| Wed 13 Nov 2002, 16:27 | | Randgold Resources Limited - Report For The Quarte |
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Randgold Resources Limited - Report For The Quarter Ended 30 September 2002
Randgold Resources Limited
Incorporated in Jersey, Channel Islands
Reg. No. 62686
LSE Trading Symbol: RRS
Nasdaq Trading Symbol: RRUS
REPORT FOR THE QUARTER ENDED 30 SEPTEMBER 2002
* Record profit and production levels achieved
- Net profit up 472% to US$30.5 million
- Operating profit from mining up 242% to
US$42.3 million
- Attributable production up 185% to 171 368
ounces
* Nasdaq listing enhances liquidity, expands
shareholder base
* Syama hedge book of 148 500 ounces closed
* Substantial cash resource developing, new
opportunities pursued
Randgold Resources Limited has 27.6 million shares in issue as at 30 September
2002
CONSOLIDATED INCOME STATEMENT
Unaudited Nine Nine
Quarter quarter quarter months months
Ended ended ended ended ended
30 Sept 30 June 30 Sept 30 Sept 30 Sept
US$000 2002 2002 2001 2002 2001
Gold sales revenue 50 487 19 344 19 840 87 254 68 201
Cost of sales
Production costs 5 353 6 727 10 028 18 338 38 079
Transport and
refinery costs 201 94 258 403 482
Transfer to deferred
stripping costs (914) (1 126) (321) (3 401) (562)
Cash operating
costs 4 640 5 695 9 965 15 340 37 999
Royalties 3 571 1 271 1 385 6 052 4 584
Total cash costs 8 211 6 966 11 350 21 392 42 583
Operating profit
from mining
activity 42 276 12 378 8 490 65 862 25 618
Depreciation and
Amortisation 2 630 1 854 1 386 6 432 4 196
Exploration and
corporate
expenditure 5 503 3 726 1 837 11 330 6 694
Profit from
Operations 34 143 6 798 5 267 48 100 14 728
Interest received 49 40 630 124 2 197
Interest expense (869) (1 105) - (2 942) (3 320)
Profit/(loss) on
financial
instruments 493 (55) 1 736 (693) 7 668
Other income and
(expenses) (3 357) (417) (1 870) (5 381) (7 890)
Profit on ordinary
activities before
taxes and minority
interests 30 459 5 261 5 763 39 208 13 383
Income tax - - (12) - (115)
Minority
shareholders`
interest 23 54 (261) 98 643
Net profit 30 482 5 315 5 490 39 306 13 911
Basic earnings
per share (US$) 1.62 0.44
Average shares in
issue 24 281 463
Average shares in
issue 31 897 185
CONSOLIDATED BALANCE SHEET
Unaudited Audited
At At
30 Sept 31 Dec
US$000 2002 2001
Assets
Cash and equivalents* 60 838 11 157
Receivables 10 027 16 558
Inventories 11 188 9 743
Total current assets 82 053 37 458
Property, plant and equipment
Cost 167 314 163 076
Accumulated depreciation (89 773) (83 339)
Net property, plant and equipment 77 541 79 737
Other long-term assets 5 760 2 359
Total assets 165 354 119 554
Bank overdraft 1 407 1 708
Accounts payable and accrued
liabilities 34 136 22 075
Total current liabilities 35 543 23 783
Provision for environmental
Rehabilitation 4 556 4 340
Liabilities on financial instruments 6 193 2 452
Long-term loans 23 393 57 147
Loans from outside shareholders in
Subsidiaries 1 445 1 335
Total long-term liabilities 35 587 65 274
Total liabilities 71 130 89 057
Shareholders` equity 94 224 30 497
Total liabilities and shareholders`
Equity 165 354 119 554
*Note: Included in cash and cash equivalents is an attributable amount of US$4.5
million relating to the N M Rothschild & Sons Limited debt service reserve
account. This amount is held in escrow for partial repayment of the Morila
project loan.
