Quarterly Report 31 March 2017

4 May 2017

Overview

BUILDING ON LAST YEAR’S RECORD RESULTS, RANDGOLD MAKES STRONG START TO 2017

London, 4 May 2017
  –  Randgold Resources’ operations delivered a robust all-round performance in the first quarter of 2017 to set the group on track to achieve its guidance for year.

Compared to the corresponding quarter in 2016, gold production was up 10% at 322 470 ounces, profit increased by 33% to $84.9 million and total cash costs decreased by 4% to $619/oz.  The group did not match the previous quarter’s record results however, with gold production down 15%, profit down 10% and total cash costs up 13% on this comparison.

Cash continued to increase, rising by 16% to $600 million, with no debt, and earlier this week shareholders approved a 52% hike to $1.00 per share in the annual dividend.

Chief executive Mark Bristow said the first quarter of the year was always a particularly busy one for Randgold and the past one had been no exception.  Despite work stoppages that impacted operations at both the Loulo-Gounkoto complex in Mali and Tongon in Côte d’Ivoire, and the continuing ramp-up to full production at Kibali, the group’s overall performance was its best for several years.

“Loulo-Gounkoto produced another solid operating quarter, marked by high recoveries, and Tongon delivered a steady performance, with good cost control.  Kibali is tracking its guidance as it works towards the full commissioning of its underground operation later this year.  Morila continued to optimise its tailings retreatment operation and is finalising approvals for the mining of its Domba satellite, provisionally scheduled to start in September this year,” he said.

Bristow noted that Randgold had succeeded in effectively replacing its reserves at a higher grade last year despite depletion by record production.  Brownfields exploration is continuing to expand its existing asset base while its greenfields exploration teams are delivering exciting new prospects in line with Randgold’s aim of developing three new projects over the next five years.  Strong cash flows from its existing operations would support the company’s objective of sustainable profitability, reinforced by its ongoing exploration commitment, a 10 year business plan at $1 000/oz, and a robust balance sheet capable of funding new developments.

“The past quarter’s work stoppages, which disrupted our usually stable industrial relations climate, prompted us to take a fresh look at this aspect of our business and we are rolling out a potent internal campaign designed to ensure that the company’s distinctive DNA is fully shared by all who work here through fostering an inclusive culture of two-way communication and engagement that takes in all levels in the organisation,” Bristow said.

Quarterly Report 31 March 2017

4 May 2017

Key Performance Indicators
  • Gold production up 10% on corresponding quarter of prior year and down 15% on record Q4 2016
  • Profit up 33% on corresponding quarter of prior year and down 10% quarter on quarter
  • Total cash costs per ounce down 4% on corresponding quarter of prior year and up 13% quarter on quarter
  • Cash increases 16% quarter on quarter to $600 million, with no debt
  • Another solid operating quarter at Loulo-Gounkoto supported by high recoveries
  • Morila tailings retreatment operation starts to deliver on plan and Domba project approved
  • Tongon delivers steady performance with good cost control
  • Kibali tracks guidance as it works to deliver on underground plan
  • Group attributable reserves replaced at higher grade
  • Busy quarter for greenfields exploration complemented by good progress on brownfields targets
  • Shareholders approve 52% increase in annual dividend to $1.00 per share

Randgold Resources Limited ("Randgold") had 94.0 million shares in issue as at 31 March 2017.

Quarterly Report 31 March 2017

4 May 2017

Downloads

Quarterly Report 31 March 2017

4 May 2017

Summarised Financial Information

Quarterly Report 31 March 2017

4 May 2017

Comments

Gold sales for the quarter of $409.6 million decreased by 10% from $453.1 million in the previous quarter.  Group gold sales for the quarter of 335 603oz was down 11% from the previous quarter following lower production.  The average gold price received of $1 220/oz increased by 1% quarter on quarter (Q4 2016: $1 206/oz).  Gold sales increased by 18% from the corresponding quarter of 2016, reflecting the higher ounces sold in the quarter, as well as the higher average gold price received (Q1 2016: $1 187/oz).

Total cash costs for the quarter of $207.7 million were in line with the prior quarter and up 10% from the corresponding quarter of 2016.  The increase from the corresponding quarter of 2016 reflects the increased throughput and production. 

