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Randgold Resources (RRS)

  Print      Mail a friend       Annual reports

Wednesday 05 April, 2000

Randgold Resources

Proposed Sale of Interest in Randgold Resources

Randgold Resources Ld
5 April 2000

Randgold & Exploration Company Limited
(Incorporated in the Republic of South Africa)
(Registration number 1992/05642/06)
NASDAQ trading symbol: RANGY

Randgold Resources Limited
(Incorporated in Jersey)
(Registration number 62686)
('Randgold Resources')

Proposed disposal to AngloGold Limited ('AngloGold') by Randgold Resources of
50% of its shareholding in its subsidiary Randgold Resources (Morila) Limited
and 50% of the shareholder's loan, due by Societe des Mines de Morila
S.A.('Morila') to Randgold Resources.

HSBC Investment Services (Africa) (Pty) Limited and HSBC Investment Bank plc
are authorised to announce that agreement has been reached between Randgold
Resources, a company listed on the London Stock Exchange Limited ('the LSE'),
which is a 61.4% held subsidiary of Randgold, and AngloGold. In terms of the
agreement, Randgold Resources will dispose of:
- 50% of its shareholding in the issued share capital of its wholly-owned
subsidiary RRML;
- 50% of all shareholder's loans, the total value of
which is approximately US$ 12.2 million, due to Randgold Resources by Morila; 
to AngloGold for an aggregate purchase consideration of US$ 132 million in
RRML owns 80% of the issued share capital of Morila, which owns the Morila
Project in Mali as its only asset.  A subsidiary company of AngloGold will be
appointed operator of Morila.

The above transaction values 100% of Morila at US$330 million, which closely
approximates the valuation computed by the management of Randgold Resources. 
It has been the stated objective of Randgold Resources to realise the value of
Morila and this transaction achieves this objective.
AngloGold is the largest gold mining company in the world and is a shareholder
in and the operator of the Sadiola Hill Mine in Mali, which has been a great
success in both its development and operational history.  The proposed
transaction brings AngloGold's considerable operational and technical strength
to the Morila Project as well as its knowledge of local Malian conditions. 
Furthermore, the proposed transaction allows Randgold Resources to crystallise
a part of its exploration success and the proceeds therefrom will be used to
substantially strengthen the balance sheet and enable Randgold Resources to
pursue additional growth opportunities.


3.1 Effective Date
The effective date of the disposal shall be three days after the completion of
the last of the conditions precedent as set out in paragraph 5 below and is
expected to be prior to 23 June 2000.

3.2 Financing of Morila
A condition of the agreement with AngloGold is that the Government of Mali
will have approved in writing the terms and conditions of the Project
Financing being arranged for Morila. 

3.3 Extension of the Barnex loan
A further condition of the agreement with AngloGold is that the loan repayment
date for all amounts due to Barnato Exploration Limited ('Barnex') by Randgold
Resources shall be extended to a date not earlier than three days after the
effective date. The loan will be repaid in full by Randgold Resources upon
receipt from AngloGold of the purchase price of the RRML shares and the Morila
shareholder's loans.
Randgold Resources is pleased to advise that agreement has been reached
between Barnex and Randgold Resources whereby the repayment date of the loan
made by Barnex to Randgold Resources has been extended from 31 March 2000 to
30 June 2000.  At 31 March 2000 the loan, including interest, amounted to R325
million.  A portion of the loan has been subordinated to the financial
institutions involved with Randgold Resources' Morila Project Finance.
As a fee for the above, Randgold Resources will pay Barnex US$3 million and an
additional fee of US$32 802 per day from 1 May 2000 to 30 June 2000 for every
day the loan is outstanding beyond 30 April 2000.
At 30 June 2000, Barnex has the option of converting the loan (including all
fees and interest) into equity in Morila or extending the loan at a rate of 3%
(three percent) above the South African prime rate of interest.

3.4 Warranties
Randgold Resources shall give warranties in respect of RRML and Morila, which
are usual or customary in transactions of a similar nature.

3.5 Joint Venture Agreement
The control structure of the proposed transaction is an equal joint venture,
with AngloGold having operational management. Appointments to the board of
RRML would be effected on an equal basis as will that of Morila, save in the
latter instance, the Government of Mali has the right to appoint
representatives in proportion to its shareholding. The parties shall conclude
a joint venture agreement in respect of RRML and Morila which will specify,
inter alia, future funding arrangements and dispute resolution provisions.

