Quarterly Report 30 September 2017

2 November 2017

Overview

RANDGOLD ON TRACK TO MEET 2017 GUIDANCE

London, 2 November 2017 - As forecast, Randgold Resources’ results for Q3 were lower than those for Q2 but the company says it remains well positioned to achieve the top end of its production guidance for the year.

Production was lower quarter on quarter due to the Gounkoto super pit pushback and a planned decrease in grade at the flagship Loulo-Gounkoto complex.  Another factor was a mill upgrade project in the first part of the quarter which impacted on throughput at Tongon. 
 
Consequently production of 310 618 ounces was 9% down on Q2 while total cash cost per ounce rose by 17% to $667.  Profit of $60.2 million was down 41%.  Comparing the first nine months of this year to the same period in 2016, production was up 11%, total cash cost per ounce was down 9% and profit was up 22% while the group cash position grew as planned.

Chief executive Mark Bristow said the commissioning and automation of Kibali’s underground ore handling systems and their integration with the shaft was currently being completed and was the key for Kibali to meet its 610 000oz guidance for the year.  Otherwise, all the group operations were on target to meet or exceed their annual production plans.  In addition, the group continued to look at ways to expand its existing asset base and to discover new world-class gold deposits. 

“Brownfields exploration continues to generate good results.  We can now confidently project annual production in excess of 600 000 ounces for at least 10 years for both Loulo-Gounkoto and Kibali, and we hope to extend Tongon’s life, as we have done at Morila,” Bristow said.

“One of our stated objectives is to define three new projects over the next four years.  In Senegal, our focus is on delivering a Massawa feasibility study with a +3 million ounce reserve that passes our investment filters.  Massawa is close to that mark and currently sits comfortably in the upper quartile of global gold development projects.”

In Côte d’Ivoire, Randgold has concluded a joint venture with Endeavour Mining which will give it access to the ground immediately north of its Mankono permit, where the promising Gbongogo target is located.  Grassroots exploration in the Democratic Republic of Congo is progressing the Moku and Ngayu projects.

“Randgold stands out as one of only a few gold mining companies that consistently outperforms the gold price and delivers real value to its shareholders, host countries and other stakeholders.  Our continuing investment in the future is in line with our long term strategy of creating value through exploration and development, and allocating capital against a strict set of criteria,” Bristow said.

“With a long term plan that is profitable at a gold price of $1 000 per ounce, a growing dividend stream flowing from past investments and a commitment to ongoing investment, I believe Randgold will continue to be a leader in the gold mining industry in terms of value creation for all stakeholders.”

Quarterly Report 30 September 2017

2 November 2017

Key Performance Indicators
  • Profits down 41% quarter on quarter and up 22% on corresponding 9 months of prior year
  • Production down 9% quarter on quarter and up 11% on corresponding 9 months of prior year
  • Earnings per share down 42% quarter on quarter and up 19% on corresponding 9 months of prior year
  • Total cash cost per ounce up 17% quarter on quarter and down 9% on corresponding 9 months of prior year
  • Cash up 9% quarter on quarter and up 72% on corresponding prior year third quarter
  • Loulo-Gounkoto on track to beat 2017 guidance
  • Morila performs in line with plan and prepares for Domba ore feed in Q4 2017
  • Tongon 2017 guidance remains intact despite dip in Q3 production
  • Kibali posts steady improvement ahead of anticipated underground ramp-up
  • Mankono footprint increases with new joint venture
  • Massawa feasibility study continues with focus on expanding reserve base
  • Brownfields exploration continues to deliver positive results at Kibali and Loulo
  • Total Injury Frequency Rate reduced by 29% quarter on quarter and 32% on corresponding 9 months of prior year

Randgold Resources Limited (‘Randgold’) had 94.1 million shares in issue as at 30 September 2017.

Quarterly Report 30 September 2017

2 November 2017

Summarised Financial Information

Quarterly Report 30 September 2017

2 November 2017

Comments

Gold sales for the quarter of $387.8 million decreased by 8% from $422.1 million in the previous quarter.  Group sales for the quarter of 302 620oz dropped by 10% from the previous quarter.  The average gold price received of $1 281/oz increased by 2% quarter on quarter (Q2 2017: $1 254/oz).  Gold sales were in line with the corresponding quarter of 2016.

