e20vf
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010 |
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Date of event requiring this shell company report |
For the transition period from to
Commission file number: 000-49888
RANDGOLD RESOURCES LIMITED
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrants name into English)
JERSEY, CHANNEL ISLANDS
(Jurisdiction of incorporation or organization)
3rd Floor Unity Chambers, 28 Halkett Street, St. Helier, Jersey JE2 4WJ, Channel Islands
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
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Title of each class
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Name of each exchange on which registered |
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Ordinary Shares, par value US $0.05 per Share*
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Nasdaq Global Select Market |
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American Depositary Shares each represented
by one Ordinary Share |
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Not for trading, but only in connection with the listing of American Depositary Shares on the
Nasdaq Global Select Market pursuant to the requirements of the Securities and Exchange
Commission. |
Securities registered or to be registered pursuant to Section 12(g) of the Act.
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
Indicate the number of outstanding shares of each of the issuers classes of capital or common
stock as of the close of the period covered by the Annual Report.
As of December 31, 2010, the Registrant had outstanding 91,089,370 ordinary shares, par
value $0.05 per share.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act.
þ Yes o No
If the report is an annual or transition report, indicate by check mark if the registrant is
not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.
o Yes þ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
þ Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
o Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
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Large accelerated filer þ
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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Indicate by check mark which basis of accounting the registrant has used to prepare the
financial statements included in this filing:
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U.S. GAAP o
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International Financial Reporting Standards as issued by the International Accounting Standards Board þ
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Other o |
If Other has been checked in response to the previous question, indicate by check mark which
financial statement item the registrant has elected to follow.
o Item 17 þ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
o Yes þ No
GLOSSARY OF MINING TECHNICAL TERMS
The following explanations are not intended as technical definitions, but rather are intended to
assist the reader in understanding some of the terms as used in this annual report (Annual
Report).
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Alteration:
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The chemical change in a rock due
to hydrothermal and other fluids. |
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Archaean:
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A geological eon before 2.5 Ga. |
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Arsenopyrite:
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An iron arsenic sulfide mineral. |
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Birimian:
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Geological time era, about 2.1 billion years ago. |
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Carbonate:
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A mineral salt typically found in quartz veins and as a product of hydrothermal alteration
of sedimentary rock. |
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Chalcopyrite:
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A copper iron sulfide mineral. |
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Clastic:
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Rocks built up of fragments of pre-existing rocks which have been produced by the processes
of weathering and erosion. |
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Cut-off grade:
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The lowest grade of material that can be mined and processed considering all applicable
costs, without incurring a loss or gaining a profit. |
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Development:
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Activities required to prepare for mining activities and maintain a planned production level. |
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Diamond Drilling (DDH):
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A drilling method. |
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Dilution:
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Mixing of ore grade material with non-ore grade/waste material in the mining process. |
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Discordant:
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Structurally unconformable. |
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Disseminated:
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A term used to describe fine particles of ore or other minerals dispersed through the
enclosing rock. |
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Dyke:
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A sheet-like body of igneous rock which is discordant to bedding or foliation. |
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EEP:
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Exclusive exploration permit. |
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Electromagnetic:
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A geophysical tool used to test the electrical properties of rock to aid exploration. |
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EP:
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Exploration permit. |
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Exploration:
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Activities associated with ascertaining the existence, location, extent or quality of
mineralized material, including economic and technical evaluations of mineralized material. |
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Fault:
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A fracture or a zone of fractures within a body of rock. |
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Feasibility Study:
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A comprehensive study of a mineral deposit in which all geological, engineering, legal,
operating, economic, social, environmental and other relevant factors are considered in
sufficient detail that it could reasonably serve as the basis for a final decision by a
financial institution to finance the development of the deposit for mineral production. |
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Feldspar:
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An alumino-silicate mineral. |
3
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Felsic:
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A light colored igneous rock composed of quartz, feldspar and muscovite. |
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Foliation:
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A term used to describe planar arrangements of minerals or mineral bands within rocks. |
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Footwall:
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The underlying side of a fault, orebody or stope. |
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g/t:
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Gram of gold per metric tonne. |
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Gabbro:
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A dark granular igneous rock composed essentially of labradorite and augite. |
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Gneiss:
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A coarse-grained, foliated rock produced by metamorphism. |
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Gold reserves:
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The gold contained within proven and probable reserves on the basis of recoverable material
(reported as mill delivered tonnes and head grade). |
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Gold sales:
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Represents the sales of gold at spot and the gains/losses on hedge contracts which have been
delivered into at the designated maturity date. It excludes gains/losses which have been rolled
forward to match future sales. This adjustment is considered appropriate because no cash is
received/paid in respect of such contracts. |
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Grade:
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The quantity of metal per unit mass of ore expressed as a percentage or, for gold, as grams of
gold per tonne of ore. |
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Granite:
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A light colored granular igneous rock composed of quartz and feldspar. |
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Greenstone:
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A field term used to describe any weakly metamorphosed rock. |
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Greywacke:
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A dark gray, coarse grained, indurated sedimentary rock consisting essentially of quartz,
feldspar, and fragments of other rock types. |
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Head grade:
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The grade of the ore as delivered to the metallurgical plant. |
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Hydrothermal:
