Quarterly Report 30 September 2018

6 November 2018

Overview

London, 6 November 2018  -  Increased output at Randgold Resources’ other operations offset the impact of the strike at Tongon and kept the group’s gold production of 308 628 ounces in line with that of the previous quarter.

Q3 results published today also show a 16% improvement in group total cash cost per ounce at $586, a 25% increase in profit of $73.2 million and cash on hand rising by 8% to $653 million.


Chief executive Mark Bristow said considering that Tongon only returned to normal in the last month of the quarter, this was an exceptional performance, highlighted by Kibali posting another set of record results, and moving further ahead of plan, while Loulo-Gounkoto also delivered increases across the board.

“With the pushback for the new Gounkoto super pit now well underway, this quarter’s results set up well for a strong finish to the year,” Bristow said.

“Meanwhile we continue to invest in our future.  The Massawa project in Senegal has started a public participation process as part of its feasibility study and we’re moving ahead with the feasibility studies for Loulo 3 and Kalimva-Ikama at Kibali.  Brownfields exploration at Loulo-Gounkoto and Kibali is confirming that we should be able to sustain our 10-year business plan by replacing depleted reserves with ounces of the same quality.  Underground extension drilling at Yalea and Kibali has returned strong results and ongoing work along the Badenou structure is showing opportunities for adding ounces at Tongon.”

During the quarter the Dow Jones Sustainability Index announced that Randgold had been included in its index of top sustainability performers.  Randgold has been a constituent of the FTSE4Good Index for the past four years.  Also in this period, Morila’s pioneering agribusiness project, designed to replace mining with a sustainable source of economic activity after the mine’s closure, received the Malian government’s official approval.  Bristow said these developments demonstrated the company’s commitment to improving the welfare of its host country’s stakeholders.

Randgold’s shareholders will vote tomorrow on its all-share merger with Barrick Gold Corporation.  Bristow, who will be the president and chief executive of the proposed new company, said it would be focused on leveraging the combined strengths of Barrick and Randgold to become the leading gold investment vehicle and deliver long term value to all stakeholders.

Quarterly Report 30 September 2018

6 November 2018

Key Performance Indicators
  • Proposed Barrick merger to create new mining champion
  • Group gold production in line with Q2 despite impact of Tongon industrial action
  • Group total cash cost per ounce down 16% quarter on quarter
  • Profit for the period up 25% quarter on quarter
  • Cash on hand increased by 8% from Q2 to $654 million
  • Kibali posts another record quarter and moves further ahead of plan
  • Solid performance by Loulo-Gounkoto with increases across the board
  • Tongon operations back to normal after lockout
  • Morila agripole project endorsed by government
  • Massawa starts public participation process as part of feasibility study
  • Strong results from Yalea and Kibali underground extension drilling
  • Preliminary economic assessments highlight potential for new satellite operations at Loulo and Kibali
  • Ongoing work along Badenou structure shows potential to add ounces at Tongon

Randgold Resources Limited (‘Randgold’) had 94.5 million shares in issue as at 30 September 2018

Quarterly Report 30 September 2018

6 November 2018

Downloads

Quarterly Report 30 September 2018

6 November 2018

Summarised Financial Information



 

Quarterly Report 30 September 2018

6 November 2018

Comments

COMMENTS ON THE QUARTER ENDED 30 SEPTEMBER 2018

Gold sales for the quarter of $374.2 million decreased by 9% from $411.5 million in the previous quarter as a result of significantly decreased ounces sold at Tongon, on the back of industrial action, and a lower average gold price received during the quarter, partially offset by increases in ounces sold at the Loulo-Gounkoto complex, Kibali and Morila.  Group sales for the quarter of 309 579oz dropped by 2% from the previous quarter.  The average gold price received of $1 209/oz decreased by 7% quarter on quarter (Q2 2018: $1 299/oz).  Gold sales were 3% lower than the corresponding quarter of 2017, reflecting the 6% decrease in the average gold price received (Q3 2017: $1 281/oz) offset by a 2% increase in ounces sold.
 
Total cash costs for the quarter of $181.6 million were down 18% from the prior quarter (Q2 2018: $221.0 million) and by 10% from the corresponding quarter of 2017 (Q3 2017: $201.9 million).  Industrial action at Tongon during the quarter resulted in a cessation of operations for a period of approximately eight weeks resulting in lower total cash costs for the quarter.  Improved unit costs, particularly in mining, at the Loulo-Gounkoto complex and Kibali also drove costs down.
 