4.1 The table below sets out the pro forma effects of the disposal on the
losses for the nine months ended 31 December 1999 and net asset value as at 31
December 1999 per Randgold share:

Randgold (i)         Unaudited       Pro forma   Increase
                     Before          After          %
                     ZAR cents       ZAR cents       
per share            (320.5)         830.1          359.0
Net asset value       434.0        1 585.0          265.2

4.2 The table below sets out the pro forma effects of the disposal on the
losses for the nine months ended 31 December 1999 and net asset value as at 31
December 1999 per Randgold Resources share:

Randgold             Unaudited       Pro forma   Increase
Resources (ii)       Before          After          %
                     US cents        US cents
(Loss)/ earnings
per share            (214.7)         166.2          177.4
Net asset value       234.0          615.0          162.8

The pro forma amounts are based on the following:
(i) The unaudited preliminary report for the nine months ended 31 December
1999 as published on 4 February 2000.
(ii) The unaudited preliminary statement of annual results for the nine months
ended 31 December 1999 as published on 4 February 2000.

The proposed disposal is conditional upon fulfilment, inter alia, of the
following conditions precedent:
- the approval of the Government of Mali;
- the approval of Randgold shareholders in general meeting of an ordinary
resolution authorising the board of directors of Randgold to vote in favour of
the resolutions to be proposed at the general meeting of Randgold Resources;
- the approval of Randgold Resources shareholders in general meeting of the
resolutions necessary to implement the disposal;
- the approval, where necessary, of all appropriate regulatory bodies,
including the South African Reserve Bank, the LSE and the Johannesburg Stock
Exchange ('the JSE'); and
- the conclusion of a Purchase and Sale Agreement, a Joint Venture Agreement,
an Operator and Management Agreement and Shareholders Agreement.

Circulars to shareholders of Randgold and Randgold Resources, containing
details of the disposal and incorporating a notice of general meeting, are in
the course of preparation and will, subsequent to LSE and JSE approval, be
posted to shareholders.

5 April 2000
Investment house to Randgold
HSBC Investment Services (Africa) (Pty) Limited

Sponsoring broker to Randgold
HSBC Securities (South Africa) (Pty) Limited

Financial Adviser and Broker to Randgold Resources
HSBC Investment Bank plc

Attorneys to Randgold 
Bowman Gilfillan Inc.

Attorneys to Randgold Resources
Ogier & Le Masurier

RANDGOLD RESOURCES                           ANGLOGOLD


You are invited to join Randgold Resources and AngloGold at a briefing in
Johannesburg later today on the content of the attached joint announcement
regarding Morila. Alternatively, you may wish to access the briefing by

Each company will also host its own teleconference today.

Details of the joint briefing and teleconference, and the individual
teleconferences, are provided below.
12.00(SA time)
11:00 GMT
Venue: Johannesburg Country Club.
If you wish to participate in the conference call, please
South Africa toll free      +0800 99 1103  
United Kingdom toll free    +0500 10 16 30
Europe dial in              +44 181 401 1043
Password 'Morila'
Instant replay can be accessed one hour after the call for one week :
European, UK, SA dial in no (+44)181 288 4459 access code 623422 - UK toll
free 0500 637 880

RANDGOLD RESOURCES                          ANGLOGOLD


5 April 2000


The Boards of AngloGold Limited and Randgold Resources Limited are pleased to
announce the sale by Randgold Resources of a 50% share of its stake in the
Morila gold mining project in Mali to AngloGold for US$132 million in cash.

The transaction involves the disposal to AngloGold of 50% of Randgold
Resources (Morila) Limited which holds 80% of Societe des Mines de Morila SA
(Morila).  This will give each company a 40% indirect interest in the
operation with the balance being held by the Mali Government.  In terms of the
joint venture agreement, AngloGold will be appointed to operate the project.