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Pertaining to the action of hot aqueous solutions on rocks. |
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Igneous:
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A rock or mineral that solidified from molten or partially molten material. |
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In situ:
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In place or within unbroken rock or still in the ground. |
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Kibalian:
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A geological time era. |
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Lower proterozoic:
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Era of geological time between 2.5 billion and 1.8 billion years before the present. |
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Mafic:
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A term used to describe an igneous rock that has a large percentage of iron magnesium minerals. |
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Measures:
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Conversion factors from metric units to US units are provided below: |
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Metric Unit |
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US Equivalent |
1 tonne |
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= 1 t |
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1.10231 tons |
1 gram |
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= 1 g |
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0.03215 ounces |
1 gram per ton |
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= 1 g/t |
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0.02917 ounces per ton |
1 kilogram per ton |
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= 1 kg/t |
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29.16642 ounces per ton |
1 kilometer |
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= 1 km |
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0.621371 miles |
1 meter |
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= 1 m |
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3.28084 feet |
1 centimeter |
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= 1 cm |
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0.3937 inches |
1 millimeter |
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= 1 mm |
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0.03937 inches |
1 square kilometer |
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= 1 sq km |
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0.3861 square miles |
4
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Metamorphism:
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A change in the structure or constitution of a rock due to natural agencies, such as pressure and
heat. |
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Mill delivered tonnes:
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A quantity, expressed in tonnes, of ore delivered to the metallurgical plant. |
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Milling/mill:
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The comminution of the ore, although the term has come to cover the broad range of machinery
inside the treatment plant where the gold is separated from the ore. |
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Mineable:
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That portion of a mineralized deposit for which extraction is technically and economically
feasible. |
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Mineralization:
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The presence of a target mineral in a mass of host rock. |
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Mineralized material:
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A mineralized body which has been delineated by appropriately spaced drilling and/or underground
sampling to support a sufficient tonnage and average grade of metals to warrant further
exploration. A deposit of mineralized material does not qualify as a reserve until a
comprehensive evaluation based upon unit cost, grade, recoveries, and other material factors
conclude legal and economic feasibility. |
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Moz:
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Million troy ounces. |
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Mt:
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Million metric tonnes. |
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Open pit:
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Mining in which the ore is extracted from a pit. The geometry of the pit may vary with the
characteristics of the orebody. |
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Orebody:
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A continuous, well-defined mass of material containing sufficient minerals of economic value to
make extraction economically feasible. |
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Ounce:
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One troy ounce, which equals 31.1035 grams. |
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Oxide Ore:
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Soft, weathered rock that is oxidized. |
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Prefeasibility Study:
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A comprehensive study of the viability of a mineral project that has advanced to a stage where the
mining method, in the case of underground mining, or the pit configuration, in the case of an open
pit, has been established, and which, if an effective method of mineral processing has been
determined and includes a financial analysis based on reasonable assumptions of technical,
engineering, operating, economic, social and environmental factors and the evaluation of other
relevant factors which are sufficient for a qualified person, acting reasonably, to determine if
all or part of the mineral resource may be classified as a mineral reserve. |
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Probable reserves:
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Reserves for which quantity and grade and/or quality are computed from information similar to that
used for proven reserves, but the sites for inspection, sampling, and measurement are farther
apart or are otherwise less adequately spaced. The degree of assurance, although lower than that
for proven reserves, is high enough to assume continuity between points of observation. |
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Prospect:
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An area of land with insufficient data available on the mineralization to determine if it is
economically recoverable, but warranting further investigation. |
5
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Proven reserves:
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Reserves for which quantity is computed from dimensions revealed in outcrops,
trenches, workings or drill holes; grade and/or quality are computed from the
results of detailed sampling; and the sites for inspection, sampling and
measurement are spaced so closely and the geologic character is so well defined
that size, shape, depth and mineral content of reserves are well-established. |
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Pyrite:
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A brassy-colored mineral of iron sulfide (compound of iron and sulfur). |
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Quartz:
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A mineral compound of silicon and oxygen. |
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Quartzite:
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Metamorphic rock with interlocking quartz grains displaying a mosaic texture. |
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Quartz-tourmaline:
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A rock unit created by alteration due to the addition of silica and boron. |
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Refining:
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The final stage of metal production in which final impurities are removed from the
molten metal by introducing air and fluxes. The impurities are removed as gases or
slag. |
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Regolith:
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Weathered products of fresh rock, such as soil, alluvium, colluvium, sands, and
hardened oxidized materials. |
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Rehabilitation:
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The process of restoring mined land to a condition approximating its original state. |
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Reserve:
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That part of a mineral deposit which could be economically and legally extracted or
produced at the time of the reserve determination. |
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Reverse circulation (RC) drilling:
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A drilling method. |
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Rotary Air Blast (RAB) drilling:
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A drilling method. |
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RP:
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Reconnaissance Permit. |
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Sampling:
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Taking small pieces of rock at intervals along exposed mineralization for assay (to
determine the mineral content). |
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Satellite deposit:
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A smaller subsidiary deposit proximal to a main deposit. |
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Scoping study:
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A conceptual study and the preliminary evaluation of the mining project. The
principal parameters for a scoping study are mostly assumed and/or factored.
