3rd Quarter Results
November 12 2003 - 6:45AM
UK Regulatory
RNS Number:9633R
Randgold Resources Ld
12 November 2003
Randgold Resources Limited
Incorporated in Jersey, Channel Islands
Reg. No. 62686
LSE Trading Symbol: RRS
Nasdaq Trading Symbol: GOLD
REPORT FOR THE THIRD QUARTER ENDED 30 SEPTEMBER 2003
** Net profit of US$13.7 million for the quarter
** Year-to-date net profit up by US$8.0 million to US$47.3 million
** Cash and cash equivalents of US$108 million
** Morila is forecast to repay the project loan by end June 2004, 18 months
ahead of schedule
** Company liquidity enhanced by addition to FTSE 250 Index
** Significant intersections from infill drilling of the high grade payshoot at
Morila
** End-of-year development decision at Loulo
** Attributable production of 79 834 ounces at total cash cost* of US$111 per
ounce
Randgold Resources Limited has 28.8 million shares in issue as at 30 September
2003
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited
quarter quarter
ended ended
30 Sept 30 June
US$000 2003 2003
Gold sales revenue 29 254 30 679
Cost of sales
Production costs 9 265 5 243
Transport and refinery costs 104 113
Transfer to deferred stripping
costs (1 978) 929
Cash operating costs* 7 391 6 285
Royalties 2 042 2 138
Total cash costs* 9 433 8 423
Profit from mining activity* 19 821 22 256
Depreciation and amortisation 2 162 2 224
Merger transaction costs+ 711 -
Exploration and corporate
expenditure 3 454 4 554
Profit from operations* 13 494 15 478
Interest received 254 445
Interest expense (432) (476)
Gain/(loss) on financial
instruments 591 (52)
Other income and (expenses) (332) 960
Profit on ordinary activities
before taxes and minority
interests 13 575 16 355
Income tax - -
Minority shareholders'
interest 77 195
Net profit 13 652 16 550
Basic earnings per share (US$) 0.48 0.59
Fully diluted earnings per
share (US$) 0.47 0.58
Average shares in issue (000) 28 754 28 074
CONSOLIDATED INCOME STATEMENT (cont'd)
Unaudited Unaudited Unaudited
quarter 9 months 9 months
ended ended ended
30 Sept 30 Sept 30 Sept
US$000 2002 2003 2002
Gold sales revenue 50 487 91 519 87 254
Cost of sales
Production costs 5 353 21 029 18 338
Transport and refinery
costs 201 332 403
Transfer to deferred
stripping costs (914) (1 422) (3 401)
Cash operating costs* 4 640 19 939 15 340
Royalties 3 571 6 387 6 052
Total cash costs* 8 211 26 326 21 392
Profit from mining
activity* 42 276 65 193 65 862
Depreciation and
amortisation 2 630 6 699 6 432
Merger transaction costs+ - - -
Exploration and
corporate expenditure 5 503 10 818 11 330
Profit from operations* 34 143 47 676 48 100
Interest received 49 770 124
Interest expense (869) (1 450) (2 942)
Gain/(loss) on financial
instruments 493 263 (693)
Other income and
(expenses) (3 357) (302) (5 381)
Profit on ordinary
activities before taxes
and minority interests 30 459 46 957 39 208
Income tax - - -
Minority shareholders'
interest 23 351 98
Net profit 30 482 47 308 39 306
Basic earnings per
share (US$) 1.10 1.66 1.62
Fully diluted earnings
per share (US$) 1.08 1.63 1.59
Average shares in
issue (000) 28 181 28 544 24 236
* Refer to pro forma information provided on page three.
+ Expenses incurred to end of September on the Ashanti Goldfields proposal.
