Jersey, Channel Islands, Aug. 12, 2003 (PRIMEZONE) -- Randgold Resources Limited (LSE:RRS) (Nasdaq:GOLD) -- Interim Report For The Quarter And 6 Months Ended June 30, 2003.
* Net profit of US$16.6 million for the quarter
* Half year net profit up by US$25 million to US$33.6 million year
on year
* Cash and cash equivalents of US$100 million
* 94,580 ounces attributable quarterly production at cash operating
cost of US$70/oz and total cash cost of US$93/oz
* Initial drilling on RRL Morila properties intercepts gold
mineralisation
* Optimisation and permitting of the Loulo project advances
* Encouraging trench results at Baboto and significant intersections
from deeper drilling at Loulo Project
* Expanded holdings in Tanzania and agreement on collaborative
venture with Government
* Company added to FTSE UK Monitored List
Randgold Resources Limited has 28.7 million shares in issue as at 30 June 2003
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Unaudited
quarter quarter quarter
ended ended ended
30 June 31 Mar 30 June
US$000 2003 2003 2002
Gold sales revenue 30 679 31 586 19 344
Cost of sales
Production costs 5 243 6 521 6 727
Transport and
refinery costs 113 115 94
Transfer to deferred
stripping costs 929 (373) (1 126)
Cash operating
costs * 6 285 6 263 5 695
Royalties 2 138 2 207 1 271
Total cash costs * 8 423 8 470 6 966
Profit from mining
activity * 22 256 23 116 12 378
Depreciation
and amortisation 2 224 2 313 1 854
Exploration and
corporate
expenditure 4 554 2 810 3 726
Profit from
operations * 15 478 17 993 6 798
Interest received 445 71 40
Interest expense (476) (542) (1 105)
(Loss) on financial
instruments (52) (276) (55)
Other income and
(expenses) 960 (219) (417)
Profit on ordinary
activities before
taxes and minority
interests 16 355 17 027 5 261
Income tax - - -
Minority shareholders'
interest 195 79 54
Net profit 16 550 17 106 5 315
Basic earnings per
share (US$) 0.59 0.61 0.23
Fully diluted earnings
per share (US$) 0.58 0.61 0.22
Average shares
in issue (000) 28 074 27 821 23 386
* Refer to pro forma information provided below
CONSOLIDATED INCOME STATEMENT (CONT'D)
Unaudited Unaudited
6 months 6 months
ended ended
30 June 30 June
US$000 2003 2002
Gold sales revenue 62 265 36 767
Cost of sales
Production costs 11 764 12 985
Transport and refinery costs 228 202
Transfer to deferred stripping
Costs 556 (2 487)
Cash operating costs * 12 548 10 700
Royalties 4 345 2 481
Total cash costs * 16 893 13 181
Profit from mining activity * 45 372 23 586
Depreciation and amortisation 4 537 3 802
Exploration and corporate
expenditure 7 364 5 827
Profit from operations * 33 471 13 957
Interest received 516 75
Interest expense (1 018) (2 073)
(Loss) on financial instruments (328) (1 186)
Other income and (expenses) 741 (2 024)
Profit on ordinary activities
before taxes and minority
interests 33 382 8 749
Income tax - -
Minority shareholders' interest 274 75
Net profit 33 656 8 824
Basic earnings per share (US$) 1.20 0.38
Fully diluted earnings per share
(US$) 1.19 0.37
Average shares in issue (000) 28 074 23 386
* Refer to pro forma information provided below
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
at at at
30 June 30 June 31 Dec
US$000 2003 2002 2002
Assets
Cash and equivalents 95 489 6 497 59 631
Restricted cash ** 4 546 4 499 4 526
Receivables 10 288 16 754 14 262
Inventories 13 968 10 745 11 601
Total current assets 124 291 38 495 90 020
Property, plant and
equipment cost 170 980 165 680 168 540
Accumulated depreciation (96 641) (87 167) (92 104)
Net property, plant
and equipment 74 339 78 513 76 436
Other long-term assets 6 846 4 846 7 402
Total assets 205 476 121 854 173 858
Bank overdraft 1 339 2 046 1 170
Accounts payable and
accrued liabilities 15 631 19 303 20 564
Total current liabilities 16 970 21 349 21 734
Provision for environmental
rehabilitation 5 115 4 484 4 972
Liabilities on
financial instruments 5 613 8 384 7 530
Long-term loans 15 037 51 211 19 307
Loans from outside
shareholders
in subsidiaries 1 036 1 468 1 330
Total long-term
liabilities 26 801 65 547 33 139
Total liabilities 43 771 86 896 54 873
Shareholders' equity 161 705 34 958 118 985
Total liabilities and
shareholders' equity 205 476 121 854 173 858
** 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 Unaudited
6 months 6 months
ended ended
30 June 30 June
US$000 2003 2002
Net cash generated from operations 34 886 7 424
Net cash utilised in investing
activities (1 544) (2 585)
Net cash generated by financing
activities
Ordinary shares issued 6 763 365
(Decrease) in long-term
borrowings (4 416) (5 728)
