Quarter Report 30 June 2018

9 August 2018

Overview

London, 9 August 2018  –  Another robust performance by Kibali highlighted a quarter in which Randgold Resources posted across-the-board advances.

Results for the quarter to June show gold production up 9% quarter on quarter at 313 302 ounces, total cash cost per ounce down 3% at $697 and gold sales of $411.5 million up 5% despite a lower gold price.  Profit from mining was up 6% at $190.6 million and net cash generated by the operations rose by 49% to $95.5 million.

Kibali ramped up underground mining as planned and continued improvements in throughput and recovery helped to boost production to a record 201 742 ounces, up 17% on the previous quarter.  Total cash cost per ounce decreased by 11% to $651, reflecting the higher grade as well as lower power costs from increased hydropower.  The mine’s third and last hydropower station is currently being commissioned.

At the end of the quarter, Kibali’s underground operation successfully transitioned from contractor mining to owner mining, following the example of the Loulo mines.  As at Loulo, the move is expected to deliver cost reductions and efficiency improvements.  Kibali remains on track to beat its 2018 production forecast.

The Loulo-Gounkoto complex performed in line with plan, increasing production by 4% to 150 117 ounces while progressing the Gounkoto super pit project.  Since the quarter, Randgold and the Malian government have agreed on a revised investment convention for Gounkoto to support the development of the super pit.

Tongon recovered well from a series of work stoppages in the first quarter which carried over to the start of the second quarter to increase production by 12% to 65 259 ounces.  Since the end of the quarter, however, a new work stoppage halted operations and the mine is working on a recovery plan to get back to full production with expected annual production revised to around 250koz.

Morila’s results were also in line with plan as it moves towards closure.  Its agripole project, designed to mitigate the socio-economic impact of closing the mine, is awaiting final government endorsement.  While the operation is mainly processing tailings, it has also started mining the Ntiola satellite pit.

In Senegal, an updated base case on the Massawa project has confirmed the robustness of the project and the upside potential as it progresses through the final feasibility study to an investment decision expected by the end of the year.  In addition to the potential benefits of ongoing drilling below the central zone, the government’s electrification roll-out plan, which envisages grid power access at Massawa by 2022, could have a significant impact on the project’s economics.

On the exploration front, Randgold’s brownfields reserve replacement teams made significant progress at Kibali, Yalea and Tongon which will reinforce the robustness of the group’s 10-year business plan which is profitable at a long term gold price of $1 000/oz.  Greenfields exploration, including airborne and ground geophysical surveys, continued to advance the exploration portfolio which also includes the new Bambadji permit across the border from Loulo in Senegal.

Chief executive Mark Bristow said the quarter’s results highlighted the Randgold team’s ability to deal effectively with multiple challenges, including the work stoppages, continuing negotiations with the DRC government about its new mining code, the sequencing of the Gounkoto pit pushback and Ntiola’s permitting delay.

“The Tongon work stoppage is obviously a challenge, but we take comfort from the government’s leadership in ensuring measures are taken to protect the assets and that they are dealing with the situation.  We are still assessing its impact but at this stage we still believe that, given Kibali’s strong performance, we are on track to be within the group production and cost guidance for 2018,” he said.

Quarter Report 30 June 2018

9 August 2018

Key Performance Indicators
  • Group gold production up 9% quarter on quarter
  • Group total cash cost per ounce down 3% quarter on quarter
  • Gold sales up 5% quarter on quarter, despite lower average gold price
  • Profit from mining up 6% quarter on quarter
  • Net cash generated from operations up 49% quarter on quarter
  • Kibali posts record quarter and stays ahead of plan
  • Loulo-Gounkoto performs in line with guidance
  • Tongon production up 12% quarter on quarter
  • Morila has steady quarter; mining starts at Ntiola
  • Preliminary economic update confirms Massawa profitability
  • Mercator target offers opportunity to extend Tongon mine life
  • Deep drillhole in Yalea central zone returns high grade intersection
  • Kibali exploration shows potential for underground and opencast resource expansion
  • $188.8 million dividend paid in Q2