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
at at at
30 Sept 30 Sept 31 Dec
US$000 2003 2002 2002
Assets
Cash and equivalents 107 842 56 331 59 631
Restricted cash** 4 555 4 507 4 526
Receivables 11 316 10 027 14 262
Inventories 12 927 11 188 11 601
Total current assets 136 640 82 053 90 020
Property, plant and
equipment
Cost 172 043 167 314 168 540
Accumulated
depreciation (98 803) (89 773) (92 104)
Net property, plant
and equipment 73 240 77 541 76 436
Other long-term assets 8 824 5 760 7 402
Total assets 218 704 165 354 173 858
Bank overdraft 1 245 1 407 1 170
Accounts payable and
accrued liabilities 15 568 34 136 20 564
Total current liabilities 16 813 35 543 21 734
Provision for environmental
rehabilitation 5 308 4 556 4 972
Liabilities on financial
instruments 6 475 6 193 7 530
Long-term loans 14 786 23 393 19 307
Loans from outside
shareholders in
subsidiaries 958 1 445 1 330
Total long-term
liabilities 27 527 35 587 33 139
Total liabilities 44 340 71 130 54 873
Shareholders' equity 174 364 94 224 118 985
Total liabilities and
shareholders' equity 218 704 165 354 173 858
** 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 Unaudited
9 months 9 months
ended ended
30 Sept 30 Sept
US$000 2003 2002
Net cash generated from
operations 49 636 44 768
Net cash utilised in
investing activities (4 023) (5 858)
Net cash generated by
financing activities
Ordinary shares issued 7 179 29 266
(Decrease) in long-term
borrowings (4 656) (18 227)
Increase in bank overdraft 75 (301)
Net increase in cash and
cash equivalents 48 211 49 648
Cash and cash equivalents at
beginning of period 59 631 6 683
Cash and cash equivalents at
end of period 107 842 56 331
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Number Accum-
of Share Share Other ulated 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
Jan - Jun 2002 Net profit
8 824 8 824
Movement on cash flow hedges
(4 728) (4 728)
Share options exercised
136 194 12 353 365
July - Sept 2002 Net profit
30 482 30 482
Movement on cash flow hedges
(117) (117)
Share options exercised
50 916 5 171 176
Nasdaq listing 11 July 2002 and related expenses
5 000 000 500 28 225 28 725
Balance - 30 Sept 2002
27 648 740 2 763 190 579 (6 590) (92 528) 94 224
Balance - 31 Dec 2002
27 663 740 2 766 190 618 (8 293) (66 106) 118 985
Jan - Jun 2003 Net profit
33 656 33 656
Movement on cash flow hedges
2 301 2 301
Share options exercised
1 046 288 104 6 659 6 763
July - Sept 2003 Net profit
13 652 13 652
Movement on cash flow hedges
(1 409) (1 409)
Share options exercised
66 611 7 409 416
Balance - 30 Sept 2003
28 776 639 2 877 197 686 (7 401) (18 798) 174 364
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 quarterly 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.
9 months 9 months
Reconciliation of net income 30 Sept 30 Sept
(US$000) 2003 2002
Net income under IFRS 47 308 39 208
Share option compensation
adjustment (3 663) (1 309)
Provision for rehabilitation - (62)
Net income under US GAAP before
cumulative effect of change in
accounting principle 43 645 37 837
Cumulative effect of change in
accounting principle 214 -
Net income under US GAAP 43 859 37 837
Movement in cash flow hedges
during the period 892 (4 845)
Comprehensive income under
US GAAP 44 751 32 992
Basic earnings per share under
US GAAP (US$) 1.54 1.56
Fully diluted earnings per
share under US GAAP (US$) 1.52 1.53
Reconciliation of shareholders'
equity (US$000)
Shareholders' equity under IFRS 174 364 94 224
Provision for rehabilitation - (298)
Shareholders' equity under
US GAAP 174 364 93 926
Roll forward of shareholders'
equity under US GAAP
Balance as at 1 January 2003 118 771 30 359
Net income under US GAAP 43 859 37 837
Movement on cash flow hedges 892 (4 845)
Nasdaq Listing 11 July 2002 - 28 725
Share options exercised 7 179 541
Share option compensation
adjustment 3 663 1 309
Shareholders' equity under
US GAAP at 30 September 2003 174 364 93 926
ACCOUNTING POLICIES
The quarterly 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 quarterly 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. Under this
method, the proportion of assets, liabilities, income and expenses and cash
flows 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
enterprise's 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 30 September 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:
* 67 086 ounces sold forward at a fixed price of US$275/oz over the period
October 2003 to December 2004;
* 23 746 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 23% for the next 15 months. If the gold price is above US$360/oz
the percentage of hedged production falls to 15%. 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$13.7 million resulting in earnings per share
of US$0.48. This was lower than the net profit achieved for the corresponding
period in 2002, which included the exceptionally high grades from the Morila pit
and down on the net profit of US$16.6 million for the previous quarter.