Accordingly, the level of accuracy is low. A conceptual study is useful as a tool
to determine if subsequent engineering studies are warranted. However, it is not
valid for economic decision making nor is it sufficient for reserve reporting. |
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Sedimentary:
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Pertaining to or containing sediment. Used in reference to rocks which are derived
from weathering and are deposited by natural agents, such as air, water and ice. |
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Shear zone:
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An elongated area of structural deformation. |
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Silica:
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A naturally occurring dioxide of silicon. |
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Stockpile:
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A store of unprocessed ore. |
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Strike length:
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The direction and length of a geological plane. |
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Stripping:
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The process of removing overburden to expose ore. |
6
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Strip ratio:
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Ratio of waste material to ore material in an open pit mine. |
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Sulfide:
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A mineral characterized by the linkages of sulfur with a metal or semi-metal, such
as pyrite or iron sulfide. Also a zone in which sulfide minerals occur. |
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Tailings:
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Finely ground rock from which valuable minerals have been extracted by milling. |
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Tonnage:
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Quantities where the ton or tonne is an appropriate unit of measure. Typically
used to measure reserves of gold-bearing material in situ or quantities of ore and
waste material mined, transported or milled. |
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Tonne:
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One tonne is equal to 1,000 kilograms (also known as a metric ton). |
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Total cash costs:
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Total cash costs, as defined in the Gold Institute standard, include mine
production, transport and refinery costs, general and administrative costs,
movement in production inventories and ore stockpiles, transfers to and from
deferred stripping where relevant and royalties. |
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Trend:
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The arrangement of a group of ore deposits or a geological feature or zone of
similar grade occurring in a linear pattern. |
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Ultramafica:
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An igneous rock with a very low silica content and rich in iron magnesium minerals. |
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Volcaniclastic:
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Where volcanic derived material has been transported and reworked through
mechanical processes. |
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Volcanisedimentary:
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Where volcanic and sedimentary material have been transported and reworked through
mechanical processes. |
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Waste:
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Rock mined with an insufficient gold content to justify processing. |
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Weathered:
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Rock broken down by erosion. |
Statements in this Annual Report concerning our business outlook or future economic performance;
anticipated revenues, expenses or other financial items; and statements concerning assumptions made
or expectations as to any future events, conditions, performance or other matters, are
forward-looking statements as that term is defined under the United States federal securities
laws. Forward-looking statements are subject to risks, uncertainties and other factors which could
cause actual results to differ materially from those stated in such statements. Factors that could
cause or contribute to such differences include, but are not limited to, those set forth under
Item 3. Key Information D. Risk Factors in this Annual Report as well as those discussed
elsewhere in this Annual Report and in our other filings with the Securities and Exchange
Commission.
We are incorporated under the laws of Jersey, Channel Islands with the majority of our operations
located in West and Central Africa. Our books of account are maintained in US dollars and our
annual and interim financial statements are prepared on a historical cost basis, except as
otherwise required under International Financial Reporting Standards as issued by International
Accounting Standards Board (IFRS), and in accordance with IFRS. IFRS differs in significant
respects from generally accepted accounting principles in the United States, or US GAAP. This
Annual Report includes our audited consolidated financial statements prepared in accordance with
IFRS. The financial information included in this Annual Report has been prepared in accordance
with IFRS and, except where otherwise indicated, is presented in US dollars. For a definition of
cash costs, please see Item 3. Key Information A. Selected Financial Data.
Unless the context otherwise requires, us, we, our, or words of similar import, refer to
Randgold Resources Limited and its subsidiaries and affiliated companies.
7
PART I
Item 1. Identity of Directors, Senior Management and Advisers
Not applicable.
