Quarterly Report 30 June 2016

4 August 2016

Overview

RANDGOLD DIGS DEEP AFTER TOUGH Q2 TO SUSTAIN 2016 PERFORMANCE FORECAST

London, Thursday 4 August 2016 - Randgold Resources’ production and costs were hit in the quarter to June by a long mill downtime at Tongon and the Kibali plant’s continuing transition to a mixed-ore feed, but the company says the improvement expected in the second half of the year should boost its 2016 results to within its market guidance.

The flagship Loulo-Gounkoto complex ended the quarter ahead of target but with one of Tongon’s two milling circuits losing 46 days after a breakdown and Kibali still dealing with throughput, recovery and dilution challenges presented by multiple ore feeds, group production was down 4% quarter on quarter at 281 494oz while total cash cost per ounce rose 12% to $727/oz.  With the higher gold price only partly buffering the impact on the bottom line, profit was down 8% at $58.7 million.

Compared to 2015’s record interim results, however, profit for the six months to June was up 11%, production was steady and total cash cost was 1% lower.  Also on the positive side, net cash generated quarter on quarter increased by 6% and cash holdings rose by 7% to $272.7 million.

Chief executive Mark Bristow described the quarter as one of the toughest in years but said in June and July both Tongon and Kibali had made significant progress, with Tongon fixing the mill and completing the commissioning of its new quaternary circuit, and the new Kombokolo satellite pit at Kibali expected to improve its feed flexibility and grades.  The development of Kibali as a complete project remains ahead of schedule.

“Looking ahead at the rest of the year, all our teams have been reworking and optimising their mine plans to ensure that we end 2016 within guidance.  In addition, we’re intensifying our focus on critical operational issues to ensure that we deliver a substantial second-half improvement,” he said.

Bristow said in addition to another strong performance by the Loulo-Gounkoto complex, the quarter’s highlight was the significant advances made by its exploration teams.

“The quality and scope of our exploration portfolio continue to grow and there is a solid pipeline of projects being developed through our resource triangle, from grassroots and generative work to resource definition.  I believe we have at least three advanced targets, already scheduled for drill test campaigns, with real potential to become important assets,” he said.

The advanced targets include Fonondara and Kassere on the Boundiali permit in northern Côte d’Ivoire and Sofia in Senegal, which looks likely to provide a high grade, free-leaching satellite resource for the feasibility study-stage Massawa project.

In Mali, the greenfields target Bakolobi is currently being drilled while drilling at Loulo’s Gara underground mine has identified significant potential to extend its life and replace this year’s depletion at Loulo.  At neighbouring Gounkoto, the feasibility study on the superpit option will be concluded by the end of this year.  In the Democratic Republic of Congo, the discovery and rapid development of the Kombokolo satellite illustrates the continued prospectivity of the Kibali permit area and augurs well for the Moku joint venture west of Kibali.

“While the more advanced work is ongoing, our greenfields team is also feeding the base of the resource triangle with new ground.  The Bambadji joint venture with Iamgold has recently been renewed, we are applying for new permits in southern and western Mali as well as in southern Côte d’Ivoire, where we are also negotiating a new joint venture,” Bristow says.

‘The rest of the gold mining industry continues to shy away from exploration and there is now a consensus that new gold production will consequently continue to decline.  This, in combination with growing global geopolitical and economic jitters, must be good for the gold price, at least in the long run.  That’s where Randgold’s focus has always been fixed.  We’re building a sustainably profitable business on a very solid foundation, but considering the internal and external challenges ahead, our teams will have to test and, if necessary, re-invent the way they operate on a continuous basis.”

Quarterly Report 30 June 2016

4 August 2016

Key Performance Indicators
  • Profit down 8% quarter on quarter but up 11% on corresponding 6 months of prior year
  • Earnings per share for the 6 months of $1.10 in line with corresponding 6 months of prior year
  • Production down 4% quarter on quarter and in line with corresponding 6 months of prior year
  • Total cash cost/oz up 12% quarter on quarter but down 1% on corresponding 6 months of prior year
  • Net cash generated from operations increases 6% and cash up 7% to $272.7 million
  • Another solid quarter from Loulo-Gounkoto with production ahead of guidance
  • Morila delivers steady performance with Domba not yet permitted
  • Tongon production down 7% quarter on quarter as a result of extended mill downtime
  • Tongon joins Gounkoto as it pays its maiden dividend to shareholders
  • Kibali production down 6% quarter on quarter as it builds ore feed flexibility
  • Lost time injury frequency rate improves by 7% from 0.59 to 0.55 year on year
  • Gara extension drilling identifies significant potential to extend Life of Mine
  • Greenfields exploration bolsters resource triangle and delivers 3 advanced targets
  • BoyzonBikes raises $2.7 million to support NVEP Foundation

Randgold Resources Limited ("Randgold") had 93.7 million shares in issue as at 30 June 2016.

