OPERATIONS

LOULO

Loulo produced 60 495 ounces of gold during the quarter at a total cash cost of US$523/oz compared to 64 250 ounces in the previous quarter at US$556/oz. Total cash costs were reduced by 12% quarter on quarter, following a drop in mining consumable costs, especially diesel, and a small reduction in tonnes mined. Ore stockpiles were also increased, in line with the plan to build sufficient crushed material ahead of commissioning the crusher expansion, scheduled for Q2 2009. The decrease in production was mainly attributable to lower ore grades than planned due to the replacement of high grade underground ore with lower grade open pit material, due to reduced equipment availability. A plan aimed at addressing certain equipment availability issues impacting on underground production has been agreed with the equipment suppliers and service providers (see Loulo Underground Development Project).

Increased throughput in 2008 partially offset the impact of lower head grades caused by a reduction in the open pit grade and the delay in underground development which limited access to higher grade ore. This resulted in 258 095 ounces of gold being produced for the year within 3% of the 265 000 ounce forecast – which, given the challenges relating to the underground that had to be overcome, was a significant achievement. Industry wide consumable cost pressures in 2008, especially diesel, together with a stronger euro/dollar exchange rate and the impact of higher tonnes mined, increased total cash costs to US$511/oz (2007: US$372/oz).
 

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, 22 749 ounces delivered at US$429/oz in the quarter ended 31 December 2008 and 19 254 ounces delivered at US$439/oz in the quarter ended 31 December 2007. Also includes the impact of 80 496 ounces for the year ended 31 December 2008 (31 December 2007: 90 836 ounces) delivered into the hedge at US$429/oz (year ended 31 December 2007: US$436/oz).



MORILA

During the quarter Morila produced 117 066 ounces, a 25% increase over the previous quarter (Q3: 94 016 ounces). Total cash costs per ounce dropped by 14% to US$377 compared to US$440 in the previous quarter. This was mainly attributable to an increase in the ore grade mined to 3.6g/t (Q3: 3.0g/t) as well as increased throughput and recoveries.

Gold production for the year of 425 828 ounces came within 2% of the forecast of 430 000 ounces, a satisfactory result given the diminishing flexibility in the pit as the mine nears the end of in-pit mining. Despite the industry wide increase in mining consumable costs, especially diesel, the stronger euro/dollar exchange rate and the drop in ounces produced (5%) due to the lower grade of ore mined, costs per ounce were well contained at US$400/oz (2007: US$332/oz).

During the quarter, the mine continued with its rightsizing strategy to optimise the Morila operations in line with the anticipated pit closure in the second quarter of 2009. This should ensure that as the mine transitions to a stockpile treatment process it remains a strong cash generator for the rest of its life. To reduce the impact of the rightsizing on the community and employees the company has launched an agri-business study to explore sustainable development after the cessation of mining operations, currently scheduled for 2013.

The mine has also started a scoping study into the mining of near pit high grade mineralisation at the northern end of the pit by underground methods. This high grade ore could not be mined economically by surface mining methods due to the high strip ratio, but may be economic as a small scale underground operation.
 

* Refer to explanation of non-GAAP measures provided.