Item 2. Offer Statistics and Expected Timetable
Not applicable.
Item 3. Key Information
A. SELECTED FINANCIAL DATA
The following selected historical consolidated financial data have been derived from, and
should be read in conjunction with, the more detailed information and financial statements,
including our audited consolidated financial statements for the years ended December 31, 2010,
2009, and 2008 and as at December 31, 2010 and 2009, which appear elsewhere in this Annual Report.
The historical consolidated financial data as at December 31, 2008, 2007 and 2006, and for the
years ended December 31, 2007 and 2006 have been derived from our audited consolidated financial
statements not included in this Annual Report.
The financial data have been prepared in accordance with IFRS, unless otherwise noted.
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Year Ended December |
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Year Ended December |
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Year Ended December |
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Year Ended December |
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Year Ended December |
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$000: |
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31, 2010 |
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31, 2009 |
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31, 2008 |
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31, 2007 |
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31, 2006 |
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STATEMENT OF COMPREHENSIVE INCOME DATA: |
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Amounts in accordance with IFRS |
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Revenues |
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484,553 |
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432,780 |
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338,572 |
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282,805 |
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258,304 |
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Profit from operations# |
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136,141 |
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113,764 |
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75,937 |
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63,539 |
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71,616 |
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Net profit attributable to owners of the parent |
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103,501 |
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69,400 |
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41,569 |
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42,041 |
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47,564 |
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Basic earnings per share ($) |
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1.14 |
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0.86 |
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0.54 |
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0.60 |
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0.70 |
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Fully diluted earnings per share ($) |
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1.13 |
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0.84 |
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0.54 |
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0.60 |
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0.69 |
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Weighted average number of shares used in
computation of basic earnings per share |
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90,645,366 |
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81,022,790 |
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76,300,116 |
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69,588,983 |
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68,391,792 |
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Weighted average number of shares used in
computation of fully diluted earnings per
share |
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91,926,912 |
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82,161,851 |
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77,540,198 |
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70,271,915 |
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69,331,035 |
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Dividends declared per share |
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0.20 |
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0.17 |
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0.13 |
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0.12 |
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0.10 |
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Other data |
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Total cash costs ($ per ounce sold) |
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699 |
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512 |
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468 |
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356 |
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293 |
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Total cash costs ($ per ounce produced) |
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657 |
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510 |
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467 |
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356 |
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296 |
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# |
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Profit from operations is calculated as profit before income tax under IFRS, excluding net
finance income/(loss). Profit from operations all arises from continuing operations. |
8
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At |
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At |
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At |
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At |
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At |
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$000: |
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December 31, 2010 |
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December 31, 2009 |
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December 31, 2008 |
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December 31, 2007 |
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December 31, 2006 |
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STATEMENT OF FINANCIAL POSITION AMOUNTS: |
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AMOUNTS IN ACCORDANCE WITH IFRS |
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Total assets |
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1,994,340 |
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1,820,168 |
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821,442 |
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780,719 |
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512,164 |
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Long-term loans |
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|
|
|
|
234 |
|
|
|
1,284 |
|
|
|
2,773 |
|
|
|
25,666 |
|
Share capital |
|
|
4,555 |
|
|
|
4,506 |
|
|
|
3,827 |
|
|
|
3,809 |
|
|
|
3,440 |
|
Share premium |
|
|
1,362,320 |
|
|
|
1,317,771 |
|
|
|
455,974 |
|
|
|
450,814 |
|
|
|
213,653 |
|
Retained earnings |
|
|
393,570 |
|
|
|
305,415 |
|
|
|
245,982 |
|
|
|
213,567 |
|
|
|
178,400 |
|
Other reserves |
|
|
31,596 |
|
|
|
18,793 |
|
|
|
(31,387 |
) |
|
|
(69,391 |
) |
|
|
(59,430 |
) |
Equity attributable to the owners of the parent |
|
|
1,792,041 |
|
|
|
1,646,485 |
|
|
|
674,396 |
|
|
|
598,799 |
|
|
|
336,063 |
|
Non-GAAP Measures
We
have identified certain measures that it believes will assist understanding of
the performance of the business. As the measures are not defined under IFRS, they may not be
directly comparable with other companies adjusted measures. The non-GAAP measures are not
intended to be a substitute for, or superior to, any IFRS measures or performance, but
management has included them as these are considered to be important comparables and key
measures used within the business for assessing performance. These measures are further
explained below. Total cash cost and total cash cost per ounce are non-GAAP measures. We have
calculated total cash costs and total cash costs per ounce using guidance issued by the Gold
Institute. The Gold Institute was 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 Institutes 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
where relevant, and royalties.
