Jersey, Channel Islands -- (MARKET WIRE) -- November 2, 2006 --
RANDGOLD RESOURCES LIMITED
Incorporated in Jersey, Channel Islands
Reg. No. 62686
LSE Trading Symbol: RRS
Nasdaq Trading Symbol: GOLD
ANOTHER PROFITABLE QUARTER AS LOULO UNDERGROUND DEVELOPMENT STARTS
AND TONGON PROGRESSES TO FEASIBILITY
London, 2 November 2006 - Randgold Resources (LSE:RRS) (Nasdaq:
GOLD) posted a
profit from mining of US$30.7 million for the September quarter, taking its
total for the nine months to date to US$99.4 million - up 90% on the
corresponding period in 2005 thanks to the contribution from its new Loulo mine
and the higher gold price.
Gold sales revenue for the quarter was US$63.2 million, in line with that of the
previous quarter in spite of a lower received gold price. Production at Loulo
increased by 11% to 57 123 ounces but was down 8% to 124 698 ounces (49 879
ounces attributable) at the company's Morila joint venture. Total cash costs at
both operations were slightly up but on a group basis, are still in line with
the overall target for the year.
At Loulo, the difficulties caused by the delay in the commissioning of the hard
rock crusher spilled over into this quarter but throughputs increased steadily
in August and September, with higher grades and improved recoveries boosting
production. At Morila, operational problems resulted in a lower head grade and
reduced plant throughput. These are being addressed and the mine is still on
track to exceed 500 000 ounces for the year as planned.
In the meantime, excavation and construction of the boxcut for the Yalea
underground mine at Loulo are well underway. The design and schedule for the
second underground mine - Gara (formerly known as Loulo 0) - are currently being
completed. Continued underground drilling has expanded the total Loulo resource
base to more than 10 million ounces.
In the Cote d'Ivoire, the company is gearing up for a 30 000 metre diamond core
feasibility drilling programme on the back of favourable results from the
recently completed tactical drilling exercise there. The feasibility programme
is due to start in January 2007, assuming political stability and safe working
conditions in the region.
Elsewhere in West Africa, Randgold Resources' exploration teams are heading back
into the field after the rainy season. In Mali, exploration continues to be
focused on and around Loulo and Morila, while in Senegal, 15 targets have been
prioritised for RAB drilling while three advanced targets have been modelled for
further diamond drilling. In Ghana, completion of the first phase of
exploration across all the company's permits will generate follow-up targets.
In Burkina Faso, a first-pass exploration programme has been completed on all
nine permits and targets in the Kiaka permit have been tested through RAB and RC
drilling.
In East Africa, the status of the Kiabakari project in Tanzania is currently
being re-evaluated. Other opportunities are currently being pursued in that
country.
Chief executive Mark Bristow said the company's sustained sound performance
reflected the benefits of balance and integration in the business and of its
strong emphasis on organic growth.
"Loulo has effectively settled some start-up problems that were not of our
making and, considering the circumstances, had a very solid quarter. Even more
important, it is steadily evolving into a world-class mining complex
encompassing open-pit and underground operations. Morila had a bit of a wobble
but is still delivering the goods and Tongon is heading into the feasibility
phase," he said.
"Our exploration teams are starting the new field season with plenty of
prospects on their plate. We will also be looking at opportunities beyond our
current six-country portfolio."
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
Email: randgoldresources@dpapr.com
Website: www.randgoldresources.com
RANDGOLD RESOURCES REPORT
DEVELOPMENT OF NEW UNDERGROUND MINE FORMALLY UNDERWAY
The development of Randgold Resources' new Yalea underground mine at its Loulo
project in Mali was officially launched on 17 October with the turning of the
first sod by the Minister of Mines, Energy and Water, his Excellency Hamed D
Semega.
The two open-cast mines at Loulo went into production late last year and to
September 2006 had already poured 241 017 ounces of gold. The Yalea underground
development is expected to raise the project's production from 250 000 ounces
per year to in excess of 400 000 ounces per year and reduce its cost profile
over the next five years. It is expected to remain in production beyond 2020.
The boxcut and portal construction at Yalea is now well advanced and excavation
of the declines is scheduled to begin before the end of the year. Randgold
Resources expects to access the first development ore in late 2007.
A second underground mine - Loulo 0 - is currently at the final planning stage.
To distinguish it clearly from the overall project, Loulo 0 has been renamed
Gara after a nearby stream.
Speaking at the launch of the Yalea underground mine, Randgold Resources chief
executive Mark Bristow said Loulo's systematic transformation into a four-mine
complex underlined the project's enormous brownfields potential.
