Loulo Gold Mine

Société des Mines de Loulo (SOMILO) S.A. which owns the 372km2 Loulo mining lease in western Mali, is the 80% owned subsidiary of Randgold Resources Limited. The remaining 20% is owned by the Government of Mali. The project is being developed as both an open pit and underground operation by Randgold Resources to exploit two main orebodies; Gara and Yalea, as well as a number of satellite deposits. The initial open pit mine was financed, developed and then commissioned by Randgold Resources in September 2005. The development of the underground phase is expected to be financed from internal cashflow and by Randgold. The original Gara orebody, was discovered by Syndicate d'Or in 1981 and the Yalea orebody, the principal orebody, by Randgold Resources in 1996/1997. The mining lease still boasts a significant portfolio of prospective targets which are being explored and evaluated through an ongoing exploration programme.


Project Update to 30 September 2008 ...

LOULO

Loulo produced 64 250 ounces of gold during the quarter at a total cash cost of US$556/oz compared to 70 100 ounces in the previous quarter at US$496/oz. The decrease in production was attributable to lower ore grades being processed, having been affected by the mix of the different ore types processed, in order to ensure consistent through put during the wet season. The average grade processed of 3.2g/t was in line with the corresponding wet quarter of 2007, but 9% below the second quarter of 2008. Tonnes milled was significantly higher than the corresponding quarter of 2007, and slightly lower than the previous quarter.

Total tonnes mined were lower than the previous quarter but significantly higher than the corresponding quarter in 2007. The increase in total cash cost per ounce is mainly attributable to the drop in ounces produced, the further increase in diesel costs as well as the effect of taking material off the stockpiles in line with the wet season plan.

Cost pressures associated with the high input prices, especially oil prices, continued to negatively impact on operational results. However, the recent drop in the oil price and other consumables, if maintained, is expected to result in lower costs going forward. 

LOULO RESULTS        

Quarter

Quarter

Quarter

9 months

9 months

 

ended

ended

ended

ended

ended

 

30 Sep

30 Jun

30 Sep

30 Sep

30 Sep

 

2008

2008

2007

2008

2007

Mining

 

 

 

 

 

Tonnes mined (000)

5 696

7 074

4 202

20 616

13 502

Ore tonnes mined (000)

558

953

547

2 380

1 722

Milling

 

 

 

 

 

Tonnes processed (000)

658

686

599

2 045

1 969

Head grade milled (g/t)

3.2

3.5

3.2

3.3

3.2

Recovery (%)

93.7

91.0

94.9

91.9

94.4

Ounces produced

64 250

70 100

58 020

197 600

196 588

Average price received+ (US$/oz)

713

782

605

761

584

Cash operating costs* (US$/oz)

515

451

363

465

316

Total cash costs* (US$/oz)

556

496

398

507

350

Profit from mining activity* (US$000)

9 823

19 970

12 079

49 668

46 127

Gold sales*+ (US$000)

45 558

54 726

35 191

149 873

114 979

 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 into the hedge at US$429/oz in the quarter ended 30 September 2008, 17 499 ounces delivered at US$429/oz in the quarter ended 30 June 2008 and 19 254 ounces delivered at US$439/oz in the quarter ended 30 September 2007.


During the quarter, the mine reviewed the Life of Mine plan as part of the 2009 budgeting process. Following the review, an optimised plan has been developed that envisages an increase in tonnes mined from the Yalea underground in 2009, whilst delaying the commissioning of the Gara underground development by approximately one year. The revised plan, which foresees a build up to steady state production of 120 000 tonnes a month from the Yalea underground through 2009, has the following key benefits: 

  • The ounces produced from the mine over the next five years are more evenly distributed;

  • The mine can commit more resources to ensuring the successful implementation of the Yalea underground operation before commencing with the second underground mine development; 

  • The increased tonnes from Yalea are higher in grade than ounces that were previously planned to be mined from Gara in 2009;  and

  • The capital costs associated with the gara development are deferred at a time when capital costs are at historical highs and could reduce in the future. 

A key component of this strategy is the Loulo plant expansion, which is scheduled to be commissioned by the end of the first quarter of 2009, and which will bring monthly throughput up to 300 000 tonnes per month from Q4 in 2009.