Chief executive’s report
“Randgold Resources
has developed into a fully
independent, integrated
business, while its
management has
matured into a well
rounded unit that can
handle the most
formidable corporate and
operational challenges
with great dexterity.”
6 Annual
Report 2005 Randgold Resources
While 2004 was a time of consolidation
for Randgold Resources, 2005 was the
year in which we spread our wings and
took off again from the higher ground our
efforts had established. In a year of
challenges and delivery, these events
and achievements were particularly
notable:
We doubled
our profit year-on-year
and increased
attributable pro-
duction
by 54%.
We opened
Loulo, our second new mine in five years, and it made
profits from month one.
We finalised plans for an underground operation at Loulo and its
development will start in the third quarter of 2006.
We solved the production problems that had plagued Morila and
it ended the year ahead of forecast.
We updated the prefeasibility study on the Tongon project and
confirmed that it would meet our investment criteria.
We expanded our reserves and resources through dynamic
exploration programmes.
We strengthened our balance sheet ahead of a new growth phase
through a successful equity placement.
THE FINANCIAL SCORECARD
Net profit for the year of US$40.9 million was more than double that
of 2004, mainly due to a substantial rise in the profit from mining.
This in turn resulted from the improvement in the gold price and a big
increase in our attributable production, which rose from 204 194
ounces to 314 831, thanks to a strong performance by Morila and the
fourth quarter contribution from Loulo. The profit improvement was
achieved in spite of higher expenditure on exploration and Morila’s
first tax payment.
On the balance sheet, the substantial increase in property, plant and
equipment is related mainly to the development in Loulo and is, in
fact, a further reflection of the company’s continued investment in its
future. The balance sheet also shows cash resources of some
US$152 million. Our equity offering of 8.1 million ordinary shares and
American Depositary Shares, designed to raise funds for the Loulo
underground development and other growth opportunities, produced
US$103 million after costs and the balance of the cash came from the
Morila and Loulo revenue streams.
It is worth noting that we could have taken an easier fundraising option,
but that would have limited it to qualified institutions. We chose to go
the fully marketed global offering route, even though this required an
enormous administrative effort, to give all our current shareholders
and some new ones the chance to participate.
