Quarterly Report 31 December 2017

5 February 2018

Overview

RECORD PRODUCTION, REDUCED COSTS IN HIGH-PERFORMANCE YEAR FOR RANDGOLD

London, 5 February 2018
  -  For the seventh consecutive year, Randgold Resources has increased its gold production in 2017, boosting output by 5% to 1.315 million ounces, ahead of its guidance, while shrinking total cash cost per ounce by 3% to $620.

Results for the year, published today, show profit up 14% at $335 million and net cash increasing by 39% to $720 million, with no debt.  The board has proposed a dividend of $2.00 per share, double that of 2016, for shareholders’ approval.

Chief executive Mark Bristow said the strong performance was led by Randgold’s flagship, the Loulo-Gounkoto complex in Mali, and supported by an across-the-board delivery from its other operations, Morila in Mali, Tongon in Côte d’Ivoire and Kibali in the Democratic Republic of Congo.

The highlight of the year was the successful commissioning of Kibali’s underground mine.  Aside from its third hydropower station, scheduled to come on stream mid-year, this completes the development of Kibali into one of the world’s largest gold mines and brings to an end its eight-year capital investment programme.  The underground mine is one of the most mechanised in Africa, with features including a fully automated underground ore handling system.

For 2018, Randgold is forecasting production of between 1.30 and 1.35 million ounces at a total cash cost per ounce in the range of $590 to $640, taking into account the effect of the current increases in the oil price and the euro:dollar exchange rate.

“Beyond that, our 10-year business plan is designed to increase net cash flows to support dividend and value growth and maintain Randgold’s position as a global industry leader in sustainable profitability,” Bristow said.

Randgold is also well placed to achieve its goal of developing three new projects in the next five years, with a production decision on the Massawa project due later this year, he said.  Brownfields exploration around its existing mines continues to show potential to replenish depleted reserves while the greenfields programmes are identifying new high-potential targets across its extensive holdings in West and Central Africa.

Quarterly Report 31 December 2017

5 February 2018

Key Performance Indicators
  • Gold production up 10% quarter on quarter and 5% year on year, exceeds annual guidance range
  • Cash and cash equivalents up 39% to $720 million year on year and debt facility remains undrawn
  • Profit up 45% quarter on quarter and 14% year on year
  • Total cash cost per ounce down 6% quarter on quarter and 3% year on year
  • Group capital expenditure in line with annual guidance at $304 million
  • Lost Time Injury frequency rate of 0.51 for 2017
  • All mines retain ISO and OHSAS environmental and safety accreditations
  • Loulo-Gounkoto complex beats annual guidance by 40koz at lowest recorded cash cost 
  • Tongon exceeds guidance and total cash cost per ounce down 18% quarter on quarter and 12% year on year
  • Kibali increases production by 17% quarter on quarter and 2% year on year and successfully commissions underground operation
  • Morila delivers increased ounces at lower cost
  • Massawa feasibility project advances
  • Exploration on Mankono and Boundiali permits in Côte d’Ivoire makes good progress
  • Proposed dividend of $2.00 per share up 100% year on year

Randgold Resources Limited (‘Randgold’) had 94.1 million shares in issue as at 31 December 2017.

Quarterly Report 31 December 2017

5 February 2018

Downloads

Quarterly Report 31 December 2017

5 February 2018

Summarised Financial Information

Quarterly Report 31 December 2017

5 February 2018

Comments

COMMENTS ON THE QUARTER ENDED 31 DECEMBER 2017
Gold sales for the quarter of $434.8 million increased by 12% from $387.8 million in the previous quarter.  Group gold production for the quarter of 340 958oz was up 10% from the previous quarter due to increases in gold production across the operations, in particular at Tongon and Kibali, as a result of higher grades and better recovery achieved at these mines.  The average gold price received of $1 278/oz was in line with the previous quarter (Q3 2017: $1 281/oz) and up 6% on the corresponding quarter of the previous year (Q4 2016: $1 206/oz).  Group gold sales and production decreased by 4% and 10% respectively from the corresponding quarter of 2016 on the back of lower production across the operations.