Total cash costs for the quarter of $201.9 million were up 5% from the prior quarter and up 3% from the corresponding quarter of 2016.  The increase in cash costs 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 $667/oz increased by 17% quarter on quarter and was in line with the corresponding quarter in 2016.  The increase was driven by the increased costs highlighted above and decreased production at the Loulo-Gounkoto complex and at Tongon, following a drop in head grade milled.  Costs per ounce were also higher at Tongon, on the back of reduced production following lower throughput and recovery.  However, costs per ounce were positively impacted by reduced costs at Kibali, mainly on the back of a lower strip ratio and slightly higher grade.

Profit from mining decreased by 19% to $185.9 million from the previous quarter, and was down 6% on the corresponding quarter of 2016.  The decrease from the prior quarter reflects the reduction in production and increased costs as explained above.  The decrease from the corresponding quarter of 2016 reflects increased costs and a lower gold price received.
 
Exploration and corporate expenditure of $11.9 million decreased by 7% quarter on quarter, and was up 6% from the corresponding quarter in 2016.  The decrease quarter on quarter reflects a reduction in general corporate expenditure.  The increase compared to the corresponding quarter of the prior year was the result of increased greenfields exploration expenditure.

Depreciation and amortisation of $50.5 million increased by 20% from the previous quarter and by 26% from the corresponding quarter of 2016.  The increase primarily follows a review of the useful lives of assets at the Loulo-Gounkoto complex and at Tongon, resulting in a one-off accelerated depreciation charge over the second half of the year, while higher throughput at the Loulo-Gounkoto complex also impacted the charge.  

Other income in the quarter of $3.6 million decreased from the previous quarter, but increased from 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 during the current quarter.  These gains and losses arise from the settlement of invoices in currencies other than the US dollar, as well as the translation of balances denominated in currencies such as the CFA franc, euro and South African rand to the US dollar rate and reflects the movements in these currencies during the respective quarter.  

Share of profits from equity accounted joint ventures was $6.9 million compared to losses from joint ventures of $3.4 million in the previous quarter and a $6.0 million profit in Q3 2016.  Kibali’s share of equity accounted joint venture profits increased from a loss of $4.3 million in Q2 2017 to a profit of $6.0 million in the current quarter.  Profit from mining for Kibali was $33.3 million for Q3 2017 compared to a profit of $23.8 million in Q2 2017, reflecting higher gold sales and lower cash costs.

The share of profits from the Kibali joint venture is stated after depreciation of $31.8 million (Q2 2017: $31.3 million), foreign exchange losses of $2.2 million (Q2 2017: $6.4 million), and a tax credit value of $6.2 million (Q2 2017: $11.2 million) related to a deferred tax asset associated with tax losses/allowances carried forward.  The prior quarter also included a time value of money discount on the outstanding value added tax (TVA) balance of $2.7 million (Q3 2017: nil).

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

Morila’s share of equity accounted joint venture profits decreased slightly from a profit of $0.9 million in Q2 2017 to a profit of $0.7 million in Q3 2017.
 
Income tax expense of $36.5 million decreased by 23% from the charge in Q2 and increased by 13% from the corresponding quarter of 2016.  The decrease quarter on quarter is mainly due to decreased profits at Loulo, Gounkoto and Tongon, while the increase from the corresponding quarter in 2016 reflects a withholding tax charge of $10.9 million incurred during the quarter on the payment of the annual Tongon dividend, partially offset by decreased profits at Loulo, Gounkoto and Tongon.

Profit for the quarter was down 41% from the previous quarter and down 22% from the corresponding quarter of 2016.  The movement quarter on quarter reflect the decrease in profit from mining, the increase in the share of profits of equity accounted joint ventures and the increased 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 and the increased depreciation charge.

Basic earnings per share decreased by 42% to $0.52 quarter on quarter (Q2 2017: $0.89) and by 26% compared to Q3 2016, reflecting lower profits.  

Net cash generated from operating activities for the quarter of $118.9 million was down 10% from the previous quarter, and in line with the corresponding quarter in 2016, primarily reflecting the movement in profits from operations.

