Q1 2016 QUARTERLY REPORT

4 May 2016

Overview

LOULO LEADS THE WAY IN CHALLENGING BUT PROFITABLE QUARTER

London, Wednesday 4 May 2016 – Randgold Resources’ flagship operation, the Loulo-Gounkoto complex in Mali, delivered a robust performance in the quarter to March when its Kibali and Tongon mines were impacted by commissioning and other technical issues.  This enabled the company to post a profit increase for the first quarter compared to the previous quarter and comparative prior year quarter.

The group also posted a significant improvement in safety with three out of five operations reporting zero lost time injuries for the quarter.  Likewise the ongoing fight against malaria delivered another step decrease in incidence rate and all operations retained their international safety certifications with only Kibali still working towards certification, planned for this year.

While production was down 11% from the previous record quarter at 291 912 ounces, the profit of $63.9 million was 19% higher than that of the previous quarter and 25% up on the corresponding quarter in 2015.  This reflected Randgold’s tightened focus on the profitability of its mines and a 9% increase in the average gold price received for the period.  Total cash costs of $189.0 million were down 8% on the previous quarter, thanks mainly to Loulo, where the transition from contract mining to owner mining started paying off in terms of improved efficiencies and lower operating costs.

At Kibali in the Democratic Republic of Congo, the two mill circuits, usually split between sulphide and oxide ores, were both campaigned on sulphides for an extended period in preparation for the ramp-up in underground ore.  Interruptions associated with this process before its successful completion, compounded by a week-long breakdown of one of the ball mills, negatively affected production and costs.

In Côte d’Ivoire, commissioning of Tongon’s fourth crushing stage, which completes the mine’s flotation upgrade and crushing extension project, took longer than expected, and the operation was also hit again by the recurring instability of the power supply from the national grid.  Tongon continues to engage with the government and the power utility on this issue and is also expanding its own generating capacity.

Morila in Mali remained profitable even while milling material with a head grade of 0.7g/t showing a significant improvement in cost and profitability compared to last quarter.  Preparations for the transition to the treatment of tailings are well underway while discussions with the government and the local community regarding the Domba project are still continuing.

Chief executive Mark Bristow said it had been a busy and demanding quarter for Randgold but in addition to dealing effectively with operational challenges at the mines it had also continued to reinforce the foundations of the business to ensure that it is in good shape to cope with the cyclical nature of the gold mining industry.

“Despite last year’s record production, we replaced 76% of our reserves and all our resources depleted, and our exploration teams continue to hunt for additional ounces around our existing operations as well our next big discovery.  Confirming the down plunge extensions of our orebodies in the Loulo district is testament to this, as are the encouraging results from ongoing work in Côte d’Ivoire, where drilling at Gbongogo has confirmed a large intrusion hosted stockwork.  Around Kibali work is identifying multiple mineralised shoots around KCD.

We’re also steadily expanding our footprint in our target areas, most recently through the Moku joint venture adjacent to Kibali.  Over at the Ngayu belt 200km to the SW of Kibali we are preparing to fly a helicopter VTEM survey over recently signed joint ventures and we continue our regional research programmes across West and Central Africa.  We keep strengthening our social licence through constructive engagement with and commitment to our host countries and communities,” Bristow said.

“With our strategy, plans and projections intact, we are able to continue delivering value at current and even lower gold price levels.  We’re quite bullish about gold’s medium to long term prospects, and when the cycle turns, the work we do now will have equipped us to capitalise fully on the upside.”

Q1 2016 QUARTERLY REPORT

4 May 2016

Key Performance Indicators
  • Profits up 19% quarter on quarter and 25% on corresponding quarter of prior year
  • Production down 11% quarter on quarter but up 4% on corresponding quarter of prior year
  • Total cash cost/oz up 3% quarter on quarter but down 8% on corresponding quarter of prior year
  • Cash increases 19% to $253.8 million on the back of reduced total cash costs and higher gold price
  • Solid quarter from Loulo-Gounkoto with production in line with plan and significant decrease in total cash cost/oz
  • Morila delivers steady performance with lower costs
  • Tongon production impacted by quaternary crushers commissioning and power supply interruptions
  • Kibali completes challenging quarter including optimising 100% sulphide feed, compounded by mill downtime
  • New Moku JV adds 1 275km2 to Randgold exploration portfolio in same greenstone belt as Kibali
  • West African exploration programmes deliver positive borehole and trench results
  • Shareholders approve 10% increase in annual dividend of $0.66 per share

Q1 2016 QUARTERLY REPORT

4 May 2016

Summarised Financial Information

Q1 2016 QUARTERLY REPORT

4 May 2016

Comments

Gold sales for the quarter of $345.8 million decreased by 3% from $354.8 million in the previous quarter.  Group gold production for the quarter of 291 912oz was 11% below the previous quarter due to a decrease in production at the Loulo-Gounkoto complex, Tongon and Kibali.  At the same time, the average gold price received of $1 187/oz increased by 9% quarter on quarter (2015 Q4: $1 091/oz), partially offsetting the drop in production.  Gold sales were in line with the corresponding quarter of 2015.