Total cash costs for the quarter of $213.3 million were up 6% from the prior quarter and up 3% from the corresponding quarter of 2016.  The increase in cash costs against the previous quarter reflects the increased throughput and production, and includes increased royalties.  The increase on the quarter of the previous year largely reflects the higher strip ratios at the Loulo-Gounkoto complex and at Tongon, in line with the mining plans, as the Gounkoto super pit stripping increased.

Total cash cost per ounce of $627/oz decreased by 6% quarter on quarter reflecting the higher production during the quarter, on the back of increased throughput, higher grades and better recovery across the operations, in particular at Tongon and Kibali.  Total cash cost per ounce increased by 14% on the corresponding quarter in 2016.  The increase was driven by the increased costs and decreased production, on the back of lower head grades across the operations, partially offset by higher recoveries at the Loulo-Gounkoto complex.  Cost per ounce was also slightly higher at Kibali on the back of reduced production following lower throughput and head grade. 

Profit from mining increased by 19% to $221.5 million from the previous quarter, and was down 10% on the corresponding quarter of 2016.  The increase from the prior quarter reflects the higher production partially offset by increased costs as explained above.  The decrease from the corresponding quarter of 2016 reflects lower production along with increased costs offset by a higher average gold price received.

Exploration and corporate expenditure of $12.2 million increased by 2% quarter on quarter and by 52% from the corresponding quarter in 2016.  The increase quarter on quarter reflects increased greenfields exploration expenditure.

Depreciation and amortisation of $51.2 million was in line with the previous quarter but decreased by 17% from the corresponding quarter of 2016.  The quarter ending 31 December 2016 included additional depreciation relating to a stripping asset ($15.5 million) at Gounkoto, as the ore was mined and fed during Q4 of 2016. 

Other income in the quarter of $1.4 million decreased from the previous quarter, but was in line with the corresponding quarter of the prior year.  Management fees from Kibali and Morila, were in line with the previous quarter and the corresponding quarter of the prior year.  A net operational foreign exchange gain of $2.3 million was included in other income in the prior quarter.  The current quarter includes a net operational foreign exchange loss of $5.4 million.  These gains and losses arise from the settlement of invoices in currencies other than the US dollar (dollar or $), as well as the translation of balances denominated in currencies such as the Congolese franc (CDF), euro and South African rand to the dollar rate and reflects the movements in these currencies during the respective quarter. 

Share of profits from equity accounted joint ventures of $13.7 million was up 98% on the previous quarter and compared to losses from joint ventures of $3.4 million in Q4 2016.  Kibali’s share of equity accounted joint venture profits increased by 150% to $15.0 million from a profit of $6.0 million in the previous quarter and increased significantly from a profit of $0.9 million in the corresponding quarter of 2016.  Profit from mining for Kibali was $46.2 million (attributable) for Q4 2017 compared to a profit of $33.3 million in Q3 2017 and a profit of $41.2 million in Q4 2016, reflecting higher gold sales and lower cash costs.  The share of profits from the Kibali joint venture is stated after depreciation of $28.3 million (Q3 2017: $31.8 million), foreign exchange losses of $1.3 million (Q3 2017: $2.2 million), and a tax credit value of $0.4 million (Q2 2017: $6.2 million) related to a deferred tax asset associated with tax losses/allowances carried forward. 

The foreign exchange losses incurred are primarily the result of the continued depreciation in the CDF compared to the dollar and the conversion of TVA balances owed to Kibali which are denominated in CDF. 

Morila’s share of equity accounted joint venture profits decreased from a profit of $0.7 million in Q3 2017 to a loss of $1.5 million in Q4 2017.  This resulted primarily from increased depreciation, related to the mining of the Domba satellite pit and an update of the estimated rehabilitation liability.

Income tax expense of $27.2 million decreased by 26% from the charge in Q3 and decreased by 19% from the corresponding quarter of 2016.  The decrease quarter on quarter reflects the withholding tax charge of $10.9 million that was incurred during the prior quarter on the Tongon dividend.  The decrease from the corresponding quarter in 2016 is due to decreased profits at Loulo and Gounkoto.