Overview

Quarterly Report 30 September 2017

2 November 2017

Overview

RANDGOLD ON TRACK TO MEET 2017 GUIDANCE

London, 2 November 2017 - As forecast, Randgold Resources’ results for Q3 were lower than those for Q2 but the company says it remains well positioned to achieve the top end of its production guidance for the year.

Production was lower quarter on quarter due to the Gounkoto super pit pushback and a planned decrease in grade at the flagship Loulo-Gounkoto complex.  Another factor was a mill upgrade project in the first part of the quarter which impacted on throughput at Tongon. 
 
Consequently production of 310 618 ounces was 9% down on Q2 while total cash cost per ounce rose by 17% to $667.  Profit of $60.2 million was down 41%.  Comparing the first nine months of this year to the same period in 2016, production was up 11%, total cash cost per ounce was down 9% and profit was up 22% while the group cash position grew as planned.

Chief executive Mark Bristow said the commissioning and automation of Kibali’s underground ore handling systems and their integration with the shaft was currently being completed and was the key for Kibali to meet its 610 000oz guidance for the year.  Otherwise, all the group operations were on target to meet or exceed their annual production plans.  In addition, the group continued to look at ways to expand its existing asset base and to discover new world-class gold deposits. 

“Brownfields exploration continues to generate good results.  We can now confidently project annual production in excess of 600 000 ounces for at least 10 years for both Loulo-Gounkoto and Kibali, and we hope to extend Tongon’s life, as we have done at Morila,” Bristow said.

“One of our stated objectives is to define three new projects over the next four years.  In Senegal, our focus is on delivering a Massawa feasibility study with a +3 million ounce reserve that passes our investment filters.  Massawa is close to that mark and currently sits comfortably in the upper quartile of global gold development projects.”

In Côte d’Ivoire, Randgold has concluded a joint venture with Endeavour Mining which will give it access to the ground immediately north of its Mankono permit, where the promising Gbongogo target is located.  Grassroots exploration in the Democratic Republic of Congo is progressing the Moku and Ngayu projects.

“Randgold stands out as one of only a few gold mining companies that consistently outperforms the gold price and delivers real value to its shareholders, host countries and other stakeholders.  Our continuing investment in the future is in line with our long term strategy of creating value through exploration and development, and allocating capital against a strict set of criteria,” Bristow said.

“With a long term plan that is profitable at a gold price of $1 000 per ounce, a growing dividend stream flowing from past investments and a commitment to ongoing investment, I believe Randgold will continue to be a leader in the gold mining industry in terms of value creation for all stakeholders.”

Key Performance Indicators

Quarterly Report 30 September 2017

2 November 2017

Key Performance Indicators
  • Profits down 41% quarter on quarter and up 22% on corresponding 9 months of prior year
  • Production down 9% quarter on quarter and up 11% on corresponding 9 months of prior year
  • Earnings per share down 42% quarter on quarter and up 19% on corresponding 9 months of prior year
  • Total cash cost per ounce up 17% quarter on quarter and down 9% on corresponding 9 months of prior year
  • Cash up 9% quarter on quarter and up 72% on corresponding prior year third quarter
  • Loulo-Gounkoto on track to beat 2017 guidance
  • Morila performs in line with plan and prepares for Domba ore feed in Q4 2017
  • Tongon 2017 guidance remains intact despite dip in Q3 production
  • Kibali posts steady improvement ahead of anticipated underground ramp-up
  • Mankono footprint increases with new joint venture
  • Massawa feasibility study continues with focus on expanding reserve base
  • Brownfields exploration continues to deliver positive results at Kibali and Loulo
  • Total Injury Frequency Rate reduced by 29% quarter on quarter and 32% on corresponding 9 months of prior year

Randgold Resources Limited (‘Randgold’) had 94.1 million shares in issue as at 30 September 2017.

Downloads

Summarised financial information

Quarterly Report 30 September 2017

2 November 2017

Summarised Financial Information

Comments

Quarterly Report 30 September 2017

2 November 2017

Comments

Gold sales for the quarter of $387.8 million decreased by 8% from $422.1 million in the previous quarter.  Group sales for the quarter of 302 620oz dropped by 10% from the previous quarter.  The average gold price received of $1 281/oz increased by 2% quarter on quarter (Q2 2017: $1 254/oz).  Gold sales were in line with the corresponding quarter of 2016.