The US$132 million will be funded through AngloGold's own resources, subject
to South African Reserve Bank exchange control regulations, with the balance
being funded through offshore bank debt.  Randgold Resources will use the cash
to repay in full its $51 million bridging loan from Barnex.  The date for this
repayment has been extended from 31 March to 30 June 2000.  In return for this
extension, Randgold Resources will pay Barnex a fee of $3 million as well as
$32 802 a day for every day the loan remains outstanding after 30 April 2000.

Randgold Resources CE Dr Mark Bristow said the deal enabled the company to
crystallise some of its exploration success.  It would substantially
strengthen Randgold Resources' balance sheet and would fuel its pursuit of new
growth opportunities which currently abounded in the gold industry.

'In addition, the alliance with AngloGold at Morila represents a potent
combination of their formidable technical and operational expertise with our
proven ability to find and develop exceptionally good prospects,' he said.

Randgold Resources also owns and operates the Syama gold mine in Mali and has
a number of advanced projects as well as active exploration programmes there
and elsewhere in West Africa.

Bristow said the AngloGold offer, which puts a $330 million price on Morila,
accorded with Randgold Resources' own valuation of the project.  Other factors
which made the bid attractive included AngloGold's record of success at the
Sadiola Hill mine in Mali and its understanding of local issues and

AngloGold CEO Bobby Godsell said: 'The high grades, life and geology of the
ore body make Morila an extremely attractive prospect, particularly given
AngloGold's very positive current experience of doing business in Mali.  The
acquisition increases AngloGold's annual production to 7.8 million ounces a
year and the production from surface and shallow operations to 2.3 million
ounces or 30% of AngloGold's worldwide production.

'The transaction also further demonstrates this company's commitment to the
African gold industry and to Mali, reinforced during President Alpha Konare's
visit to South Africa last week.'

Morila is situated in southern Mali, 180 kilometres south-east of Bamako and
600 kilometres south-east of Sadiola.  Construction, which began in 1999, is
30% complete and pre-stripping has started. 

The resource is estimated to contain some 5.9 million ounces of gold.  High
grade oxide ore (1 million tonnes containing some 280 000 ounces) will be
available for free-dig mining in the first four to five years and this will
yield very high grades (6.7 g/t).  Thereafter, the sulphide deposit should
produce an average grade of 4.35 g/t.

Gold production is expected to be 420 000 ounces a year from an open-pit
operation.  The partners anticipate a relatively uncomplicated metallurgical
process with a plant throughput of 250 000 tonnes a month and a 90% recovery
rate.  The operation is expected to have an average cash operating cost of
$137 per ounce over the asset's 14-year life.  

Total capital expenditure will be $84.6 million of which $55 million had been
spent by the end of last year.


In South Africa
Investor Relations
Steve Lenahan
+2711 637 6248 (tel)
+2711 637 6107 (fax)
[email protected]

In South Africa
James Duncan
+2711 637 6147 (tel)
+2711 637 6399 (fax)
+27 82 892 8052 (mobile)
[email protected]

In the UK
Alex Buck
+44 20 7849 5630 (tel)
+44 20 7849 6137 (fax)
+44 7932 2740 452 (mobile)
[email protected]

In the USA
Charles Carter
800 417 9255 toll free 
+1 212 750 7999 (tel)
+1 212 750 5626 (fax)
[email protected]

In Australia
Andrea Maxey
+61 3 9684 4920 (tel)
+61 3 9684 4951 fax)
+61 411 231 393
[email protected]

website :


In South Africa
Roger Kebble
+2711 837 0706 (tel)
+27 82 444 3030(mobile)

Chief Executive Officer
Mark Bristow
+2711 837 0706 (tel)
+27 82 800 4293 (mobile)

Investor & Media Relations
Kathy du Plessis
+2711 728 4701 (tel)
+27 83 266 5847 (mobile)
[email protected]

website :

Certain of the statements made in this announcement are forward-looking in
nature. By their nature, the forward-looking statements involve risk and
uncertainty because they relate to events and depend upon circumstances that
will occur in the future. These factors include, but are not limited to,
statements made elsewhere in this announcement. In addition, risk factors
relating to Randgold Resources and AngloGold can be found in their respective
public SEC filings. Neither Randgold Resources nor AngloGold undertake any
obligation to publicly update any forward-looking statements whether as a
result of new information, future events or otherwise. Any statement should be
evaluated in the light of these factors.


a d v e r t i s e m e n t