Jersey, CHANNEL ISLANDS, U.K., May 14, 2003 (PRIMEZONE) -- Randgold Resources Limited (Nasdaq:GOLD) (LSE:RRS): The London and Nasdaq listed gold company Randgold Resources today reported a net profit of US$17.1 million for the March quarter -- a fivefold increase on the corresponding quarter in 2002 -- and said its continued strong operational performance was bolstering its growth prospects.
Attributable production of 95 398 ounces at a cash operating cost of US$65/oz (total cash cost of US$88/oz) from its Morila joint venture was lower than in the high grade bonanza December quarter but in line with forecast. A higher received gold price of US$338/oz impacted positively on revenues and operating profit margins remained above 70%. Plant throughput at Morila comfortably exceeded design parameters, reflecting the benefits of the ongoing mine-to-mill optimisation exercise. Work has started on a capital expansion programme designed to increase production above the 330 000 tons per month level.
Randgold Resources' balance sheet was strengthened further by the latest results, with cash now standing at US$80 million and virtually no debt other than the company's attributable share of the non-recourse Morila project finance. Shareholders' equity rose to US$140 million from US$119 million at the end of 2002.
Chief executive Dr Mark Bristow said the company was continuing to accelerate its pursuit of new high-return growth opportunities. It had entered into ten confidentiality agreements during the past quarter and was conducting due diligences on exploration and feasibility-level prospects in East, Central and West Africa as well as Europe.
Within its existing project and exploration portfolio, drilling of the high-grade axis and orebody extensions at Morila was making good progress, and drill testing of four prioritised Morila-style targets located on Randgold Resources' properties was scheduled to start in the next quarter.
An updated opencast feasibility study on the 4.3 million ounce Loulo project, in the Mali West region, was presented to the Malian government and a potential new resource has been delineated on the Loulo 0 West target. The next drilling campaign to add further opencast and underground resources has started. It was announced earlier this week that Randgold Resources was leading an investigation into cooperative options in Mali West with Nevsun, to bring their respective projects to account.
In Senegal, exploration work on the Tomboronkoto permit is returning good results and drilling programmes are scheduled for late in the year. The company has applied for a further 16 licences in Tanzania, where it is also pursuing joint venture opportunities.
During the quarter Randgold Resources granted a 12-month option over its interest in the discontinued Syama mining operation in Mali to Resolute Mining. Resolute will pay Randgold Resources a monthly option fee of US$75 000 while it carries out a due diligence on the project.
Issued on behalf of Randgold Resources Limited by du Plessis Associates.
dPA contact Kathy du Plessis on Tel: 27(11) 728 4701,
mobile: 27(0)83 266 5847 or e-mail randgoldresources@dpapr.com
website: www.randgoldresources.comRANDGOLD RESOURCES LIMITED -- REPORT FOR THE QUARTER ENDED 31 MARCH 2003
- Net profit of US$17.1 million for the quarter further strengthens
balance sheet
- Strong operational performance provides platform for growth
- Attributable production of 95 368 ounces at a cash operating cost*
of US$65/oz and at a total cash cost* of US$88/oz
- Morila drilling of high grade axis and orebody extensions enhances
definition
- Loulo updated opencast feasibility study presented to Malian
government
- Drill testing of prioritised targets to commence in the Morila
region
- Delineation drilling defines potential resource at Loulo 0 west
- Option to purchase Syama granted at US$75 000 per month
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Unaudited
quarter quarter quarter
ended ended ended
31 Mar 31 Mar 31 Dec
US$000 2003 2002 2002
Gold sales revenue 31,586 17,423 44,186
Cost of sales
Production costs 6,521 6,259 8,351
Transport and refinery
costs 115 108 185
Transfer to deferred
stripping cost (373) (1,361) (1,642)
Cash operating costs* 6,263 5,006 6,894
Royalties 2,207 1,210 3,133
Total cash costs* 8,470 6,216 10,027
Profit from mining
activity* 23,116 11,207 34,159
Depreciation and
