Notes to the consolidated financial statements
FOR THE YEAR ENDED 31 DECEMBER 2005
48 Annual
Report 2005 Randgold Resources
1 NATURE OF OPERATIONS
The company and its subsidiaries (the “group”) together with its joint ventures carry out gold mining activities and exploration.
Currently there are two operating mines in Mali, West Africa: the Morila gold mine, which commenced production in October
2000, and the Loulo mine, which commenced production in November 2005. The group also has a portfolio of exploration
projects in West and East Africa. The interests of the group in its operating mines are held through Morila SA (“Morila”) which
owns the Morila mine and Somilo SA (“Somilo”) which owns the Loulo mine. Randgold Resources holds an effective 40%
interest in Morila, following the sale to AngloGold Ashanti Limited on 3 July 2000 of one-half of Randgold Resources’ wholly-
owned subsidiary, Morila SA. Management of Morila Limited, the 80% shareholder of Morila, is effected through a joint
venture committee, with Randgold Resources and AngloGold Ashanti each appointing one-half of the members of the
committee. AngloGold Ashanti Mali SA (“Anser”), a subsidiary of AngloGold Ashanti, is the operator of Morila. Randgold
Resources holds an effective 80% interest in Loulo. The remaining 20% interest is held by the Malian government. Randgold
Resources is the operator of Loulo. The group has various sizes of exploration programmes ranging from substantial to early
stage in Mali West, around Morila and in Senegal, Tanzania, Burkina Faso and Ghana. An updated pre-feasibility study has
been completed for the Tongon project in Côte d’Ivoire. As a result of the political situation in Côte d’Ivoire, no further
exploration activity was effected in the year. However, new applications have been made and field work is expected to
recommence in 2006.
2 SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated. A change in accounting
policy reflecting the adoption of IFRS 2 “share-based payments” is described in note
6.
BASIS OF PREPARATION: The consolidated financial statements of Randgold Resources Limited and its subsidiaries have
been prepared in accordance with International Financial Reporting Standards (IFRS). The consolidated financial statements
have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets,
and certain financial assets and financial liabilities (including derivative instruments) which are carried at fair value through
profit and loss. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the company’s accounting
policies. The areas involving a high degree of judgement or complexity, or areas where assumptions and estimates are
significant to the the consolidated financial statements, are disclosed in note
3.
The following standards which have been recently issued or revised have not been adopted early by the group. Their impact
on the results is discussed below:
IFRS 6 Exploration for and Evaluation of Mineral Resources (effective 1 January 2006)
The objective of this IFRS is to specify the financial reporting for the exploration for, and evaluation of mineral resources.
Adoption of this standard should not affect the financial statements.
IFRS 7 Financial Instruments Disclosure (effective 1 January 2007)
The objective of this IFRS is to require entities to provide disclosures in their financial statements that enable users to
evaluate the significance of financial instruments for the entity’s financial position; and the nature and extent of risks
arising from financial instruments to which the entity is exposed during the period and at the reporting date, and how the
entity manages those risks. The impact of the adoption of the standard is currently being assessed.
IFRIC Interpretation 4 Determining whether an arrangement contains a lease (effective 1 January 2006)
IFRIC 4 specifies criteria for determining, at the inception of an arrangement, whether the arrangement contains a lease.
It also specifies when an arrangement should be reassessed subsequently. Adoption of this standard should not affect
the financial statements.
IFRIC Interpretation 8 Scope of IFRS 2 (effective 1 May 2006)
The interpretation determines whether IFRS 2 applies to transactions in which the entity cannot identify some or all of the
goods or services received. The impact of the adoption of the standard is currently being assessed.
The following standards are not applicable to the group:
IFRIC Interpretation 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation
Funds (effective 1 January 2006)
IFRIC Interpretation 6 Liabilities arising from Participation in a Specific Market - Waste Electrical and Electrical Equipment
(effective 1 December 2005)
IFRIC Interpretation 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary
Economies (effective 1 March 2006)
CONSOLIDATION: The consolidated financial information includes the financial statements of the company, its subsidiaries
and the company’s proportionate share in joint ventures using uniform accounting policies for like transactions and other
events in similar circumstances.
SUBSIDIARIES: Subsidiaries are entities over which the group has the power to govern the financial and operating policies,
generally accompanying an interest of more than one half of the voting rights. Subsidiaries are fully consolidated from the
date on which control is transferred to the group. They are de-consolidated from the date that control ceases. The purchase
method of accounting is used to account for the acquisition of subsidiaries by the group. The cost of an acquisition is
measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of
exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired (including mineral property
interests) and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values
at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair
value of the group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less
than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the group.
JOINT VENTURES: Joint ventures are those entities in which the group holds a long term interest and which are jointly
controlled by the group and one or more venturers under a contractual arrangement. The group’s interest in such jointly
