbol: RRSNasdaq Trading Symbol: GOLD 7 August 2006 RANDGOLD RESOURCES UPDATE LOULO PLANT SUBSTANTIALLY COMPLETE A herculean effort from the Randgold Resources team at Loulo has completed theplant, as originally designed, with only a few loose ends remaining to be tiedup. Chief executive Mark Bristow says that when the company made the difficultdecision to take back the project from the defaulting contractor, it appearedthat the job was some 65% complete. As the team got to grips with the task,however, it became increasingly evident that it had only been half done. "We faced two challenges. The first was to complete the hard-rock crushingcircuit as quickly as possible, while using mobile crushers as an interimmeasure. The second was to address various critical operational issues, such asthe tailings facility and the water storage and pumping systems, which were notup to our standards. And at the same time, of course, we had to settle down anew mine and a new operating team," he said. Unfinished or not started by the contractor, but now completed by the team, are:the hard-rock crushing circuit, except for the stockpiling system,the Garra water storage facility and diversion canal weir,the tailings storage facility and return water pumping system,the water pipelines to the Garra and from the Garra to the plant,the CIL expansion tank bases,the woodchip dewatering screens and disposal systems,the plant spillage pumping systems,the plant dust suppression systems,the plant fire-fighting systems,the lime pneumatic handling system,the steel ball handling system,the acid wash tank,the cyanide store, plant workshops, village shop and other buildings,the fencing around the plant and the tailings storage facility, andthe carbon regeneration system. Still being buttoned up are the main fuel farms, where three out of five tankshave been finished i.e. the installation of some of the final steelwork andsupports around the stockpile and the completion of the punch list for Phase 2. YALEA UNDERGROUND CONTRACT AWARDED The contract for the development of the Yalea underground mine at the Loulocomplex has been awarded to Shaft Sinkers, a mining contractor with a proventrack record in Africa. Site preparation for the twin decline system has alreadystarted and the boxcut and portal construction will soon commence with shaftsinking scheduled to begin in the last quarter of this year. The office andworkshop complex has been prefabricated in South Africa and is expected toarrive in Mali in August. Meanwhile, the supply contract for the underground heavy vehicle fleet -consisting of Atlas Copco drill rigs backed by Elphinstone/CAT loaders andtrucks - has been awarded to JA Delmas, the principal Caterpillar dealer in WestAfrica. Underground manager Thinus Strydom says the Loulo 0 underground plan iscurrently being updated and integrated with the open pit plan. Additional areasof synergy between the open pit and underground operations are also beinginvestigated. These include the introduction of an overland conveyor systemwhich will transport both underground and open pit ore from Yalea to the plantinstead of trucking it. TACTICAL DRILLING UNDER WAY IN CoTE D'IVOIRE CEO Mark Bristow, GM:Mali Mahamadou Samake and exploration manager Paul Harbidgerecently completed a very successful trip to the Cote d'Ivoire. Productivemeetings were held in Abidjan, prior to a field visit to Randgold Resources' 75%owned Nielle permit, which accommodates the Tongon project. They wereaccompanied by Soro Guillaume, the leader of the Forces Nouvelles and Ministerof State; representatives from the ministries of mines and defence; N'goloCoulibaly, the president of the general council for the Korhogo region; andSidiki Konate, the director of the cabinet, together with the media. The government and the Forces Nouvelles both approved Randgold Resources' planto resume exploration activities and granted a temporary lifting of the 'ForceMajeure' which has been in place since the start of the conflict in September2002. A 10-hole, 2 000 metre tactical drilling programme is underway to providea broad framework for the final feasibility drilling programme, due to startafter a return to stability. The next detailed drilling programme will form partof the final feasibility study which should take about 24 months to complete. Resources at Tongon currently fall within the inferred category: 35.96Mt at2.68g/t for 3.11Mozs. "Randgold Resources believes in the gold prospectivity of the Cote d'Ivoire andthe resolve of its people and leaders to find a lasting solution for thecountry. When compared with other countries that are emerging from political andmilitary conflict and are prospective for new gold discoveries, Cote d'Ivoirestands out as one of the better ones and we will continue to support the peaceprocess as a business partner to the country," Bristow said. INFLATION PRESSURES INCREASE BREAKEVEN COSTS The