London, 4 February 2008 (LSE:RRS)(Nasdaq:GOLD) - Randgold Resources today announced that its board had approved the development of a new gold mine at Tongon in the Côte d'Ivoire, subject to the conclusion of a mining convention with the Government.
Reporting its results for the fourth quarter of 2007 and the year to December, the company also said a strong performance from its Loulo operations in Mali had boosted Q4 net profit to US$14.5 million, up 26% on the previous quarter and 34% up on the comparable quarter in 2006. A dividend of 12 US cents, up 20% on 2006, was declared for the year.
Attributable gold production for the year of 444 573 ounces was in line with forecast, due in part to Loulo's increased contribution of 264 467 ounces at a total cash cost of US$372/oz (2006: 241 575 ounces at US$328/oz). This compensated for the shortfall in production at Morila, which delivered 449 815 ounces at a total cash cost of US$332/oz against a forecast of 475 000 ounces. The company said the shortfall was attributable to operational problems related to planning, grade control and plant lock-up.
Net profit for the year was down from US$50.9 million to US$45.6 million as a result of a tax adjustment of US$3.2 million at the Morila joint venture; a rise of US$7.1 million in exploration and corporate expenditure, mainly as a result of increased spending on Tongon; and costs associated with a programme to improve Loulo's operational flexibility. The company said its annual profit would have exceeded the previous year's had it not been for these exceptional items.
The company also announced today that Randgold Resources (Mali) was taking over the operational responsibility for Morila from its joint venture partner AngloGold Ashanti. AngloGold Ashanti has advised Randgold Resources that it is considering the disposal of its 40% stake in Morila and the two companies have agreed that in the circumstances it would be best for all stakeholders if Randgold Resources assumed the operatorship as soon as possible, given its continuing presence in and commitment to the region.
At Tongon, a Type 3 feasibility study was concluded and on the strength of this the Randgold Resources board has given the green light for mine development to proceed. An initial draft of a proposed mining convention has been submitted to the Côte d'Ivoire's Ministry of Mines and Energy. Subject to agreement on this, construction of the mine will start at the end of 2008 with first gold production scheduled for the fourth quarter of 2010. Funding for Tongon has already been secured through last year's successful US$240 million private placement of shares.
Meanwhile the development of the Yalea underground mine at Loulo has continued to make steady progress, with the shaft advancing by a record 260 metres in January. Development ore should be accessed later this quarter with the first mining faces established by mid-year. It has been decided to replace the raiseboring shaft with an additional decline shaft to extend access to the orebody.
On the exploration front, Massawa in Senegal has emerged as a significant new drilling target. RAB drilling has returned high-grade results, confirming continuous mineralisation over a 2.8 kilometre strike length. A 5 000 metre diamond drilling programme is scheduled to start this quarter.
Chief executive Mark Bristow said at a time when the gold industry was faced with declining output and a dearth of quality projects, Randgold Resources was gearing up to grow production and profits. With Loulo targeting production of 400 000 ounces per year by 2010 and Tongon stepping in to replace the declining Morila, group attributable production was set to increase by 50% to 600 000 ounces per year by 2011. In addition, a robust exploration project portfolio led by Massawa offered additional organic growth potential.
"We're strong in equity and cash and so also well placed to make the most of any corporate opportunities that meet our profit criteria and fit in with our pure gold strategy," he said.