Total cash costs for the quarter under review of $189.0 million decreased by 8% compared to the previous quarter primarily due to lower cash costs at the Loulo-Gounkoto complex, reflecting lower mining costs, especially underground mining costs and lower processing costs. 

Total cash cost per ounce of $648/oz increased by 3% quarter on quarter, reflecting the lower production during the quarter.  This was primarily the result of lower grade and recovery achieved at the Loulo-Gounkoto complex, Tongon and Kibali, as well as lower throughput at Kibali and Tongon, partially offset by good cost control, especially at Loulo.  Compared to the corresponding quarter of 2015, total cash costs and total cash cost per ounce decreased by 6% and by 8% respectively.  This was the result of increased production, as well as lower unit costs quarter on quarter.

Profit from mining increased by 5% to $156.8 million from the previous quarter’s $149.2 million and was up 9% on the corresponding quarter of 2015 ($143.9 million), largely as a result of the drop in the total cash costs, especially at the Loulo-Gounkoto complex, as well as the increase in the average gold price received.

Exploration and corporate expenditure of $8.9 million decreased by 34% quarter on quarter, principally due to decreased exploration expenditure incurred during the quarter, as well as reductions in corporate expenditure.  Exploration and corporate costs were in line with the same quarter in the previous year.

Depreciation and amortisation of $37.9 million increased by 17% from the previous quarter and by 5% from the corresponding 2015 quarter, due to an 8% increase in throughput at Loulo (tonnes milled) on the previous quarter and increased assets brought into production at Loulo during the quarter.

Other income in the quarter of $1.3 million decreased from $3.4 million in the previous quarter and $1.8 million in the corresponding period of the prior year, both decreases being the result of net operational foreign exchange losses incurred during the quarter, compared to net exchange gains incurred in the prior and corresponding quarter of 2015.  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.  Other income also includes management fees from Kibali and Morila. 

Share of profits from joint ventures increased by 343% to $8.5 million from the previous quarter of $1.9 million.  The increase was the result of a stronger quarter from Morila due to lower unit costs achieved, as well as higher gold prices during the quarter.  Morila’s share of equity accounted joint venture profits increased from a loss of $3.8 million in Q4 2015 to a profit of $1.1 million in Q1 2016.  Kibali’s share of equity accounted joint venture profits increased from $5.5 million in Q4 2015 to $7.6 million in the current quarter.  The share of profits from the Kibali joint ventures are stated after a tax charge of $1.0 million (attributable).  Kibali’s equity accounted joint venture further includes depreciation on a tonnes milled basis and decreased quarter on quarter in line with the 5% drop in throughput.  Compared to the corresponding quarter in the previous year, profit from joint ventures dropped by 70% because of lower gold sales and profits from both Morila and Kibali.

Income tax expense of $21.1 million increased by 24% quarter on quarter, reflecting higher provisions for tax charges at Loulo in line with increased profits, partially offset by lower tax charges at Gounkoto in line with the decrease in profits.  The income tax expense increased by 118% on the corresponding quarter of the prior year, as a result of the increase in profits at the Loulo-Gounkoto complex quarter on quarter.

Profit for the quarter was 19% up on the previous quarter and up 25% from the corresponding quarter in 2015, reflecting the increase in profit from mining, lower exploration expenditure during the quarter, partially offset by increased taxes during the current quarter.  Basic earnings per share increased by 21% to $0.58 (Q4 2015: $0.48) quarter on quarter, reflecting the increase in profits.  Compared to Q1 2015, basic earnings per share increased by 12%, also reflecting the higher profits.

Net cash generated from operations for the quarter of $95.8 million decreased by 16% from the previous quarter and by 6% compared to the corresponding quarter in 2015, primarily reflecting increases in operating working capital.