Increase in bank overdraft 169 338
Net increase in cash and cash
equivalents 35 858 (186)
Cash and cash equivalents at
beginning of period 59 631 6 683
Cash and cash equivalents at
end of period 95 489 6 497
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Number Accum-
of Share Share Other ulated 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
Mar 2002 net profit
- - - - 3 509 3 509
Movement on cash flow hedges
- - - (3 893) - (3 893)
Share options exercised
136 194 12 353 - - 365
Jun 2002 net profit
- - - - 5 315 5 315
Movement on cash flow hedges
- - - (835) - (835)
Share options exercised
- - - - - -
Balance - 30 Jun 2002
22 597 824 2 258 162 183 (6 473) (123 010) 34 958
Balance - 31 Dec 2002
27 663 740 2 766 190 618 (8 293) (66 106) 118 985
Mar 2003 net profit
- - - - 17 106 17 106
Movement on cash flow hedges
- - - 2 059 - 2 059
Share options exercised
471 926 47 1 665 - - 1 712
June 2003 net profit
- - - - 16 550 16 550
Movement on cash flow hedges
- - - 242 - 242
Share options exercised
574 362 57 4 994 - - 5 051
Balance - 30 Jun 2003
28 710 028 2 870 197 277 (5 992) (32 450) 161 705
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 Standard, by gold ounces produced for all periods presented.
Total cash costs as defined in the Gold Institute 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 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.
6 months 6 months
Reconciliation of net income 30 June 30 June
(US$000) 2003 2002
Net income under IFRS 33 656 8 824
Share option compensation
adjustment (1 717) (1 309)
Provision for rehabilitation - (40)
Net income under US GAAP
before cumulative effect of
change in accounting
principle 31 939 7 475
Cumulative effect of change
in accounting principle 214 -
Net income under US GAAP 32 153 7 475
Movement in cash flow hedges
during the period 2 301 (4 728)
Comprehensive income/(loss)
under US GAAP 34 454 2 747
Basic earnings per share
under US GAAP (US$) 1.14 0.32
Fully diluted earnings per
share under US GAAP (US$) 1.13 0.31
Reconciliation of shareholders'
equity (US$000)
Shareholders' equity
under IFRS 161 705 34 958
Provision for rehabilitation - (178)
Shareholders' equity
under US GAAP 161 705 34 780
Roll forward of shareholders'
equity under US GAAP
Balance as at 1 January 2003 118 771 30 359
Net income under US GAAP 32 153 7 475
Movement on cash flow hedges 2 301 (4 728)
Share options exercised 6 763 365
Share option compensation
adjustment 1 717 1 309
Shareholders' equity under
US GAAP at 30 June 2003 161 705 34 780
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 proportionate 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 enterprise's 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 30 June 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:
* 82 231 ounces sold forward at a fixed price of US$275/oz over the period July 2003 to December 2004; * 29 107 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 20% for the next 18 months. If the gold price is above US$360/oz, the percentage of hedged production falls to 13%. 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$16.6 million resulting in earnings per share of US$0.59. This was three times higher than the net profit achieved for the corresponding period in 2002 and in line with net profit of US$17.1 million for the previous quarter. Revenues were affected by slightly lower ounces produced resulting from lower metallurgical recoveries during the quarter, but this was offset by higher ore grades. Operating profit margins remained above 70%. Profit from mining activity was US$22.3 million compared with US$12.4 million for the corresponding quarter in 2002 and US$23.1 million in the previous quarter.
Exploration and corporate expenditure increased during the current quarter, mainly as a result of exploration drilling on the Company's permits in the Morila region and Mali West.
Other income and expenses for the quarter include a realised exchange gain of US$0.2 million and an unrealised gain of US$0.6 million resulting from the Group's treasury activities.
For the six months to June, profit from mining activity was US$45.3 million, which was double that of the corresponding period in 2002. This was mainly due to the higher grades at Morila in 2003. Net profit was US$33.6 million compared to US$8.8 million, a threefold increase. This was the result of the higher profit from mining activity in 2003, expenses relating to Syama's care and maintenance in 2002, as well as lower interest charges resulting from lower debt levels in 2003.