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited
9 months 9 months
ended ended
30 Sept 30 Sept
US$000 2002 2001
Net cash generated from operations 44 768 31 999
Net cash (utilised)/generated by
investment activities (4 236) (11 813)
Net cash generated/(utilised)
by financing activities 9 450 (70 564)
Net increase/(decrease) in cash
and equivalents 49 982 (50 378)
Cash and cash equivalents at
beginning of period 9 449 61 638
Cash and cash equivalents at end
of period net of overdraft 59 431 11 260
The September 2001 comparative for financing activities includes the effect of
the share buyback, where the Company raised US$35 million and returned US$81.3
million to shareholders. The September 2002 financing figure comprises the net
US$29 million raised on the Nasdaq listing less the repayment of long-term
loans.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Number Accumu-
of Share Share Other lated Total
ordinary capital premium reserves losses equity
shares US$000 US$000 US$000 US$000 US$000
Balance - 31 Dec 2000
33 076 629 3 307 240 742 - (150 108) 93 941
Prior year adjustment 2 388 515 2 903
Restated balance - 1 Jan 2001
33 076 629 3 307 240 742 2 388 (149 953) 96 844
Net profit Jan - Sept 2001 13 911 13 911
Movement on financial
instruments (4 133) (4 133)
Share options exercised
997 404 100 1 639 1 739
Share buyback and related expenses
(11 612 403) (1 161) (80 551) (81 712)
Balance - 30 Sept 2001
22 461 630 2 246 161 830 (1 745) (135 682) 26 649
Net profit Oct - Dec 2001 3 848 3 848
Balance - 31 Dec 2001
22 461 630 2 246 161 830 (1 745) (131 834) 30 497
Net profit Jan - Jun 2002 8 824 8 824
Movement on financial instruments
(4 728) (4 728)
Share options exercised
136 194 12 353 365
Balance - 30 Jun 2002
22 597 824 2 258 162 183 (6 473) (123 010) 34 958
Net profit July - Sept 2002 30 482 30 482
Movement on financial instruments (117) (117)
Nasdaq listing 11 July 2002 and related expenses
5 000 000 500 28 225 28 725
Share options exercised
50 916 5 171 176
Balance - 30 Sept 2002
27 648 740 2 763 190 579 (6 590) (92 528) 94 224
COMMENTS
As anticipated in our June quarter announcement, higher grades from the northern
pit at Morila had a substantial positive impact on the Company`s results for the
quarter under review.
The Company made an operating profit of US$42.3 million for the quarter ended 30
September 2002, compared with US$12.4 million for the previous quarter and
US$8.5 million for the corresponding period in 2001. For the nine months ended
30 September 2002, profits were US$65.9 million compared to US$25.6 million for
the comparative period in 2001, which improvement also reflects the cessation
of the operation at Syama at the end of 2001. The current quarter`s net profit
of US$30.5 million is substantially better than the US$5.3 million reported for
the previous quarter, mainly due to higher gold sales revenues and lower
production costs, partially offset by increased royalties, exploration and
corporate expenditure and other expenses.
The main balance sheet movements for the nine months are an increase in cash,
which reflects the balance of the proceeds from the Nasdaq listing on the 11
July 2002, net of the listing costs and long-term loan repayments, as well as
the higher attributable earnings from Morila. The main movement in receivables
reflects the collection of the proceeds from the sale of assets at Syama in
2001. The increase in other long-term assets is attributable to the increase in
deferred stripping associated with the Morila pit. Accounts payable and accrued
liabilities included the entire Randgold Resources Limited syndicated loan, of
which US$16 million was outstanding as at 30 September 2002. This was retired
in early November 2002 as part of a restructuring of the corporate facility.
The Company has now replaced the facility with an undrawn
US$20 million revolving facility with the same consortium of banks led by N M
Rothschild & Sons Limited. Long-term loans now largely comprise the
attributable portion of the Morila project loan and Morila finance leases. The
increase in deferred liabilities on financial instruments is the result of the
movement on the mark-to-market value of the hedge book. Shareholders equity was
positively impacted by the proceeds from the Nasdaq listing plus the net profits
for the period.
The Company received its fourth distribution from Morila, amounting to US$5.4
million, in July 2002. The fifth dividend distribution of US$42 million was
received at the end of October 2002.
ACCOUNTING POLICIES
The abridged financial statements in this report have been prepared in
accordance with the Group`s accounting policies, which are in terms of
International Accounting Standards and except for as noted below are consistent
with the prior period.