Profit for the quarter was up 45% from the previous quarter and down 8% from the corresponding quarter of 2016.  The movement quarter on quarter reflects the increase in profit from mining, the increase in the share of profits of equity accounted joint ventures and the decreased depreciation and other charges during the quarter as explained above.  The decrease from the corresponding quarter of 2016 mainly reflects the decrease in profit from mining.

Basic earnings per share increased by 54% to $0.80 quarter on quarter (Q3 2017: $0.52) but decreased by 5% compared to Q4 2016, reflecting higher and lower profits respectively. 

Net cash generated from operating activities for the quarter of $163.4 million was up 37% from the previous quarter (Q3 2017: $118.9 million) primarily reflecting the increase in profits from operations, net of taxes paid.  Net cash generated from operating activities was down 20% against the corresponding quarter in 2016 as a result of lower profits from operations.

COMMENTS ON THE YEAR ENDED 31 DECEMBER 2017
Gold sales for the year ended 31 December 2017 of $1.65 billion were up 7% from the previous year principally as a result of the 6% increase in the number of ounces of gold sold across the group, as well as a slight increase in the average gold price received of $1 258/oz (2016: $1 244/oz).  Gold production increased by 5%, on the back of higher throughput and recoveries and partially offset by lower head grade milled.  Total cash costs for the year ended 31 December 2017 of $815.3 million (2016: $794.4 million) increased by 3% on the prior year, driven by higher throughput and slightly higher unit costs at Kibali.  Total cash cost per ounce dropped 3% to $620/oz for the year (2016: $639/oz), reflecting the 6% increase in ounces sold year on year, offset by the 3% increase in total cash costs.

Profit for the year ended 31 December 2017 of $335.0 million represents an increase of 14% compared to a profit of $294.2 million in the previous year, resulting from increased production and revenue and lower cash costs per ounce of production, partially offset by a 4% increase in depreciation and the 35% increase in corporate tax expenses for the year.

Depreciation and amortisation for the year ended 31 December 2017 of $182.9 million increased from the prior year cost of $175.3 million.  Depreciation at Loulo of $106.3 million in 2017 was in line with the depreciation of $105.2 million incurred in 2016.  Depreciation at Gounkoto decreased from $23.5 million in 2016 to $10.5 million in 2017 due to the depreciation of the stripping asset ($15.5 million) which was included in Q4 of 2016.  This was partially offset by the increase in depreciation compared to the corresponding quarter of 2016, in line with the increased throughput at Gounkoto.  Depreciation at Tongon of $65.3 million in 2017 increased by 43% with the depreciation charged in 2016 ($45.7 million), primarily due to an increase in throughput year on year, as well as the increased charge following the change in reserve estimates at Tongon at the end of 2016.  Exploration and corporate expenditure of $47.8 million for the year ended 31 December 2017 increased by 16% from the previous year’s $41.2 million, reflecting increased exploration activity during the year.

Other income of $14.9 million and $6.0 million, for the years ended 31 December 2017 and 2016 respectively, include management fees from Morila and Kibali (2017: $5.2 million compared to 2016: $5.0 million) as well as operational foreign exchange gains (2017: $9.7 million compared to 2016: $1.0 million).  Other expenses for the year of $7.9 million increased 32% on the prior year’s $6.0 million and includes operational foreign exchange losses.

Share of profits of equity accounted joint ventures of $12.0 million decreased by 31% year on year (2016: $17.3 million).

Kibali’s share of equity accounted joint venture profits decreased from $24.2 million in 2016 to $11.6 million in 2017 primarily due to increased depreciation partially offset by deferred tax credits.  Profit from mining for Kibali for 2017 amounted to $129.5 million (attributable) compared to a profit of $131.0 million in 2016, reflecting the increased ounces and increased cost of production.  The share of profits from the Kibali joint venture is stated after depreciation of $123.7 million (2016: $102.7 million), foreign exchange losses of $17.2 million (2016: $16.3 million) and a deferred tax credit of $24.5 million (2016: $10.3 million). 

The increase in depreciation at Kibali was driven by an increase in throughput year on year, as well as increased assets brought into use following the completion of the underground shaft, materials handling system and further underground development. 

