• Major milestones achieved at expanding Loulo complex and new Tongon mine
• Morila positioned for profitability as stockpile treatment operation
• Massawa confirmed as exciting discovery, reinforcing growth prospects

For Randgold Resources, 2008 was a year of growth - in earnings, in market capital, in reserves, in the number of businesses we manage, in operations and in tangible prospects - made exceptional by its achievement in the face of challenging circumstances.

The operational highlights of this particularly eventful year were our successful takeover of the management of the Morila joint venture, first production from the Yalea underground development at Loulo, the completion of the preliminaries for our next mine at Tongon and the emergence of the Massawa target as a major discovery. Particularly pleasing was that gold production (258 000 ounces from Loulo and 425 000 ounces from Morila) was virtually on budget on a consolidated and attributable basis. Behind the scenes, but equally significant, were a forceful cost containment drive, the continued hunt for profitable growth opportunities and a sustained focus on the strengthening of our intellectual base and our partnerships.

Morila remains profitable in twilight years
In February we took on the operational responsibility for Morila, at a difficult time in the life of this great mine, when the near exhaustion of the mineable deposit severely limits flexibility. In addition, management had to start converting the operation from mining to stockpile treatment by the second quarter of 2009, ensuring that it remains a strong cash generator in this new incarnation.

Our first step at Morila was to align the operation with the way we do business, a process facilitated by the mine’s energetic and motivated management team.

The success of this approach was evident in a strong performance turnaround in the fourth quarter, with the consistency achieved in plant throughput auguring well for Morila’s factory-type future.

Morila remains one of the gold mining industry’s outstanding successes of this decade. Since it went into production at the end of 2000, it has produced more than 5 million ounces of gold and paid more than US$1.3 billion to stakeholders. In spite of a scheduled production decrease of 100 000 ounces in 2009, the mine is still forecasting a dividend of around US$100 million for the year, showing that if it is managed properly, it should remain profitable even at this late stage of its life. The key to this is cost containment and management is implementing a range of cost cutting initiatives, from the rightsizing of the workforce to increasing throughput and improving recoveries.

In the meantime, we are employing our newly acquired underground expertise to evaluate a high grade remnant of the orebody located in the northern footwall of the pit. Should our scoping study prove the project to be viable, it could add about 100 000 ounces at 5g/t to the reserve.

Loulo readying to ramp up production
As Loulo grows, it also becomes more complex. Its two main orebodies already host one underground and two open pit mines, with a second underground mine on the drawing board. In addition to running these mines, the Loulo team has had to manage major capital programmes in the form of the plant expansion and the Yalea underground development, and to contend with the inevitable tie-ins and stoppages these entailed.

Production and costs were under pressure at Loulo throughout the year as a result of the slower than expected rate of development at Yalea, which limited access to the higher grade underground ore, and management did extremely well to produce a creditable set of results in these circumstances.

The issues at Yalea are being addressed in a cooperative effort between our underground team and their contractors and suppliers, which has vividly illustrated the value of Randgold Resources’ emphasis on nurturing productive partnerships with our business associates.

Stoping at Yalea started in the second quarter of the year and in June the first ore from silling was produced. The project passed another crucial milestone in the third quarter with the commissioning of the underground conveyor belt system, which has enabled the team to increase development tonnage and to expand stoping operations. The target is to reach its planned production level of 120 000 tonnes per month by the end of 2009.

Thanks to the flexibility which enables us to resequence mining, Loulo has not lost real ground as a result of the underground delay, and our original production growth forecast of 360 000 ounces in 2009 and plus 400 000 ounces by 2010 remains intact. This flexibility has also
allowed us to improve Loulo’s production profile by delaying the construction of the Gara underground mine by one year and increasing production from Yalea underground by 30% from late 2009. The underground infrastructure at Yalea is more than capable of coping with the additional load while the plant expansion, scheduled for commissioning in the second quarter of 2009, will raise monthly throughput capacity to 300 000 tonnes. This rescheduling will allow the underground team to focus on a single operation for an extra year before taking on the second and it delays a large capital expenditure on Gara without sacrificing production.

The current year is going to be another tough one for the Loulo team but they are committed to delivering on their plans and the record shows their ability to stay on course through adverse circumstances.

Tongon development takes shape
At our latest development, Tongon in the Côte d’Ivoire, the issuing of an environmental permit and the delineation of the mine site cleared the way for construction to start. Site establishment is already well underway with the construction of key installations such as housing, the power and water supply, and administration and communication facilities. The final process design has been completed and all long lead equipment items have been ordered. The engineering, construction and civil earthworks contractors have been appointed, and other contracts are being negotiated. The project is due to be commissioned in the fourth quarter of 2010, which means it will come on stream - with a five-year tax holiday - as Morila phases out and Loulo moves into a tax-paying position.