The sustained profits for the quarter further strengthened the balance sheet. The main balance sheet movements for the six months ended 30 June 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 decrease in long-term loans reflects the repayment of our attributable portion of the Morila project loan in June 2003. The attributable balance of the Morila project loan as at the end of June 2003 was US$10.8 million. The Company received its sixth distribution from Morila of US$18.8 million at the beginning of May 2003. A further dividend of US$14.0 million was received at the beginning of August 2003.
OPERATIONS - MORILA
Morila mine again produced satisfactory results, in line with forecast. A total of 771 000 tons were processed at a head grade of 10.5g/t for a total of 236 449 ounces produced. Costs were adversely affected by lower mill throughput, partly due to a mill motor failure and higher fuel costs due to international oil prices and continued high transport costs as a result of the situation in Cote d'Ivoire, but still averaged US$70/oz total cash operating cost* and US$93/oz total cash cost*. Limited results from the close-spaced reverse circulation drilling programme in the high-grade axis has returned results generally higher than predicted previously.
The capital expansion programme is progressing and is on track to increase the production level to 350 000 tons per month by year-end.
MORILA RESULTS
Quarter Quarter Quarter 6 months 6 months
ended ended ended ended ended
30 Jun 31 Mar 30 Jun 30 June 30 Jun
US$000 2003 2003 2002 2003 2002
Mining
Tons mined
(000) 5 389 5 957 6 557 11 345 14 635
Ore tons
mined (000) 1 273 1 223 865 2 496 1 840
Milling
Tons processed
(000) 771 830 788 1 601 1 520
Head grade milled
(g/t) 10.50 9.75 6.41 10.11 6.46
Recovery (%) 90.9 93.7 91.4 91.3 91.7
Ounces
produced 236 449 238 421 150 126 474 870 299 122
Average
price
received
(US$/ounce) 337 338 304 338 298
Cash operating
costs*
(US$/ounce) 70 65 87 67 83
Total cash
costs*
(US$/ounce) 93 88 108 90 106
Cash profit
(US$000) 55 640 57 790 30 945 113 430 58 965
Attributable (40%)
Ounces
produced 94 580 95 368 60 050 189 948 119 649
Cash profit
(US$000) 22 256 23 116 12 378 45 372 23 586
* Refer pro forma information provided above
DISCONTINUED OPERATION - SYAMA
Care and maintenance activities continued as normal during the quarter, with the focus on retaining the value of the assets. Following on from the announcement in the previous quarter, Resolute Mining Limited has commenced with a drilling campaign, as part of their 12 month evaluation process.
Syama was successful in recovering US$0.3 million in respect of fuel duties during the quarter, which had previously been provided for as a doubtful debt, enabling the Company to write back the provision, resulting in a net profit for the quarter.
SYAMA INCOME STATEMENT
Quarter Quarter Quarter 6 months 6 months
ended ended ended ended ended
30 Jun 31 Mar 30 Jun 30 Jun 30 Jun
US$000 2003 2003 2002 2003 2002
(Loss) from
operations - - - - -
Interest
expense - - - - -
(Loss) on
financial
instruments - - (55) - (1 085)
Other income/
(expenses) 42 (335) (577) (293) (1 329)
Profit/(loss)
on ordinary
activities
before taxes 42 (335) (632) (293) (2 414)
Income tax - - - - -
Net profit/
(loss) 42 (335) (632) (293) (2 414)
PROJECTS AND EVALUATION
Loulo Project
Loulo 0 and Yalea were remodelled, incorporating the latest surface and drill data. As part of progressing various financing options, these models have been submitted together with all relevant data to SRK, who will carry out an independent, external audit and resource modelling exercise, including an optimisation of the surface to underground interface.
Loulo 0 deeps has emerged as the prime candidate to convert significant resources to reserves at Loulo. A further drill campaign has been designed to extend the present resource a further 100m vertical depth after which a pre-feasibility study will be initiated on the underground potential at Loulo 0. Further drilling will commence in the final quarter on three resource satellite bodies with the express intention of converting them to reserve status.
Progress has been made with regard to water permitting and the tripartite Malian - Senegalese - Mauritanian water permit is being finalised. The government has planned to meet at the ministerial level to discuss infrastructural issues relating to the Loulo project, particularly the upgrading of the Kayes - Keneti road and the provision of power from the Manantali Hydro scheme.
The Loulo team continues to investigate the operational and infrastructural synergies that may exist within western Mali - eastern Senegal region.
Tongon Project
No further work has been possible at Tongon as a result of the ongoing situation in the Cote d'Ivoire. Some progress has been made towards resolving the political and security situation but not sufficient to restart work on site.
EXPLORATION ACTIVITIES
Exploration activities during the quarter included the continuation of drilling programmes in Mali with good results received from depth extensions at the Loulo deposit and the discovery of new mineralisation within the Morila region, securing of six exploration licenses and a joint venture with the government in Tanzania and further target definition and new target generation in Senegal.