Total cash cost per ounce of $586 decreased by 16% quarter on quarter (Q2 2018: $697/oz) and by 12% against the corresponding quarter in 2017 (Q3 2017: $667/oz).  The decrease was driven by the improved cost management highlighted earlier and increased ounces sold at Loulo-Gounkoto, Morila and Kibali, resulting from an increase in head grade milled at Loulo-Gounkoto and Kibali and increased thoughput at Kibali.  This was partially offset by the increased total cash costs per ounce at Tongon, on the back of reduced production and ounces sold due to the industrial action. 
 
Profit from mining increased slightly from the previous quarter to $192.7 million (Q2 2018: $190.6 million) and by 4% on the corresponding quarter of 2017 (Q3 2017: $185.9 million).  The increase from the prior quarter and the corresponding quarter of 2017 reflects the increase in production and decreased costs as explained above, partially offset by the lower average gold price received.
 
Exploration and corporate expenditure of $11.3 million decreased by 24% quarter on quarter (Q2 2018: $14.9 million) and was down 5% from the corresponding quarter in 2017 (Q3 2017: $11.9 million).  The decrease quarter on quarter reflects a reduction in general corporate expenditure and decreased greenfields exploration expenditure due to the decrease in fieldwork during the annual rainy season in West Africa.
 
Depreciation and amortisation of $43.2 million decreased by 15% from the previous quarter (Q2 2018: $50.9 million) and by 14% from the corresponding quarter of 2017 (Q3 2017: $50.5 million).  The decrease in both cases primarily relates to significantly lower throughput at Tongon, as well as a slight decrease in throughput at Loulo offset but slightly higher throughput at Gounkoto. 
 
Other income in the quarter of $6.2 million increased from the previous quarter (Q2 2018: $3.0 million) and against the corresponding quarter of 2017 (Q3 2017: $3.6 million).  Management fees for 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 $2.7 million is included in other income during the current quarter, compared to a loss in the previous quarter of $11.4 million included in other expenses and a gain of $2.3 million in the corresponding quarter of 2017, included in other income.  These gains and losses arise largely from the translation of balances denominated in currencies such as CFA, euro and South African rand to the US dollar rate, especially in relation to value added tax (TVA) receivables and prepaid balances, as well as settlement of invoices in currencies other than the US dollar and reflects the movements in these currencies and the timing of payments during the respective quarter. 
 
Other expenses in the quarter were $10.2 million compared to $11.4 million in the previous quarter (Q3 2017: nil).  During the quarter $9.8 million of costs has been classified as other expenses, relating to ongoing costs attributable to the period without associated revenue at Tongon due to the illegal industrial action, and these costs have been excluded from non-GAAP measures relating to cash costs per ounce.  As noted earlier, other expenses in the previous quarter included net operational foreign exchange losses.
 
Share of profits from equity accounted joint ventures was $28.3 million and increased by 35% on the previous quarter’s profit of $20.9 million and increased by 310% against the profit of $6.9 million in the corresponding quarter of 2017. 
 
Kibali’s share of equity accounted joint venture profits was $30.0 million in the current quarter compared to a profit of $22.0 million in the previous quarter and a profit of $6.0 million in Q3 2017.  Profit from mining (attributable) for Kibali was $70.1 million for Q3 2018 compared to a profit of $59.8 million in Q2 2018 and a profit of $33.3 million in Q3 2017, reflecting higher gold sales, higher grade and lower cash costs in the current quarter.
 
The share of profits from the Kibali joint venture is stated after depreciation of $38.5 million (Q2 2018: $38.1 million; and Q3 2017: $31.8 million), foreign exchange losses of $0.5 million (Q2 2018: $0.3 million; and Q3 2017: $2.2 million), and a tax charge of $3.7 million (Q2 2018: $1.0 million charge; Q3 2017: $6.2 million credit) related to a deferred tax asset associated with tax losses/allowances carried forward.  The movement in the tax charge in the current quarter was a result of the decrease in the deferred tax asset associated with tax losses/allowances carried forward.  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 increased slightly from a loss of $1.0 million in Q2 2018 to a loss of $1.8 million in Q3 2018 and compared to a profit in Q3 2017 of $0.7 million.  Profit from mining (attributable) for Morila was $0.6 million for Q3 2018 compared to a profit of $1.1 million in Q2 2018 and a profit of $1.6 million in Q3 2017, reflecting higher gold sales offset by lower gold price received and higher input costs in the current quarter.
 