The foreign exchange losses are primarily the result of the depreciation in the CDF compared to the dollar during the year and the conversion of TVA balances owed to Kibali which are denominated in CDF.  The tax credit related to a deferred tax asset associated with tax losses/allowances carried forward. 

Morila’s share of equity accounted joint venture losses reduced from a loss of $7.1 million in 2016 to a loss of $0.1 million in 2017.  Profit from mining for 2017 was $7.6 million (attributable) (2016: $2.7 million).  The net loss of $0.1 million includes $5.1 million of depreciation charges (2016: $3.8 million) and $1.4 million of tax charges (2016: $0.6 million).  Profits from mining increased year on year following the increase in tonnes processed and production associated with the feeding of the Domba satellite ore in the latter part of 2017.

Income tax expense of $145.8 million increased by 35% year on year, reflecting higher accruals for tax charges at the Loulo-Gounkoto complex and Tongon, in line with higher profits.  The effective tax rate for the year was 30% (2016: 27%).

Basic earnings per share increased by 12% to $2.96 (2016: $2.64), in line with the increase in profit for the year as described above.

Net cash generated from operating activities for the year of $547.8 million increased by 5% from the previous year (2016: $521.2 million), in line with the strong operating performances at Loulo, Gounkoto and Tongon.  Cash and cash equivalents increased to $719.8 million compared to $516.3 million at the end of 2016, reflecting the net cash generated from operations, partially offset by increased additions to property, plant and equipment, as well as increased dividends paid to shareholders and increased funds invested in joint ventures.

The board has proposed a final cash dividend of 200 US cents per share, a 100% increase on the prior year’s 100 US cents per share.  The proposed final cash dividend will be put to shareholders for approval at the annual general meeting to be held on 8 May 2018.  The dividend will be paid in cash with no script alternative being made available.  The company anticipates, subject to shareholder approval, paying the final cash dividend on 18 May 2018.  The ex-dividend date is 22 March 2018 and the record date for the dividend is 23 March 2018.  Further details of the company’s proposed final cash dividend will be made available to shareholders in the explanatory notes of the company’s notice of annual general meeting.

Overview

Quarterly Report 31 December 2017

5 February 2018

Overview

RECORD PRODUCTION, REDUCED COSTS IN HIGH-PERFORMANCE YEAR FOR RANDGOLD

London, 5 February 2018
  -  For the seventh consecutive year, Randgold Resources has increased its gold production in 2017, boosting output by 5% to 1.315 million ounces, ahead of its guidance, while shrinking total cash cost per ounce by 3% to $620.

Results for the year, published today, show profit up 14% at $335 million and net cash increasing by 39% to $720 million, with no debt.  The board has proposed a dividend of $2.00 per share, double that of 2016, for shareholders’ approval.

Chief executive Mark Bristow said the strong performance was led by Randgold’s flagship, the Loulo-Gounkoto complex in Mali, and supported by an across-the-board delivery from its other operations, Morila in Mali, Tongon in Côte d’Ivoire and Kibali in the Democratic Republic of Congo.

The highlight of the year was the successful commissioning of Kibali’s underground mine.  Aside from its third hydropower station, scheduled to come on stream mid-year, this completes the development of Kibali into one of the world’s largest gold mines and brings to an end its eight-year capital investment programme.  The underground mine is one of the most mechanised in Africa, with features including a fully automated underground ore handling system.

For 2018, Randgold is forecasting production of between 1.30 and 1.35 million ounces at a total cash cost per ounce in the range of $590 to $640, taking into account the effect of the current increases in the oil price and the euro:dollar exchange rate.

“Beyond that, our 10-year business plan is designed to increase net cash flows to support dividend and value growth and maintain Randgold’s position as a global industry leader in sustainable profitability,” Bristow said.

Randgold is also well placed to achieve its goal of developing three new projects in the next five years, with a production decision on the Massawa project due later this year, he said.  Brownfields exploration around its existing mines continues to show potential to replenish depleted reserves while the greenfields programmes are identifying new high-potential targets across its extensive holdings in West and Central Africa.

