Randgold Resources Ld
06 February 2007
RANDGOLD RESOURCES LIMITED
Incorporated in Jersey, Channel Islands
Reg. No. 62686
LSE Trading Symbol: RRS
Nasdaq Trading Symbol: GOLD
ARE GOLD PRODUCERS DEVELOPING OR EXPLOITING?
Cape Town, 6 February 2007 - Is the gold industry being buoyed up by
speculative sentiment rather than by the creation of real value? Randgold
Resources chief executive Mark Bristow asked the Mining Indaba here today.
Bristow said the growth in the industry's market capital was attributable to
mergers and acquisitions at the top end and a flurry of new listings at the
bottom. Many producers were apparently concentrating on the exploitation of
market opportunities rather than the development of profitable businesses, while
investors were largely focused on the short term.
Despite the spectacular rise in the gold price, the industry's modest profit
margin had not increased at the same rate because cash costs had also increased
sharply, and due to a lack of exploration investment, the new gold supply was
static and possibly declining. There was therefore no strong underlying support
for the present value of the market.
Bristow noted that of Africa's 'big six' gold mines developed since 1995, only
three had as yet generated real returns.
'Because we're in a bull market which rewards production rather than profits,
nobody is focusing too much on this financial underperformance but ultimately
it's not a sustainable situation. Stakeholders expect rewards and their
patience is not infinite. When host governments, for example, see that mines
are not producing the promised profits, and therefore not paying the anticipated
taxes, it prompts them to tax through royalties,' he said.
'Successful operations support profitability, and profitability in turn supports
sustainability. We don't manage Randgold Resources with one eye on the next
quarter and the other on the whims of the market - we manage it for the
long-term benefit of all its stakeholders. The question remains: are we as an
industry building profitable businesses or are we merely exploiting short-term
opportunities. For Randgold Resources the answer is clear: we've built and we
continue to build.'
Randgold Resources discovered and developed the world-class Morila and Loulo
deposits in Mali. Its Tongon project in the Cote d'Ivoire is currently at
bankable feasibility stage.
RANDGOLD RESOURCES ENQUIRIES:
Chief Executive Financial Director Investor & Media Relations
Dr Mark Bristow Roger Williams Kathy du Plessis
+44 779 775 2288 +44 791 709 8939 +27 11 728 4701
+223 675 0122 +223 675 0109 Fax: +27 11 728 2547
Cell: +27 83 266 5847
DISCLAIMER: Statements made in this document with respect to Randgold Resources'
current plans, estimates, strategies and beliefs and other statements that are
not historical facts are forward-looking statements about the future performance
of Randgold Resources. These statements are based on management's assumptions
and beliefs in light of the information currently available to it. Randgold
Resources cautions you that a number of important risks and uncertainties could
cause actual results to differ materially from those discussed in the
forward-looking statements, and therefore you should not place undue reliance on
them. The 2005 annual report notes that the financial statements do not reflect
any provisions or other adjustments that might arise from the claims and legal
process initiated by Loulo against MDM. Other potential risks and uncertainties
include risks associated with: fluctuations in the market price of gold, gold
production at Morila, the development of Loulo and estimates of resources,
reserves and mine life. For a discussion on such other risk factors refer to the
annual report on Form 20-F for the year ended 31 December 2005 which was filed
with the United States Securities and Exchange Commission (the 'SEC') on 29 June
2006. Randgold Resources assumes no obligation to update information in this
release. Cautionary note to US investors: the 'SEC' permits companies, in their
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' does not
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 our
resources will ever be converted into reserves which qualify as 'proven and
probable 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 Exchange