Randgold Resources Limited (‘Randgold’) had 94.4 million shares in issue as at 30 June 2018

 

Quarter Report 30 June 2018

9 August 2018

Downloads

Quarter Report 30 June 2018

9 August 2018

Summarised Financial Information

Quarter Report 30 June 2018

9 August 2018

Comments

COMMENTS ON THE QUARTER ENDED 30 JUNE 2018

Gold sales for the quarter of $411.5 million increased by 5% from $391.8 million in the previous quarter.  The number of gold ounces sold for the quarter was up 8% on the previous quarter following improved production at the Loulo-Gounkoto complex, Tongon and Kibali.  The average gold price received of $1 299/oz decreased by 2% quarter on quarter (Q1 2018: $1 331/oz).  Gold sales decreased by 3% from the corresponding quarter of 2017, reflecting the 6% lower ounces sold in the current quarter, offset by a 4% higher average gold price received (Q2 2017: $1 254/oz).
 
Total cash costs for the quarter of $221.0 million were 4% higher than prior quarter and up 15% from the corresponding quarter of 2017.  Costs were higher at Kibali, Tongon and at the Loulo-Gounkoto complex, on the back of higher throughput.  Total cash cost per ounce of $697 decreased by 3% quarter on quarter and increased by 21% compared to the corresponding quarter in 2017.  The decrease quarter on quarter is mainly the result of higher gold production and slightly offset by costs related to the increased throughput. 
 
Profit from mining increased by 6% to $190.6 million from the previous quarter, but decreased by 17% on the corresponding quarter of 2017.  The increase from the prior quarter reflects the increased production during the current quarter partially offset by higher costs of production.  The decrease from the corresponding quarter of 2017 reflects the drop in production and increased costs as explained above. 
Exploration and corporate expenditure of $14.9 million was in line with the previous quarter (Q1 2018: $15.8 million), however it increased by 17% compared to the corresponding quarter in 2017, principally due to increased greenfields exploration expenditure during the quarter, especially drilling.
 
Depreciation and amortisation of $50.9 million increased by 9% from the previous quarter and increased by 21% against the corresponding quarter of 2017.  The increase quarter on quarter is due to higher throughput at Tongon and Loulo offset by lower throughput at Gounkoto.  The increase on the corresponding quarter of 2017 was due to higher throughput at Loulo as well as increases in the asset bases of both Loulo (capitalised underground development) and Gounkoto (deferred stripping asset), offset by lower throughput at Gounkoto and Tongon.
 
Other income in the quarter of $3.0 million decreased from the previous quarter, as well as the corresponding quarter of the prior year.  Management fees from Kibali and Morila of $1.6 million were in line with the previous quarter and the corresponding quarter of the prior year.  The decrease from the prior quarter, as well as the corresponding quarter in 2017, is the result of net operational foreign exchange gains of $7.1 million and $6.2 million that were included in other income during the previous quarter and comparative quarter respectively, compared to a net operational foreign exchange loss in the current quarter of $11.4 million included in other expenses.  These gains and losses arise largely from the translation of balances denominated in currencies such as CFA, euro and South African rand to the US dollar rate, especially in relation to TVA (value added tax) receivables and prepaid tax balances, as well as from the settlement of invoices in currencies other than the US dollar and reflects the movements in these currencies and timing of payments during the respective quarter. 
 
