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.