As at 1 January 2001 the Group adopted International Accounting Standard 39
("IAS 39"). The effect of the adoption has been disclosed in the consolidated
statement of equity.
The consolidated financial information includes the financial statements of the
Company, its subsidiaries and the Morila joint venture.
Joint ventures are those investments in which the Group has joint control and
are accounted for under the proportional consolidated method and under this
method, the proportion of assets, liabilities, income and expenses and cashflows
of each joint venture attributable to the Group are incorporated in the
consolidated financial statements under appropriate headings. Intercompany
accounts and transactions are eliminated on consolidation.
FINANCIAL INSTRUMENTS
It is Randgold Resources` policy to hedge in times of heavy capital expenditure
and debt. Now that Syama is effectively closed, the Syama hedge book is
superfluous.
The balance of the Syama hedge position comprising sold call options of 148 500
ounces at US$353/oz was therefore closed out during the quarter at a cost of
US$1.8 million. The amount is payable in 2004 in line with the original
contract dates.
The remaining financial instruments at 30 September 2002 all relate to Morila.
Randgold Resources Limited`s attributable share is as follows :
* 129 336 ounces sold forward at a fixed price of US$275/oz over the period
October 2002 to December 2004;
* 45 786 ounces of purchased call options for the same period at prices between
US$340/oz and US$360/oz; and
* 6 000 ounces of put options bought at US$275/oz and 6 000 ounces of call
options sold at US$310/oz for the period October to December 2002.
The percentage of forecast production which is hedged is less than 20% for the
next 2 years. After 2004 all sales will be fully exposed to the spot gold
price.
OPERATION MORILA
Morila produced record results this quarter as extremely high-grade ore was
accessed from the northern pit. (The results of infill drilling in this area
had been reported previously in the first quarter and it was noted last quarter
that there would be a positive impact on planned production and grades).
A total of 428 421 ounces was produced at a cash operating cost of US$28/oz and
a total cash cost of US$49/oz. Head grade for the quarter was 27.7g/t (*). The
milling rate was decreased substantially in order to improve recoveries through
finer grinding and increased residue times. Due to the extremely high head
grades, higher residues than normal were produced and these have been stored in
an isolated compartment on the tailings facility for later retreatment.
Year-to-date the mine has produced 727 543 ounces at a total cash cost of
US$72/oz and has already exceeded budgeted production and results for the full
year. Further analysis of the orebody model indicates the potential for a
continuation of the high-grade zone in the northern pit through to the earlier
mined high grades in the southern pit.
The uprising in the Cte d`Ivoire has had little or no impact on the operation
as alternate supply routes are functioning.
MORILA RESULTS
Unaudited Nine Nine
Quarter quarter quarter months months
Ended ended ended ended ended
30 Sept 30 June 30 Sept 30 Sept 30 Sept
US$000 2002 2002 2001 2002 2001
Mining
Tons mined (000) 5 548 6 557 5 273 20 200 15 359
Ore tons mined
(000) 849 865 839 2 689 2 611
Milling
Tons processed
(000) 546 788 754 2 067 2 080
Ore grade milled
(g/t) (*) 27.7 6.4 7.2 11.9 7.8
Recovery (%) (*) 88.1 91.4 91.8 90.7 92.5
Ounces produced 428 421 150 126 163 278 727 543 487 461
Average price
received
(US$/ounce) 310 304 278 308 272
Cash operating cost
(US$/ounce) 28 87 85 51 79
Total cash costs
(US$/ounce) 49 108 105 72 98
Cash profit
(US$000) 105 690 30 945 28 013 164 655 84 322
Attributable (40%)
Ounces produced 171 368 60 050 65 311 291 017 194 984
Cash profit
(US$000) 42 276 12 378 11 205 65 862 33 729
(*) Ore grade milled and recovery percentage for the quarter ended 30 September
2002 have been recalculated based on the `recovery plus residue` method due to
the extremely high and variable head grades fed to the plant this quarter.
DISCONTINUED OPERATIONS
While rehabilitation, monitoring and maintenance activities continued at Syama,
the Company is still seeking parties interested in acquiring its share of the
operation. A tender process being conducted through Prime Corporate Finance of
Australia is under way and will be concluded in the December quarter. Should
this marketing effort fail to achieve an acceptable result, phased disposal of
the plant and infrastructure will be considered.