Share of profits from equity accounted joint ventures was $20.9 million compared to share of profits of $13.8 million in the previous quarter and to share of losses of $3.4 million in Q2 2017.  Kibali’s share of equity accounted joint venture profits was $22.0 million in the current quarter compared to a profit of $12.7 million in Q1 2018.  Profit from mining (attributable) for Kibali for Q2 2018 was $59.8 million compared to a profit of $48.0 million in Q1 2018, reflecting higher gold sales, higher grade, slightly improved recovery and lower cash costs.  The share of profits from the Kibali joint venture is stated after depreciation of $38.1 million (Q1 2018: $39.4 million), foreign exchange losses of $0.3 million (Q1 2018: $0.3 million) and a deferred tax charge of $1.0 million (Q1 2018: credit of $3.2 million).  The movement in the tax charge in the current quarter compared to a credit in the previous quarter was a result of a decrease in the deferred tax asset associated with tax losses/allowances carried forward.
 
Morila’s share of equity accounted joint venture profits decreased to a loss of $1.0 million compared to a profit of $0.9 million in Q1 2017 and a profit of $0.9 million in Q2 2017, following lower gold sales and higher input costs.
 
Income tax expense of $16.0 million was 23% lower than the charge in the previous quarter (Q1 2018: $20.7 million) and decreased by 66% from the corresponding quarter in 2017, mainly due to decreased profits at Loulo, Gounkoto and Tongon.
 
Profit for the quarter of $58.4 million was down 12% from the previous quarter and down 43% from the corresponding quarter of 2017.  The movement quarter on quarter reflects the increase in profit from mining offset by increased depreciation and other charges during the quarter, as explained above.  The decrease from the corresponding quarter of 2017 mainly reflects the decrease in profit from mining.
 
Basic earnings per share decreased by 10% quarter on quarter to $0.55 (Q1 2018: $0.61) and decreased by 38% compared to the corresponding quarter in 2017 (Q2 2017: $0.89) reflecting the lower profits in the current quarter. 
 
Net cash generated from operating activities for the quarter of $95.5 million increased by 49% from the previous quarter but decreased by 28% from the corresponding quarter in 2017.  The change quarter on quarter primarily reflects the movement in profits from operations.

Overview

Quarter Report 30 June 2018

9 August 2018

Overview

London, 9 August 2018  –  Another robust performance by Kibali highlighted a quarter in which Randgold Resources posted across-the-board advances.

Results for the quarter to June show gold production up 9% quarter on quarter at 313 302 ounces, total cash cost per ounce down 3% at $697 and gold sales of $411.5 million up 5% despite a lower gold price.  Profit from mining was up 6% at $190.6 million and net cash generated by the operations rose by 49% to $95.5 million.

Kibali ramped up underground mining as planned and continued improvements in throughput and recovery helped to boost production to a record 201 742 ounces, up 17% on the previous quarter.  Total cash cost per ounce decreased by 11% to $651, reflecting the higher grade as well as lower power costs from increased hydropower.  The mine’s third and last hydropower station is currently being commissioned.

At the end of the quarter, Kibali’s underground operation successfully transitioned from contractor mining to owner mining, following the example of the Loulo mines.  As at Loulo, the move is expected to deliver cost reductions and efficiency improvements.  Kibali remains on track to beat its 2018 production forecast.

The Loulo-Gounkoto complex performed in line with plan, increasing production by 4% to 150 117 ounces while progressing the Gounkoto super pit project.  Since the quarter, Randgold and the Malian government have agreed on a revised investment convention for Gounkoto to support the development of the super pit.

Tongon recovered well from a series of work stoppages in the first quarter which carried over to the start of the second quarter to increase production by 12% to 65 259 ounces.  Since the end of the quarter, however, a new work stoppage halted operations and the mine is working on a recovery plan to get back to full production with expected annual production revised to around 250koz.

Morila’s results were also in line with plan as it moves towards closure.  Its agripole project, designed to mitigate the socio-economic impact of closing the mine, is awaiting final government endorsement.  While the operation is mainly processing tailings, it has also started mining the Ntiola satellite pit.

