Quarterly Report 30 September 2016

3 November 2016

Overview

RANDGOLD SETS SIGHTS ON THREE NEW PROJECTS IN NEXT FIVE YEARS

London, 3 November 2016 - A strong third quarter performance kept Randgold Resources on track to meet its 2016 guidance.  Forecast cash flows generated from operations are expected to support funding for the three new projects the company has set as a goal to establish over the next five years as well as increasing dividends.Results for the quarter, published today, show profit of $77.3 million, up 32% on the previous quarter and 58% on Q3 2015, while earnings per share increased by 35% quarter on quarter and 17% on 2015.  Production of 301 163 ounces was up 7% quarter on quarter and in line with the previous year, and total cash cost per ounce of $663 was 9% lower quarter on quarter and 5% down on the prior year’s corresponding quarter.  With net cash generated by the operations increasing by 18% quarter on quarter, cash grew to $361.1 million.

Chief executive Mark Bristow said Kibali and Tongon had bounced back well from the technical issues that had plagued them in the first half of the year while the flagship Loulo-Gounkoto complex continued on its steady course.  He said it was worth noting that despite the high level of activity, there had been zero lost-time injuries across the group during the quarter.

“Tongon got its mills back up at the end of June and Kibali ramped up production, boosting group throughput by 13%.  Unit costs were also better, with decreased processing costs supported by lower strip ratios at Tongon and Kibali.  The higher gold price also contributed to the significant increase in profit,” Bristow said.

“If the gold price stays above $1 250 per ounce, and we deliver on our forecasts, we should get close to a $500 million net cash position at the year end.”

Turning to exploration, Bristow described the company’s strategy as “Three in Five” – the defining or securing of three new projects in the next five years, be they from the company’s exploration portfolio or from new business initiatives.  Current priorities were to fast-track the development of the Boundiali structures with the aim of making a world-class discovery; to establish whether Massawa or Gbongogo could replace Tongon; to define mineable satellites around Tongon while replacing depletion at the other mines; and to continue driving generative programmes to feed the company’s resource portfolio.

The Gounkoto Super Pit feasibility study is nearing completion and if, as expected, the project goes ahead, it will significantly enhance the Loulo-Gounkoto complex’s production and cost profiles.  In the meantime, new targets at Loulo’s Yalea and Gara operations are being investigated in a programme which has already delivered 600 000 additional resource ounces at Gara.

“Loulo-Gounkoto and Kibali are both strongly placed to produce in excess of 600 000 ounces per year for the next 10 years, and Tongon’s life of mine continues for at least another five years.  In the meantime, the prospects for our next mine or mines are taking increasingly tangible shape.  Considering that we have a business that is designed to be profitable at a gold price of $1 000 per ounce, I believe that Randgold still stands alone in terms of its ability to create and deliver real value,” Bristow said.

Quarterly Report 30 September 2016

3 November 2016

Key Performance Indicators
  • Profits up 32% quarter on quarter and 58% on corresponding quarter of prior year
  • Earnings per share up 35% quarter on quarter and 56% on corresponding quarter of prior year
  • Production up 7% quarter on quarter and in line with corresponding quarter of prior year
  • Total cash cost/oz down 9% quarter on quarter and 5% on corresponding quarter of prior year
  • Net cash generated from operations increases 18% quarter on quarter and cash up 32% to $361.1 million
  • Loulo-Gounkoto complex remains on track to beat 2016 guidance
  • Morila transitions to full tailings retreatment
  • Tongon gets back on track with gold production up 41% and costs down 21% quarter on quarter
  • Kibali delivers improved operational performance with gold production up 23% and costs down 9% quarter on quarter
  • Zero lost time injuries in Q3 improves group LTIFR to 0.36 for the year
  • Ongoing work points to improved 10 year production profile for Loulo-Gounkoto complex
  • Exploration teams back in the field with exciting portfolio of targets

Randgold Resources Limited (‘Randgold’) had 93.8 million shares in issue as at 30 September 2016.