Income tax expense of $18.9 million during the quarter increased by 18% from the charge in the previous quarter (Q2 2018: $16.0 million) and decreased by 48% from the corresponding quarter of 2017 (Q3 2017: $36.5 million).  The increase quarter on quarter is as a result of a withholding tax charge of $15.7 million incurred during the quarter on the payment of the annual Tongon dividend, offset by a tax credit at Tongon resulting from the loss incurred in the quarter and a credit to tax at Gounkoto during the quarter in relation to the corporate tax reduction received from the Malian Government on 31 July 2018.  Gounkoto was granted a 50% corporate tax reduction over a four year period, effective from 1 January 2018 until 31 December 2021, to support the development of a super pit at the mine.  The agreement, which reduces the corporate tax rate, is a concession under Gounkoto’s mining convention that gives Gounkoto the right to apply for the additional tax exoneration should it make additional investments.  The impact of the reduced tax rate resulted in the application of an effective 15% tax for the current year and reversal of the previous tax charge on profits of 30%, including associated reversals of the additional charges recorded in the current year relating to deferred tax adjustments.  The decrease on the corresponding quarter in 2017 is mainly due to losses incurred at Tongon during the current quarter, offset by the increase in the withholding tax charge (Q3 2017: $10.9 million) incurred during the quarter.
 
Profit for the quarter of $73.2 million was up 25% from the previous quarter (Q2 2018: $58.4 million) and up 22% from the corresponding quarter of 2017 (Q3 2017: $60.2 million).  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 decrease in depreciation and other charges during the quarter as explained earlier. 
 
Basic earnings per share increased by 18% to $0.65 quarter on quarter (Q2 2018: $0.55) and by 25% compared to Q3 2017 (Q3 2017: $0.52), reflecting higher profits.

Overview

Quarterly Report 30 September 2018

6 November 2018

Overview

London, 6 November 2018  -  Increased output at Randgold Resources’ other operations offset the impact of the strike at Tongon and kept the group’s gold production of 308 628 ounces in line with that of the previous quarter.

Q3 results published today also show a 16% improvement in group total cash cost per ounce at $586, a 25% increase in profit of $73.2 million and cash on hand rising by 8% to $653 million.


Chief executive Mark Bristow said considering that Tongon only returned to normal in the last month of the quarter, this was an exceptional performance, highlighted by Kibali posting another set of record results, and moving further ahead of plan, while Loulo-Gounkoto also delivered increases across the board.

“With the pushback for the new Gounkoto super pit now well underway, this quarter’s results set up well for a strong finish to the year,” Bristow said.

“Meanwhile we continue to invest in our future.  The Massawa project in Senegal has started a public participation process as part of its feasibility study and we’re moving ahead with the feasibility studies for Loulo 3 and Kalimva-Ikama at Kibali.  Brownfields exploration at Loulo-Gounkoto and Kibali is confirming that we should be able to sustain our 10-year business plan by replacing depleted reserves with ounces of the same quality.  Underground extension drilling at Yalea and Kibali has returned strong results and ongoing work along the Badenou structure is showing opportunities for adding ounces at Tongon.”

During the quarter the Dow Jones Sustainability Index announced that Randgold had been included in its index of top sustainability performers.  Randgold has been a constituent of the FTSE4Good Index for the past four years.  Also in this period, Morila’s pioneering agribusiness project, designed to replace mining with a sustainable source of economic activity after the mine’s closure, received the Malian government’s official approval.  Bristow said these developments demonstrated the company’s commitment to improving the welfare of its host country’s stakeholders.

Randgold’s shareholders will vote tomorrow on its all-share merger with Barrick Gold Corporation.  Bristow, who will be the president and chief executive of the proposed new company, said it would be focused on leveraging the combined strengths of Barrick and Randgold to become the leading gold investment vehicle and deliver long term value to all stakeholders.