Included in other income and expenses for the current quarter is an increase to
the provision for the settlement of the Rolls-Royce Power Venture dispute of
US$1.1 million, based on advanced discussions between the parties.
Randgold Resources purchased the IFC`s full 5% share of Somisy in the quarter
for a nominal amount.
SYAMA INCOME STATEMENT
Unaudited Nine Nine
Quarter quarter quarter months months
Ended ended ended ended ended
30 Sept 30 June 30 Sept 30 Sept 30 Sept
US$000 2002 2002 2001 2002 2001
Gold sales revenue - - 1 670 - 15 229
Cost of sales
Production costs - - 4 307 - 22 332
Transport and
refinery
costs - - 30 - 132
Cash operating costs - - 4 337 - 22 464
Royalties - - 135 - 942
Total cash costs - - 4 472 - 23 406
Depreciation and
amortisation - - - - -
(Loss) from
operations - - (2 802) - (8 177)
Interest expense - - 385 - (1 009)
Profit/(loss) on
financial
instruments 363 (55) 1 736 (722) 7 969
Other income and
(expenses) (2 012) (577) (1 766) (3 341) (8 357)
Loss on ordinary
activities
before taxes (1 649) (632) (2 447) (4 063) (9 574)
Income tax - - (12) - (115)
Net loss (1 649) (632) (2 459) (4 063) (9 689)
PROJECTS AND EVALUATION
Tongon Prefeasibility
The results of the 16-borehole diamond drill programme carried out in the last
quarter in the southern zone at Tongon have been incorporated into an updated
resource model. This re-modelling has led to a better understanding of the
geometry of the orebody, highlighting further opportunities to fill in the gaps
and facilitating refinement of the layout of the next drilling programme.
The northern zone has also been re-assessed. Further drilling on both the
southern and northern zones will continue to upgrade confidence in the orebody
as well as exploring its open ends. The drilling programmes scheduled to start
in November have, however, been postponed due to the current conflict in the
Cte d`Ivoire. The Company is monitoring the situation closely with a view to
resuming drilling and other on-site activities when the situation has settled.
In the meantime, further off-site testwork will be progressed in order to
advance the Feasibility Type 3 Study.
Loulo Project - Updated Feasibility Study
Further updating of the feasibility study has been advanced through the
finalisation of the optimum economic pit shells, the compilation of a scoping
study on the underground extensions at Loulo 0 and further metallurgical
testwork which confirms the response of the ore to gravity treatment. Further
environmental studies are also being completed.
While detailed internal review of the updated feasibility study has confirmed
the projects potential to meet the Company`s hurdle rates, the sensitivity of
the project to certain factors has been highlighted. In particular these are:
ore mining rates, metallurgical recoveries, power, infrastructure and logistical
costs. The project team has recommended additional drilling to define the
boundaries of the payshoots and potential for expanding the underground resource
as well as allowing for further metallurgical testwork to better define
variability in recoveries.
Detailed scheduling and an independent audit of the mining rate for the life of
the planned pits are in progress. Based on the results from the Loulo
underground study a scoping study to test the potential of the Yalea underground
resource is also planned. Discussions with the government are proceeding to
finalise the fiscal regime under which the project will operate as well as the
capital structure of the operating company.
EXPLORATION ACTIVITIES
Exploration activities during the quarter focused on integrating and
interpreting last season`s exploration data, developing new geological models
and outlining programmes and budgets for the current field campaign.
On the Morila mine lease further geological modelling, based on latest drilling
and in-pit mapping results, highlights that the orebody is potentially still
open in the west, south west and east. The exploration programme will focus on
drilling these orebody extensions.
Shallow drilling programmes are also planned to cover targets to the northwest
at Bla and Donba and deeper drilling to test the potential for buried
mineralisation east of the Morila pit and at San Extension. In the Morila
region, the Company has recently completed the reconnaissance phase of
exploration and consequently refined its exploration model. Twenty-one targets
on nine permits (3 003km2) have been defined and follow up programmes will be
effected during the quarter in order to prioritise areas for drill testing.