Total cash cost per ounce of $619/oz increased by 13% quarter on quarter and decreased by 4% compared to the corresponding quarter in 2016.  The increase quarter on quarter is the result of lower ore grades being fed at Gounkoto, Kibali and Tongon compared to last quarter.  Work stoppages during the quarter at both the Loulo-Gounkoto complex and at Tongon also impacted costs and production negatively.

Profit from mining dropped by 18% to $201.9 million from the previous quarter, but was up 29% on the corresponding quarter of 2016.  The decrease from the prior quarter reflects the drop in production and increased costs as explained above.  The increase from the corresponding quarter of 2016 reflect higher sales (18%), increased production (10%) and decreased cash costs per ounce (4%).

Exploration and corporate expenditure of $10.9 million increased by 36% quarter on quarter, and by 22% compared to the corresponding quarter in 2016, principally due to increased greenfields exploration expenditure during the quarter, especially drilling.

Depreciation and amortisation of $39.0 million dropped by 36% from the previous quarter and was in line with the corresponding quarter of 2016, due to a drop in throughput at the Loulo-Gounkoto complex and at Tongon during the quarter.  Depreciation at Gounkoto further decreased by $16.0 million quarter on quarter, due to the inclusion of depreciation of the stripping asset ($15.5 million) in Q4 2016 as the ore was mined and fed during Q4.  Depreciation also decreased at Loulo in line with changes in the LoM units of production depreciation estimates following the increase in reserves. 

Other income in the quarter of $2.4 million increased from the previous quarter, as well as the corresponding quarter of the prior year.  Management fees from Kibali and Morila were in line with the previous quarter and the corresponding quarter of the prior year.  The increase from the prior quarter, as well as the corresponding quarter in 2016, is the result of a net operational foreign exchange gain of $1.0 million that was included in other income during the current quarter.  These gains and losses arise from the settlement of invoices in currencies other than the US dollar, as well as the translation of balances denominated in currencies such as the CFA, euro and South African rand to the US dollar rate and reflects the movements in these currencies during the respective quarter. 

Share of losses from equity accounted joint ventures was $5.2 million compared to share of losses from joint ventures of $3.2 million in the previous quarter and to $8.5 million profit in Q4 2016.  Kibali’s share of equity accounted joint venture losses was $5.1 million in the current quarter compared to a profit of $0.9 million in Q4 2016.  Profit from mining for Kibali for Q1 2017 was $26.2 million compared to a profit of $41.2 million in Q4 2016, reflecting a drop in the ore grades processed, as well as higher power costs through lower hydropower availability during the low rainfall period, and reduced recoveries.  The share of losses from the Kibali joint ventures are stated after depreciation of $32.2 million (31 Dec 2016: $31.4 million), foreign exchange losses of $7.3 million (31 Dec 2016: $11.8 million) and a deferred tax credit of $6.6 million (31 Dec 2016: $4.2 million).  The foreign exchange losses being incurred, are the result of the continued depreciation in the Congolese franc compared to the US dollar and the conversion of TVA (value added tax) balances owed to Kibali which are denominated in Congolese franc.  The increase in the tax credit quarter on quarter was a result of a decrease in the deferred tax liability in line with the increase in losses during the quarter.  Morila’s share of equity accounted joint venture losses decreased from a loss of $4.0 million in Q4 2016 to a loss of $0.2 million in Q1 2017, following good cost control and improved throughput.

Income tax expense of $34.7 million was in line with the charge in Q4 2016 and increased by 64% from the corresponding quarter in 2016, mainly due to increased profits at Gounkoto and Tongon.

Profit for the quarter was down 10% from the previous quarter and up 33% from the corresponding quarter of 2016.  The movement quarter on quarter reflects the decrease in profit from mining, partially offset by the decreased depreciation and other charges during the quarter as explained above.  The increase from the corresponding quarter of 2016 mainly reflects the increase in profit from mining.

Basic earnings per share decreased by 12% to $0.74 quarter on quarter (Q4 2016: $0.84), reflecting the lower profits.  Compared to the corresponding quarter in 2016, basic earnings per share increased by 28%.

Net cash generated from operating activities for the quarter of $133.1 million decreased by 35% from the previous quarter and increased by 39% from the corresponding quarter in 2016, primarily reflecting the movement in profits from operations.