Total cash costs for the quarter of $201.9 million were up 5% from the prior quarter and up 3% from the corresponding quarter of 2016.  The increase in cash costs 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 $667/oz increased by 17% quarter on quarter and was in line with the corresponding quarter in 2016.  The increase was driven by the increased costs highlighted above and decreased production at the Loulo-Gounkoto complex and at Tongon, following a drop in head grade milled.  Costs per ounce were also higher at Tongon, on the back of reduced production following lower throughput and recovery.  However, costs per ounce were positively impacted by reduced costs at Kibali, mainly on the back of a lower strip ratio and slightly higher grade.

Profit from mining decreased by 19% to $185.9 million from the previous quarter, and was down 6% on the corresponding quarter of 2016.  The decrease from the prior quarter reflects the reduction in production and increased costs as explained above.  The decrease from the corresponding quarter of 2016 reflects increased costs and a lower gold price received.
 
Exploration and corporate expenditure of $11.9 million decreased by 7% quarter on quarter, and was up 6% from the corresponding quarter in 2016.  The decrease quarter on quarter reflects a reduction in general corporate expenditure.  The increase compared to the corresponding quarter of the prior year was the result of increased greenfields exploration expenditure.

Depreciation and amortisation of $50.5 million increased by 20% from the previous quarter and by 26% from the corresponding quarter of 2016.  The increase primarily follows a review of the useful lives of assets at the Loulo-Gounkoto complex and at Tongon, resulting in a one-off accelerated depreciation charge over the second half of the year, while higher throughput at the Loulo-Gounkoto complex also impacted the charge.  

Other income in the quarter of $3.6 million decreased from the previous quarter, but increased from 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 during the current quarter.  These gains and losses arise from the settlement of invoices in currencies other than the US dollar, as well as the translation of balances denominated in currencies such as the CFA franc, euro and South African rand to the US dollar rate and reflects the movements in these currencies during the respective quarter.  

Share of profits from equity accounted joint ventures was $6.9 million compared to losses from joint ventures of $3.4 million in the previous quarter and a $6.0 million profit in Q3 2016.  Kibali’s share of equity accounted joint venture profits increased from a loss of $4.3 million in Q2 2017 to a profit of $6.0 million in the current quarter.  Profit from mining for Kibali was $33.3 million for Q3 2017 compared to a profit of $23.8 million in Q2 2017, reflecting higher gold sales and lower cash costs.

The share of profits from the Kibali joint venture is stated after depreciation of $31.8 million (Q2 2017: $31.3 million), foreign exchange losses of $2.2 million (Q2 2017: $6.4 million), and a tax credit value of $6.2 million (Q2 2017: $11.2 million) related to a deferred tax asset associated with tax losses/allowances carried forward.  The prior quarter also included a time value of money discount on the outstanding value added tax (TVA) balance of $2.7 million (Q3 2017: nil).

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

Morila’s share of equity accounted joint venture profits decreased slightly from a profit of $0.9 million in Q2 2017 to a profit of $0.7 million in Q3 2017.
 
Income tax expense of $36.5 million decreased by 23% from the charge in Q2 and increased by 13% from the corresponding quarter of 2016.  The decrease quarter on quarter is mainly due to decreased profits at Loulo, Gounkoto and Tongon, while the increase from the corresponding quarter in 2016 reflects a withholding tax charge of $10.9 million incurred during the quarter on the payment of the annual Tongon dividend, partially offset by decreased profits at Loulo, Gounkoto and Tongon.

Profit for the quarter was down 41% from the previous quarter and down 22% from the corresponding quarter of 2016.  The movement quarter on quarter reflect the decrease in profit from mining, the increase in the share of profits of equity accounted joint ventures and the increased 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 and the increased depreciation charge.

Basic earnings per share decreased by 42% to $0.52 quarter on quarter (Q2 2017: $0.89) and by 26% compared to Q3 2016, reflecting lower profits.  

Net cash generated from operating activities for the quarter of $118.9 million was down 10% from the previous quarter, and in line with the corresponding quarter in 2016, primarily reflecting the movement in profits from operations.

Quarterly Report 30 September 2017

2 November 2017

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