amortisation 2,313 1,948 2,333
Exploration and corporate
expenditure 2,810 2,101 5,336
Profit from operations* 17,993 7,158 26,490
Interest received 71 35 101
Interest expense (542) (968) (744)
Profit/(loss) on financial
instruments (276) (1,131) 347
Other income and (expenses) (219) (1,606) 126
Profit on ordinary
activities before taxes
and minority interests 17,027 3,488 26,320
Income tax - - -
Minority shareholders'
interest 79 21 122
Net profit 17,106 3,509 26,442
Basic earnings per
share (US$) 0.61 0.16 0.96
Fully diluted earnings
per share (US$) 0.61 0.15 0.95
Average shares in
issue 27,821,049 22,507,028 27,643,073
* Refer to pro forma information provided below
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
at at at
31 Mar 31 Mar 31 Dec
US$000 2003 2002 2002
Assets
Cash and equivalents 80,803 10,620 59,631
Restricted cash** 4,533 4,474 4,526
Receivables 10,079 13,775 14,262
Inventories 11,809 10,460 11,601
Total current assets 107,224 39,329 90,020
Property, plant and equipment
Cost 169,818 165,092 168,540
Accumulated
depreciation (94,417) (85,287) (92,104)
Net property, plant and
equipment 75,401 79,805 76,436
Other long-term assets 7,775 3,721 7,402
Total assets 190,400 122,855 173,858
Bank overdraft 1,337 1,954 1,170
Accounts payable and
accrued liabilities 18,239 18,982 20,564
Total current liabilities 19,576 20,936 21,734
Provision for environmental
rehabilitation 5,044 4,412 4,972
Liabilities on financial
instruments 5,777 7,498 7,530
Long-term loans 18,890 58,009 19,307
Loans from outside
shareholders in
subsidiaries 1,251 1,522 1,330
Total long-term
liabilities 30,962 71,441 33,139
Total liabilities 50,538 92,377 54,873
Shareholders' equity 139,862 30,478 118,985
Total liabilities and
shareholders' equity 190,400 122,855 173,858
** Note: This is the amount relating to the N.M. Rothschild & Sons Limited debt service reserve account. The amount is held in escrow for the partial repayment of the Morila project loan.
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Audited
quarter quarter
ended ended
31 Mar 31 Dec
US$000 2003 2002
Net cash generated from operations 21,134 4,480
Net cash utilised in investing
activities (1,285) (2,016)
Net cash generated by/(utilised in)
financing activities
Ordinary shares issued 1,712 365
(Decrease)/increase in long-term
borrowings (556) 862
Increase in bank overdraft 167 246
Net increase in cash and cash
equivalents 21,172 3,937
Cash and cash equivalents at beginning
of period 59,631 6,683
Cash and cash equivalents at end
of period 80,803 10,620
CONSOLIDATED STATEMENT ON CHANGES IN EQUITY
Number Accumu-
of Share Share Other lated Total
ordinary capital premium reserves losses equity
shares US$000 US$000 US$000 US$000 US$000
Balance - 31 Dec 2001
22,461,630 2,246,161,830 (1,745) (131,834) 30,497
Net profit - Mar 2002
- - - - 3,509 3,509
Movement on cash flow hedges
- - - (3,893) - (3,893)
Share options exercised
136,194 12 353 - - 365
Balance - 31 Mar 2002
22,597,824 2,258 162,183 (5,638) (128,325) 30,478
Balance - 31 Dec 2002
27,663,740 2,766 190,618 (8,293) (66,106) 118,985
Net profit - Mar 2003
- - - - 17,106 17,106
Movement on cash flow hedges
- - - 2,059 - 2,059
Share options exercised
471,926 47 1,665 - - 1,712
Balance - 31 Mar 2003
28,135,666 2,813 192,283 (6,234) (49,000) 139,862
PRO FORMA INFORMATION
The Company uses the following pro forma disclosures as it believes that this information is relevant to the mining industry.
Total cash costs per ounce are calculated by dividing total cash costs, as determined using the Gold Institute Industry Standard, by gold ounces produced for all periods presented.
Total cash costs as defined in the Gold Institute Industry Standard, includes mine production, transport and refinery costs, general and administrative costs, movement in production inventories and ore stockpile, transfers to and from deferred stripping and royalties.
Cash operating costs are defined as total cash costs excluding royalties.
Total cash operating costs per ounce are calculated by dividing cash operating costs by gold ounces produced for all periods presented.
Profit from mining activity is calculated by subtracting total cash costs from gold sales revenue for all periods presented.
Profit from operations is calculated by subtracting depreciation and amortisation charges and exploration and corporate expenditure from profit from mining activity.
