Notes to the consolidated financial statements
(continued)
FOR THE YEAR ENDED 31 DECEMBER 2005
62 Annual Report 2005 Randgold Resources
23 RELATED PARTY TRANSACTIONS (continued)
Key management personnel compensation was as follows:
US$000
2005
2004
Short term employee benefits
3 853 3 600
Share-based payments
2 053 974
Total
5 906 4 574
24 SALE OF SYAMA
On 5 April 2004, Resolute Mining purchased the company’s 80% interest in the Syama mine. Resolute paid the group
US$9.9 million and transaction fees of US$1.2 million were incurred. Furthermore, at a gold price of more than
US$350 per ounce, the company would receive a royalty of US$10 per ounce on the first million ounces of production
from Syama and US$5 per ounce on the next three million ounces based on the attributable ounces acquired by
Resolute Mining. This has not been included in the profit attributable to the sale of Syama and no income has been
accrued in the year ended 31 December 2005 as Syama was still on care and maintenance.
The assets and liabilities of Syama disposed of were as follows:
31 Dec
US$000
2004
Property, plant and equipment
3 668
Current assets
3 797
Total assets
7 465
Total liabilities
(5 901)
Net assets
1 564
Proceeds from sale
(8 634)
Profit on disposal of Syama
(7 070)
Proceeds from sale
8 634
Cash disposed
(63)
Net cash on sale
8 571
25 NON GAAP INFORMATION
Total cash cost, total cash cost per ounce and profit from mining activity are non GAAP measures. We have
calculated total cash costs and total cash costs per ounce (and hence profit from mining activity) using guidance
issued by the Gold Institute. The Gold Institute is a non-profit industry association comprised of leading gold
producers, refiners, bullion suppliers and manufacturers. This institute has now been incorporated into the National
Mining Association. The guidance was first issued in 1996 and revised in November 1999. Total cash costs, as
defined in the Gold Institute’s guidance, include mine production, transport and refinery costs, general and
administrative costs, movement in production inventories and ore stockpiles, transfers to and from deferred stripping
and royalties. The transfer to and from deferred stripping is calculated based on the actual historical waste stripping
costs, as applied to a life of mine estimated stripping ratio. The costs of waste stripping in excess of the life of mine
estimated stripping ratio, are deferred and then charged to production, at the average historical cost of mining the
deferred waste, when the actual stripping ratio is below the life of mine stripping ratio. The net effect is to include a
proportional share of total estimated stripping costs for the life of the mine, based on the current period ore mined.
Total cash costs per ounce are calculated by dividing total cash costs, as determined using the Gold Institute
guidance, by gold ounces produced for the periods presented. We have calculated total cash costs and total cash
costs per ounce on a consistent basis for the periods presented. Total cash costs, total cash costs per ounce and
profit from mining activity should not be considered by investors as an alternative to operating profit or net profit
attributable to shareholders, as an alternative to other IFRS measures or an indicator of our performance.
The data does not have a meaning prescribed by IFRS and therefore amounts presented may not be comparable to
data presented by gold producers who do not follow the guidance provided by the Gold Institute. In particular
depreciation and amortisation would be included in a measure of total costs of producing gold under IFRS, but is not
included in total cash costs under the guidance provided by the Gold Institute. The total cost of producing gold
calculated in accordance with IFRS would provide investors with an indication of earnings before interest expense
and taxes, when compared to the average realised price. Furthermore, while the Gold Institute has provided a
definition for the calculation of total cash costs and total cash costs per ounce, the calculation of these numbers may
vary from company to company and may not be comparable to other similarly titled measures of other companies.
However, we believe that total cash costs per ounce is a useful indicator to investors and management of a mining
company’s performance as it provides an indication of a company’s profitability and efficiency, the trends in cash
costs as the company’s operations mature, and a benchmark of performance to allow for comparison against other
companies. Within this annual report, the company’s discussion and analysis is focused on the “total cash cost”
measure as defined by the Gold Institute. The following table reconciles total cash costs and profit from mining
