| Wed 14 May 2003, 15:47 | | Randgold Resources Limited - Report For The Quarte |
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(Registration number: 1992/005642/06)
("Randgold & Exploration")
JSE Code: RNG
ISIN: ZAE000008819
REPORT FOR THE QUARTER ENDED 31 MARCH 2003
- Net profit of US$17.1 million for the quarter further strengthens balance
sheet
- Strong operational performance provides platform for growth
- Attributable production of 95 368 ounces at a cash operating cost* of US$65/oz
and at a total cash cost* of US$88/oz
- Morila drilling of high grade axis and orebody extensions enhances definition
- Loulo updated opencast feasibility study presented to Malian government
- Drill testing of prioritised targets to commence in the Morila region
- Delineation drilling defines potential resource at Loulo 0 west
- Option to purchase Syama granted at US$75 000 per month
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Unaudited
quarter quarter quarter
ended ended ended
31 Mar 31 Mar 31 Dec
US$000 2003 2002 2002
Gold sales revenue 31 586 17 423 44 186
Cost of sales
Production costs 6 521 6 259 8 351
Transport and refinery
costs 115 108 185
Transfer to deferred
stripping cost (373) (1 361) (1 642)
Cash operating costs* 6 263 5 006 6 894
Royalties 2 207 1 210 3 133
Total cash costs* 8 470 6 216 10 027
Profit from mining
activity* 23 116 11 207 34 159
Depreciation and
amortisation 2 313 1 948 2 333
Exploration and corporate
expenditure 2 810 2 101 5 336
Profit from operations* 17 993 7 158 26 490
Interest received 71 35 101
Interest expense (542) (968) (744)
Profit/(loss) on financial
instruments (276) (1 131) 347
Other income and (expenses) (219) (1 606) 126
Profit on ordinary
activities before taxes
and minority interests 17 027 3 488 26 320
Income tax - - -
Minority shareholders"
interest 79 21 122
Net profit 17 106 3 509 26 442
Basic earnings per
share (US$) 0.61 0.16 0.96
Fully diluted earnings
per share (US$) 0.61 0.15 0.95
Average shares in
issue 27 821 049 22 507 028 27 643 073
* Refer to pro forma information provided below
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
at at at
31 Mar 31 Mar 31 Dec
US$000 2003 2002 2002
Assets
Cash and equivalents 80 803 10 620 59 631
Restricted cash** 4 533 4 474 4 526
Receivables 10 079 13 775 14 262
Inventories 11 809 10 460 11 601
Total current assets 107 224 39 329 90 020
Property, plant and equipment
Cost 169 818 165 092 168 540
Accumulated
depreciation (94 417) (85 287) (92 104)
Net property, plant and
equipment 75 401 79 805 76 436
Other long-term assets 7 775 3 721 7 402
Total assets 190 400 122 855 173 858
Bank overdraft 1 337 1 954 1 170
Accounts payable and
accrued liabilities 18 239 18 982 20 564
Total current liabilities 19 576 20 936 21 734
Provision for environmental
rehabilitation 5 044 4 412 4 972
Liabilities on financial
instruments 5 777 7 498 7 530
Long-term loans 18 890 58 009 19 307
Loans from outside
shareholders in
subsidiaries 1 251 1 522 1 330
Total long-term
liabilities 30 962 71 441 33 139
Total liabilities 50 538 92 377 54 873
Shareholders" equity 139 862 30 478 118 985
Total liabilities and
shareholders" equity 190 400 122 855 173 858
** Note: This is the amount relating to the N.M. Rothschild & Sons Limited debt
service reserve account. The amount is held in escrow for the partial repayment
of the Morila project loan.
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Audited
quarter quarter
ended ended
31 Mar 31 Dec
US$000 2003 2002
Net cash generated from operations 21 134 4 480
Net cash utilised in investing
activities (1 285) (2 016)
Net cash generated by/(utilised in)
financing activities
Ordinary shares issued 1 712 365
(Decrease)/increase in long-term
borrowings (556) 862
Increase in bank overdraft 167 246
Net increase in cash and cash
equivalents 21 172 3 937
Cash and cash equivalents at beginning
of period 59 631 6 683
Cash and cash equivalents at end
of period 80 803 10 620
CONSOLIDATED STATEMENT ON 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 2001
22 461 630 2 246 161 830 (1 745) (131 834) 30 497
Net profit - Mar 2002
- - - - 3 509 3 509
Movement on cash flow hedges
- - - (3 893) - (3 893)
Share options exercised
136 194 12 353 - - 365
Balance - 31 Mar 2002
22 597 824 2 258 162 183 (5 638) (128 325) 30 478
Balance - 31 Dec 2002
27 663 740 2 766 190 618 (8 293) (66 106) 118 985
Net profit - Mar 2003
- - - - 17 106 17 106
Movement on cash flow hedges
- - - 2 059 - 2 059
Share options exercised
471 926 47 1 665 - - 1 712
Balance - 31 Mar 2003
28 135 666 2 813 192 283 (6 234) (49 000) 139 862
PRO FORMA INFORMATION
The Company uses the following pro forma disclosures, as it believes that this
information is relevant to the mining industry.