Key Performance Indicators

Quarterly Report 30 September 2018

6 November 2018

Key Performance Indicators
  • Proposed Barrick merger to create new mining champion
  • Group gold production in line with Q2 despite impact of Tongon industrial action
  • Group total cash cost per ounce down 16% quarter on quarter
  • Profit for the period up 25% quarter on quarter
  • Cash on hand increased by 8% from Q2 to $654 million
  • Kibali posts another record quarter and moves further ahead of plan
  • Solid performance by Loulo-Gounkoto with increases across the board
  • Tongon operations back to normal after lockout
  • Morila agripole project endorsed by government
  • Massawa starts public participation process as part of feasibility study
  • Strong results from Yalea and Kibali underground extension drilling
  • Preliminary economic assessments highlight potential for new satellite operations at Loulo and Kibali
  • Ongoing work along Badenou structure shows potential to add ounces at Tongon

Randgold Resources Limited (‘Randgold’) had 94.5 million shares in issue as at 30 September 2018

Downloads

Quarterly Report 30 September 2018

6 November 2018

Downloads

Summarised financial information

Quarterly Report 30 September 2018

6 November 2018

Summarised Financial Information



 

Comments

Quarterly Report 30 September 2018

6 November 2018

Comments

COMMENTS ON THE QUARTER ENDED 30 SEPTEMBER 2018

Gold sales for the quarter of $374.2 million decreased by 9% from $411.5 million in the previous quarter as a result of significantly decreased ounces sold at Tongon, on the back of industrial action, and a lower average gold price received during the quarter, partially offset by increases in ounces sold at the Loulo-Gounkoto complex, Kibali and Morila.  Group sales for the quarter of 309 579oz dropped by 2% from the previous quarter.  The average gold price received of $1 209/oz decreased by 7% quarter on quarter (Q2 2018: $1 299/oz).  Gold sales were 3% lower than the corresponding quarter of 2017, reflecting the 6% decrease in the average gold price received (Q3 2017: $1 281/oz) offset by a 2% increase in ounces sold.
 
Total cash costs for the quarter of $181.6 million were down 18% from the prior quarter (Q2 2018: $221.0 million) and by 10% from the corresponding quarter of 2017 (Q3 2017: $201.9 million).  Industrial action at Tongon during the quarter resulted in a cessation of operations for a period of approximately eight weeks resulting in lower total cash costs for the quarter.  Improved unit costs, particularly in mining, at the Loulo-Gounkoto complex and Kibali also drove costs down.
 
Total cash cost per ounce of $586 decreased by 16% quarter on quarter (Q2 2018: $697/oz) and by 12% against the corresponding quarter in 2017 (Q3 2017: $667/oz).  The decrease was driven by the improved cost management highlighted earlier and increased ounces sold at Loulo-Gounkoto, Morila and Kibali, resulting from an increase in head grade milled at Loulo-Gounkoto and Kibali and increased thoughput at Kibali.  This was partially offset by the increased total cash costs per ounce at Tongon, on the back of reduced production and ounces sold due to the industrial action. 
 
Profit from mining increased slightly from the previous quarter to $192.7 million (Q2 2018: $190.6 million) and by 4% on the corresponding quarter of 2017 (Q3 2017: $185.9 million).  The increase from the prior quarter and the corresponding quarter of 2017 reflects the increase in production and decreased costs as explained above, partially offset by the lower average gold price received.
 
Exploration and corporate expenditure of $11.3 million decreased by 24% quarter on quarter (Q2 2018: $14.9 million) and was down 5% from the corresponding quarter in 2017 (Q3 2017: $11.9 million).  The decrease quarter on quarter reflects a reduction in general corporate expenditure and decreased greenfields exploration expenditure due to the decrease in fieldwork during the annual rainy season in West Africa.
 
Depreciation and amortisation of $43.2 million decreased by 15% from the previous quarter (Q2 2018: $50.9 million) and by 14% from the corresponding quarter of 2017 (Q3 2017: $50.5 million).  The decrease in both cases primarily relates to significantly lower throughput at Tongon, as well as a slight decrease in throughput at Loulo offset but slightly higher throughput at Gounkoto. 
 