In Senegal, an updated base case on the Massawa project has confirmed the robustness of the project and the upside potential as it progresses through the final feasibility study to an investment decision expected by the end of the year.  In addition to the potential benefits of ongoing drilling below the central zone, the government’s electrification roll-out plan, which envisages grid power access at Massawa by 2022, could have a significant impact on the project’s economics.

On the exploration front, Randgold’s brownfields reserve replacement teams made significant progress at Kibali, Yalea and Tongon which will reinforce the robustness of the group’s 10-year business plan which is profitable at a long term gold price of $1 000/oz.  Greenfields exploration, including airborne and ground geophysical surveys, continued to advance the exploration portfolio which also includes the new Bambadji permit across the border from Loulo in Senegal.

Chief executive Mark Bristow said the quarter’s results highlighted the Randgold team’s ability to deal effectively with multiple challenges, including the work stoppages, continuing negotiations with the DRC government about its new mining code, the sequencing of the Gounkoto pit pushback and Ntiola’s permitting delay.

“The Tongon work stoppage is obviously a challenge, but we take comfort from the government’s leadership in ensuring measures are taken to protect the assets and that they are dealing with the situation.  We are still assessing its impact but at this stage we still believe that, given Kibali’s strong performance, we are on track to be within the group production and cost guidance for 2018,” he said.

Key Performance Indicators

Quarter Report 30 June 2018

9 August 2018

Key Performance Indicators
  • Group gold production up 9% quarter on quarter
  • Group total cash cost per ounce down 3% quarter on quarter
  • Gold sales up 5% quarter on quarter, despite lower average gold price
  • Profit from mining up 6% quarter on quarter
  • Net cash generated from operations up 49% quarter on quarter
  • Kibali posts record quarter and stays ahead of plan
  • Loulo-Gounkoto performs in line with guidance
  • Tongon production up 12% quarter on quarter
  • Morila has steady quarter; mining starts at Ntiola
  • Preliminary economic update confirms Massawa profitability
  • Mercator target offers opportunity to extend Tongon mine life
  • Deep drillhole in Yalea central zone returns high grade intersection
  • Kibali exploration shows potential for underground and opencast resource expansion
  • $188.8 million dividend paid in Q2

Randgold Resources Limited (‘Randgold’) had 94.4 million shares in issue as at 30 June 2018

 

Downloads

Quarter Report 30 June 2018

9 August 2018

Downloads

Summarised financial information

Quarter Report 30 June 2018

9 August 2018

Summarised Financial Information

Comments

Quarter Report 30 June 2018

9 August 2018

Comments

COMMENTS ON THE QUARTER ENDED 30 JUNE 2018

Gold sales for the quarter of $411.5 million increased by 5% from $391.8 million in the previous quarter.  The number of gold ounces sold for the quarter was up 8% on the previous quarter following improved production at the Loulo-Gounkoto complex, Tongon and Kibali.  The average gold price received of $1 299/oz decreased by 2% quarter on quarter (Q1 2018: $1 331/oz).  Gold sales decreased by 3% from the corresponding quarter of 2017, reflecting the 6% lower ounces sold in the current quarter, offset by a 4% higher average gold price received (Q2 2017: $1 254/oz).
 
Total cash costs for the quarter of $221.0 million were 4% higher than prior quarter and up 15% from the corresponding quarter of 2017.  Costs were higher at Kibali, Tongon and at the Loulo-Gounkoto complex, on the back of higher throughput.  Total cash cost per ounce of $697 decreased by 3% quarter on quarter and increased by 21% compared to the corresponding quarter in 2017.  The decrease quarter on quarter is mainly the result of higher gold production and slightly offset by costs related to the increased throughput. 
 
Profit from mining increased by 6% to $190.6 million from the previous quarter, but decreased by 17% on the corresponding quarter of 2017.  The increase from the prior quarter reflects the increased production during the current quarter partially offset by higher costs of production.  The decrease from the corresponding quarter of 2017 reflects the drop in production and increased costs as explained above. 
Exploration and corporate expenditure of $14.9 million was in line with the previous quarter (Q1 2018: $15.8 million), however it increased by 17% compared to the corresponding quarter in 2017, principally due to increased greenfields exploration expenditure during the quarter, especially drilling.
 