Total cash costs per ounce are calculated by dividing total cash costs, as
determined using the Gold Institute Industry Standard, by gold ounces produced
for all periods presented.
Total cash costs as defined in the Gold Institute Industry Standard, includes
mine production, transport and refinery costs, general and administrative costs,
movement in production inventories and ore stockpile, transfers to and from
deferred stripping and royalties.
Cash operating costs are defined as total cash costs excluding royalties.
Total cash operating costs per ounce are calculated by dividing cash operating
costs by gold ounces produced for all periods presented.
Profit from mining activity is calculated by subtracting total cash costs from
gold sales revenue for all periods presented.
Profit from operations is calculated by subtracting depreciation and
amortisation charges and exploration and corporate expenditure from profit from
mining activity.
RECONCILIATION TO US GAAP
The interim condensed financial statements presented above have been prepared in
accordance with International Financial Reporting Standards (IFRS), which differ
in certain significant respects from Generally Accepted Accounting Principles in
the United States (US GAAP). The effect of applying US GAAP to net income and
shareholders" equity is set out below.
Quarter Quarter Quarter
ended ended ended
Reconciliation of Net 31 Mar 31 Mar 31 Dec
Income (U$000) 2003 2002 2002
Net income under IAS 17 106 3 509 26 442
Share option compensation
adjustment 195 (588) (5 991)
Provision for
rehabilitation - (40) (76)
Net income under US GAAP
before cumulative effect
of change in accounting
principle 17 301 2 881 20 375
Cumulative effect of
change in accounting
principle 214 - -
Net income under US GAAP 17 515 2 881 20 375
Movement in cash flow
hedges during the
period 2 059 (3 893) (1 703)
Comprehensive income/
(loss) Under US GAAP 19 574 (1 012) 18 672
Basic earnings per share
under US GAAP (US$) 0.62 0.13 0.74
Fully diluted earnings
per share under US GAAP
(US$) 0.62 0.12 0.73
Reconciliation of As at As at As at
Shareholders" Equity 31 Mar 31 Mar 31 Dec
(U$000) 2003 2002 2002
Shareholders" equity
under IAS 139 862 30 478 118 985
Provision for
rehabilitation - (178) (214)
Shareholders" equity
under US GAAP 139 862 30 300 118 771
Roll forward of shareholders"
equity under US GAAP
Balance as at
1 Jan 2003 118 771 30 359
Net income under
US GAAP 17 515 2 881
Movement on cash flow
hedges 2 059 (3 893)
Share options exercised 1 712 365
Share option compensation
adjustment (915) 588
Shareholders" equity
under US GAAP at
31 Mar 2003 139 862 30 300
ACCOUNTING POLICIES
The interim condensed financial statements in this report have been prepared in
accordance with the Group"s accounting policies, which are in terms of
International Financial Reporting Standards and are consistent with the prior
period.
The consolidated financial information includes the interim financial statements
of the Company, its subsidiaries and the Morila joint venture, which comply with
IAS 34.
Joint ventures are those investments in which the Group has joint control and
are accounted for under the proportional consolidation 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. Inter-company
accounts and transactions are eliminated on consolidation.
No segmental information has been provided as the source and nature of the
enterprises risks and returns are not governed by more than one segment due to
the closing down of Syama.
FINANCIAL INSTRUMENTS
The remaining financial instruments at 31 March 2003 are held by the Morila
company and relate to derivatives taken out as part of the project finance
arrangements. Randgold Resources" attributable share is as follows:
* 97 376 ounces sold forward at a fixed price of US$275/oz over the period
April 2003 to December 2004;
* 34 469 ounces of purchased call options for the same period at prices between
US$350/oz and US$360/oz.
At present prices, the percentage of production, which is hedged, is
approximately 19% for the next two calendar years. If the gold price is above
US$350/oz the percentage of hedged production falls to 13%. With a gold price
of US$360/oz, this reduces further to 12%. After 2004 all sales will be fully
exposed to the spot gold price. The facility is margin free.