Under our accounting policies, there are no transfers to and from deferred stripping. Total
cash costs per ounce are calculated by dividing total cash costs, as determined using the Gold
Institute guidance, by gold ounces sold for the periods presented. We have calculated total
cash costs and total cash costs per ounce on a consistent basis for all periods presented.
Total cash costs and total cash costs per ounce should not be considered by investors as an
alternative to 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 amortization
would be included in a measure of total costs of producing gold under IFRS, but are not included
in total cash costs under the guidance provided by the Gold Institute. 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
companys performance as it provides an indication of a companys profitability and efficiency,
the trends in cash costs as the companys operations mature, and a benchmark of performance to
allow for comparison against other companies. Within this Annual Report our discussion and
analysis is focused on the total cash cost measure as defined by the Gold Institute.
We previously calculated total cash costs per ounce by dividing total cash costs, as
defined above, by ounces produced, as permitted under the guidance. Given the significant
difference between ounces produced and ounces sold in the year, together with the fact that,
under the definitions above, costs relating to ounces produced but
not sold are recognized in
the quarter when the ounces are actually sold, we deemed it appropriate to change the bases for
these calculations by dividing total costs by ounces sold, as this would better match the timing
of costs and sales recorded. Historically, this change would not have resulted in materially
different cash costs per ounce; however, in the current year the difference was significant and
consequently the numbers have been restated on this basis.
9
The following table lists the costs of producing gold, determined in accordance with IFRS, and
reconciles this GAAP measure to total cash costs as defined by the Gold Institutes guidance, as a
non-GAAP measure, for each of the periods set forth below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$000: |
|
Year Ended December |
|
|
Year Ended December |
|
|
Year Ended December |
|
|
Year Ended December |
|
|
Year Ended December |
|
Costs |
|
31, 2010 |
|
|
31, 2009 |
|
|
31, 2008 |
|
|
31, 2007 |
|
|
31, 2006 |
|
Mine production costs |
|
$ |
247,850 |
|
|
$ |
196,318 |
|
|
$ |
186,377 |
|
|
$ |
136,312 |
|
|
$ |
115,217 |
|
Depreciation and amortization |
|
|
28,127 |
|
|
|
28,502 |
|
|
|
21,333 |
|
|
|
20,987 |
|
|
|
22,844 |
|
Other mining and processing costs |
|
|
20,598 |
|
|
|
19,073 |
|
|
|
13,675 |
|
|
|
13,638 |
|
|
|
13,006 |
|
Transport and refinery costs |
|
|
1,653 |
|
|
|
1,594 |
|
|
|
2,053 |
|
|
|
1,595 |
|
|
|
711 |
|
Royalties |
|
|
27,680 |
|
|
|
25,410 |
|
|
|
19,730 |
|
|
|
18,307 |
|
|
|
16,979 |
|
Elimination of inter-company sales |
|
|
7,414 |
|
|
|
1,047 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Movement in production inventory and
ore stockpiles |
|
|
(16,152 |
) |
|
|
5,741 |
|
|
|
(21,865 |
) |
|
|
(11,534 |
) |
|
|
(13,373 |
) |
Total cost of producing gold determined
in accordance with IFRS |
|
|
317,170 |
|
|
|
277,685 |
|
|
|
221,303 |
|
|
|
179,305 |
|
|
|
155,384 |
|
Less: Non-cash costs included in total
cost of producing gold: Depreciation
and amortization |
|
|
(28,127 |
) |
|
|
(28,502 |
) |
|
|
(21,333 |
) |
|
|
(20,987 |
) |
|
|
(22,844 |
) |
Total cash costs using the Gold
Institutes guidance |
|
|
289,043 |
|
|
|
249,183 |
|
|
|
199,970 |
|
|
|
158,318 |
|
|
|
132,540 |
|
As previously disclosed: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ounces produced * |
|
|
440,107 |
|
|
|
488,255 |
|
|
|
428,426 |
|
|
|
444,573 |
|
|
|
448,242 |
|
Total production costs per ounce under
IFRS ($ per ounce) |
|
|
721 |
|
|
|
569 |
|
|
|
517 |
|
|
|
403 |
|
|
|
347 |
|
Total cash costs per ounce ($ per ounce) |
|
|
657 |
|
|
|
510 |
|
|
|
467 |
|
|
|
356 |
|
|
|
296 |
|
As now measured: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ounces sold* |
|
|
413,262 |
|
|
|
486,324 |
|
|
|
427,713 |
|
|
|
444,597 |
|
|
|
452,523 |
|
Total production costs per ounce under
IFRS ($ per ounce) |
|
|
767 |
|
|
|
571 |
|
|
|
517 |
|
|
|
403 |
|
|
|
343 |
|
Total cash costs per ounce ($ per ounce) |
|
|
699 |
|
|
|
512 |
|
|
|
468 |
|
|
|
356 |
|
|
|
293 |
|
|
|
|
* |
|
40% share of Morila and 100% share of Loulo and Tongon |
B. CAPITALIZATION AND INDEBTEDNESS
Not applicable.