Quarterly Report 30 June 2016

4 August 2016

Summarised Financial Information

Quarterly Report 30 June 2016

4 August 2016

Comments

Gold sales for the quarter of $354.4 million increased by 2% from $345.8 million in the previous quarter.  Group gold production for the quarter of 281 494oz was 4% below the previous quarter due to a decrease in production at Tongon and Kibali.  At the same time, the average gold price received of $1 264/oz increased by 6% quarter on quarter (2016 Q1: $1 187/oz), which offset the drop in production.  Gold sales were in line with the corresponding quarter of 2015, reflecting the higher average gold price received and lower gold production.

Total cash costs for the quarter of $203.8 million were up 8% from the previous quarter primarily due to challenges at Kibali associated with variable ore feeds, as well as at the Loulo-Gounkoto complex with higher underground costs.  Total cash costs for the quarter were in line with the corresponding quarter of 2015.

Total cash cost per ounce of $727/oz increased by 12% quarter on quarter, reflecting the lower production during the quarter as well as increased costs.  This was primarily the result of the lower grade and recovery achieved at Kibali, as well as lower throughput at Tongon following extended mill downtime relating to a damaged journal.  Compared to the corresponding quarter of 2015, total cash cost per ounce increased by 6%, driven by decreased production, most notably at Kibali and Tongon, as a result of lower grade and recovery.

Profit from mining decreased by 4% to $150.6 million from the previous quarter’s $156.8 million, and was in line with the corresponding quarter of 2015, largely as a result of the increase in total cash costs, especially at Kibali, partially offset by the increase in the average gold price received.

Exploration and corporate expenditure of $13.0 million increased by 46% quarter on quarter, principally due to increased exploration expenditure incurred during the quarter, in line with the plan.  Exploration and corporate costs were in line with the same quarter of the previous year.

Depreciation and amortisation of $35.9 million decreased by 5% from the previous quarter and by 16% from the corresponding 2015 quarter, primarily due to the decrease in throughput at Tongon.

Other income in the quarter of $2.3 million increased from $1.3 million in the previous quarter and down from $3.8 million in the corresponding period of the prior year.  The increase quarter on quarter is the result of net operational foreign exchange gains incurred during the quarter, compared to net exchange losses incurred in the prior quarter and lower foreign exchange gains incurred in the current quarter compared to the 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 decreased by 28% to $6.1 million from the previous quarter’s $8.5 million.  The decrease was the result of a weaker operational quarter from both Morila and Kibali, as described above.  Morila’s share of equity accounted joint venture profits decreased from a profit of $1.1 million in Q1 2016 to a loss of $0.7 million in Q2 2016.  Kibali’s share of equity accounted joint venture profits decreased from $7.5 million in Q1 2016 to $6.7 million in the current quarter.  The share of profits from the Kibali joint ventures are stated after a deferred tax credit of $3.7 million (attributable) for the quarter.  Kibali’s equity accounted joint venture also includes depreciation on a tonnes milled basis which was in line with the prior quarter.  Compared to the corresponding quarter of the previous year, profit from joint ventures was down 82% due to lower gold sales and profits from both Morila and Kibali.

Income tax expense of $21.6 million was in line with the prior quarter.  The income tax expense increased by 69% from the corresponding quarter of the prior year, as a result of the increase in profits at Loulo and Gounkoto.

Profit for the quarter was down 8% from the previous quarter and in line with the corresponding quarter of 2015, reflecting the decrease in profit from mining, as well as increased exploration expenditure during the quarter.  Basic earnings per share decreased by 10% to $0.52 quarter on quarter (Q1 2016: $0.58), reflecting the lower profits.  Compared to Q2 2015, basic earnings per share decreased by 10%, also reflecting the lower profits.

Net cash generated from operations for the quarter of $101.5 million increased by 6% from the previous quarter and by 42% from the corresponding quarter in 2015, primarily reflecting decreases in operating working capital.