Key Performance Indicators

Quarterly Report 31 December 2017

5 February 2018

Key Performance Indicators
  • Gold production up 10% quarter on quarter and 5% year on year, exceeds annual guidance range
  • Cash and cash equivalents up 39% to $720 million year on year and debt facility remains undrawn
  • Profit up 45% quarter on quarter and 14% year on year
  • Total cash cost per ounce down 6% quarter on quarter and 3% year on year
  • Group capital expenditure in line with annual guidance at $304 million
  • Lost Time Injury frequency rate of 0.51 for 2017
  • All mines retain ISO and OHSAS environmental and safety accreditations
  • Loulo-Gounkoto complex beats annual guidance by 40koz at lowest recorded cash cost 
  • Tongon exceeds guidance and total cash cost per ounce down 18% quarter on quarter and 12% year on year
  • Kibali increases production by 17% quarter on quarter and 2% year on year and successfully commissions underground operation
  • Morila delivers increased ounces at lower cost
  • Massawa feasibility project advances
  • Exploration on Mankono and Boundiali permits in Côte d’Ivoire makes good progress
  • Proposed dividend of $2.00 per share up 100% year on year

Randgold Resources Limited (‘Randgold’) had 94.1 million shares in issue as at 31 December 2017.

Downloads

Quarterly Report 31 December 2017

5 February 2018

Downloads

Summarised financial information

Quarterly Report 31 December 2017

5 February 2018

Summarised Financial Information

Comments

Quarterly Report 31 December 2017

5 February 2018

Comments

COMMENTS ON THE QUARTER ENDED 31 DECEMBER 2017
Gold sales for the quarter of $434.8 million increased by 12% from $387.8 million in the previous quarter.  Group gold production for the quarter of 340 958oz was up 10% from the previous quarter due to increases in gold production across the operations, in particular at Tongon and Kibali, as a result of higher grades and better recovery achieved at these mines.  The average gold price received of $1 278/oz was in line with the previous quarter (Q3 2017: $1 281/oz) and up 6% on the corresponding quarter of the previous year (Q4 2016: $1 206/oz).  Group gold sales and production decreased by 4% and 10% respectively from the corresponding quarter of 2016 on the back of lower production across the operations.

Total cash costs for the quarter of $213.3 million were up 6% from the prior quarter and up 3% from the corresponding quarter of 2016.  The increase in cash costs against the previous quarter reflects the increased throughput and production, and includes increased royalties.  The increase on the quarter of the previous year largely reflects the higher strip ratios at the Loulo-Gounkoto complex and at Tongon, in line with the mining plans, as the Gounkoto super pit stripping increased.

Total cash cost per ounce of $627/oz decreased by 6% quarter on quarter reflecting the higher production during the quarter, on the back of increased throughput, higher grades and better recovery across the operations, in particular at Tongon and Kibali.  Total cash cost per ounce increased by 14% on the corresponding quarter in 2016.  The increase was driven by the increased costs and decreased production, on the back of lower head grades across the operations, partially offset by higher recoveries at the Loulo-Gounkoto complex.  Cost per ounce was also slightly higher at Kibali on the back of reduced production following lower throughput and head grade. 

Profit from mining increased by 19% to $221.5 million from the previous quarter, and was down 10% on the corresponding quarter of 2016.  The increase from the prior quarter reflects the higher production partially offset by increased costs as explained above.  The decrease from the corresponding quarter of 2016 reflects lower production along with increased costs offset by a higher average gold price received.

Exploration and corporate expenditure of $12.2 million increased by 2% quarter on quarter and by 52% from the corresponding quarter in 2016.  The increase quarter on quarter reflects increased greenfields exploration expenditure.

Depreciation and amortisation of $51.2 million was in line with the previous quarter but decreased by 17% from the corresponding quarter of 2016.  The quarter ending 31 December 2016 included additional depreciation relating to a stripping asset ($15.5 million) at Gounkoto, as the ore was mined and fed during Q4 of 2016. 

Other income in the quarter of $1.4 million decreased from the previous quarter, but was in line with the corresponding quarter of the prior year.  Management fees from Kibali and Morila, were in line with the previous quarter and the corresponding quarter of the prior year.  A net operational foreign exchange gain of $2.3 million was included in other income in the prior quarter.  The current quarter includes a net operational foreign exchange loss of $5.4 million.  These gains and losses arise from the settlement of invoices in currencies other than the US dollar (dollar or $), as well as the translation of balances denominated in currencies such as the Congolese franc (CDF), euro and South African rand to the dollar rate and reflects the movements in these currencies during the respective quarter. 