COMMENTS
Net profit for the quarter was US$17.1 million resulting in earnings per share
of US$0.61. This was almost five times higher than the net profit achieved for
the corresponding period in 2002. Net profit for the December 2002 quarter was
US$26 million largely as a result of exceptionally high grades at Morila of 17
g/t. Grades for the quarter were down from these exceptionally high levels, but
remained in line with management"s expectations. Revenues were impacted
positively by a higher received gold price of US$338/oz and operating profit
margins remained above 70%. Profit from mining activity was US$23.1 million
compared to US$11.2 million for the corresponding quarter in 2002 and US$34.1
million in the previous quarter.
The strong profits for the quarter further strengthened the balance sheet. The
main balance sheet movements for the quarter ended 31 March 2003 are an increase
in cash and shareholders" equity reflecting the attributable earnings from
Morila.
The decrease in liabilities on financial instruments is the result of the
movement on the mark-to-market value of the financial instruments.
The Company received its fifth distribution from Morila of US$24 million at the
beginning of February 2003. A further dividend of US$18.8 million was received
at the beginning of May 2003.
OPERATIONS MORILA
The Morila mine continues to produce satisfactory results. Production for the
quarter was 238 421 ozs and head grade was in line with forecast for the quarter
but lower than the previous quarter.
Plant throughput comfortably exceeded design parameters and totaled 830 477 tons
for the quarter, showing the positive effects of "mine to mill" optimisation.
The total cash operating cost* for the quarter was US$65/oz and the total cash
cost* was US$88/oz.
Results have been received from limited drilling in the high-grade axis
confirming the previously intersected high grades. They indicate the amount of
high-grade ore particularly in the northern target is more than originally
expected and consequently this could result in a positive impact on production
in the future. Close spaced reverse circulation drilling will now be undertaken
to drill out the remaining area in the high grade zone, in order to more closely
define mineable grades.
The capital expansion programme has been approved and construction has commenced
on the project which is planned to increase production above the 330 000 tons
per month level.
MORILA RESULTS
Quarter Quarter Quarter
ended ended ended
31 Mar 31 Mar 31 Dec
2003 2002 2002
Mining
Tons mined (000) 5 957 8 096 6 063
Ore tons mined (000) 1 223 975 542
Milling
Tons processed (000) 830 733 669
Head grade milled (g/t) 9.75 6.51 17.1
Recovery (%) 93.7 92.0 88.4
Ounces produced 238 421 148 996 325 273
Average price received
(US$/ounce) 338 291 316
Cash operating cost*
(US$/ounce) 65 80 54
Total cash costs*
(US$/ounce) 88 104 78
Cash profit (US$000) 57 790 28 018 85 398
Attributable (40%)
Ounces produced 95 368 59 598 130 109
Cash profit (US$000) 23 116 11 207 34 159
* Refer pro forma information provided above.
DISCONTINUED OPERATION - SYAMA
Randgold Resources has entered into an option agreement with the Australian
mining company, Resolute Mining Limited, over its interest in the Syama mine in
Mali. In terms of the agreement, Resolute have been given a 12 month period in
which to conduct a full due diligence over Syama.
Resolute will pay Randgold Resources a US$75 000 monthly option fee, the first
of which was received on 25 April 2003, and can terminate the agreement on one
month"s notice. If it exercises the option within the 12 month period it will
pay Randgold Resources US$6 million and take on up to US$7 million in Syama
liabilities. In addition, subject to the gold price being above US$350/oz, a
royalty will be payable on gold produced from the Syama project of US$10 per
ounce for the first million ounces and US$5 per ounce for the next three million
ounces.
Care and maintenance activities continued in the quarter.
SYAMA INCOME STATEMENT
Unaudited Unaudited Unaudited
quarter quarter quarter
ended ended ended
31 Mar 31 Mar 31 Dec
(US$000) 2003 2002 2002
(Loss) from operations - - -
Interest expense - - -
(Loss) on financial
instruments - (1 093) -
Other expenses net of
other income (335) (689) (1 489)
(Loss) on ordinary
activities before taxes (335) (1 782) (1 489)
Income tax - - -
Net (loss) (335) (1 782) (1 489)
PROJECTS AND EVALUATION
Loulo Project - Updated Feasibility Study
The updated feasibility study based on opencast reserves only was completed in
the quarter and submitted to our partner, the Malian government (20% share).