Overview

Quarterly Report 30 June 2016

4 August 2016

Overview

RANDGOLD DIGS DEEP AFTER TOUGH Q2 TO SUSTAIN 2016 PERFORMANCE FORECAST

London, Thursday 4 August 2016 - Randgold Resources’ production and costs were hit in the quarter to June by a long mill downtime at Tongon and the Kibali plant’s continuing transition to a mixed-ore feed, but the company says the improvement expected in the second half of the year should boost its 2016 results to within its market guidance.

The flagship Loulo-Gounkoto complex ended the quarter ahead of target but with one of Tongon’s two milling circuits losing 46 days after a breakdown and Kibali still dealing with throughput, recovery and dilution challenges presented by multiple ore feeds, group production was down 4% quarter on quarter at 281 494oz while total cash cost per ounce rose 12% to $727/oz.  With the higher gold price only partly buffering the impact on the bottom line, profit was down 8% at $58.7 million.

Compared to 2015’s record interim results, however, profit for the six months to June was up 11%, production was steady and total cash cost was 1% lower.  Also on the positive side, net cash generated quarter on quarter increased by 6% and cash holdings rose by 7% to $272.7 million.

Chief executive Mark Bristow described the quarter as one of the toughest in years but said in June and July both Tongon and Kibali had made significant progress, with Tongon fixing the mill and completing the commissioning of its new quaternary circuit, and the new Kombokolo satellite pit at Kibali expected to improve its feed flexibility and grades.  The development of Kibali as a complete project remains ahead of schedule.

“Looking ahead at the rest of the year, all our teams have been reworking and optimising their mine plans to ensure that we end 2016 within guidance.  In addition, we’re intensifying our focus on critical operational issues to ensure that we deliver a substantial second-half improvement,” he said.

Bristow said in addition to another strong performance by the Loulo-Gounkoto complex, the quarter’s highlight was the significant advances made by its exploration teams.

“The quality and scope of our exploration portfolio continue to grow and there is a solid pipeline of projects being developed through our resource triangle, from grassroots and generative work to resource definition.  I believe we have at least three advanced targets, already scheduled for drill test campaigns, with real potential to become important assets,” he said.

The advanced targets include Fonondara and Kassere on the Boundiali permit in northern Côte d’Ivoire and Sofia in Senegal, which looks likely to provide a high grade, free-leaching satellite resource for the feasibility study-stage Massawa project.

In Mali, the greenfields target Bakolobi is currently being drilled while drilling at Loulo’s Gara underground mine has identified significant potential to extend its life and replace this year’s depletion at Loulo.  At neighbouring Gounkoto, the feasibility study on the superpit option will be concluded by the end of this year.  In the Democratic Republic of Congo, the discovery and rapid development of the Kombokolo satellite illustrates the continued prospectivity of the Kibali permit area and augurs well for the Moku joint venture west of Kibali.

“While the more advanced work is ongoing, our greenfields team is also feeding the base of the resource triangle with new ground.  The Bambadji joint venture with Iamgold has recently been renewed, we are applying for new permits in southern and western Mali as well as in southern Côte d’Ivoire, where we are also negotiating a new joint venture,” Bristow says.

‘The rest of the gold mining industry continues to shy away from exploration and there is now a consensus that new gold production will consequently continue to decline.  This, in combination with growing global geopolitical and economic jitters, must be good for the gold price, at least in the long run.  That’s where Randgold’s focus has always been fixed.  We’re building a sustainably profitable business on a very solid foundation, but considering the internal and external challenges ahead, our teams will have to test and, if necessary, re-invent the way they operate on a continuous basis.”

Key Performance Indicators

Quarterly Report 30 June 2016

4 August 2016

Key Performance Indicators
  • Profit down 8% quarter on quarter but up 11% on corresponding 6 months of prior year
  • Earnings per share for the 6 months of $1.10 in line with corresponding 6 months of prior year
  • Production down 4% quarter on quarter and in line with corresponding 6 months of prior year
  • Total cash cost/oz up 12% quarter on quarter but down 1% on corresponding 6 months of prior year
  • Net cash generated from operations increases 6% and cash up 7% to $272.7 million
  • Another solid quarter from Loulo-Gounkoto with production ahead of guidance
  • Morila delivers steady performance with Domba not yet permitted
  • Tongon production down 7% quarter on quarter as a result of extended mill downtime
  • Tongon joins Gounkoto as it pays its maiden dividend to shareholders
  • Kibali production down 6% quarter on quarter as it builds ore feed flexibility
  • Lost time injury frequency rate improves by 7% from 0.59 to 0.55 year on year
  • Gara extension drilling identifies significant potential to extend Life of Mine
  • Greenfields exploration bolsters resource triangle and delivers 3 advanced targets
  • BoyzonBikes raises $2.7 million to support NVEP Foundation

Randgold Resources Limited ("Randgold") had 93.7 million shares in issue as at 30 June 2016.