Overview

Quarterly Report 31 March 2017

4 May 2017

Overview

BUILDING ON LAST YEAR’S RECORD RESULTS, RANDGOLD MAKES STRONG START TO 2017

London, 4 May 2017
  –  Randgold Resources’ operations delivered a robust all-round performance in the first quarter of 2017 to set the group on track to achieve its guidance for year.

Compared to the corresponding quarter in 2016, gold production was up 10% at 322 470 ounces, profit increased by 33% to $84.9 million and total cash costs decreased by 4% to $619/oz.  The group did not match the previous quarter’s record results however, with gold production down 15%, profit down 10% and total cash costs up 13% on this comparison.

Cash continued to increase, rising by 16% to $600 million, with no debt, and earlier this week shareholders approved a 52% hike to $1.00 per share in the annual dividend.

Chief executive Mark Bristow said the first quarter of the year was always a particularly busy one for Randgold and the past one had been no exception.  Despite work stoppages that impacted operations at both the Loulo-Gounkoto complex in Mali and Tongon in Côte d’Ivoire, and the continuing ramp-up to full production at Kibali, the group’s overall performance was its best for several years.

“Loulo-Gounkoto produced another solid operating quarter, marked by high recoveries, and Tongon delivered a steady performance, with good cost control.  Kibali is tracking its guidance as it works towards the full commissioning of its underground operation later this year.  Morila continued to optimise its tailings retreatment operation and is finalising approvals for the mining of its Domba satellite, provisionally scheduled to start in September this year,” he said.

Bristow noted that Randgold had succeeded in effectively replacing its reserves at a higher grade last year despite depletion by record production.  Brownfields exploration is continuing to expand its existing asset base while its greenfields exploration teams are delivering exciting new prospects in line with Randgold’s aim of developing three new projects over the next five years.  Strong cash flows from its existing operations would support the company’s objective of sustainable profitability, reinforced by its ongoing exploration commitment, a 10 year business plan at $1 000/oz, and a robust balance sheet capable of funding new developments.

“The past quarter’s work stoppages, which disrupted our usually stable industrial relations climate, prompted us to take a fresh look at this aspect of our business and we are rolling out a potent internal campaign designed to ensure that the company’s distinctive DNA is fully shared by all who work here through fostering an inclusive culture of two-way communication and engagement that takes in all levels in the organisation,” Bristow said.

Key Performance Indicators

Quarterly Report 31 March 2017

4 May 2017

Key Performance Indicators
  • Gold production up 10% on corresponding quarter of prior year and down 15% on record Q4 2016
  • Profit up 33% on corresponding quarter of prior year and down 10% quarter on quarter
  • Total cash costs per ounce down 4% on corresponding quarter of prior year and up 13% quarter on quarter
  • Cash increases 16% quarter on quarter to $600 million, with no debt
  • Another solid operating quarter at Loulo-Gounkoto supported by high recoveries
  • Morila tailings retreatment operation starts to deliver on plan and Domba project approved
  • Tongon delivers steady performance with good cost control
  • Kibali tracks guidance as it works to deliver on underground plan
  • Group attributable reserves replaced at higher grade
  • Busy quarter for greenfields exploration complemented by good progress on brownfields targets
  • Shareholders approve 52% increase in annual dividend to $1.00 per share

Randgold Resources Limited ("Randgold") had 94.0 million shares in issue as at 31 March 2017.

Downloads

Quarterly Report 31 March 2017

4 May 2017

Downloads

Summarised financial information

Quarterly Report 31 March 2017

4 May 2017

Summarised Financial Information

Comments

Quarterly Report 31 March 2017

4 May 2017

Comments

Gold sales for the quarter of $409.6 million decreased by 10% from $453.1 million in the previous quarter.  Group gold sales for the quarter of 335 603oz was down 11% from the previous quarter following lower production.  The average gold price received of $1 220/oz increased by 1% quarter on quarter (Q4 2016: $1 206/oz).  Gold sales increased by 18% from the corresponding quarter of 2016, reflecting the higher ounces sold in the quarter, as well as the higher average gold price received (Q1 2016: $1 187/oz).

Total cash costs for the quarter of $207.7 million were in line with the prior quarter and up 10% from the corresponding quarter of 2016.  The increase from the corresponding quarter of 2016 reflects the increased throughput and production. 