depreciating dollar, rising oil prices and inflation concerns have driventhe gold price upward - but for the mining industry these same factors also havea steep downside: their impact on capital and operating costs. Rising inflation has caused industry analysts to increase their cost projectionssharply. Nesbitt Burns, for example, has increased its senior producer averagetotal cash cost forecasts of US$220/oz and US$223/oz for 2007 and 2008, made in2004, to US$276 and US$286. For intermediate producers, the forecast has movedup from US$191 and US$183 to US$235 and US$231. Senior producer breakeven costshave also risen significantly, from an actual US$310/oz in 2003 to an actualUS$381/oz in 2005. Current expectations for 2006 and 2007 are US$426/oz andUS$415/oz. For intermediate producers, breakeven costs have increased fromUS$281/oz in 2003 to US$394/oz in 2005 and forecasts for 2006 and 2007 areUS$384/oz and US$358/oz respectively. Breakeven costs measure total cash costsplus depreciation, exploration and interest expenses. In its third annual review of global mining trends, published in June,PriceWaterhouseCoopers notes that mining company CEOs are increasingly concernedabout cost pressures, notably of energy, more aggressive pricing by contractorsand the additional strain imposed by governments reviewing royalties, taxes andthe level of foreign ownership. 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. Driven by the fear of shortages due togeopolitical instability, and increasing demand from China, the oil priceincreased by 36% in 2004 and 33% in 2005. For producers in areas where costs are not primarily denominated in dollars,inflationary pressures have been exacerbated by the decline in the US currency,which has weakened by some 20% in the protracted bear market which started in2002. Randgold Resources chief financial officer Roger Williams says the company hasrisen to the challenge of increased input costs by continuously striving toimprove its own efficiency as well as that of its suppliers. It has been able tomitigate some of the inflationary and currency cost pressures by sourcingcheaper input materials and embedding a culture of cost-consciousness. "Under the current cost regime we like to see our mines produce at a cash costof below US$350 per ounce. In the longer run, therefore, our fundamentalresponse to the cost challenges we face is to invest aggressively in the huntfor more high-quality lower-cost ounces," he said. EXPLORATION: ARE THE JUNIORS GETTING DISTRACTED? With the junior companies increasingly opting for development over exploration,the gold industry is in danger of losing its traditional trail blazers andentrepreneurs, says Randgold Resources chief executive Mark Bristow. Speaking at the African Junior Mining Conference in Johannesburg, Bristow saidjuniors should be the industry's replacement engines, driving reserve andproduction growth. They were supported in this historical role by relative easeof access to equity risk capital, a generally flexible and entrepreneurialapproach, and a higher capacity for risk, which allowed them early entry intonew regions. "It's the speculative junior sector and those companies which offer thepotential for bonanza discoveries that have always attracted the risk capital attimes like these. The problem at this point in the cycle is that many of thespeculative investors don't understand the industry and its risks. Isexploration a value proposition? Definitely - but you can't just switch it on tocoincide with a move in the market. It's a business which requires constantplanning and investment ahead of the curve," Bristow said. One of the underlying causes of the shift away from exploration, said Bristow,was the fact that many of the juniors were listed on the Aim market of theLondon Stock Exchange. "This market's hunger for instant rewards has focused them on trying to becomeproducers by developing those smaller projects that didn't make it through thelast cycle. History shows that unless one can add substantially to marginalprojects, they remain marginal in the long run," he said. "New discoveries are the only way to replace production and create value. If theindustry is to maintain, let alone raise, its production profile, the majorsneed to re-establish their exploration businesses. Even more important, thejuniors need to invest their venture capital in making discoveries. Juniors,like seniors, need business strategies that focus on sustainable profitability,and that recognise that building an integrated gold business requires a solidexploration base." NURTURING OUR INTELLECTUAL CAPITAL Since the start it has been Randgold Resources' policy to build a strongintellectual capital base by attracting, developing, retaining and motivatingthe best people, with a particular emphasis on the citizens of the countries inwhich it operates. The immense intellectual capital it has amassed has providedit