C. REASONS FOR THE OFFER AND USE OF PROCEEDS
Not applicable.
D. RISK FACTORS
In addition to the other information included in this Annual Report, you should carefully
consider the following factors, which individually or in combination could have a material adverse
effect on our business, financial condition and results of operations. There may be additional
risks and uncertainties not presently known to us, or that we currently see as immaterial, which
may also harm our business. If any of the risks or uncertainties described below or any such
additional risks and uncertainties actually occur, our business, results of operations and
financial condition could be materially and adversely affected. In this case, the trading price of
our ordinary shares and American Depositary Shares, or ADS, could decline and you might lose all or
part of your investment.
Risks Relating to Our Operations
The profitability of our operations, and the cash flows generated by our operations, are affected
by changes in the market price for gold which in the past has fluctuated widely.
10
Substantially all of our revenue and cash flows have come from the sale of gold.
Historically, the market price for gold has fluctuated widely and has been affected by numerous
factors, over which we have no control, including:
|
|
|
the demand for gold for investment purposes, industrial uses and for use in jewelry; |
|
|
|
|
international or regional political and economic trends; |
|
|
|
|
the strength of the US dollar, the currency in which gold prices generally are quoted,
and of other currencies; |
|
|
|
|
market expectations regarding inflation rates; |
|
|
|
|
interest rates; |
|
|
|
|
speculative activities; |
|
|
|
|
actual or expected purchases and sales of gold bullion holdings by central banks, the
International Monetary Fund, or other large gold bullion holders or dealers; |
|
|
|
|
hedging activities by gold producers; and |
|
|
|
|
the production and cost levels for gold in major gold-producing nations. |
The volatility of gold prices is illustrated in the following table, which shows the
approximate annual high, low and average of the afternoon London Bullion Market fixing price of
gold in US dollars for the past ten years.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price Per Ounce ($) |
Year |
|
High |
|
Low |
|
Average |
2001 |
|
|
293 |
|
|
|
256 |
|
|
|
271 |
|
2002 |
|
|
349 |
|
|
|
278 |
|
|
|
310 |
|
2003 |
|
|
416 |
|
|
|
320 |
|
|
|
363 |
|
2004 |
|
|
454 |
|
|
|
375 |
|
|
|
409 |
|
2005 |
|
|
537 |
|
|
|
411 |
|
|
|
444 |
|
2006 |
|
|
725 |
|
|
|
525 |
|
|
|
604 |
|
2007 |
|
|
841 |
|
|
|
608 |
|
|
|
695 |
|
2008 |
|
|
1,011 |
|
|
|
712 |
|
|
|
871 |
|
2009 |
|
|
1,213 |
|
|
|
810 |
|
|
|
972 |
|
2010 |
|
|
1,421 |
|
|
|
1,058 |
|
|
|
1,224 |
|
2011 (through February) |
|
|
1,411 |
|
|
|
1,319 |
|
|
|
1,364 |
|
If gold prices should fall below and remain below our cost of production for any sustained
period we may experience losses, and if gold prices should fall below our cash costs of production
we may be forced to curtail or suspend some or all of our mining operations. In addition, we would
also have to assess the economic impact of low gold prices on our ability to recover from any
losses we may incur during that period and on our ability to maintain adequate reserves. Our total
cash cost of production per ounce of gold sold was $699 in the year ended December 31, 2010, $512
in the year ended December 31, 2009, and $468 in the year ended December 31, 2008. We expect that
Morilas cash costs per ounce will rise as the life of the mine advances as a result of expected
declining grade, which will adversely affect our profitability in the absence of any mitigating
factors. The high grades expected from the underground mining at Loulo will, in the absence of any
other increases, have a positive impact on unit costs.
Our mining operations may yield less gold under actual production conditions than indicated by our
gold reserve figures, which are estimates based on a number of assumptions, including assumptions
as to mining and recovery factors, production costs and the price of gold.
The ore reserve estimates contained in this Annual Report are estimates of the mill delivered
quantity and grade of gold in our deposits and stockpiles. They represent the amount of gold that
we believe can be mined, processed and sold at prices sufficient to recover our estimated total
cash costs of production, remaining investment and anticipated additional capital expenditures.