Quarterly Report 30 September 2016

3 November 2016

Summarised Financial Information

Quarterly Report 30 September 2016

3 November 2016

Comments

Gold sales for the quarter of $392.8 million increased by 11% from $354.4 million in the previous quarter.  Group gold production for the quarter of 301 163oz was up 7% from the previous quarter due to increases in production at Tongon and Kibali.  The average gold price received of $1 333/oz increased by 5% quarter on quarter (2016 Q2: $1 264/oz), which aided the growth in gold sales.  Gold sales increased by 15% from the corresponding quarter of 2015, reflecting the higher average gold price received.

Total cash costs for the quarter of $195.4 million were down 4% from the previous quarter and down 8% from the corresponding quarter of 2015.  Costs were positively impacted by improved unit costs following better operating performances at Tongon and Kibali, offset by increased throughput and production.  Costs were further reduced by the stripping adjustment at Gounkoto ($13.5 million) during the quarter in respect of the MZ3 zone of the orebody in line with the group's accounting policies in respect of stripping.

Total cash cost per ounce of $663/oz decreased by 9% quarter on quarter, reflecting the higher production during the quarter as well as decreased costs.  This was primarily the result of the higher throughput and recovery achieved at Kibali and Tongon following the improvement in ore feed, processing controls and run time at Kibali, as well as increased mill availability at Tongon following the repairs undertaken in Q2. 

Profit from mining was significantly up (31%) to $197.4 million from the previous quarter, and 54% up on the corresponding quarter of 2015, largely as a result of the decrease in total cash costs, as well as the increase in the average gold price received.

Exploration and corporate expenditure of $11.2 million decreased by 14% quarter on quarter, principally due to a reduction in staff and general expenditure during the quarter.  Exploration and corporate costs increased by 15% compared to the same quarter of the previous year, as a result of the increase in exploration activity.

Depreciation and amortisation of $40.1 million increased by 12% from the previous quarter, primarily due to the increase in throughput at Tongon.  Depreciation and amortisation were in line with the corresponding quarter of 2015.

Other income in the quarter of $1.2 million decreased from $2.3 million in the previous quarter and was down from $6.7 million in the corresponding period of the prior year.  The decrease quarter on quarter is the result of net operational foreign exchange losses incurred during the quarter, compared to net exchange gains incurred in the prior quarter, as well as 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 of $6.0 million was in line with the previous quarter’s $6.1 million.  Morila’s share of equity accounted joint venture profits decreased from a loss of $0.7 million in Q2 2016 to a loss of $3.5 million in Q3 2016.  Kibali’s share of equity accounted joint venture profits increased from $6.7 million in Q2 2016 to $9.2 million in the current quarter.  The share of profits from the Kibali joint venture is stated after foreign exchange losses of $4.7 million (attributable) following sustained depreciation in the Congolese Franc compared to the US dollar and the conversion of TVA balances owed to Kibali.  The results from the Kibali joint venture also include depreciation calculated on a tonnes milled basis which increased quarter on quarter.  Compared to the corresponding quarter of the previous year, profit from joint ventures was down 55% due to lower gold sales and profits at Morila, and lower production and higher costs at Kibali.

Income tax expense of $32.2 million increased by 49% from the prior quarter and by 274% from the corresponding quarter in 2015, mainly due to increased profits at the Loulo complex as well as at Tongon.  Tongon’s tax exoneration period expired in December 2015.

Profit for the quarter was up 32% from the previous quarter and up 58% from the corresponding quarter of 2015, reflecting the increase in profit from mining, partially offset by the increased tax expense during the quarter.  Basic earnings per share increased by 35% to $0.70 quarter on quarter (Q2 2016: $0.52), reflecting the higher profits and by 56% compared to Q3 2015.

Net cash generated from operations for the quarter of $119.3 million increased by 18% from the previous quarter and by 9% from the corresponding quarter in 2015, primarily reflecting the increase in profits from operations.