Total cash cost per ounce of $619/oz increased by 13% quarter on quarter and decreased by 4% compared to the corresponding quarter in 2016.  The increase quarter on quarter is the result of lower ore grades being fed at Gounkoto, Kibali and Tongon compared to last quarter.  Work stoppages during the quarter at both the Loulo-Gounkoto complex and at Tongon also impacted costs and production negatively.

Profit from mining dropped by 18% to $201.9 million from the previous quarter, but was up 29% on the corresponding quarter of 2016.  The decrease from the prior quarter reflects the drop in production and increased costs as explained above.  The increase from the corresponding quarter of 2016 reflect higher sales (18%), increased production (10%) and decreased cash costs per ounce (4%).

Exploration and corporate expenditure of $10.9 million increased by 36% quarter on quarter, and by 22% compared to the corresponding quarter in 2016, principally due to increased greenfields exploration expenditure during the quarter, especially drilling.

Depreciation and amortisation of $39.0 million dropped by 36% from the previous quarter and was in line with the corresponding quarter of 2016, due to a drop in throughput at the Loulo-Gounkoto complex and at Tongon during the quarter.  Depreciation at Gounkoto further decreased by $16.0 million quarter on quarter, due to the inclusion of depreciation of the stripping asset ($15.5 million) in Q4 2016 as the ore was mined and fed during Q4.  Depreciation also decreased at Loulo in line with changes in the LoM units of production depreciation estimates following the increase in reserves. 

Other income in the quarter of $2.4 million increased from the previous quarter, as well as the corresponding quarter of the prior year.  Management fees from Kibali and Morila were in line with the previous quarter and the corresponding quarter of the prior year.  The increase from the prior quarter, as well as the corresponding quarter in 2016, is the result of a net operational foreign exchange gain of $1.0 million that was included in other income during the current quarter.  These gains and losses arise from the settlement of invoices in currencies other than the US dollar, as well as the translation of balances denominated in currencies such as the CFA, euro and South African rand to the US dollar rate and reflects the movements in these currencies during the respective quarter. 

Share of losses from equity accounted joint ventures was $5.2 million compared to share of losses from joint ventures of $3.2 million in the previous quarter and to $8.5 million profit in Q4 2016.  Kibali’s share of equity accounted joint venture losses was $5.1 million in the current quarter compared to a profit of $0.9 million in Q4 2016.  Profit from mining for Kibali for Q1 2017 was $26.2 million compared to a profit of $41.2 million in Q4 2016, reflecting a drop in the ore grades processed, as well as higher power costs through lower hydropower availability during the low rainfall period, and reduced recoveries.  The share of losses from the Kibali joint ventures are stated after depreciation of $32.2 million (31 Dec 2016: $31.4 million), foreign exchange losses of $7.3 million (31 Dec 2016: $11.8 million) and a deferred tax credit of $6.6 million (31 Dec 2016: $4.2 million).  The foreign exchange losses being incurred, are the result of the continued depreciation in the Congolese franc compared to the US dollar and the conversion of TVA (value added tax) balances owed to Kibali which are denominated in Congolese franc.  The increase in the tax credit quarter on quarter was a result of a decrease in the deferred tax liability in line with the increase in losses during the quarter.  Morila’s share of equity accounted joint venture losses decreased from a loss of $4.0 million in Q4 2016 to a loss of $0.2 million in Q1 2017, following good cost control and improved throughput.

Income tax expense of $34.7 million was in line with the charge in Q4 2016 and increased by 64% from the corresponding quarter in 2016, mainly due to increased profits at Gounkoto and Tongon.

Profit for the quarter was down 10% from the previous quarter and up 33% from the corresponding quarter of 2016.  The movement quarter on quarter reflects the decrease in profit from mining, partially offset by the decreased depreciation and other charges during the quarter as explained above.  The increase from the corresponding quarter of 2016 mainly reflects the increase in profit from mining.

Basic earnings per share decreased by 12% to $0.74 quarter on quarter (Q4 2016: $0.84), reflecting the lower profits.  Compared to the corresponding quarter in 2016, basic earnings per share increased by 28%.

Net cash generated from operating activities for the quarter of $133.1 million decreased by 35% from the previous quarter and increased by 39% from the corresponding quarter in 2016, primarily reflecting the movement in profits from operations.

Quarterly Report 31 March 2017

4 May 2017

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