with a keen competitive edge and a potent operational engine, as thecompany's performance record shows. Equally importantly, its decision to employand empower locals has considerably enhanced its productive partnerships withits host countries. These are some of the people who make up our intellectual capital base: EXECUTIVE MANAGEMENT Mahamadou Samake - executive manager of the Randgold Resources Mali operationalcentre; resident member of the Randgold Resources executive in Mali and adirector of Morila SA and SOMILO. EXPLORATION Felix Kiemde - manages all exploration projects in Burkina Faso; was closelyinvolved in the delineation of the Tongon and Yalea orebodies. Fousseyni Diakite - exploration administration manager Mali exploration;involved in company exploration activities in Mali since Randgold Resourcesfirst entered the country; has the distinction of being its first employee inWest Africa. Emmanuel Badini - currently exploration manager at Loulo; has worked forRandgold Resources in Burkina Faso, at Syama and Morila. Aziz Sy - manages all exploration projects in Senegal; as a senior geologist wasclosely involved in the delineation of the Morila orebody; recently completed anMBA. Babacar Diouf - responsible for the evaluation of orebodies and currentlyworking at Tongon; has worked for the company in Senegal, Loulo, and atexploration sites throughout West Africa and Tanzania; currently studying for agraduate diploma at Wits University. Mamadou Diallo - heads the company's generative geological function in Mali; hasthe reputation as the geologist involved in an exercise that indicated thepresence of gold at Sadiola Hill, Syama, Morila and Loulo. Sounkalo Kone - a Randgold Resources employee since 1996 and currently workingin Mali West; was one of four senior geologists on the team which discovered theMorila orebody; played a pivotal role in preparing the local villagessurrounding Morila for the change from an exploration site to a mine site. Mamadou Bathily - a Randgold Resources employee since 1996 and currently incharge of exploration at Mali South; one of four senior geologists on the teamwhich discovered the Morila orebody. David Mbaye - manages some exploration projects in Senegal; was closely involvedin the delineation of the Yalea orebody. Kezia Aaron - administrative manager in Tanzania and has worked with the companythroughout its time in Tanzania; in charge of all administrative aspects relatedto exploration projects, including government liaison. Bodiel N'Diaye - administration manager in Cote d'Ivoire and in charge of alladministrative aspects related to exploration projects, including governmentliaison. LOULO GOLD MINE Amadou Konta - the first Malian national to be appointed general manager of alarge gold mine in Mali; was previously manager mining of the Syama mine inMali, and has been with the company since it took over Syama in 1996. Tahiro Ballo - manager mining designate at Loulo; in charge of openpit mining;was the mining production superintendent at Syama. Mamadou Kanoute - manager engineering designate at Loulo; currently responsiblefor engineering maintenance in the metallurgical processing plant; joinedRandgold Resources at Syama and worked at Morila before taking up his currentpost. Abdoulaye Cisse - plant superintendent at the metallurgical processing plant;developed his managerial skills at Syama; recently attended a management courseat the University of Cape Town. Amadou Maiga - head of management accounts department at Loulo; been at the minesince construction started. Ibrahima Diane - manager human resources; joined the company after completing along and distinguished career in the Department of Labour. Chiaka Berthe - currently responsible for grade control at one of the open pits;as an exploration geologist was part of the team that discovered Yalea; recentlyattended a management course at the University of Cape Town's Business School. Amadou Famanta - currently responsible for grade control at one of the openpits; as an exploration geologist was part of the team that discovered Yalea; in2006 completed an MBA through the University of Quebec; played an important rolein preparing the communities in the Loulo area for the change of the Louloexploration project to an operating mine. BAMAKO OFFICE N'golo Sanogo - operational centre financial manager responsible for financialaccounting on all company Malian operations; has worked for Randgold Resourcessince it took over Syama; was a stores accounts and a cost control manager atSyama before moving to the Bamako office. Mamadou Djire - head of financial accountants at Bamako office. Seydio Dagnon - group payroll controller in Mali, responsible for exploration,Bamako office and SOMILO payrolls; recently attained a management accounting andeconomics diploma. 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:
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