The project - which is the third mine to be built by Randgold Resources - has been phased to take full advantage of the early, lower cost exploitation of the oxide and transition material as well as the later commissioning (and therefore deferred capital outlay) of the hard rock crushing section for the treatment of the sulphide ores. This is one more way of maximising project returns to achieve a faster payback on the investment. Keenly alert to other costsaving opportunities, the Tongon team evaluates all procurement to see whether purchases can be delayed until expected price decreases materialise on the back of the global decline in demand for goods.

Protecting margins against cost pressures
Cost control has generally been a major issue at Randgold Resources for the past three years, with steady increases in the price of oil and mining consumables putting margins under pressure throughout the industry.

To deal with this situation we are controlling consumption by focusing on efficiencies all the way from the pit face through the production process at our operations. We have also adopted a zero based approach in justifying expenditure, which has enabled us to keep our costs, in absolute terms, below the average inflationary increases for the industry.

As we generate our own power, the price of diesel fuel is a significant component of our cost structure, and the recent drop in the oil price has already brought some relief, as evident in the reduction of 11% in our total cash costs in the fourth quarter. At Tongon we will have access to Côte d’Ivoire’s electricity grid, which means that its power will probably be significantly cheaper than the cost of generation at Morila and Loulo. There are also indications that the global recession will reduce other input costs.

Our management remains intent on improving margins in this high gold price environment. Ultimately, of course, the best defence against rising unit costs is to produce more ounces, which is exactly what we plan to do.

Massawa leads long line of exciting prospects
The Massawa target in Senegal has continued to shape up as a major new gold discovery and may well have the makings of our fourth mine, slotting in behind Tongon and extending our record of creating stakeholder value through discovery and development.

To date we have identified a seven kilometre long mineralised structure, of which a four kilometre section has been drilled to a 100 metre by 50 metre spacing. A further one kilometre of strike has been delineated for drill testing. We have intersected some very significant grades as well as indications of a sizable oxide resource. We have also conducted initial metallurgical testwork which points to recoveries of approximately 90% for the sulphide ore and well in excess of 90% for the oxides. A scoping study is now underway which, if it meets our expectations, will be followed by a prefeasibility study.

In addition to improving our understanding of Massawa, our exploration efforts are currently concentrated on brownfields targets at and around our Loulo and Tongon holdings. On the Loulo permit, Loulo 3 is a priority target with the potential for enhancing the complex’s short term mining plans as well as adding to its longer term reserves. Gounkoto is another advanced target within this permit which is returning encouraging results. Across the border in Senegal, but still adjacent to the Loulo lease, a RAB drilling programme has confirmed corridors of gold mineralisation at our Bambadji joint venture with Iamgold. In Côte d’Ivoire, we are evaluating satellite targets within trucking distance of the Tongon plant and looking further afield, in the Nielle/Boundiali region, at targets with the potential to become stand alone operations.

While our traditional West African base still holds great potential for further world class discoveries, Randgold Resources’ long term approach means that we also have to look beyond our present horizons for future growth. In line with this approach, and considering that some interesting joint venture and other opportunities are being generated by the current economic climate, we are dedicating part of our current exploration effort to a new region - the gold belts located within the Congo Craton in Central and East Africa.

Exploration will always remain the key to our strategy of building long term value growth. In the past year, it again proved its worth not only by identifying or advancing future projects but also by expanding our reserve base by one million ounces after mining depletion.

The right people for the challenges ahead
The past year is one in which we have grown and enhanced not only our physical assets but also our human resource. We have taken on additional skills in almost every sphere of our business and we are steadily introducing and developing a new generation of senior managers. In doing so, we have remained mindful of the need to grow the business and maximise the benefits of a larger organisation without succumbing to the bureaucracy and inefficiency usually associated with size in the mining industry.

Randgold Resources’ rapid rise from a small exploration business to a substantial gold company is the result of an extraordinary endeavour by a group of exceptional people. While the personnel have changed in the course of time, the ethos has remained the same and the Randgold Resources team continues to be characterised by a substantial and constantly expanding skills set, which ranks among the industry’s very best, and by an implacable commitment to the achievement of short term targets as well as long term goals.

My personal thanks goes to all our people for the contribution each of them made to the company’s achievements in 2008. I know the company and its stakeholders can rely on them for a further great effort in what is likely to be another challenging year ahead. I would also like to express my appreciation to the members of the board for their guidance and support.

Fortunately, we start the year well-placed to meet our own ambitious objectives as well as the market’s expectations, reflected in the company’s current rating, with a firm grip on the business, a solid balance sheet, profitable operations, a growing resource base and production profile, and a large inventory of potential new projects.

/s/Mark Bristow
Chief executive