Revenues were affected by lower ounces produced resulting from reduced grades,
offset by higher metallurgical recoveries during the quarter, plus a higher
received gold price. The operating profit margin for the quarter was adversely
affected by accelerated waste stripping and rebuild costs but remains at above
70% for the nine months ended September 2003.
For the nine months to September, profit from mining activity was US$65.2
million. This compares favourably to the US$65.9 million for the corresponding
period in 2002, particularly since the latter period contained exceptionally
high grades. Net profit was US$47.3 million up from US$39.3 million for the
same period last year. This was the result of higher interest received on the
Group's increased cash holdings, lower interest expenses resulting from the
reduced debt levels in 2003 as well as less care and maintenance costs
associated with Syama compared to 2002.
The merger transaction costs are expenses incurred to the end of September on
the Ashanti Goldfields proposal. A further US$2 million was incurred subsequent
to the end of the quarter.
As a result of the slowdown in field work during the rainy season, quarterly
exploration and corporate expenses decreased.
Other income and expenses include an unrealised gain of US$0.7 million resulting
from the Group's treasury activities, for the nine months ended September 2003.
The sustained profits for the quarter further strengthened the balance sheet.
The main balance sheet movements for the nine months ended 30 September 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 decrease in long-term loans reflects the repayment of our attributable
portion of the Morila project loan. The attributable balance of the Morila loan
as at the end of September 2003 was US$10.8 million, and will be fully paid by
June 2004 which is a full 18 months ahead of schedule. The Company received its
seventh distribution from Morila of US$14.0 million at the beginning of August
2003. A further dividend of US$12.8 million was received at the beginning of
November 2003.
OPERATIONS - MORILA
As expected, production dropped to total just under 200 000 ounces for the
quarter (last quarter 236 449 ounces) mainly as a result of lower grades
processed. Higher grade areas were not accessible in the pit, partly as a
result of a heavier than normal rainy season. Costs were subsequently higher
this quarter and averaged $85/oz total cash operating cost* and $111/oz total
cash cost*. Major contributors to cost increases were the increased transport
costs of diesel and other reagents as a result of the continuing situation in
Cote d'Ivoire.
This cost trend is expected to continue as lower grade ore is accessed over the
next few months.
Results from infill drilling on a 20 metre x 20 metre grid within the high grade
axis have retained some very encouraging results.
Borehole Value (uncut)
San 334 33m @ 23.08 g/t
San 336 75m @ 9.7 g/t
San 338 71m @ 18.07 g/t
(including 17.5m @ 58.1 g/t)
San 342 55m @ 11.13 g/t
(including 25m @ 19.56 g/t)
San 360 18m @ 17.12 g/t
RCX 177 15m @ 11.84 g/t and
17m @ 29.28 g/t
Delay in final completion of the drilling programme has led to a delay in the
planning process for next year.
The orebody model is currently being revised, and when complete pit planning and
scheduling will be optimised based on the new grade model.
The capital expansion programme designed to increase production to 350 000 tons
per month and partially ameliorate the forecast grade drop-off is making
progress and is expected to be commissioned by year-end.
