Randgold Resources Ld
12 November 2001
For further information call:
(Chairman) Roger Kebble +27 (11) 309-6037
(CEO) Mark Bristow +44 (0) 779-775-2288
RANDGOLD RESOURCES INCREASES PROFIT FOR THIRD SUCCESSIVE QUARTER
London, 12 November - Randgold Resources reported a 9% increase in net profit
in the three months to September, the quarter in which it also returned US$81
million to shareholders, to post its third performance improvement in a row.
At the same time the company said it was aggressively pursuing new growth
opportunities through exploration and project development as well as
size-enhancing deals. A number of feasibility or prefeasibility studies and
due diligences are currently under way.
During the quarter the Morila Gold Mine in Mali, in which Randgold Resources
has a 40% stake, passed its final completion tests and paid its first
dividend. The mine produced 163 278 ounces of gold at a cash operating cost of
US$85/oz in the quarter and is on track to exceed 600 000 ounces for the year.
In the meantime, continued exploration has found additional resources and new
targets on the Morila mine permit. Exploration by Randgold Resources has
expanded the Loulo project resource in Mali by 15% to total more than 4
million ounces. One million ounces was added to the Tongon project in Cote
d'Ivoire taking the total estimated resource to 2.9 million ounces. Work also
highlighted a promising target in the Morila region.
'As a resource company we believe we constantly need to find new prospects to
feed into our project pipeline. This is why we have maintained our
exploration programmes during a time when there has been little or no
exploration of substance in the gold industry generally. In fact, total
spending on global exploration has dropped by more than half over the past
four years, a period when Randgold Resources has demonstrably added to the
size and value of its resource base,' chief executive Dr Mark Bristow said.
Bristow said Loulo was increasingly looking like a developable project and its
inherent attraction was being enhanced by infrastructural development in its
vicinity. The company is currently updating its feasibility study on the
project and is looking at the best way of bringing the asset to account. A
pre-feasibility study on the expanding Tongon project is due for completion
early next year. During the quarter the company also re-established a
presence in Senegal.
Bristow said the recent shareholder approved compulsory share buyback, in
which Randgold Resources bought back some 11.6 million of its shares at US$7
per share, had been prompted by its policy of returning value to investors.
He noted that some shareholders had already reinvested in the company.
'The buyback price of US$7 represents our discounted tangible NAV per share.
It does not take into account our potential for creating further value through
continued exploration successes, through another Morila-style quality
development, through bringing the Loulo and Tongon projects to account, or
through size-enhancing deals,' Bristow said.
He noted that, assuming no change and a gold price of US$270/oz with
exploration and corporate spending budgeted at US$10 million per year,
Randgold Resources should be debt-free with cash in the bank by 2004.
Issued on behalf of Randgold Resources Limited by du Plessis Associates.
dPA contact Kathy du Plessis on Tel: 27(11) 728 4701, cell: (0)83 266 5847 or
RANDGOLD RESOURCES LIMITED
REPORT FOR THE 3RD QUARTER ENDED 30 SEPTEMBER 2001
Incorporated in Jersey, Channel Islands
Reg. No. 62686
HIGHLIGHTS OF THE QUARTER
* Quarter on quarter profit up 9%
* US$81 million returned to shareholders
* Morila goes non-recourse and pays first dividend
* Tongon resource increased by plus 1 Mozs to 2.9 Mozs
* Loulo resource increased to 4.17 Mozs
* Significant drill results in the Morila lease
Randgold Resources has 22 million shares in issue as at 30 September 2001
CONSOLIDATED INCOME STATEMENT
Quarter ended Quarter ended
30 September 30 June
US$000 2001 2001
Gold sales 18 170 17 909
Interest received 630 714
recovered 79 12
Other income 9 264
18 888 18 899
Cost and expenses
Production costs 5 436 5 301
Transport and refinery costs 600 (93)
Transfer to deferred
stripping costs (321) 12
Cash operating costs 5 715 5 220
Royalties 1 250 1 229
Total cash costs 6 965 6 449
Profit before other charges 11 923 12 450
Interest expense 800 957
amortisation 1 386 1 355
Exploration and corporate
expenditure 1 959 3 231
Rehabilitation provision 48 48
Other expenses 2 658 2 168
Total costs 13 816 14 208
Profit on ordinary activities
before taxes and
minority interests 5 072 4 691
Income tax - -
Net profit on ordinary
minority interest 5 072 4 691
interest 118 50
Net profit 5 190 4 741
CONSOLIDATED BALANCE SHEET
30 September 30 June
US$000 2001 2001
Cash 13 166 58 175
Receivables 9 266 13 624
Inventories 10 240 11 805
Total current assets 32 672 83 604
Property, plant and equipment
Cost 163 114 166 098
Accumulated depreciation (80 438) (79 052)
Net property, plant and equipment 82 676 87 046
Other long-term assets 930 608
Total assets 116 278 171 258
Bank overdraft 1 906 1 467
Accounts payable and accrued
liabilities 23 327 24 598
Total current liabilities 25 233 26 065
Provision for environmental
rehabilitation 3 392 3 657
Deferred liabilities on
financial instruments 1 000 1 000
Long-term loans (note) 59 131 36 589
Loans from outside shareholders
in subsidiaries 1 088 21 746
Total long-term liabilities 64 611 62 992
Total liabilities 89 844 89 057
Interest of outside shareholders in
subsidiaries' losses - (20 461)
Shareholders' equity 26 434 102 662
Total liabilities and
shareholders' equity 116 278 171 258
The Company's share of the Morila project financing, which amounts to US$30
million, is non-recourse to Randgold Resources.
