Sunday, February 4, 2007

London, 5 February 2007 - LSE and Nasdaq listed gold miner Randgold Resources today reported a 54% increase to US$74 million in profit before tax for the 12 months to 31 December 2006, fuelled by the first full-year contribution from its Loulo operation in Mali and a higher gold price.

Net profit was up 6% at US$51 million against 2005's restated figure.  This was in spite of a tax charge of US$23.1 million, the company's share of its Morila joint venture's first full year of corporate taxation.  Earnings per share were 70 cents.  Attributable production rose for the third successive year from 314 831 ounces in 2005 to 399 927 ounces (448 242 ounces assuming 100% of Loulo production).  Total cash costs for the year averaged US$296 per ounce, up from 2005's US$201, mainly due to the lower grade, but were still well below the industry average of US$350.

The company ended the year with cash of US$143 million after expenditure of US$29 million on exploration and corporate costs, US$32 million on the completion of the Loulo plant and additions, US$18 million on the Yalea underground development and another US$19 million on repaying the first third of the Loulo project finance.

In view of the strong cash flows from operations and the company's robust balance sheet, the board decided to declare a dividend of 10 cents per share, totalling a pay-out of US$6.9 million.

Chief executive Mark Bristow said the initiation of dividend payments was a major milestone in the development of Randgold Resources as a profitable business.

Loulo finished the year with an excellent quarter, increasing production by 20% from the previous quarter's level on the back of continued operational improvements.  Despite delays caused by the late commissioning of the hard rock crushing circuit, production for the year was only marginally below target at 241 575 ounces.  The higher average gold price received of US$601 per ounce was partly offset by the effect of delivering 66 922 ounces into the hedge at US$434 per ounce.  Profit from mining activity for the first full year of production was US$57.5 million and net profit was US$16.2 million.

"All in all, it's been a very satisfactory year for Loulo, thanks to outstanding performances by our capital and operational teams.  The operation has settled down to a solid state and the focus now is on achieving further efficiencies and improving cost control," Bristow said.  Production at Loulo is scheduled to exceed 250 000 ounces in 2007 from its two open-pit mines.

In the meantime, the development of the Yalea underground mine at Loulo is progressing rapidly.  Construction of the boxcut is almost complete and decline development started with the first blast into hard rock on 22 December last year.  First ore is expected to be accessed towards the end of this year, with full production scheduled for 2009.  Development of Gara,  Loulo's  second underground mine,  is due to start at the beginning of 2009 with first ore delivered to the plant by the end of that year. The recently completed redesign of Gara has doubled its reserve. The two underground mines are expected to not only extend Loulo's life but to boost its annual production to more than 400 000 ounces by 2011.

Elsewhere in Mali, Morila produced 516 667 ounces for the year, below 2005's level as a result of lower grades, but in line with expectations.  After some operational problems in the second and third quarters, a record throughput was achieved in October and the plant is currently operating at its full expanded capacity.  Morila is slated to produce around the 500 000 ounce level again in 2007.  Morila has no debt and no hedging.

In Côte d'Ivoire, a 30 000 metre drilling programme which will form the basis for a feasibility study on the development of a mine is underway at the company's 3 million ounce Tongon project.

On the exploration front, Randgold Resources now has 128 targets on 20 414km² in six countries in West and East Africa. In addition to the work being done at Loulo and Tongon, the company plans to drill advanced targets in Burkina Faso, Senegal and Tanzania.  It has recently also established a generative team to assess the countries in which the company does not already have a presence with a view to identifying opportunities there.

"The substantial profit and production increases of the past year reflect the continuing success of our organic growth strategy.  With two established and robust operations, one underground mine in development and another waiting in the wings, a feasibility stage project at Tongon and a pipeline of quality prospects, we are strongly placed to sustain our business in 2007 and beyond," Bristow said.

"In the year ahead we'll be looking to extract the maximum benefit from Loulo and Morila while progressing the Yalea underground development and advancing our other projects and prospects.  We'll also be keeping a close eye on costs.  Pressures produced by the weak dollar, high oil and steel prices and rising contract mining costs are currently being felt throughout the industry.  As far as Randgold Resources in particular is concerned, our mines are in remote areas and have to generate their own power from diesel-fired generators, and the rise in the diesel price means that this now accounts for 25% of our total production costs.  Keeping these costs under control through improved efficiencies, good housekeeping and tight management will therefore be a key focus for 2007."

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