Our ore reserves are estimated based upon many factors, including:
11
|
|
|
the results of exploratory drilling and an ongoing sampling of the orebodies; |
|
|
|
|
past experience with mining properties; |
|
|
|
|
gold price; and |
|
|
|
|
operating costs. |
Because our ore reserve estimates are calculated based on current estimates of future
production costs and gold prices, they should not be interpreted as assurances of the economic life
of our gold deposits or the profitability of our future operations.
Reserve estimates may require revisions based on actual production experience. Further, a
sustained decline in the market price of gold may render the recovery of ore reserves containing
relatively lower grades of gold mineralization uneconomical and ultimately result in a restatement
of reserves. The failure of the reserves to meet our recovery expectations may have a materially
adverse effect on our business, financial condition and results of operations.
The profitability of operations and the cash flows generated by these operations are significantly
affected by the fluctuations in the price, cost and supply of inputs.
Fuel, power and consumables, including diesel, steel, chemical reagents, explosives and tires,
form a relatively large part of our operating costs. The cost of these consumables is impacted to
varying degrees, by fluctuations in the price of oil, exchange rates and a shortage of supplies.
Such fluctuations have a significant impact upon our operating costs and capital expenditure
estimates and, in the absence of other economic fluctuations, could result in significant changes
in the total expenditure estimates for mining projects, new and existing, and could even render
certain projects non-viable.
We are subject to various political and economic uncertainties associated with operating in Côte
dIvoire, which is currently experiencing a state of political unrest, and the success of the
Tongon mine will depend in large part on our ability to overcome significant challenges.
We are subject to risks associated with operating the Tongon mine in Côte dIvoire. Côte
dIvoire has experienced several years of political chaos, including an attempted coup détat. A
dispute over the recent Côte dIvoire presidential election in November 2010 has resulted in the
establishment of two rival governments. The Electoral Commission declared Mr. A. Ouattara as the
winner. However, the incumbent president challenged the results and refused to give up office.
Presently a stalemate exists while representatives from the African Union attempt to resolve the
impasse. International sanctions have been imposed on the incumbent president and those
individuals and institutions supporting him. Included in the list of entities against whom
sanctions have been imposed are the Ports of Abidjan and San Pedro, the two key shipping ports of
Côte dIvoire, and the SIR, the Ivorian Petroleum refinery. As a result of the sanctions we have
had to re-arrange our logistics arrangements for our Tongon mine and we will now be shipping all
materials for Tongon through the Port of Dakar in Senegal. At times, we have been unable to ship
and sell our Tongon gold production, which has resulted in timing discrepancy between our gold
produced and the recognition of revenue from gold sales. We are unable to predict when or how the
disputed election will be resolved. Accordingly, we are unable to predict when sales of Tongon
gold produced will be delayed and how this could impact our financial results, or whether the
issues associated with the disputed election will require us to cease operations at the Tongon
mine, which would have a material adverse effect on our gold production and financial results.
Any appreciation of the currencies in which we incur costs against the US dollar could adversely
affect our results of operations.
While our revenue is derived from the sale of gold in US dollars, a significant portion of our
input costs are incurred in currencies other than the dollar, primarily Euro, Communauté Financière
Africaine franc, South African Rand, and the Congolese franc. Accordingly, any appreciation in
such other currencies could adversely affect our results of operations.
Our results of operations have been adversely affected by increases in fuel prices, and we would be
adversely affected by future increases in fuel prices or disruptions in the supply of fuel.
12
Our results are significantly affected by the price and availability of fuel, which are in
turn affected by a number of factors beyond our control. Fuel prices are volatile. During 2010,
the average price of our landed fuel was higher than 2009, and it has been rising in 2011. In the
year ended December 31, 2010, the cost of fuel and other power generation costs comprised 25% of
our operating costs and the annual price increase of our landed fuel was 10%.
Historically, fuel costs have been subject to wide price fluctuations based on geopolitical
factors and supply and demand. While we do not currently anticipate a significant reduction in
fuel availability, factors beyond our control make it impossible to predict the future availability
of fuel. Recent political unrest in certain oil producing countries has led to an increase in the
cost of fuel. If there are additional outbreaks of hostilities or other conflicts in oil producing
areas or elsewhere, or a reduction in refining capacity (due to weather events, for example), or
governmental limits on the production or sale of fuel, or restrictions on the transport of fuel,
there could be reductions in the supply of fuel and significant increases in the cost of fuel.
We are not parties to any agreements that protect us against price increases or guarantee the
availability of fuel. Major reductions in the availability of fuel or significant increases in its
cost, or a continuation of current high prices for a significant period of time, would have a
material adverse impact on us.
Our business may be adversely affected if the Government of Mali fails to repay Value Added Tax, or
TVA, owing to Morila and Loulo.
Our mining companies operating in Mali are exonerated by their Establishment Conventions from
paying TVA for the three years following first commercial production. After that, TVA is payable
and reimbursable. TVA is only reclaimable insofar as it is expended in the production of income.
