London, UK, 29 March 2007 (LSE:RRS)(Nasdaq:GOLD) - Randgold Resources' consistent adherence to a long-term growth strategy has given it a record of value creation with few equals in the gold mining industry, says chairman Philippe Liétard in the company's 2006 annual report, published today.
During the year the company increased its profit before tax by more than 50% to US$74 million and started dividend payments. It ended 2006 with cash of US$143 million after spending more than US$100 million on the completion of the plant at its Loulo mine, the repayment of the first third of the Loulo project finance, the first stage of the underground development at Loulo and its ongoing exploration programmes.
Liétard says the company remains committed to its strategy of investing its financial and intellectual capital in exploration to find successful operations capable of generating profits which it can reinvest in its future to ensure sustainability.
"This is particularly important in the current market, where the excitement of a rising gold price seems to have shifted the industry's emphasis from building profitable businesses to pursuing short-term trading opportunities," he says.
"We do not know how long the bull run in the gold price will continue. However, as far as Randgold Resources is concerned, our overriding priority is to continue finding and developing good gold prospects and building a business that will be successful not only at present gold prices but also at the much lower price levels at which the metal has traded in the past."
Liétard notes that in the challenging spheres of African mining and international markets, a company's success is directly linked to the skills and motivation of its personnel.
"Randgold Resources has since its inception had exceptionally competent executive and exploration teams. Over time, the company has also developed first-class skills in the evaluation, design and development of capital projects, operational management, corporate finance, procurement and logistics. It has also invested a great deal of effort in nurturing local managers in host countries, to considerable effect."
As part of the continuing expansion of its intellectual base, the company has added two eminent international businessmen, Norborne P Cole, Jr and Karl Voltaire, to its board.
Also in the report, chief executive Mark Bristow says the company's long-term approach means that it constantly has to search beyond its existing borders for fresh profitable growth opportunities.
"Exciting and demanding as the Yalea and Gara underground developments (at Loulo) are, we are already looking past them at future prospects. We can do this because, as our record shows, our management teams are more than capable of running one operation while building another and advancing a third," he says.
Bristow says the Tongon project in the Côte d'Ivoire, currently at final feasibility study stage, could well have the makings of the company's third major mine. A development decision will be made at the end of 2008. Elsewhere in Africa, the Kiaka target in Burkina Faso has emerged as a significant mineralised gold system and in Senegal, 12 advanced targets are being evaluated.
"We ended the year with a total of 128 promising targets on almost 20 000 km² in six countries in West and East Africa. In line with our policy of constantly seeking to widen our horizons, we have recently put together an 'African hunting team' whose brief is to find and evaluate opportunities in prospective countries where we do not already have a presence," he says.