Randgold Resources Annual Report 2005 63
25 NON GAAP INFORMATION (continued)
activity as non GAAP measures, to the information provided in the income statement, determined in accordance
with IFRS, for each of the years set forth below:
Year
Year
ended
ended
31 Dec
31 Dec
US$000
2005
2004
Gold sales revenue
151 502 73 330
Mine production costs
66 612 37 468
Movement in production inventory and ore stock piles
(27 137) (8 512)
Transfer from/(to) deferred stripping
11 197 (3 999)
Transport and refinery costs
360 233
Royalties
10 273
5 304
General and administration expenses
7 438 6
986
Total cash costs
68 743 37 480
Profit from mining activity
82 759 35 850
Depreciation and amortisation
(11 910) (8 738)
Exploration and corporate expenditure
(21 802) (15 529)
Share-based payments
(2 247) (1 321)
Interest and other income, including exchange gains
3 780 10 413
Gain on forward gold sales
45 2 232
Exchange losses and other expenses
(3 542) (2 491)
Interest expense
(1 861) (1 623)
Profit before income tax
45 222 18 793
Total cash costs for 2005 include one-off charges totalling US$4.7 million in respect of accounting provisions at Morila
against slow moving stock and receivables and the settlement of a dispute of undirect taxes.
26 SIGNIFICANT UNCERTAINTIES RELATING TO TRANSACTIONS WITH A CONTRACTOR
The directors believe that the group is entitled to recover US$30 million from MDM Ferroman (Pty) Ltd (“MDM”), the
contractor responsible for construction of the Loulo mine (“the project”) until the main construction contract was taken
back on 30 December 2005. This comprises payments totalling US$17.8 million which have been capitalised as
part of the cost of the project and advances of US$12.2 million included in receivables. Of this latter amount,
US$5.2 million is secured by various fixed assets, debtors, bank accounts and personal guarantees, and
US$7 million is secured by performance bonds.
In addition to legal action being instituted against MDM and related entities to recover these funds from MDM,
the group has obtained a provisional liquidation order against MDM based on an initial claim of US$26 million. An
attempt by MDM to have the provisional winding up order rescinded was dismissed on 3 February 2006. Recovery
of the full amount from MDM is dependent on the liquidation process and the successful conclusion of the legal action
referred to above. The directors believe that the group has sufficient security to recover the full amount of US$12.2
million, but the ultimate value of the security cannot presently be determined. The consolidated financial statements
do not reflect any additional provision that may be required if the security is found to be worth less than the
receivable.
On 22 January 2006, MDM purported to submit a claim amounting to US$29 million in respect of variations, extension
of time and additional costs incurred in respect of the project. This claim has not been submitted in terms of the
provisions of the contract, which is a fixed lump sum turnkey project, and the directors believe that, apart from
variations already agreed, no additional amounts are due to MDM. However, the ultimate outcome of this matter
cannot presently be determined. The consolidated financial statements do not reflect any adjustment to the cost of
the Loulo development that may arise from this claim and counterclaim, or any charge that may arise from MDM’s
inability to settle amounts that are determined to be payable by MDM to the group. The directors believe it is unlikely
that this dispute will be resolved in MDM’s favour.
27 MINING AND PROCESSING COSTS
Mining and processing costs comprise:
Year
Year
ended
ended
31 Dec
31 Dec
US$000
2005
2004
Mine production cost
66 612 37 468
Movement in production inventory and ore stockpiles
(27 137) (8 512)
Transfer from/(to) deferred stripping
11 197 (3 999)
Depreciation and amortisation
11 910 8 738
General and administration expenses
7 438 6 809
70 020 40 504