Downloads

Summarised financial information

Quarterly Report 30 June 2016

4 August 2016

Summarised Financial Information

Comments

Quarterly Report 30 June 2016

4 August 2016

Comments

Gold sales for the quarter of $354.4 million increased by 2% from $345.8 million in the previous quarter.  Group gold production for the quarter of 281 494oz was 4% below the previous quarter due to a decrease in production at Tongon and Kibali.  At the same time, the average gold price received of $1 264/oz increased by 6% quarter on quarter (2016 Q1: $1 187/oz), which offset the drop in production.  Gold sales were in line with the corresponding quarter of 2015, reflecting the higher average gold price received and lower gold production.

Total cash costs for the quarter of $203.8 million were up 8% from the previous quarter primarily due to challenges at Kibali associated with variable ore feeds, as well as at the Loulo-Gounkoto complex with higher underground costs.  Total cash costs for the quarter were in line with the corresponding quarter of 2015.

Total cash cost per ounce of $727/oz increased by 12% quarter on quarter, reflecting the lower production during the quarter as well as increased costs.  This was primarily the result of the lower grade and recovery achieved at Kibali, as well as lower throughput at Tongon following extended mill downtime relating to a damaged journal.  Compared to the corresponding quarter of 2015, total cash cost per ounce increased by 6%, driven by decreased production, most notably at Kibali and Tongon, as a result of lower grade and recovery.

Profit from mining decreased by 4% to $150.6 million from the previous quarter’s $156.8 million, and was in line with the corresponding quarter of 2015, largely as a result of the increase in total cash costs, especially at Kibali, partially offset by the increase in the average gold price received.

Exploration and corporate expenditure of $13.0 million increased by 46% quarter on quarter, principally due to increased exploration expenditure incurred during the quarter, in line with the plan.  Exploration and corporate costs were in line with the same quarter of the previous year.

Depreciation and amortisation of $35.9 million decreased by 5% from the previous quarter and by 16% from the corresponding 2015 quarter, primarily due to the decrease in throughput at Tongon.

Other income in the quarter of $2.3 million increased from $1.3 million in the previous quarter and down from $3.8 million in the corresponding period of the prior year.  The increase quarter on quarter is the result of net operational foreign exchange gains incurred during the quarter, compared to net exchange losses incurred in the prior quarter and lower foreign exchange gains incurred in the current quarter compared to the 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 decreased by 28% to $6.1 million from the previous quarter’s $8.5 million.  The decrease was the result of a weaker operational quarter from both Morila and Kibali, as described above.  Morila’s share of equity accounted joint venture profits decreased from a profit of $1.1 million in Q1 2016 to a loss of $0.7 million in Q2 2016.  Kibali’s share of equity accounted joint venture profits decreased from $7.5 million in Q1 2016 to $6.7 million in the current quarter.  The share of profits from the Kibali joint ventures are stated after a deferred tax credit of $3.7 million (attributable) for the quarter.  Kibali’s equity accounted joint venture also includes depreciation on a tonnes milled basis which was in line with the prior quarter.  Compared to the corresponding quarter of the previous year, profit from joint ventures was down 82% due to lower gold sales and profits from both Morila and Kibali.

Income tax expense of $21.6 million was in line with the prior quarter.  The income tax expense increased by 69% from the corresponding quarter of the prior year, as a result of the increase in profits at Loulo and Gounkoto.

Profit for the quarter was down 8% from the previous quarter and in line with the corresponding quarter of 2015, reflecting the decrease in profit from mining, as well as increased exploration expenditure during the quarter.  Basic earnings per share decreased by 10% to $0.52 quarter on quarter (Q1 2016: $0.58), reflecting the lower profits.  Compared to Q2 2015, basic earnings per share decreased by 10%, also reflecting the lower profits.

Net cash generated from operations for the quarter of $101.5 million increased by 6% from the previous quarter and by 42% from the corresponding quarter in 2015, primarily reflecting decreases in operating working capital.

Quarterly Report 30 June 2016

4 August 2016

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