"Randgold Resources is known for its commitment to organic growth driven by
exploration and it was our discovery of the Yalea deposit that made Loulo a
viable project in the first place. Further exploration showed that underground
mines could be developed to complement the open-cast operations on which the
project was initially based. These will significantly extend the life and
enhance the value of the project and have elevated it to true world-class
status," he said.
Eleven diamond drillholes were completed on the deep drilling of the Gara
deposit for a total of 6 940 metres this quarter. Results confirmed the
presence of good grades at depth in the central portion of the orebody. All new
results were used to revise the geological and resource models, resulting in an
increase of the total resource to 25Mt at 4.11g/t for 3.3Moz. The updated
resource is tabled below and reflects an 800 000 ounce increase from the
previous declaration. The cross-section of the resource shows a broad
south-westerly plunge to the high-grade mineralisation which is coincident with
the plunge direction and angle of fold lineations measured in the pit. Further
drilling is underway to infill some gaps within the deep drilling as well as to
test the high-grade trend of the central high-grade portion of the deposit to
600 metres below surface.
MALI GOLD INDUSTRY REQUIRES REINVESTMENT TO SECURE ITS FUTURE
Mali's currently burgeoning gold mining industry requires reinvestment from the
mining companies as well as the Mali government if it is still to thrive in 10
years' time, says Randgold Resources chief executive Mark Bristow.
Speaking at an open day at the company's Morila joint venture, Bristow noted
that mining constantly needed to replenish the sources of the gold it produced
and also had to expand its intellectual base to cope with the challenges
presented by an increasingly complex business.
"Randgold Resources believes the best way for the industry to create value for
all stakeholders, including its host countries, is through discovery and
development. It was our discovery of the Morila deposit that created a mine that
since 2000 has produced more than four million ounces of gold, generated total
cash profits of more than US$900 million and contributed FCFA334 billion (US$636
million) to the Malian economy. While Morila is now entering the last stage of
its life, it still has a number of profitable years ahead of it, and we are
still exploring with some success around the fringes of the deposit and beyond,"
Bristow said.
"It was our belief in Mali's prospectivity, coupled with the productive
partnership we have forged with its government and people, that gave us the
confidence to reinvest substantially in this country. Last year, we opened a
new mine at Loulo and the Minister of Mines, Energy and Water, the his
Excellency Hamed D. Semega, has now launched the development of an underground
mine to complement the two existing open-cast operations there. Loulo will
eventually be four mines in one, and a true world-class gold project."
Bristow noted that Randgold Resources was continuing to explore extensively at
and around Morila and Loulo.
"We are also committed to nurturing and empowering local management. Our
general manager for Mali, our financial controller and the general manager at
Loulo are all Malian nationals. In addition, we have taken the lead in such
initiatives as the establishment of the KankouMoussa gold bank to provide a
service to artisanal producers and local jewellers," Bristow said.
"During the last couple of years Randgold Resources directly reinvested more
than US$150 million in Mali. It's an investment we believe will not only
benefit ourselves but also our partners, the government and people of Mali.
While we are happy to show the way, we believe it is important for all concerned
to understand that securing a sustainable future for Mali's gold industry will
require a commensurate commitment from the other gold companies here, as well as
from government."
THE TONGON PROJECT - NEXT IN LINE FOR DEVELOPMENT?
Randgold Resources acquired the Nielle permit in 1997 and after a period of
regional geological mapping, geochemical sampling and airborne geophysics,
focused on the Tongon target. An initial diamond drilling programme, carried
out in 2000, led to the discovery of the Southern Zone and an inferred resource
of 1.7 million ounces. After two further drilling programmes, the total resource
for the Southern Zone as well as the lesser drilled Northern Zone increased to
2.89 million ounces, indicating that Tongon was a key asset in our portfolio.
A prefeasibility Type 2 study was completed in June 2002 which demonstrated that
the Tongon project could meet the company's criteria for investment and a Type 3
feasibility study was initiated. After an initial 16 drillhole programme,
further drilling and on-site feasibility study work was put on hold as a result
of the political conflict in the Cote d'Ivoire. However, we retained confidence
both in the ability of the people of the country to sort out the political and
social problems as well as in the value of the project. We maintained an office
in the country and have engaged and co-operated with the stakeholders from both
sides. A state of 'force majeure' was declared with respect to the period of
validity of the permits.
As the peace process, with strong African and international support, led to
increased political accommodation between the governing party and the
opposition, we have been encouraged by all to resume our feasibility activities.
