OPERATIONS

LOULO

Loulo produced 63 249 ounces of gold during the quarter at a total cash cost of US$470/oz (cash operating cost of US$429/oz) compared to last quarter’s production of 68 059 ounces at US$436/oz (cash operating cost US$399/oz). The drop in production, as a result of a decrease in the average grade of ore mined and processed, was in line with the current mine plan.

After additional equipment was mobilised by the mining contractor at the beginning of the fourth quarter in 2007, the mine continued to improve its operational flexibility with additional tonnes being moved over and above the mine plan similar to the previous quarter. This should ensure the operation in a position to meet its targeted throughput during the coming midyear rainy season.

The higher gold prices received during the quarter also corresponded with higher fuel prices and a weaker US dollar, which impacted negatively on consumables and other commodity prices and resulted in a negative impact on the cash operating costs. Randgold Resources continues to remain focused on the quantities of the commodities consumed in the production process in order to keep costs under control.

Randgold Resources owns 80% of Loulo with the Government of Mali owning 20%. The Government’s share is not a free carried interest. Randgold Resources has funded the Government portion of the investment in Loulo by way of shareholder loans and therefore controls 100% of the cash flows from Loulo until the shareholder loans are repaid.

Randgold Resources consolidates 100% of Loulo and shows the minority interest separately.

*    Refer to explanation of non-GAAP measures provided.

+    Includes the impact of 17 499 ounces delivered into the hedge at US$429/oz in the quarter ended 31 March 2008, 19 254 ounces delivered at US$439/oz in the quarter ended 31 December 2007, 19 254 ounces delivered at US$439/oz in the quarter ended 31 March 2007 and 90 836 ounces delivered at US$426/oz for the year ended 31 December 2007.


Resource and Reserve Update

During the quarter, the group released its annual resource and reserve declaration and the relevant extract relating to the Loulo reserves is shown in the table below, including a comparison with 2006 figures :

MORILA

Morila had a satisfactory production performance during the first quarter. A total of 101 000 ounces were produced at a total cash cost of US$393/oz (cash operating cost of US$334/oz) compared to last quarter’s production of 129 193 ounces at US$337/oz (cash operating cost US$279/oz).

Processed grades were up on plan, which compensated for the lower than planned throughput caused by poor plant availability and utilisation.

* Refer to explanation of non-GAAP measures provided.

The reserve base for Morila as at end 2007 is tabulated below with a comparison to figures as at the end of 2006:

As a result of AngloGold Ashanti’s notification to Randgold Resources that it was considering the disposal of its 40% share of Morila, it was agreed that Randgold Resources assume the operatorship of the mine. This was effected on 15 February 2008. On assumption of operatorship, a multi-disciplinary team comprising Randgold Resources and AngloGold Ashanti representatives performed an on-site audit of the current situation.

Several operational issues were identified as requiring rectification. These included :

• lack of short interval controls;
• poor maintenance; and
• poor communication with suppliers of critical equipment.
  

Consequently we have instituted corrective action and have also identified the possibility of increasing plant throughput which we will investigate further to evaluate the options and possible benefits.

An investigation was launched into the discrepancy between results from the grade control model and the life of mine ore reserve model (October 2007), which was returning lower tonnes and grade. A new hybrid model, incorporating the additional drilling from October 2007, was compiled. This has shown lower tonnages and grades due to wireframe changes based on geological interpretation, increased amounts of internal waste as well as the increased variability of the orezones on the fringes of the orebody.

As a result of these changes, we have reduced the forecast production for 2008 from the previous guidance of 465 000 ounces to a total of 430 000 ounces. Randgold Resources will continue to look for ways of increasing production during the year and is reviewing any impact on future years’ production. Advanced grade control has been prioritised with a second rig being brought to site.