RECONCILIATION TO US GAAP
The interim condensed financial statements presented above have been prepared in accordance with International Financial Reporting Standards (IFRS), which differ in certain significant respects from Generally Accepted Accounting Principles in the United States (US GAAP). The effect of applying US GAAP to net income and shareholders' equity is set out below.
Quarter Quarter Quarter
ended ended ended
Reconciliation of Net 31 Mar 31 Mar 31 Dec
Income (U$000) 2003 2002 2002
Net income under IAS 17,106 3,509 26,442
Share option compensation
adjustment 195 (588) (5,991)
Provision for
rehabilitation - (40) (76)
Net income under US GAAP
before cumulative effect
of change in accounting
principle 17,301 2,881 20,375
Cumulative effect of
change in accounting
principle 214 - -
Net income under US GAAP 17,515 2,881 20,375
Movement in cash flow
hedges during the
period 2,059 (3,893) (1,703)
Comprehensive income/
(loss) Under US GAAP 19,574 (1,012) 18,672
Basic earnings per share
under US GAAP (US$) 0.62 0.13 0.74
Fully diluted earnings
per share under US GAAP
(US$) 0.62 0.12 0.73
Reconciliation of As at As at As at
Shareholders' Equity 31 Mar 31 Mar 31 Dec
(U$000) 2003 2002 2002
Shareholders' equity
under IAS 139,862 30,478 118,985
Provision for
rehabilitation - (178) (214)
Shareholders' equity
under US GAAP 139,862 30,300 118,771
Roll forward of shareholders'
equity under US GAAP
Balance as at
1 Jan 2003 118,771 30,359
Net income under
US GAAP 17,515 2,881
Movement on cash flow
hedges 2,059 (3,893)
Share options exercised 1,712 365
Share option compensation
adjustment (915) 588
Shareholders' equity
under US GAAP at
31 Mar 2003 139,862 30,300
ACCOUNTING POLICIES
The interim condensed financial statements in this report have been prepared in accordance with the Group's accounting policies, which are in terms of International Financial Reporting Standards and are consistent with the prior period.
The consolidated financial information includes the interim financial statements of the Company, its subsidiaries and the Morila joint venture, which comply with IAS 34.
Joint ventures are those investments in which the Group has joint control and are accounted for under the proportional consolidation method and under this method, the proportion of assets, liabilities, income and expenses and cashflows of each joint venture attributable to the Group are incorporated in the consolidated financial statements under appropriate headings. Inter-company accounts and transactions are eliminated on consolidation.
No segmental information has been provided as the source and nature of the enterprises risks and returns are not governed by more than one segment due to the closing down of Syama.
FINANCIAL INSTRUMENTS
The remaining financial instruments at 31 March 2003 are held by the Morila company and relate to derivatives taken out as part of the project finance arrangements. Randgold Resources' attributable share is as follows:
* 97 376 ounces sold forward at a fixed price of US$275/oz over the period April 2003 to December 2004;
* 34 469 ounces of purchased call options for the same period at prices between US$350/oz and US$360/oz.
At present prices, the percentage of production which is hedged is approximately 19% for the next two calendar years. If the gold price is above US$350/oz the percentage of hedged production falls to 13%. With a gold price of US$360/oz, this reduces further to 12%. After 2004 all sales will be fully exposed to the spot gold price. The facility is margin free.
COMMENTS
Net profit for the quarter was US$17.1 million resulting in earnings per share of US$0.61. This was almost five times higher than the net profit achieved for the corresponding period in 2002. Net profit for the December 2002 quarter was US$26 million largely as a result of exceptionally high grades at Morila of 17 g /t. Grades for the quarter were down from these exceptionally high levels, but remained in line with management's expectations. Revenues were impacted positively by a higher received gold price of US$338/oz and operating profit margins remained above 70%. Profit from mining activity was US$23.1 million compared to US$11.2 million for the corresponding quarter in 2002 and US$34.1 million in the previous quarter.
The strong profits for the quarter further strengthened the balance sheet. The main balance sheet movements for the quarter ended 31 March 2003 are an increase in cash and shareholders' equity reflecting the attributable earnings from Morila.
The decrease in liabilities on financial instruments is the result of the movement on the mark-to-market value of the financial instruments.
The Company received its fifth distribution from Morila of US$24 million at the beginning of February 2003. A further dividend of US$18.8 million was received at the beginning of May 2003.