The net profit increased for the third successive quarter, rising from US$4.74
million to US$5.19 million. Exploration and corporate expenditure was lower
than in the previous quarter, when costs were high due to the intense drilling
programmes which took place in May and June. Other expenses consist mainly of
Syama's retrenchments and care and maintenance costs.
Having achieved financial and technical completion, Morila commenced dividend
payments and Randgold Resources received its first dividend amounting to
US$6.4 million in September. US$30 million of the Rothschild corporate
facility and revolving credit was drawn down as at 30 September 2001, and the
compulsory repurchase of 34.08% of the Company's shares at US$7 per share, as
approved by the shareholders in the last quarter, was successfully completed.
The Company paid out a total of US$81.3 million to shareholders in the share
repurchase scheme. Shares in issue decreased from 33 million to 22 million.
This is reflected in a decrease in shareholders' equity through a reduction in
The other main balance sheet movements are a reduction in cash and an increase
in long-term loans. The long-term loans include the Company's 40% share of
the Morila project financing and its share of Morila's power plant finance
lease. The remaining project finance, of which the Company's share is some
US$30 million, is now non-recourse to Randgold Resources. Morila paid back a
further US$4 million of the project finance capital portion in the quarter in
accordance with the loan agreements.
In view of the cessation of operations at Syama, the loans from and interest
of outside shareholders in Syama, have been set off during the quarter under
OPERATIONS - MORILA
30 September 30 June
US$000 2001 2001
Tons mined (000) 5 273 5 974
Ore tons mined (000) 839 874
Tons processed (000) 754 737
Ore grade milled (g/t) 7.20 7.47
Recovery (%) 91.8 92.5
Ounces produced 163 278 163 702
Average price received (US$/ounce) 278 274
Cash operating cost (US$/ounce) 85 80
Cash profit 28 013 28 529
Ounces produced 65 311 65 481
Cash profit 11 205 11 412
The Morila mine produced 163 278 ozs of gold for the quarter at cash operating
costs of US$85/oz and total cash costs of US$104/oz in line with expectations.
Year to date production amounts to 486 408 ozs and the mine is on target to
exceed 600 000 ozs for the year.
Morila succeeded in meeting the completion test parameters as set out by the
lenders and the project sponsor's guarantees have been released. In terms of
agreements with the project lenders, an amount equivalent to the next capital
and interest repayment is now held in an escrow account and US$10 million
working capital must be maintained in the project. Surplus cash will be
distributed quarterly to shareholders.
Now that the operation has successfully bedded down at design throughput,
optimisation of the process plant is receiving attention in order to boost
production further. The power supplied by the Rolls Royce generators, which
failed last quarter, has been augmented by the use of additional contract
In the first twelve months of operation a total of 628 023 ozs was produced at
a total cash cost of less than US$100/oz.
The latest life of mine plan is currently being finalised. This foresees a
total resource of more than 6 million ozs, with a mineable reserve of
approximately 5 million ozs being available as per current planning
assumptions. The next three years production is being forecast to exceed 600
000 ozs per year at a total cash cost of approximately US$110/oz. Updated
reserves and resources will be published as soon as audited.