The major issue highlighted from the recent work was the disparity between the
opencast reserve base and estimated project infrastructure costs, both
operational and regional. Progress is being made on three fronts in this
regard. Firstly, we have commenced with a further drilling campaign to convert
more of the large resource base to reserves, both on new targets and at depth
underlying the existing pits. Secondly, we have reached agreement with Nevsun
whereby our two companies, under the leadership of Randgold Resources, have
agreed to jointly initiate a study, which will investigate possible synergies,
and whether there is a commercial logic to integrating our respective gold
projects in the region utilising as much shared operational infrastructure as
possible. Thirdly, we are progressing discussions with government towards the
goal of a more equitable share of the project revenue between Government and
Randgold Resources. In this regard indications are that Government is prepared
to fund certain of the infrastructural requirements for development of the gold
mining potential in this region.
Tongon Project
We are pleased that progress has been reported by the parties involved regarding
a lasting political solution for the current conflict in the Cote d"Ivoire.
While the next phase of drilling has been planned and budgeted, it is still on
hold pending a lasting resolution of the conflict in the area.
EXPLORATION ACTIVITIES
During the last quarter, activities included diamond drilling at the Loulo
project and Morila mine lease, re-establishment of exploration in Tanzania, good
progress with Morila Region and Senegal and the pursuit of new opportunities in
both West and East Africa.
On the Morila mine permit, delineation drilling commenced on the western margin
of the current orebody where, as reported last quarter, exploratory work
confirmed the continuation of the flat-lying mineralised structure. The current
programme of 17 holes (6 255 metres) is designed to delineate the geology and
improve our ability to model the mineralisation over a 750 metre by 1 kilometre
area west of the current pit. An encouraging drill intercept of 19 metres @ 2.1
g/t was also returned from a hole drilled 200 metres south of the current pit
and further drilling will be undertaken in this area. Finally drilling
programmes to test the NW and San Extension targets, which are located 3 and 6
kilometres northwest of the current orebody, will follow on from the extension
drilling.
In the Morila region, but outside the joint venture with AngloGold, exploration
work remains focused on defining conceptual targets with potential to host
Morila style mineralisation and the 21 targets reported last quarter have been
reduced to 17. Four of these have been prioritised and drill testing is planned
to start on the first target during the current quarter. The priority targets
are all hosted within greywackes with shallow dipping foliations and associated
quartz veining reminiscent of the hangingwall zone at Morila. At the Ntiola
Target, a reconnaissance trench returned intervals of 15 metres @ 2 g/t and 5
metres @ 2 g/t from greywackes in close contact with a diorite body. At the
Dialakoro Target, pitting has intercepted multiple shallow dipping quartz veins
with values of 1 to 7.5 g/t.
At Loulo, a nine hole delineation drilling programme on the Loulo 0 west target
outlined a potential new resource by highlighting two mineralised zones, each
with true widths averaging 9 metres and intercepts grading 1.6 to 5.0 g/t over a
500 metre strike length. Mineralisation is still open to the north and
interhole spacing is 100 metres. Loulo 0 west locates 350 metres west of and in
the hangingwall to the Loulo 0 orebody. A Phase 2 definition-drilling
programme, designed to confirm and upgrade the resource potential and reduce
interhole spacing to approximately 50 metres, has commenced. A drilling
programme to extend the underground resources both at Loulo 0 and Yalea will
follow. Elsewhere on the Loulo permit exploration work continues to focus on
defining new targets along the 15-kilometre Yalea shear structure as well as
delineating higher grade (+ 3.5 g/t) satellite bodies at Loulo 3 and Baboto.
In Senegal, deepening of trenches within the TA target, Tomboronkoto permit,
returned good intercepts of 39 metres @ 2.7 g/t and 32 metres @ 4.7 g/t from a
quartz vein stockwork in granodiorite. Exploration work to date has outlined
continuous mineralisation over an E - W trending zone of 800 metres where the
focus is on target definition for drill testing later this year.
The Company has re-established active exploration activities in Tanzania with
the acquisition of three prospecting licences in the Musoma Mara region and the
opening of an office in Mwanza. A further 16 licence applications are pending.
CORPORATE AND NEW BUSINESS
The Company is actively pursuing a number of new business opportunities. To
this end, ten confidentiality agreements were signed in the quarter. A number
of due diligences have been carried out or are in progress on opportunities in
East, Central and West Africa as well as in Europe. These are both at
exploration and feasibility level.
On behalf of Randgold Resources Limited
R A R Kebble D M Bristow
Chairman Chief Executive
14 May 2003
Registered office:
La Motte Chambers, La Motte Street, St Helier, Jersey JEI IBJ, Channel Islands *
London Office: 100 Piccadilly, London W1J 7NH
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
********************************************************************************
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.
Date: 14/05/2003 02:37:21 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