Other income in the quarter of $6.2 million increased from the previous quarter (Q2 2018: $3.0 million) and against the corresponding quarter of 2017 (Q3 2017: $3.6 million).  Management fees for 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 $2.7 million is included in other income during the current quarter, compared to a loss in the previous quarter of $11.4 million included in other expenses and a gain of $2.3 million in the corresponding quarter of 2017, included in other income.  These gains and losses arise largely from the translation of balances denominated in currencies such as CFA, euro and South African rand to the US dollar rate, especially in relation to value added tax (TVA) receivables and prepaid balances, as well as settlement of invoices in currencies other than the US dollar and reflects the movements in these currencies and the timing of payments during the respective quarter. 
 
Other expenses in the quarter were $10.2 million compared to $11.4 million in the previous quarter (Q3 2017: nil).  During the quarter $9.8 million of costs has been classified as other expenses, relating to ongoing costs attributable to the period without associated revenue at Tongon due to the illegal industrial action, and these costs have been excluded from non-GAAP measures relating to cash costs per ounce.  As noted earlier, other expenses in the previous quarter included net operational foreign exchange losses.
 
Share of profits from equity accounted joint ventures was $28.3 million and increased by 35% on the previous quarter’s profit of $20.9 million and increased by 310% against the profit of $6.9 million in the corresponding quarter of 2017. 
 
Kibali’s share of equity accounted joint venture profits was $30.0 million in the current quarter compared to a profit of $22.0 million in the previous quarter and a profit of $6.0 million in Q3 2017.  Profit from mining (attributable) for Kibali was $70.1 million for Q3 2018 compared to a profit of $59.8 million in Q2 2018 and a profit of $33.3 million in Q3 2017, reflecting higher gold sales, higher grade and lower cash costs in the current quarter.
 
The share of profits from the Kibali joint venture is stated after depreciation of $38.5 million (Q2 2018: $38.1 million; and Q3 2017: $31.8 million), foreign exchange losses of $0.5 million (Q2 2018: $0.3 million; and Q3 2017: $2.2 million), and a tax charge of $3.7 million (Q2 2018: $1.0 million charge; Q3 2017: $6.2 million credit) related to a deferred tax asset associated with tax losses/allowances carried forward.  The movement in the tax charge in the current quarter was a result of the decrease in the deferred tax asset associated with tax losses/allowances carried forward.  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 increased slightly from a loss of $1.0 million in Q2 2018 to a loss of $1.8 million in Q3 2018 and compared to a profit in Q3 2017 of $0.7 million.  Profit from mining (attributable) for Morila was $0.6 million for Q3 2018 compared to a profit of $1.1 million in Q2 2018 and a profit of $1.6 million in Q3 2017, reflecting higher gold sales offset by lower gold price received and higher input costs in the current quarter.
 
Income tax expense of $18.9 million during the quarter increased by 18% from the charge in the previous quarter (Q2 2018: $16.0 million) and decreased by 48% from the corresponding quarter of 2017 (Q3 2017: $36.5 million).  The increase quarter on quarter is as a result of a withholding tax charge of $15.7 million incurred during the quarter on the payment of the annual Tongon dividend, offset by a tax credit at Tongon resulting from the loss incurred in the quarter and a credit to tax at Gounkoto during the quarter in relation to the corporate tax reduction received from the Malian Government on 31 July 2018.  Gounkoto was granted a 50% corporate tax reduction over a four year period, effective from 1 January 2018 until 31 December 2021, to support the development of a super pit at the mine.  The agreement, which reduces the corporate tax rate, is a concession under Gounkoto’s mining convention that gives Gounkoto the right to apply for the additional tax exoneration should it make additional investments.  The impact of the reduced tax rate resulted in the application of an effective 15% tax for the current year and reversal of the previous tax charge on profits of 30%, including associated reversals of the additional charges recorded in the current year relating to deferred tax adjustments.  The decrease on the corresponding quarter in 2017 is mainly due to losses incurred at Tongon during the current quarter, offset by the increase in the withholding tax charge (Q3 2017: $10.9 million) incurred during the quarter.
 
Profit for the quarter of $73.2 million was up 25% from the previous quarter (Q2 2018: $58.4 million) and up 22% from the corresponding quarter of 2017 (Q3 2017: $60.2 million).  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 decrease in depreciation and other charges during the quarter as explained earlier. 
 
Basic earnings per share increased by 18% to $0.65 quarter on quarter (Q2 2018: $0.55) and by 25% compared to Q3 2017 (Q3 2017: $0.52), reflecting higher profits.

Quarterly Report 30 September 2018

6 November 2018

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