MORILA RESULTS
Quarter Quarter Quarter
ended ended ended
30 Sept 30 Jun 30 Sept
US$000 2003 2003 2002
Mining
Tons mined (000) 6 170 5 389 5 548
Ore tons mined (000) 602 1 273 849
Milling
Tons processed (000) 822 771 546
Head grade milled (g/t) 8.24 10.50 27.7
Recovery (%) 91.8 90.9 88.1
Ounces produced 199 585 236 449 428 421
Average price received
(US$/ounce) 348 337 310
Cash operating costs*
(US$/ounce) 85 70 28
Total cash costs*
(US$/ounce) 111 93 49
Cash profit (US$000) 49 553 55 640 105 690
Attributable (40%)
Ounces produced 79 834 94 580 171 368
Cash profit (US$000) 19 821 22 256 42 276
MORILA RESULTS (cont'd)
9 months 9 months
ended ended
30 Sept 30 Sept
US$000 2003 2002
Mining
Tons mined (000) 17 515 20 200
Ore tons mined (000) 3 098 2 689
Milling
Tons processed (000) 2 423 2 067
Head grade milled (g/t) 9.47 11.9
Recovery (%) 91.7 90.7
Ounces produced 674 455 727 543
Average price received
(US$/ounce) 341 308
Cash operating costs*
(US$/ounce) 73 51
Total cash costs* (US$/ounce) 96 72
Cash profit (US$000) 162 983 164 655
Attributable (40%)
Ounces produced 269 782 291 017
Cash profit (US$000) 65 193 65 862
* Refer pro forma information provided above
Production to year-end is expected to be in line with prospects discussed in the
first quarter of this year. The Company is confident that in excess of 800 000
ounces will be produced for the year albeit at marginally higher than the
targeted US$100/oz costs mainly as a result of the increased transport costs.
DISCONTINUED OPERATION - SYAMA
Resolute Mining Limited continued with their 12 month evaluation process, which
includes a drilling programme of approximately 6 000 metres along the strike of
the main mineralised zone within and below the Life of Mine Syama Pit. The best
intersections to date reported by Resolute include 34m @ 3.88 g/t and 29m @ 8.44
g/t. Initial metallurgical testwork has also been undertaken as well as a
preliminary study of the capital and operating costs for both concentrate
roasting and Pressure Oxidisation by Minproc.
Care and maintenance activities continued as normal during the quarter, with the
focus on retaining the value of the assets.
SYAMA INCOME STATEMENT
Quarter Quarter Quarter
ended ended ended
30 Sept 30 Jun 30 Sept
US$000 2003 2003 2002
(Loss) from operations - - -
Interest expense - - -
(Loss) on financial
instruments - - 363
Other income/(expenses) (648) 42 (2 012)
Profit/(loss) on ordinary
activities before taxes (648) 42 (1 649)
Income tax - - -
Net profit/(loss) (648) 42 (1 649)
SYAMA INCOME STATEMENT (cont'd)
9 months 9 months
ended ended
30 Sept 30 Sept
US$000 2003 2002
(Loss) from operations - -
Interest expense - -
(Loss) on financial instruments - (722)
Other income/(expenses) (941) (3 341)
Profit/(loss) on ordinary
activities before taxes (941) (4 063)
Income tax - -
Net profit/(loss) (941) (4 063)
PROJECTS AND EVALUATION
Loulo Project
External consultants SRK (South Africa), have completed an audit and
re-estimation exercise on the Loulo 0 and Yalea orebodies. This exercise
accompanies a geological re-modelling exercise completed by Randgold Resources
and confirms the resource base of the two deposits, albeit at slightly higher
grades and lower tonnages. Work is currently underway to reoptimise pit designs
and scheduling and to "test" the optimum open pit to underground interface.
Indications are that the amount of waste to be moved could reduce which would
enhance the economics of the operations. A further programme of deep drilling
at both Loulo 0 and Yalea will be completed this quarter to add to the
underground resource as well as improve on the confidence in the resources
already delineated.
Work continues to optimise the final process and infrastructure design and
discussions with the Government of Mali on regional infrastructure and fiscal
issues are at an advanced stage. The project is scheduled to be presented to
the Board of Randgold Resources at the year-end board meeting with a view to
finalising the development decision.
The Company continues to evaluate synergies in the region with the view of
optimising "start-up" and mine operating costs in the future.
Tongon Project
The situation in Cote d'Ivoire is still being monitored and no further work on
the Tongon Project was carried out during the period under review.