OPERATIONS MORILA
The Morila mine continues to produce satisfactory results. Production for the quarter was 238 421 ozs and head grade was in line with forecast for the quarter but lower than the previous quarter.
Plant throughput comfortably exceeded design parameters and totaled 830 477 tons for the quarter, showing the positive effects of "mine to mill" optimisation. The total cash operating cost* for the quarter was US$65/oz and the total cash cost* was US$88/oz.
Results have been received from limited drilling in the high grade axis confirming the previously intersected high grades. They indicate the amount of high grade ore particularly in the northern target is more than originally expected and consequently this could result in a positive impact on production in the future. Close spaced reverse circulation drilling will now be undertaken to drill out the remaining area in the high grade zone, in order to more closely define mineable grades.
The capital expansion programme has been approved and construction has commenced on the project which is planned to increase production above the 330 000 tons per month level.
MORILA RESULTS
Quarter Quarter Quarter
ended ended ended
31 Mar 31 Mar 31 Dec
2003 2002 2002
Mining
Tons mined (000) 5,957 8,096 6,063
Ore tons mined (000) 1,223 975 542
Milling
Tons processed (000) 830 733 669
Head grade milled (g/t) 9.75 6.51 17.1
Recovery (%) 93.7 92.0 88.4
Ounces produced 238,421 148,996 325,273
Average price received
(US$/ounce) 338 291 316
Cash operating cost*
(US$/ounce) 65 80 54
Total cash costs*
(US$/ounce) 88 104 78
Cash profit (US$000) 57,790 28,018 85,398
Attributable (40%)
Ounces produced 95,368 59,598 130,109
Cash profit (US$000) 23,116 11,207 34,159
* Refer pro forma information provided above.
DISCONTINUED OPERATION -- SYAMA
Randgold Resources has entered into an option agreement with the Australian mining company, Resolute Mining Limited, over its interest in the Syama mine in Mali. In terms of the agreement, Resolute have been given a 12 month period in which to conduct a full due diligence over Syama.
Resolute will pay Randgold Resources a US$75 000 monthly option fee, the first of which was received on 25 April 2003, and can terminate the agreement on one month's notice. If it exercises the option within the 12 month period it will pay Randgold Resources US$6 million and take on up to US$7 million in Syama liabilities. In addition, subject to the gold price being above US$350/oz, a royalty will be payable on gold produced from the Syama project of US$10 per ounce for the first million ounces and US$5 per ounce for the next three million ounces.
Care and maintenance activities continued in the quarter.
SYAMA INCOME STATEMENT
Unaudited Unaudited Unaudited
quarter quarter quarter
ended ended ended
31 Mar 31 Mar 31 Dec
(US$000) 2003 2002 2002
(Loss) from operations - - -
Interest expense - - -
(Loss) on financial
instruments - (1,093) -
Other expenses net of
other income (335) (689) (1,489)
(Loss) on ordinary
activities before taxes (335) (1,782) (1,489)
Income tax - - -
Net (loss) (335) (1,782) (1,489)
PROJECTS AND EVALUATION
Loulo Project -- Updated Feasibility Study
The updated feasibility study based on opencast reserves only was completed in the quarter and submitted to our partner, the Malian government (20% share). The major issue highlighted from the recent work was the disparity between the opencast reserve base and estimated project infrastructure costs, both operational and regional. Progress is being made on three fronts in this regard. Firstly, we have commenced with a further drilling campaign to convert more of the large resource base to reserves, both on new targets and at depth underlying the existing pits. Secondly, we have reached agreement with Nevsun whereby our two companies, under the leadership of Randgold Resources, have agreed to jointly initiate a study which will investigate possible synergies and whether there is a commercial logic to integrating our respective gold projects in the region utilising as much shared operational infrastructure as possible. Thirdly, we are progressing discussions with government towards the goal of a more equitable share of the project revenue between Government and Randgold Resources. In this regard indications are that Government is prepared to fund certain of the infrastructural requirements for development of the gold mining potential in this region.
Tongon Project
We are pleased that progress has been reported by the parties involved regarding a lasting political solution for the current conflict in the Cote d'Ivoire. While the next phase of drilling has been planned and budgeted, it is still on hold pending a lasting resolution of the conflict in the area.