Geological modelling on the Loulo project is being undertaken along the Yalea
structure. Outside the Yalea deposit, only limited shallow drilling has been
completed along a 15km mineralised strike area. The Company will recommence
drilling programmes at Loulo 0 and Loulo 2 during the next quarter. At the
Loulo 2 target, steeply dipping brecciated bodies have returned grades of +10
g/t over widths of 10 - 14 metres. At Loulo 0, infill diamond drilling will be
undertaken to confirm payshoot boundaries and reduce spacing in sparsely drilled
areas with the objective of ensuring that the current pits are optimally
designed. Finally, a review of underground potential of the Yalea and Loulo
orebodies has highlighted high grade (+ 5g/t) payshoots which will be drill-
tested this field season.
Following last quarter`s announcement of permit consolidation in the Sabodala
belt in Senegal, the Company has undertaken intitial field investigations and
data processing. The permit portfolio hosts four follow-up targets, nine plus
one kilometre soil anomalies and several greenfield target areas. The follow-up
targets include a prospect with a 2 x 3 kilometre plus 0.5 g/t soil anomaly and
another with multiple mineralised zones of between 2 - 52 metres grading 1 -
5/gt over an east-west trending zone of one kilometre. Focus during the current
season will be on progressing our understanding of the prospectivity of the
permits.
In the Cte d`Ivoire, exploration work undertaken during the last quarter has
identified gold targets around the Tongon project which require follow-up
programmes. On the Boundiali permit at the Tiasso target, trench intersections
and soil anomalies are associated with brecciation and quartz vein stockworks
over a 1km2 and it is planned to further define the extent of the target area
using RAB drilling. Physical exploration activities are pending resolution of
the current conflict.
CORPORATE AND NEW BUSINESS
The strategic objective of improving the tradeability and liquidity of the
Company`s stock through a secondary listing on Nasdaq is being achieved, as
evidenced by the subsequent increase in the share price.
While the exceptional high grades in the northern pit at Morila are not likely
to be sustained at the past quarter`s level, they will continue to impact
positively on the Company`s results in the short to medium term. This, combined
with the new revolving facility, will create a substantial cash source for the
Company.
The Company continues actively to develop organic, and pursue corporate, growth
opportunities.
Prospects under global review at present include grassroots as well as
partnership opportunities. Within Africa, the focus is being widened to
encompass the central and eastern regions of the continent.
On behalf of Randgold Resources Limited
R A R Kebble D M Bristow
Chairman Chief Executive
13 November 2002
DISCLAIMER: Statements made in this document with respect to Randgold
Resources` current plans, estimates, strategies and beliefs and other statements
that are not historical facts are forward-looking statements about the future
performance of Randgold Resources. These statements are based on management`s
assumptions and beliefs in light of the information currently available to it.
Randgold Resources cautions you that a number of important risks and
uncertainties could cause actual results to differ materially from those
discussed in the forward-looking statements, and therefore you should not place
undue reliance on them. The potential risks and uncertainties include, among
others, risks associated with: fluctuations in the market price of gold, gold
production at Morila, estimates of reserves and mine life and liabilities
arising from the closure of the Syama. Randgold Resources assumes no obligation
to update information in this release.
Registered office: La Motte Chambers, La Motte Street, St Helier, Jersey JEI
IBJ, Channel Islands Web-site: www.randgoldresources.com
Registrars: Computershare Investor Services (Channel Islands) Limited, P.O. Box
83, Ordnance House, 31 Pier Road, St Helier, Jersey JE4 8PW, Channel Islands
Transfer agents: Computershare Services Plc, P.O. Box 663, 7th Floor, Jupiter
House, Triton Court, 14 Finsbury Square, London EC2A 1BR
Investor & media relations: For further information contact Kathy du Plessis on
Telephone +27(11) 728-4701, Fax +27(11) 728-2547, e-mail:
randgoldresources@dpapr.com
Keep updated on the latest Company information
For full, up to date and historical information on Randgold Resources Limited,
visit our website at www.randgoldresources.com. If you wish to receive an
investor pack on the Company or wish to be placed on the Company`s electronic or
postal distribution list for news announcements and financial reports, please
contact:
Kathy du Plessis
Randgold Resources Investor & Media Relations
E-mail: randgoldresources@dpapr.com
Telephone: +27 11 728-4701
Fax: +27 11 728-2547
Postal Address: La Motte Chambers, La Motte Street, St Helier Jersey JE1 1BJ,
Channel Islands
For further information call:
(CEO) Mark Bristow +44 779 775 2288
(CFO) Roger Williams +44 779 771 9660
RECORD QUARTER AS PROFITS AND PRODUCTION SOAR
RandGold Resources Limited
Press Release
London, 13 November 2002 - Randgold Resources, the London and Nasdaq listed
mining and exploration company, today reported a 472% surge in net profit for
the September quarter and said it would use its growing cash resources to pursue
new growth opportunities.