EXPLORATION ACTIVITIES
Randgold Resources footprint in the major gold belts of Africa continues to grow
with the acquisition of new ground in Mali, Senegal and Tanzania along with a
new opportunity in Burkina Faso. The Company continues to consolidate and
develop its portfolio of targets and projects which now cover over 8 000 km2.
Focused programmes on this portfolio have been designed to achieve the principal
strategic objectives of finding new ounces and converting existing resources to
reserves. During the quarter exploration focused on integration and
interpretation of all previous work and the design of future programmes as the
rainy season prevented field activities.
An aggressive exploration programme is planned for the Loulo Project during the
next quarter and into 2004 to expand the reserve base and generate new targets.
Focused drilling programmes have been designed to test four satellite deposits
referred to as Baboto, P125, Loulo 2 and Loulo 3. Drilling will continue to
evaluate the continuation of the high grade zone with depth at Loulo 0 where
encouraging intercepts were drilled during the previous quarter. At the Yalea
deposit, the 1 100 metre long high grade zone will be tested at depths below 200
metres where no drilling has been completed so far. Geological models have been
developed to test new targets along the five major, gold bearing, structural
corridors within the Loulo lease.
In accordance with the Company's policy to grow its ground position in the Loulo
region, a Heads of Agreement has been signed with the artisanal co-operative of
Sitakili. The Sitakili site locates twenty kilometres due east of the Loulo
camp and covers a thirty square kilometre area previously untested by modern
exploration methodologies. Gold mineralisation is associated with felsic
intrusives emplaced in a folded arch.
In the Morila region, exploration work continues to define new mineralised
systems in the mine area and within the Company's plus 2 500 km2 footprint
around the exploitation lease. On the Morila mine lease diamond drilling on the
western margin has highlighted two significant zones of gold mineralisation
which are associated with disseminated arsenopyrite and Morila-style alteration.
Follow-up drilling is currently in progress on both targets as well as the
north-east and south-west extensions of the high grade payshoot to the Morila
orebody. On the Company's own holdings around the lease area, target delineation
is in progress at the Ntiola prospect over the large soil anomaly covering a 1
500 metre by 600 metre area and on twelve other targets which all locate within
a 25 km radius of the mine site.
In Senegal the Company holds title to over 1 200 km2 of ground within three
permits on the Sabodala Belt and recently submitted a tender to increase its
holding in this area. On the Tomboronkoto Permit encouraging results have been
received from the "BA" target where north-south trending silicified zones
outlined encouraging values over a 300 metre strike length and a drill hole
intercepting one of these zones, returning 11 metres at 2.6 g/t. The target is
open to the north. On the Kounemba permit regional soil sampling has outlined a
plus four kilometre anomalous zone which forms the southern extension to the
Sabodala deposit. Exploration activities during the forthcoming season will
focus on defining and drill testing targets.
In the Lake Victoria Goldfields region of Tanzania the Company has now secured
eight prospecting licences four of which locate within a specific area covered
by a collaborative venture with the government. A further seven licence
applications are pending within the area of interest. The Company is now well
established in the country. A target portfolio is being developed and
generative studies continue in order to expand its footprint within the region.
CORPORATE AND NEW BUSINESS
During the past quarter, the Company made a merger proposal to Ashanti
Goldfields Limited with a view to creating a major independent pan-African gold
business in line with its growth strategy. This proposal was eventually
declined by the Ashanti board. The Company continues to focus on the
development of growth opportunities which meets its return criteria. In this
regard, a number of due diligence reviews of attractive exploration and mining
prospects are currently being progressed.
The Company was included in the FTSE 250 index on 22 October 2003 and this has
significantly raised its profile in the London market and enhanced the liquidity
of its shares.
Mr Bernard Asher has been elected as senior independent non-executive director
of the Company and Messrs Brett Kebble and David Ashworth have resigned from the
board.
R A R Kebble D M Bristow R A Williams
Chairman Chief Executive Financial Director
12 November 2003
Registered office:
La Motte Chambers, La Motte Street, St Helier, Jersey JE1 1BJ, 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 and 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 Syama. Randgold Resources assumes no obligation to update
information in this release.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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