Share of profits from equity accounted joint ventures of $13.7 million was up 98% on the previous quarter and compared to losses from joint ventures of $3.4 million in Q4 2016.  Kibali’s share of equity accounted joint venture profits increased by 150% to $15.0 million from a profit of $6.0 million in the previous quarter and increased significantly from a profit of $0.9 million in the corresponding quarter of 2016.  Profit from mining for Kibali was $46.2 million (attributable) for Q4 2017 compared to a profit of $33.3 million in Q3 2017 and a profit of $41.2 million in Q4 2016, reflecting higher gold sales and lower cash costs.  The share of profits from the Kibali joint venture is stated after depreciation of $28.3 million (Q3 2017: $31.8 million), foreign exchange losses of $1.3 million (Q3 2017: $2.2 million), and a tax credit value of $0.4 million (Q2 2017: $6.2 million) related to a deferred tax asset associated with tax losses/allowances carried forward. 

The foreign exchange losses incurred are primarily the result of the continued depreciation in the CDF compared to the dollar and the conversion of TVA balances owed to Kibali which are denominated in CDF. 

Morila’s share of equity accounted joint venture profits decreased from a profit of $0.7 million in Q3 2017 to a loss of $1.5 million in Q4 2017.  This resulted primarily from increased depreciation, related to the mining of the Domba satellite pit and an update of the estimated rehabilitation liability.

Income tax expense of $27.2 million decreased by 26% from the charge in Q3 and decreased by 19% from the corresponding quarter of 2016.  The decrease quarter on quarter reflects the withholding tax charge of $10.9 million that was incurred during the prior quarter on the Tongon dividend.  The decrease from the corresponding quarter in 2016 is due to decreased profits at Loulo and Gounkoto.

Profit for the quarter was up 45% from the previous quarter and down 8% from the corresponding quarter of 2016.  The movement quarter on quarter reflects the increase in profit from mining, the increase in the share of profits of equity accounted joint ventures and the decreased depreciation and other charges during the quarter as explained above.  The decrease from the corresponding quarter of 2016 mainly reflects the decrease in profit from mining.

Basic earnings per share increased by 54% to $0.80 quarter on quarter (Q3 2017: $0.52) but decreased by 5% compared to Q4 2016, reflecting higher and lower profits respectively. 

Net cash generated from operating activities for the quarter of $163.4 million was up 37% from the previous quarter (Q3 2017: $118.9 million) primarily reflecting the increase in profits from operations, net of taxes paid.  Net cash generated from operating activities was down 20% against the corresponding quarter in 2016 as a result of lower profits from operations.

COMMENTS ON THE YEAR ENDED 31 DECEMBER 2017
Gold sales for the year ended 31 December 2017 of $1.65 billion were up 7% from the previous year principally as a result of the 6% increase in the number of ounces of gold sold across the group, as well as a slight increase in the average gold price received of $1 258/oz (2016: $1 244/oz).  Gold production increased by 5%, on the back of higher throughput and recoveries and partially offset by lower head grade milled.  Total cash costs for the year ended 31 December 2017 of $815.3 million (2016: $794.4 million) increased by 3% on the prior year, driven by higher throughput and slightly higher unit costs at Kibali.  Total cash cost per ounce dropped 3% to $620/oz for the year (2016: $639/oz), reflecting the 6% increase in ounces sold year on year, offset by the 3% increase in total cash costs.

Profit for the year ended 31 December 2017 of $335.0 million represents an increase of 14% compared to a profit of $294.2 million in the previous year, resulting from increased production and revenue and lower cash costs per ounce of production, partially offset by a 4% increase in depreciation and the 35% increase in corporate tax expenses for the year.