Overview

Q1 2016 QUARTERLY REPORT

4 May 2016

Overview

LOULO LEADS THE WAY IN CHALLENGING BUT PROFITABLE QUARTER

London, Wednesday 4 May 2016 – Randgold Resources’ flagship operation, the Loulo-Gounkoto complex in Mali, delivered a robust performance in the quarter to March when its Kibali and Tongon mines were impacted by commissioning and other technical issues.  This enabled the company to post a profit increase for the first quarter compared to the previous quarter and comparative prior year quarter.

The group also posted a significant improvement in safety with three out of five operations reporting zero lost time injuries for the quarter.  Likewise the ongoing fight against malaria delivered another step decrease in incidence rate and all operations retained their international safety certifications with only Kibali still working towards certification, planned for this year.

While production was down 11% from the previous record quarter at 291 912 ounces, the profit of $63.9 million was 19% higher than that of the previous quarter and 25% up on the corresponding quarter in 2015.  This reflected Randgold’s tightened focus on the profitability of its mines and a 9% increase in the average gold price received for the period.  Total cash costs of $189.0 million were down 8% on the previous quarter, thanks mainly to Loulo, where the transition from contract mining to owner mining started paying off in terms of improved efficiencies and lower operating costs.

At Kibali in the Democratic Republic of Congo, the two mill circuits, usually split between sulphide and oxide ores, were both campaigned on sulphides for an extended period in preparation for the ramp-up in underground ore.  Interruptions associated with this process before its successful completion, compounded by a week-long breakdown of one of the ball mills, negatively affected production and costs.

In Côte d’Ivoire, commissioning of Tongon’s fourth crushing stage, which completes the mine’s flotation upgrade and crushing extension project, took longer than expected, and the operation was also hit again by the recurring instability of the power supply from the national grid.  Tongon continues to engage with the government and the power utility on this issue and is also expanding its own generating capacity.

Morila in Mali remained profitable even while milling material with a head grade of 0.7g/t showing a significant improvement in cost and profitability compared to last quarter.  Preparations for the transition to the treatment of tailings are well underway while discussions with the government and the local community regarding the Domba project are still continuing.

Chief executive Mark Bristow said it had been a busy and demanding quarter for Randgold but in addition to dealing effectively with operational challenges at the mines it had also continued to reinforce the foundations of the business to ensure that it is in good shape to cope with the cyclical nature of the gold mining industry.

“Despite last year’s record production, we replaced 76% of our reserves and all our resources depleted, and our exploration teams continue to hunt for additional ounces around our existing operations as well our next big discovery.  Confirming the down plunge extensions of our orebodies in the Loulo district is testament to this, as are the encouraging results from ongoing work in Côte d’Ivoire, where drilling at Gbongogo has confirmed a large intrusion hosted stockwork.  Around Kibali work is identifying multiple mineralised shoots around KCD.

We’re also steadily expanding our footprint in our target areas, most recently through the Moku joint venture adjacent to Kibali.  Over at the Ngayu belt 200km to the SW of Kibali we are preparing to fly a helicopter VTEM survey over recently signed joint ventures and we continue our regional research programmes across West and Central Africa.  We keep strengthening our social licence through constructive engagement with and commitment to our host countries and communities,” Bristow said.

“With our strategy, plans and projections intact, we are able to continue delivering value at current and even lower gold price levels.  We’re quite bullish about gold’s medium to long term prospects, and when the cycle turns, the work we do now will have equipped us to capitalise fully on the upside.”

Key Performance Indicators

Q1 2016 QUARTERLY REPORT

4 May 2016

Key Performance Indicators
  • Profits up 19% quarter on quarter and 25% on corresponding quarter of prior year
  • Production down 11% quarter on quarter but up 4% on corresponding quarter of prior year
  • Total cash cost/oz up 3% quarter on quarter but down 8% on corresponding quarter of prior year
  • Cash increases 19% to $253.8 million on the back of reduced total cash costs and higher gold price
  • Solid quarter from Loulo-Gounkoto with production in line with plan and significant decrease in total cash cost/oz
  • Morila delivers steady performance with lower costs
  • Tongon production impacted by quaternary crushers commissioning and power supply interruptions
  • Kibali completes challenging quarter including optimising 100% sulphide feed, compounded by mill downtime
  • New Moku JV adds 1 275km2 to Randgold exploration portfolio in same greenstone belt as Kibali
  • West African exploration programmes deliver positive borehole and trench results
  • Shareholders approve 10% increase in annual dividend of $0.66 per share

Downloads

Summarised financial information

Q1 2016 QUARTERLY REPORT

4 May 2016

Summarised Financial Information

Comments

Q1 2016 QUARTERLY REPORT

4 May 2016

Comments

Gold sales for the quarter of $345.8 million decreased by 3% from $354.8 million in the previous quarter.  Group gold production for the quarter of 291 912oz was 11% below the previous quarter due to a decrease in production at the Loulo-Gounkoto complex, Tongon and Kibali.  At the same time, the average gold price received of $1 187/oz increased by 9% quarter on quarter (2015 Q4: $1 091/oz), partially offsetting the drop in production.  Gold sales were in line with the corresponding quarter of 2015.