EXPLORATION ACTIVITIES
During the last quarter, activities included diamond drilling at the Loulo project and Morila mine lease, re-establishment of exploration in Tanzania, good progress with Morila Region and Senegal and the pursuit of new opportunities in both West and East Africa.
On the Morila mine permit, delineation drilling commenced on the western margin of the current orebody where, as reported last quarter, exploratory work confirmed the continuation of the flat-lying mineralised structure. The current programme of 17 holes (6,255 metres) is designed to delineate the geology and improve our ability to model the mineralisation over a 750 metre by 1 kilometre area west of the current pit. An encouraging drill intercept of 19 metres @ 2.1 g/t was also returned from a hole drilled 200 metres south of the current pit and further drilling will be undertaken in this area. Finally drilling programmes to test the NW and San Extension targets, which are located 3 and 6 kilometres northwest of the current orebody, will follow on from the extension drilling.
In the Morila region, but outside the joint venture with AngloGold, exploration work remains focused on defining conceptual targets with potential to host Morila style mineralisation and the 21 targets reported last quarter have been reduced to 17. Four of these have been prioritised and drill testing is planned to start on the first target during the current quarter. The priority targets are all hosted within greywackes with shallow dipping foliations and associated quartz veining reminiscent of the hangingwall zone at Morila. At the Ntiola Target, a reconnaissance trench returned intervals of 15 metres @ 2 g/t and 5 metres @ 2 g/t from greywackes in close contact with a diorite body. At the Dialakoro Target, pitting has intercepted multiple shallow dipping quartz veins with values of 1 to 7.5 g/t.
At Loulo, a nine hole delineation drilling programme on the Loulo 0 west target outlined a potential new resource by highlighting two mineralised zones, each with true widths averaging 9 metres and intercepts grading 1.6 to 5.0 g/t over a 500 metre strike length. Mineralisation is still open to the north and interhole spacing is 100 metres. Loulo 0 west locates 350 metres west of and in the hangingwall to the Loulo 0 orebody. A Phase 2 definition drilling programme, designed to confirm and upgrade the resource potential and reduce interhole spacing to approximately 50 metres, has commenced. A drilling programme to extend the underground resources both at Loulo 0 and Yalea will follow. Elsewhere on the Loulo permit exploration work continues to focus on defining new targets along the 15 kilometre Yalea shear structure as well as delineating higher grade (+ 3.5 g/t) satellite bodies at Loulo 3 and Baboto.
In Senegal, deepening of trenches within the TA target, Tomboronkoto permit, returned good intercepts of 39 metres @ 2.7 g/t and 32 metres @ 4.7 g/t from a quartz vein stockwork in granodiorite. Exploration work to date has outlined continuous mineralisation over an E -- W trending zone of 800 metres where the focus is on target definition for drill testing later this year.
The Company has re-established active exploration activities in Tanzania with the acquisition of three prospecting licences in the Musoma Mara region and the opening of an office in Mwanza. A further 16 licence applications are pending.
CORPORATE AND NEW BUSINESS
The Company is actively pursuing a number of new business opportunities. To this end, ten confidentiality agreements were signed in the quarter. A number of due diligences have been carried out or are in progress on opportunities in East, Central and West Africa as well as in Europe. These are both at exploration and feasibility level.
On behalf of Randgold Resources Limited R A R Kebble D M Bristow Chairman Chief Executive Registered office: La Motte Chambers, La Motte Street, St Helier, Jersey JEI IBJ, Channel Islands * London Office: 100 Piccadilly, London W1J 7NH Web-site: www.randgoldresources.com
Registrars:
Computershare Investor Services (Channel Islands) Limited, P.O. Box 83,Ordnance House, 31 Pier Road, St Helier, Jersey JE4 8PW, Channel Islands
Transfer agents:
Computershare Services Plc, P.O. Box 663, 7th Floor, Jupiter House, Triton Court, 14 Finsbury Square, London EC2A 1BR
Investor & media relations:
For further information contact Kathy du Plessis on Telephone +27(11) 728-4701, Fax +27(11) 728-2547, e-mail: randgoldresources@dpapr.com
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 potential risks and uncertainties include, among others, risks associated with: fluctuations in the market price of gold, gold production at Morila, estimates of reserves and mine life and liabilities arising from the closure of the Syama. Randgold Resources assumes no obligation to update information in this release.
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