Loulo is controlled by a Malian company, Société des Mines de Loulo (Somilo), which is owned 80% by Randgold Resources and 20% by the Malian government.

The mine is located within the Kedougou-Kéniéba inlier of Birimian rocks which hosts several major gold deposits, namely Gara and Yalea on the Loulo lease as well as Sadiola and Yatela in Mali and the Senegalese deposits of Sabodala and Massawa.

The mine was officially opened on 12 Nove mber 2005 with initial production from the two main open pit mines of Yalea and Gara. An underground mine is now being developed at Yalea to access the deeper high grade ore. Work on a second underground mine at Gara is planned to start in 2010. Since commissioning, Loulo has produced over 800 000 ounces at approximately 250 000 ounces per year, and is planned to ramp up to 400 000 ounces by 2011 once the underground mines are fully operational.

Increased plant throughput in 2008 partially offset the impact of lower head grades caused by the delay of the underground development which limited access to higher grade ore. Gold production for the year was 258 095 ounces, compared to 264 647 ounces in 2007. Industry-wide consumable cost pressures in 2008, especially from diesel, steel and reagents together with a stronger euro/dollar exchange rate and the slightly lower head grade resulted in higher total cash costs of US$511 per ounce compared to US$372 per ounce in the previous year. Despite numerous challenges the mine still managed to come within 3% of forecast production - a significant achievement in a difficult year.

1) The Yalea underground development is on track to reach the planned 120 000 tonnes per month by the end of 2009.

2)The Loulo Life of Mine plan has been optimised, resulting in significant benefits.

PRODUCTION EXPANSION
During the year headway was made with a number of capital projects as the mine sought to expand production throughput and increase the Yalea high grade feed.
The main projects were:

• Start of power plant expansion with two new medium speed generator units increasing power supply to 27.5MW.
• Tailings thickener and cl arifier installed, together with cyanide destruction module.
• Oxygen plant capacity expanded together with the installation of high shear reactors to improve the quantity and efficiency of oxygen supply into the circuit.
• New stockpile project started to link overland conveyor system from Yalea underground with current crushing plant feeding system together with crusher modifications to increase monthly process plant throughput to 300 000 tonnes per month.

UNDERGROUND
Loulo remains a very dynamic operation, particularly during this period of transition from a principally open pit operation to one that will be dominated by underground production. Delays during the year on underground development, largely due to poor availability of the development loaders, has been managed through the incorporation of extra open pit mining from the main pits and the smaller satellite pits at Loulo 3, together with the stockpiling of lower grade ores. The first six months of 2009 will require further waste push backs at Gara to ensure the mine retains this flexibility, together with a concerted exploration and drill out effort on Loulo 3 which is expected to deliver more open pit ounces in the short term.

The underground developments clearly represent the future of Loulo and there has been a concerted effort between management and the equipment suppliers and service providers to overcome a series of technical challenges that delayed the project during the year. The equipment supplier Caterpillar, explosives supplier Maxam and service providers Shaft Sinkers, JA Delmas and Manutention Africa have identified the key issues and plans are in place to address these. Foremost among these was the unsuitability of the development loaders that had been supplied. Caterpillar has agreed to modify the existing fleet and to supply an additional back-up loader in the meantime. In addition, Caterpillar is expediting the delivery of a fleet of new loaders which will be on site by April 2009.

Maxam have made extra resources available to facilitate the loading and blasting of up holes and have airfreighted parts to the site to ensure availability of their explosives.

The service providers have agreed to stock more spares on site - including complete engines and drive trains - and to increase the number of mechanics, thus ensuring better equipment availability. Shaft Sinkers are recruiting highspeed development crews to add their specialist skills to the team.

Despite delays some significant milestones were achieved during the year:

• A total of 3 861 metres of development was completed and 107 805 tonnes of ore at a grade of 4.42g/t was mined from the initial stopes below P125 pit. The Yalea declines have now been advanced to a distance of 1 150 metres from surface and a vertical depth of 180 metres.
• The first and second belts in the underground conveyor system were installed and commissioned and are currently making use of a temporary tipping arrangement, awaiting the introduction of the overland conveyor system planned for completion in the first half of 2009.
• A waste backfill trial was successfully completed during the final quarter of the year, utilising waste rock from development. Drilling of backfill slurry holes from surface started in January 2009 with the first sill casting early in quarter two of 2009.
• Construction work on the concrete tunnels was completed and the filling of the box cut is nearly complete.

Following a rescheduling exercise, the Life of Mine plan has been modified. The optimised plan envisages an increase in tonnes mined from the Yalea underground mine in 2009, while delaying the commissioning of the Gara underground development until 2010. The revised plan foresees a build-up to a production rate of 120 000 tonnes a month from the Yalea underground by year end. The new plan has the following key benefits:

• The ounces produced from the mine over the next five years will be more evenly distributed.
• The mine can commit more resources to ensuring the successful implementation of the Yalea underground operation before starting 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.
• The capital costs associated with the Gara development can be deferred at a time when capital costs are at historical highs but could reduce in future.

During 2008 work continued on the positioning of the Gara portal, with sterilisation and geotechnical drilling being completed. A position inside the south-western wall of the Gara pit has been identified as the most suitable for portal placement, allowing for the rapid access of ore from Gara underground.

3) A concerted effort between Loulo management, equipment suppliers and service providers overcame a series of underground development challenges.