Total cash costs for the quarter under review of $189.0 million decreased by 8% compared to the previous quarter primarily due to lower cash costs at the Loulo-Gounkoto complex, reflecting lower mining costs, especially underground mining costs and lower processing costs. 

Total cash cost per ounce of $648/oz increased by 3% quarter on quarter, reflecting the lower production during the quarter.  This was primarily the result of lower grade and recovery achieved at the Loulo-Gounkoto complex, Tongon and Kibali, as well as lower throughput at Kibali and Tongon, partially offset by good cost control, especially at Loulo.  Compared to the corresponding quarter of 2015, total cash costs and total cash cost per ounce decreased by 6% and by 8% respectively.  This was the result of increased production, as well as lower unit costs quarter on quarter.

Profit from mining increased by 5% to $156.8 million from the previous quarter’s $149.2 million and was up 9% on the corresponding quarter of 2015 ($143.9 million), largely as a result of the drop in the total cash costs, especially at the Loulo-Gounkoto complex, as well as the increase in the average gold price received.

Exploration and corporate expenditure of $8.9 million decreased by 34% quarter on quarter, principally due to decreased exploration expenditure incurred during the quarter, as well as reductions in corporate expenditure.  Exploration and corporate costs were in line with the same quarter in the previous year.

Depreciation and amortisation of $37.9 million increased by 17% from the previous quarter and by 5% from the corresponding 2015 quarter, due to an 8% increase in throughput at Loulo (tonnes milled) on the previous quarter and increased assets brought into production at Loulo during the quarter.

Other income in the quarter of $1.3 million decreased from $3.4 million in the previous quarter and $1.8 million in the corresponding period of the prior year, both decreases being the result of net operational foreign exchange losses incurred during the quarter, compared to net exchange gains incurred in the prior and corresponding quarter of 2015.  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.  Other income also includes management fees from Kibali and Morila. 

Share of profits from joint ventures increased by 343% to $8.5 million from the previous quarter of $1.9 million.  The increase was the result of a stronger quarter from Morila due to lower unit costs achieved, as well as higher gold prices during the quarter.  Morila’s share of equity accounted joint venture profits increased from a loss of $3.8 million in Q4 2015 to a profit of $1.1 million in Q1 2016.  Kibali’s share of equity accounted joint venture profits increased from $5.5 million in Q4 2015 to $7.6 million in the current quarter.  The share of profits from the Kibali joint ventures are stated after a tax charge of $1.0 million (attributable).  Kibali’s equity accounted joint venture further includes depreciation on a tonnes milled basis and decreased quarter on quarter in line with the 5% drop in throughput.  Compared to the corresponding quarter in the previous year, profit from joint ventures dropped by 70% because of lower gold sales and profits from both Morila and Kibali.

Income tax expense of $21.1 million increased by 24% quarter on quarter, reflecting higher provisions for tax charges at Loulo in line with increased profits, partially offset by lower tax charges at Gounkoto in line with the decrease in profits.  The income tax expense increased by 118% on the corresponding quarter of the prior year, as a result of the increase in profits at the Loulo-Gounkoto complex quarter on quarter.

Profit for the quarter was 19% up on the previous quarter and up 25% from the corresponding quarter in 2015, reflecting the increase in profit from mining, lower exploration expenditure during the quarter, partially offset by increased taxes during the current quarter.  Basic earnings per share increased by 21% to $0.58 (Q4 2015: $0.48) quarter on quarter, reflecting the increase in profits.  Compared to Q1 2015, basic earnings per share increased by 12%, also reflecting the higher profits.

Net cash generated from operations for the quarter of $95.8 million decreased by 16% from the previous quarter and by 6% compared to the corresponding quarter in 2015, primarily reflecting increases in operating working capital.

Q1 2016 QUARTERLY REPORT

4 May 2016

© Copyright 2015 - Randgold Resources Limited