With very high grades kicking in at Morila as expected, Randgold Resources`
share of the production from its 40% owned mine in Mali climbed by 185% to a
record level of 171 368 ounces for the quarter. By end-September, Morila had
already exceeded its production and earnings targets for the full year. Cash
operating cost for the quarter was US$28/oz and total cash cost was US$49/oz,
comfortably maintaining Morila`s position as one of the highest-margin gold
producers in the world.
Boosted by Morila`s strong performance, the company`s net profit of US$30.5
million was up almost sixfold from the previous quarter, in spite of increased
exploration and other expenditure, while operating profit grew by 242% to
US$42.3 million.
Randgold Resources` two feasibility-stage projects - Loulo in Mali and Tongon in
Cte d`Ivoire - were both advanced. A detailed review of the updated
feasibility study on Loulo has confirmed the projects potential to meet the
company`s hurdle rates and identified the risk areas that require further
evaluation. The Tongon resource has been remodelled to refine the lay-out of the
next drilling programme, scheduled to start in November, but this has been put
on hold pending the resolution of the current conflict in Cte d`Ivoire.
"Both these projects appear to be commercially viable but we`re under no
pressure to fast-track their development," said chief executive Dr Mark Bristow.
"We have the luxury of time and we`re going to use it fully to ensure that
before we commit ourselves to building a new mine, we`re completely confident
that all the associated risks have been identified and evaluated as manageable."
Exploration activities during the quarter focused on interpreting and
integrating the previous season`s data, developing new geological models and
outlining programmes and budgets for the current field campaign.
On the corporate front, chairman Roger Kebble said the strategic objective of
improving the tradeability and liquidity of the company`s stock was being
achieved through its recent Nasdaq listing, which had increased its shareholder
base and created an efficient American trading platform. The share price has
increased significantly since the July listing. He also noted that with equity
now standing at US$94.2 million, the Randgold Resources team had already
replaced the value returned to shareholders through a US$81.3 million share
buyback last year.
Looking ahead, Bristow said while the high grades at Morila were not likely to
be sustained at the past quarter`s extremely high levels, they would continue to
have a significant positive impact on the company`s results in the short to
medium term. He explained that further analysis of the orebody model indicated
the potential for continuity of the higher grade zone. In combination with an
undrawn revolving facility of US$20 million recently provided by a Rothschild-
led bank consortium, the strong income stream from Morila was creating a
substantial cash resource for the company.
"We`re a return-driven business and we`re actively pursuing further growth
opportunities, both organic and corporate. Thus far we`ve largely concentrated
on West Africa but we`ve now begun to widen our focus and we`re currently
looking at the central and eastern regions of the continent as well as further
afield," he said.
Issued on behalf of Randgold Resources Limited by du Plessis Associates. dPA
contact Kathy du Plessis on Tel: 27(11) 728 4701, mobile: (0)83 266 5847 or e-
mail: randgoldresources@dpapr.com
DISCLAIMER:
Statements made in this release with respect to Randgold Resources` current
plans, estimates, strategies and beliefs and other statements that are not
historical facts are forward-looking statements about the future performance of
Randgold Resources. These statements are based on management`s assumptions and
beliefs in light of the information currently available to it. Randgold
Resources cautions you that a number of important risks and uncertainties could
cause actual results to differ materially from those discussed in the forward-
looking statements, and therefore you should not place undue reliance on them.
The potential risks and uncertainties include, among others, risks associated
with: fluctuations in the market price of gold, gold production at Morila,
estimates of reserves and mine life and liabilities arising from the closure of
Syama. Randgold Resources assumes no obligation to update information in this
release.
Date: 13/11/2002 03:09:28 PM Produced by the JSE SENS Department