Overview

Quarterly Report 30 September 2016

3 November 2016

Overview

RANDGOLD SETS SIGHTS ON THREE NEW PROJECTS IN NEXT FIVE YEARS

London, 3 November 2016 - A strong third quarter performance kept Randgold Resources on track to meet its 2016 guidance.  Forecast cash flows generated from operations are expected to support funding for the three new projects the company has set as a goal to establish over the next five years as well as increasing dividends.Results for the quarter, published today, show profit of $77.3 million, up 32% on the previous quarter and 58% on Q3 2015, while earnings per share increased by 35% quarter on quarter and 17% on 2015.  Production of 301 163 ounces was up 7% quarter on quarter and in line with the previous year, and total cash cost per ounce of $663 was 9% lower quarter on quarter and 5% down on the prior year’s corresponding quarter.  With net cash generated by the operations increasing by 18% quarter on quarter, cash grew to $361.1 million.

Chief executive Mark Bristow said Kibali and Tongon had bounced back well from the technical issues that had plagued them in the first half of the year while the flagship Loulo-Gounkoto complex continued on its steady course.  He said it was worth noting that despite the high level of activity, there had been zero lost-time injuries across the group during the quarter.

“Tongon got its mills back up at the end of June and Kibali ramped up production, boosting group throughput by 13%.  Unit costs were also better, with decreased processing costs supported by lower strip ratios at Tongon and Kibali.  The higher gold price also contributed to the significant increase in profit,” Bristow said.

“If the gold price stays above $1 250 per ounce, and we deliver on our forecasts, we should get close to a $500 million net cash position at the year end.”

Turning to exploration, Bristow described the company’s strategy as “Three in Five” – the defining or securing of three new projects in the next five years, be they from the company’s exploration portfolio or from new business initiatives.  Current priorities were to fast-track the development of the Boundiali structures with the aim of making a world-class discovery; to establish whether Massawa or Gbongogo could replace Tongon; to define mineable satellites around Tongon while replacing depletion at the other mines; and to continue driving generative programmes to feed the company’s resource portfolio.

The Gounkoto Super Pit feasibility study is nearing completion and if, as expected, the project goes ahead, it will significantly enhance the Loulo-Gounkoto complex’s production and cost profiles.  In the meantime, new targets at Loulo’s Yalea and Gara operations are being investigated in a programme which has already delivered 600 000 additional resource ounces at Gara.

“Loulo-Gounkoto and Kibali are both strongly placed to produce in excess of 600 000 ounces per year for the next 10 years, and Tongon’s life of mine continues for at least another five years.  In the meantime, the prospects for our next mine or mines are taking increasingly tangible shape.  Considering that we have a business that is designed to be profitable at a gold price of $1 000 per ounce, I believe that Randgold still stands alone in terms of its ability to create and deliver real value,” Bristow said.

Key Performance Indicators

Quarterly Report 30 September 2016

3 November 2016

Key Performance Indicators
  • Profits up 32% quarter on quarter and 58% on corresponding quarter of prior year
  • Earnings per share up 35% quarter on quarter and 56% on corresponding quarter of prior year
  • Production up 7% quarter on quarter and in line with corresponding quarter of prior year
  • Total cash cost/oz down 9% quarter on quarter and 5% on corresponding quarter of prior year
  • Net cash generated from operations increases 18% quarter on quarter and cash up 32% to $361.1 million
  • Loulo-Gounkoto complex remains on track to beat 2016 guidance
  • Morila transitions to full tailings retreatment
  • Tongon gets back on track with gold production up 41% and costs down 21% quarter on quarter
  • Kibali delivers improved operational performance with gold production up 23% and costs down 9% quarter on quarter
  • Zero lost time injuries in Q3 improves group LTIFR to 0.36 for the year
  • Ongoing work points to improved 10 year production profile for Loulo-Gounkoto complex
  • Exploration teams back in the field with exciting portfolio of targets

Randgold Resources Limited (‘Randgold’) had 93.8 million shares in issue as at 30 September 2016.

