Randgold Resources    Annual Report 2005 5

its existence, at a time when the industry generally cut

back on exploration.

Another distinctive feature of Randgold Resources is

that it has continued to invest substantially in its own

future - and the exploration drive is one facet of this. Its

long-range perspective on the industry and the courage

of its convictions have given it the confidence to make

those investments ahead of the curve. Loulo is a prime

example of the potential benefits of this approach. The

decision to proceed with the development of the mine

was taken when the market was soft; but now that the

mine is in production, it is delivering gold at historically

high price levels.

Gold’s bull run continued in 2005 with average prices

rising to US$445 per ounce from the previous year’s

US$409. The metal ended the year at US$513 and at

the time of writing is at US$570, a 25-year high.

The factors that are driving the gold price include

geopolitical instability, economic concerns and

mainstream investment interest from generalist funds

and the public as well as some hedge fund speculation.

Physical demand has provided an underpin every time

the price has made significant moves downwards.

Producer forward selling has again been at a low level.

For a producer, the key factor is replacing production

profitably. The general cutback on exploration

expenditure in the Nineties has resulted in a dearth of

discoveries, especially large ones. Such new ore bodies

as have been found have been relatively small and

production from the areas which traditionally host large

deposits, notably South Africa, has been declining for

years. The environment therefore appears to be weighted

in gold’s favour, and it is difficult to foresee a significant

downturn in its fortunes in the short to medium term.

Against this background, we expect that 2006 will be

another good year for Randgold Resources. The Morila

joint venture will continue to be a healthy cash generator

and Loulo will weigh in with a substantial contribution.

The successful equity placement of 2005 has

strengthened the company’s balance sheet, giving it a

sound base from which to grasp the next generation of

growth opportunities. Foremost among these is the

underground development at Loulo, preparatory work

on which has started. When the current unrest in the

Côte d’Ivoire is ended, the feasibility stage Tongon

project will be advanced. And in the meantime, the

company’s extensive exploration programmes will

continue to generate prospects for the future.

For a business to be truly successful it has to be more

than merely profitable, however: it must also be a

responsible citizen and a good neighbour. This is

particularly true for those companies operating in

emerging markets, where a constructive partnership

between the providers and managers of capital on the

one hand, and the government and the people on the

other, is an essential requirement for an economic

environment in which business can create prosperity for

all. Randgold Resources is a great believer in such

relationships and has contributed more than US$1 billion

to the economies of countries where it is active through

salaries, taxes and payments to local suppliers. This is

tangible proof of its long term commitment to their

sustainable development.

In return, governments need to provide an enabling

environment for business to flourish. In some of the

countries we work in, there are constraints to effective

or efficient business. Dialogue is essential to address

issues to improve the ability of investing companies to

operate.

I should like to express our gratitude to the governments

and the people of those countries for the support they

have given us. Without that support the company could

not have functioned, let alone prospered. For our part,

we shall continue to do everything in our power to ensure

that these partnerships are mutually beneficial.

A word of appreciation is due also to the investment

community for their interest in the company and in

particular to our shareholders for their faith in

management’s ability to maintain the creation and

delivery of value. Mark Bristow and his team merit special

commendation for another stellar performance at the

corporate as well as the operational level. Finally, my

personal thanks to my colleagues on the board, whose

enormous experience of mining and finance gives

context and direction to our strategic thinking.

Philippe Liétard

Chairman