Depreciation and amortisation for the year ended 31 December 2017 of $182.9 million increased from the prior year cost of $175.3 million.  Depreciation at Loulo of $106.3 million in 2017 was in line with the depreciation of $105.2 million incurred in 2016.  Depreciation at Gounkoto decreased from $23.5 million in 2016 to $10.5 million in 2017 due to the depreciation of the stripping asset ($15.5 million) which was included in Q4 of 2016.  This was partially offset by the increase in depreciation compared to the corresponding quarter of 2016, in line with the increased throughput at Gounkoto.  Depreciation at Tongon of $65.3 million in 2017 increased by 43% with the depreciation charged in 2016 ($45.7 million), primarily due to an increase in throughput year on year, as well as the increased charge following the change in reserve estimates at Tongon at the end of 2016.  Exploration and corporate expenditure of $47.8 million for the year ended 31 December 2017 increased by 16% from the previous year’s $41.2 million, reflecting increased exploration activity during the year.

Other income of $14.9 million and $6.0 million, for the years ended 31 December 2017 and 2016 respectively, include management fees from Morila and Kibali (2017: $5.2 million compared to 2016: $5.0 million) as well as operational foreign exchange gains (2017: $9.7 million compared to 2016: $1.0 million).  Other expenses for the year of $7.9 million increased 32% on the prior year’s $6.0 million and includes operational foreign exchange losses.

Share of profits of equity accounted joint ventures of $12.0 million decreased by 31% year on year (2016: $17.3 million).

Kibali’s share of equity accounted joint venture profits decreased from $24.2 million in 2016 to $11.6 million in 2017 primarily due to increased depreciation partially offset by deferred tax credits.  Profit from mining for Kibali for 2017 amounted to $129.5 million (attributable) compared to a profit of $131.0 million in 2016, reflecting the increased ounces and increased cost of production.  The share of profits from the Kibali joint venture is stated after depreciation of $123.7 million (2016: $102.7 million), foreign exchange losses of $17.2 million (2016: $16.3 million) and a deferred tax credit of $24.5 million (2016: $10.3 million). 

The increase in depreciation at Kibali was driven by an increase in throughput year on year, as well as increased assets brought into use following the completion of the underground shaft, materials handling system and further underground development. 

The foreign exchange losses are primarily the result of the depreciation in the CDF compared to the dollar during the year and the conversion of TVA balances owed to Kibali which are denominated in CDF.  The tax credit related to a deferred tax asset associated with tax losses/allowances carried forward. 

Morila’s share of equity accounted joint venture losses reduced from a loss of $7.1 million in 2016 to a loss of $0.1 million in 2017.  Profit from mining for 2017 was $7.6 million (attributable) (2016: $2.7 million).  The net loss of $0.1 million includes $5.1 million of depreciation charges (2016: $3.8 million) and $1.4 million of tax charges (2016: $0.6 million).  Profits from mining increased year on year following the increase in tonnes processed and production associated with the feeding of the Domba satellite ore in the latter part of 2017.

Income tax expense of $145.8 million increased by 35% year on year, reflecting higher accruals for tax charges at the Loulo-Gounkoto complex and Tongon, in line with higher profits.  The effective tax rate for the year was 30% (2016: 27%).

Basic earnings per share increased by 12% to $2.96 (2016: $2.64), in line with the increase in profit for the year as described above.

Net cash generated from operating activities for the year of $547.8 million increased by 5% from the previous year (2016: $521.2 million), in line with the strong operating performances at Loulo, Gounkoto and Tongon.  Cash and cash equivalents increased to $719.8 million compared to $516.3 million at the end of 2016, reflecting the net cash generated from operations, partially offset by increased additions to property, plant and equipment, as well as increased dividends paid to shareholders and increased funds invested in joint ventures.

The board has proposed a final cash dividend of 200 US cents per share, a 100% increase on the prior year’s 100 US cents per share.  The proposed final cash dividend will be put to shareholders for approval at the annual general meeting to be held on 8 May 2018.  The dividend will be paid in cash with no script alternative being made available.  The company anticipates, subject to shareholder approval, paying the final cash dividend on 18 May 2018.  The ex-dividend date is 22 March 2018 and the record date for the dividend is 23 March 2018.  Further details of the company’s proposed final cash dividend will be made available to shareholders in the explanatory notes of the company’s notice of annual general meeting.

Quarterly Report 31 December 2017

5 February 2018

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