Downloads

Summarised financial information

Quarterly Report 30 September 2016

3 November 2016

Summarised Financial Information

Comments

Quarterly Report 30 September 2016

3 November 2016

Comments

Gold sales for the quarter of $392.8 million increased by 11% from $354.4 million in the previous quarter.  Group gold production for the quarter of 301 163oz was up 7% from the previous quarter due to increases in production at Tongon and Kibali.  The average gold price received of $1 333/oz increased by 5% quarter on quarter (2016 Q2: $1 264/oz), which aided the growth in gold sales.  Gold sales increased by 15% from the corresponding quarter of 2015, reflecting the higher average gold price received.

Total cash costs for the quarter of $195.4 million were down 4% from the previous quarter and down 8% from the corresponding quarter of 2015.  Costs were positively impacted by improved unit costs following better operating performances at Tongon and Kibali, offset by increased throughput and production.  Costs were further reduced by the stripping adjustment at Gounkoto ($13.5 million) during the quarter in respect of the MZ3 zone of the orebody in line with the group's accounting policies in respect of stripping.

Total cash cost per ounce of $663/oz decreased by 9% quarter on quarter, reflecting the higher production during the quarter as well as decreased costs.  This was primarily the result of the higher throughput and recovery achieved at Kibali and Tongon following the improvement in ore feed, processing controls and run time at Kibali, as well as increased mill availability at Tongon following the repairs undertaken in Q2. 

Profit from mining was significantly up (31%) to $197.4 million from the previous quarter, and 54% up on the corresponding quarter of 2015, largely as a result of the decrease in total cash costs, as well as the increase in the average gold price received.

Exploration and corporate expenditure of $11.2 million decreased by 14% quarter on quarter, principally due to a reduction in staff and general expenditure during the quarter.  Exploration and corporate costs increased by 15% compared to the same quarter of the previous year, as a result of the increase in exploration activity.

Depreciation and amortisation of $40.1 million increased by 12% from the previous quarter, primarily due to the increase in throughput at Tongon.  Depreciation and amortisation were in line with the corresponding quarter of 2015.

Other income in the quarter of $1.2 million decreased from $2.3 million in the previous quarter and was down from $6.7 million in the corresponding period of the prior year.  The decrease quarter on quarter is the result of net operational foreign exchange losses incurred during the quarter, compared to net exchange gains incurred in the prior quarter, as well as 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 of $6.0 million was in line with the previous quarter’s $6.1 million.  Morila’s share of equity accounted joint venture profits decreased from a loss of $0.7 million in Q2 2016 to a loss of $3.5 million in Q3 2016.  Kibali’s share of equity accounted joint venture profits increased from $6.7 million in Q2 2016 to $9.2 million in the current quarter.  The share of profits from the Kibali joint venture is stated after foreign exchange losses of $4.7 million (attributable) following sustained depreciation in the Congolese Franc compared to the US dollar and the conversion of TVA balances owed to Kibali.  The results from the Kibali joint venture also include depreciation calculated on a tonnes milled basis which increased quarter on quarter.  Compared to the corresponding quarter of the previous year, profit from joint ventures was down 55% due to lower gold sales and profits at Morila, and lower production and higher costs at Kibali.

Income tax expense of $32.2 million increased by 49% from the prior quarter and by 274% from the corresponding quarter in 2015, mainly due to increased profits at the Loulo complex as well as at Tongon.  Tongon’s tax exoneration period expired in December 2015.

Profit for the quarter was up 32% from the previous quarter and up 58% from the corresponding quarter of 2015, reflecting the increase in profit from mining, partially offset by the increased tax expense during the quarter.  Basic earnings per share increased by 35% to $0.70 quarter on quarter (Q2 2016: $0.52), reflecting the higher profits and by 56% compared to Q3 2015.

Net cash generated from operations for the quarter of $119.3 million increased by 18% from the previous quarter and by 9% from the corresponding quarter in 2015, primarily reflecting the increase in profits from operations.

Quarterly Report 30 September 2016

3 November 2016

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