Depreciation and amortisation of $50.9 million increased by 9% from the previous quarter and increased by 21% against the corresponding quarter of 2017.  The increase quarter on quarter is due to higher throughput at Tongon and Loulo offset by lower throughput at Gounkoto.  The increase on the corresponding quarter of 2017 was due to higher throughput at Loulo as well as increases in the asset bases of both Loulo (capitalised underground development) and Gounkoto (deferred stripping asset), offset by lower throughput at Gounkoto and Tongon.
 
Other income in the quarter of $3.0 million decreased from the previous quarter, as well as the corresponding quarter of the prior year.  Management fees from Kibali and Morila of $1.6 million were in line with the previous quarter and the corresponding quarter of the prior year.  The decrease from the prior quarter, as well as the corresponding quarter in 2017, is the result of net operational foreign exchange gains of $7.1 million and $6.2 million that were included in other income during the previous quarter and comparative quarter respectively, compared to a net operational foreign exchange loss in the current quarter of $11.4 million included in other expenses.  These gains and losses arise largely from the translation of balances denominated in currencies such as CFA, euro and South African rand to the US dollar rate, especially in relation to TVA (value added tax) receivables and prepaid tax balances, as well as from the settlement of invoices in currencies other than the US dollar and reflects the movements in these currencies and timing of payments during the respective quarter. 
 
Share of profits from equity accounted joint ventures was $20.9 million compared to share of profits of $13.8 million in the previous quarter and to share of losses of $3.4 million in Q2 2017.  Kibali’s share of equity accounted joint venture profits was $22.0 million in the current quarter compared to a profit of $12.7 million in Q1 2018.  Profit from mining (attributable) for Kibali for Q2 2018 was $59.8 million compared to a profit of $48.0 million in Q1 2018, reflecting higher gold sales, higher grade, slightly improved recovery and lower cash costs.  The share of profits from the Kibali joint venture is stated after depreciation of $38.1 million (Q1 2018: $39.4 million), foreign exchange losses of $0.3 million (Q1 2018: $0.3 million) and a deferred tax charge of $1.0 million (Q1 2018: credit of $3.2 million).  The movement in the tax charge in the current quarter compared to a credit in the previous quarter was a result of a decrease in the deferred tax asset associated with tax losses/allowances carried forward.
 
Morila’s share of equity accounted joint venture profits decreased to a loss of $1.0 million compared to a profit of $0.9 million in Q1 2017 and a profit of $0.9 million in Q2 2017, following lower gold sales and higher input costs.
 
Income tax expense of $16.0 million was 23% lower than the charge in the previous quarter (Q1 2018: $20.7 million) and decreased by 66% from the corresponding quarter in 2017, mainly due to decreased profits at Loulo, Gounkoto and Tongon.
 
Profit for the quarter of $58.4 million was down 12% from the previous quarter and down 43% from the corresponding quarter of 2017.  The movement quarter on quarter reflects the increase in profit from mining offset by increased depreciation and other charges during the quarter, as explained above.  The decrease from the corresponding quarter of 2017 mainly reflects the decrease in profit from mining.
 
Basic earnings per share decreased by 10% quarter on quarter to $0.55 (Q1 2018: $0.61) and decreased by 38% compared to the corresponding quarter in 2017 (Q2 2017: $0.89) reflecting the lower profits in the current quarter. 
 
Net cash generated from operating activities for the quarter of $95.5 million increased by 49% from the previous quarter but decreased by 28% from the corresponding quarter in 2017.  The change quarter on quarter primarily reflects the movement in profits from operations.

Quarter Report 30 June 2018

9 August 2018

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