Details of hedging financial instruments at 30 September 2001 are:
Randgold Resources' share of gold which has been sold forward at a fixed price
of US$275/oz over the period October 2001 to December 2004 amounts to 204 900
ozs. The Company's share of purchased call options for the same period
amounts to 72 500 ozs at prices between US$330/oz and US$360/oz and sold call
options of 148 500 ozs at US$353/oz. Morila undertook some additional hedging
in the quarter for the year 2002. The Company's share is 24 000 ozs of put
options bought at US$275/oz and 24 000 ozs of call options sold at US$310/oz.
PROJECTS AND EVALUATION
Loulo Project Updated Feasibility Study
The Loulo Feasibility Study is being updated taking into consideration the
current outlook for the gold market. Results from the last drilling campaign
which increased the resources have been incorporated into the orebody model.
New pit optimisation evaluations are in progress.
One recent development, which could have a significant impact on the project,
is the commissioning of the Manantali Hydro Electric Scheme. This raises the
possibility of grid electricity being available to the project.
Different processing and scheduling options along with various regional
development scenarios are being reviewed to assess the optimum way of bringing
the project to account.
Following last quarter's successful drilling campaign, a Prefeasibility Study
level 2 has commenced at Tongon. All drillhole data from the last phase of
drilling (11 582 metres) has been validated and an updated orebody model
compiled. Metallurgical test work is in progress, an assessment of
infrastructure requirements has commenced and discussions relating to the
fiscal regime and investment incentives with the Ivorian government have
Processing of oxide dumps and clean-up work at Syama continues. Disposal of
non-core assets and preparatory work to preserve essential plant is in
progress. The mine is on track to reduce its activities to rehabilitation and
monitoring work by early in the new year.
Randgold Resources continues to co-operate with interested and affected
parties in exploring alternatives for Syama's future.
Principal activities during the quarter involved geological modelling,
resource estimation and generative work. Exploration for the forthcoming
field season will focus on the Morila region, Mali West - Senegal and Cote
d'Ivoire. In the Morila Exploitation Lease, within Mali, analysis of results
received from the Morila - Donba RAB programme (31 336 metres) has identified
four gold targets. The Donba target returned significant intersections of 30
metres at 3.6 g/t and 18 metres at 2.3 g/t over a strike length of 200 metres.
Mineralisation is open in all directions and will be the subject of follow up
programmes during the next quarter. Generative work continued on the
Company's extensive holdings in the Morila region with the highlight being a
promising gold target on the Kolondieba permit close to the Banafin Shear
On the Loulo Project in Mali, following drilling and modelling of orebody
extensions, the total estimated resource have been increased by 570 000 ozs
to 4.17 million ozs (33.68 Mt at 3.85g/t).
In Cote d'Ivoire on the Tongon Project the inferred resource has increased by
1 million ozs to
2.9 million ozs (34 Mt at 2.65 g/t). Delineated mineralisation extends over a
strike length of
1 400 metres in the Southern Zone and 700 metres in the Northern Zone.
Mineralisation is still open at depth with current resources only blocked to
between 100 and 150 metres below surface. Drill spacing is still wide and
further drilling is planned.
The Company has re-established itself in Senegal and is well advanced in
developing a new exploration project. Field work during the next quarter will
focus on three previously drilled targets which returned encouraging diamond
intercepts of 40 metres at 2.6 g/t and 25 metres at 1.9 g/t.
Randgold Resources is, and will remain, a return driven business, focussed on
growth opportunities. Against that background the Company is constantly
seeking new opportunities. Confidentiality agreements have been signed and a
number of due diligence studies will be completed during the current quarter.
In the previous quarter's report, shareholders were advised that a review into
improving the tradeability of the Company's shares through a North American
secondary listing on an exchange in that market had been initiated.
Consultation with various institutions and advisors indicate that such a
listing would facilitate more efficient trading in the Company's listed
The Board has approved, subject to a final detailed recommendation, a
programme which will result in a secondary listing on a North American
On behalf of Randgold Resources Limited
R A R Kebble D M Bristow
Chairman Chief Executive
12 November 2001
La Motte Chambers, La Motte Street, St Helier,
Jersey JE1 1BJ, Channel Islands
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Investor & media relations:
For further information contact Kathy du Plessis on
Telephone +27(11) 728-4701, Fax +27(11) 728-2547,
e-mail : firstname.lastname@example.org
Certain of the statements made in this document are forward-looking in nature
and are based on certain assumptions which involve risk and uncertainty
because they relate to events and depend on circumstances that will occur in
the future. Randgold Resources undertakes no obligation to update any
Mining and exploration by its very nature, is a risky business and one in
which the producers have little influence over the price of their product.
Consequently investors should be mindful of the inherent risks associated with
all mineral development projects.