In 2005 we reviewed all aspects of the Tongon project, updating the financial
parameters to reflect current market conditions. The total resource base was
confirmed as exceeding 3 million ounces and a 30 000 metre drilling programme
was designed to allow the completion of a final feasibility study and production
decision within two years of full recommencement of drilling activities.
We recognise as do the other players in the country, the value of Tongon as a
national asset, and are working hard, with full co-operation from both sides to
turn this project to account. We have visited the project with officials from
both the government ministries and the opposition and have been bowled over by
the commitment of all concerned to make this work.
An 8 drillhole, 1 992 metre diamond drilling programme has been successfully
completed ahead of the rains; results from this programme are being used to plan
the feasibility drilling programme.
All mining projects in all countries world-wide come with risks. We are prepared
to spend some of our exploration and corporate budget in further adding value to
the Tongon project. The next phase of drilling will help us better understand
the relatively complex geology of the Southern Zone as well as add additional
resources to the Northern Zone. The biggest risk we see in the project is
timing - we're confident the people and governing structures of Cote d'Ivoire
are committed to peace. The completion of a successful final feasibility study
would allow a production decision and financing arrangements to be made. As to
country risk, when compared to other countries that are recently becoming
targets for the development of gold mines, Cote d'Ivoire stands out as being one
of the better ones n not the least because of its excellent infrastructure as
well as the commitment of the people to reach an amicable solution.
THE GOLD INDUSTRY: THE CASE FOR A NEW VALUE MODEL
The current bull run in the gold market is camouflaging crucial structural flaws
in the mining industry, notably its inability to deliver real value to
investors, says Randgold Resources chief executive Mark Bristow.
Speaking at the Gold & Precious Metals Investment Conference in Hong Kong,
Bristow said that while there were blue-chip gold companies, the industry itself
was not a blue-chip one. He pointed out that over the past five years - some of
the best the gold market has ever known - the industry as a whole made no money
other than through equity raisings.
"It doesn't create great wealth or make substantial returns: in fact, it barely
survives. There's a simple explanation for this: obsessed by size, the industry
confuses growth in ounces with profitable growth. In other words, its value
creation model, in so far as it has one at all, is essentially flawed," he said.
"True value is created by discovery and development, which requires a
substantial and continuing investment in exploration, and a disciplined process
that identifies appropriate prospects and drives them up the value curve, thus
realising shareholder wealth on a sustainable basis."
The criteria by which the industry has traditionally evaluated itself - size and
costs, rather than profitability - are not helpful to the value investor, he
said. Nor is its track record encouraging, because that shows a history of
investing prodigally in the good times and stumbling when the going gets tough.
While industry expenditure on exploration had apparently increased in recent
years, this was not delivering the goods in terms of increased production, he
noted. The new gold supply is continuing to decline, and between 2004 and 2005,
when the gold price increased by 25%, reserves grew by only 2%. The reason for
the discrepancy between exploration expenditure and delivery was that much of
what was being flagged as exploration was not breaking new ground but dusting
off old projects.
Sustainable success as a gold miner required the capacity to do well not only at
the current US$500 to US$600 an ounce but also at more realistic price levels -
such as the US$380 30-year average. This in turn required substantial and
consistent investment in organic growth, generated by discovery and development.
"Considering that most new discoveries are being made in emerging economies, it
is also important that these projects and their managers should have the
capacity to contribute to the socio-political development of the host
countries," he said.
"Mining is a risky business at the best of times and the risk inevitably
increases in an emerging country. Assessing that risk is not a matter of cold
scientific calculation - it's about knowledge, understanding and the ability to
manage."
CONTINUED PROGRESS IN BURKINA FASO
In Burkina Faso a generative study has highlighted the Markoye Fault, a
significant transcrustal structure, and its associated splays, as very
prospective for gold mineralisation. It already hosts a complement of 8 million
ounces of gold in six deposits.
We have since consolidated a plus 2 000 kilometre square permit portfolio in the
south of the country, covering the southern extension of this fault system. The
first phase of regional exploration across all the permits has been completed
and this has generated a number of targets and the development of a strong base
to the resource triangle. In addition, the Kiaka target is showing promise
with drilling outlining broad zones of mineralisation over a 3 kilometre strike
length.
Randgold's Burkina operations are managed by an all-Burkinabe exploration team
which is headed by Felix Kiemde, a geologist who has been with Randgold for 10
years and worked at Morila and Loulo in Mali, Tongon in Cote d'Ivoire and
Tanzania.
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