At the Loulo project, a sixteen hole Phase 2 drilling program completed on Loulo 0 West delineated an additional satellite resource. A five hole deep diamond drilling programme targeting the adjacent Loulo 0 main orebody, confirmed the geological model and continuity of high grade mineralisation over a 400 metre strike length to vertical depths of 420 metres below surface. The following intercepts were returned using 1g/t cut-off.
LOULO EXPLORATION RESULTS AT 30 JUNE 2003 Hole From To Width g/t LOWDH17 348.2 352.0 3.8 5.6 LOWDH23 435.4 445.4 10.0 7.6 LOWDH20 363.8 369.0 5.2 26.8 LOCP32 394.6 400.0 5.4 3.4 LOCP31 331.0 339.0 8.0 2.8
On the Baboto prospect, 10 kilometres north of the Loulo deposit, trenching has outlined a high grade area and returned encouraging intercepts of 100 metres at 3.2g/t, 72 metres at 4.3g/t, 46 metres at 2.4g/t and 10 metres at 2.6g/t over a 150 metres strike length. Furthermore, trenching west of the Yalea deposit has outlined a footwall zone which averages 3.4g/t over a 15 metre width and strike length of 155 metres. Further drilling is planned for the Loulo 0 underground extensions, Baboto, other satellites and the depth extension to Yalea during the last quarter of this year.
On the Morila mine lease, further diamond drilling was completed at the western margin which returned intercepts of 17 metres at 4.9g/t, 35 metres at 3.0g/t, 7 metres at 4.2g/t, 4 metres at 8.4g/t and 10 metres at 1.5g/t. These results confirm the presence of the Morila style mineralisation however the geological model is still in an early phase of understanding.
The Company has undertaken reconnaissance drilling of three conceptual targets within its tenements in the Morila region. Results received from the first target, Ntiola, which locates 10 kilometres north west of the mine, returned 36 metres @ 1.41g/t including significant intercepts of 6 metres at 2.9g/t and 15 metres at 1.6g/t at a depth of ninety metres and directly below a trench grading 24 metres at 2.3g/t. Mineralisation locates within silicified metasediments hosting disseminated arsenopyrite and pyrrhotite which are similar to those hosting the Morila orebody. The target is still conceptual with only 4 trenches and one borehole testing a broad zone. The identified zone locates on the eastern margin of a large gold in soil anomaly coincident with a series of geophysical anomalies and remain as yet untested.
To the north west of the Morila lease area, work has progressed on the ground covered by the joint venture with OMRD and has identified a large geochemical anomaly which will be the subject of follow-up exploration.
In Senegal, trenching over an 800 metre strike length confirms continuity of mineralisation in a East-West direction on the TA target at widths of 7 to 60 metres grading 1.5 to 6.0g/t. Pitting is currently focussed on improving the surface definition of the target, which will assist in the planning of a reconnaissance drilling programme for next season.
In Tanzania, the Company has now secured six exploration licenses within the Lake Victoria goldfields and field exploration is in progress. The government of Tanzania has agreed to form a collaborative venture with the Company to effect exploration in the Musoma Greenstone Belt.
Field exploration activities have now ceased in West Africa due to the onset of the rainy season. During this period all new data will be processed and targets generated and prioritized for the forthcoming field season.
CORPORATE AND NEW BUSINESS
During the quarter, the Company was added to the FTSE's UK Monitored List following the redenomination of its ordinary shares on the LSE. Inclusion in the UK Monitored List means that the Company will be considered for inclusion in the FTSE 250 Index Series at the next review, to be held in September 2003.
Corporate activity is currently focused on new business, both internally generated and with the aim of participating in the rationalisation taking place in the gold mining industry. To this end, due diligence reviews of exploration and mining opportunities are being progressed.
In order to repay debt and to fund future growth our major shareholder, Randgold & Exploration Company Limited, sold one million shares during the quarter thereby diluting its holding to 43% and creating further liquidity in the Company's trading stock.
R A R Kebble D M Bristow R A Williams Chairman Chief Executive Financial Director August 12, 2003 Registered office : La Motte Chambers, La Motte Street, St Helier, Jersey JEI IBJ, Channel Islands Website : www.randgoldresources.com Registrars : Computershare Investor Services (Channel Islands) Limited, PO Box 83, Ordnance House, 31 Pier Road, St Helier, Jersey JE4 8PW, Channel Islands Transfer agents : Computershare Services Plc, PO Box 663, 7th Floor, Jupiter House, Triton Court, 14 Finsbury Square, London EC2A 1BR
DISCLAIMER: Statements made in this release 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 Syama. Randgold Resources assumes no obligation to update information in this release.
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