A key aspect in TVA recovery is managing the completion of the Government of Malis audit of the
taxpayers payments, at which time the Government of Mali recognizes a liability.
By December 2007, Morila had successfully concluded a reimbursement protocol with the
Government of Mali for all TVA reimbursements it was owed up to June 2005. Morila was unable to
conclude a second protocol subsequent to December 2007, however, and pursuant to its establishment
convention, began offsetting TVA reimbursements it was owed against corporate and other taxes
payable by Morila to the Government of Mali. As a result of the offsets, the TVA owed by the
Government of Mali to Morila declined to $2.6 million at December 31, 2009. As of December 31,
2010, Morila had recouped all its outstanding TVA, as the Government of Mali repaid all outstanding
amounts by this date. While all the TVA at Morila was recovered and the Government of Mali
recognized the tax offsets, we cannot guarantee that they will continue to reimburse the TVA going
forward.
At June 30, 2009, TVA owed by the Government of Mali to Loulo stood at $16.2 million. This
amount has increased by $20.8 million to $37.0 million at December 31, 2009 due to the end of the
exoneration period on November 8, 2008. As at December 31, 2010, Loulo had a balance of $11.6
million outstanding on TVA after receiving payment from the Government of Mali.
If Morila and Loulo are unable to recover these or future amounts due, or if the future tax
offsets are not recognized, then their results of operations and financial position would be
adversely affected, as would their ability to pay dividends to their shareholders. Accordingly,
our business, cash flows and financial condition will be adversely affected if anticipated
dividends are not paid.
Certain factors may affect our ability to support the carrying value of our property, plant and
equipment, and other assets on our consolidated statement of financial position.
We review and test the carrying amount of our assets on an annual basis when events or changes
in circumstances suggest that the net book value may not be recoverable. If there are indications
that impairment may have occurred, we prepare estimates of expected future discounted cash flows
for each group of assets. Assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units) for purposes of assessing impairment. Expected
future cash flows are inherently uncertain, and could materially change over time. Such cash flows
are significantly affected by reserve and production estimates, together with economic factors such
as spot and forward gold prices, discount rates, currency exchange rates, estimates of costs to
produce reserves and future capital expenditures.
13
We may not be able to recover certain funds from MDM Ferroman (Pty) Limited.
In August 2004, we entered into a fixed lump sum turnkey contract for $63 million for the
design, supply, construction and commissioning of the Loulo processing plant and infrastructure
with MDM Ferroman (Pty) Ltd, or MDM. At the end of 2005, after making advances and additional
payments to MDM totaling $26 million in excess of the contract, we determined that MDM was unable
to perform its obligations under the MDM Contract, at which time we enforced a contractual remedy
which allowed us to act as our own general contractor and to complete the remaining work on the
Loulo project that was required under the MDM Contract.
We believe that we are entitled to recover certain amounts from MDM, including advances of
$10.7 million included in receivables as at December 31, 2010. Of this amount, $7 million is
secured by performance bonds and the remainder is secured by various personal guarantees and other
assets. In January 2009 and 2010, the liquidator declared and paid dividends of $1.6 million from
the insolvent estate, leaving an outstanding balance of $10.7 million (stated net of an impairment
provision of $1.3 million) as at December 31, 2010.
As part of our efforts to recoup the monies owed to us, MDM was put into liquidation on
February 1, 2006. This resulted in a South African Companies Act Section 417 investigation into
the business and financial activities of MDM, its affiliated companies and their directors. This
investigation was completed in the last quarter of 2007 and the liquidators have issued their
report that confirms that MDMs liabilities exceeded its assets. During the second quarter of 2011
we will be involved in arbitration proceedings with the providers of the performance bonds, which
have been the subject of legal proceedings in the South African Courts.
Our ability to recover in full the $10.7 million included in receivables is dependent on the
amounts which can be recovered from the performance bonds, personal guarantees and other assets
provided as security. Any shortfall is expected to be recovered from any free residue accruing to
the insolvent estate. The aggregate amount which will ultimately be recovered cannot presently be
determined. The financial statements do not reflect any additional provision that may be required
if the $10.7 million cannot be recovered in full. Our results of operations may be adversely
affected if we are unable to recover the amounts advanced by us to MDM. Any part of the $10.7
million included in accounts receivable which cannot in fact be recovered will need to be charged
as an expense. The ultimate outcome of this claim cannot presently be determined and there is
significant uncertainty surrounding the amount that will ultimately be recovered.
We may incur losses or lose opportunities for gains as a result of any future use of derivative
instruments to protect us against low gold prices.
We have from time to time used derivative instruments to protect the selling price of some of
our anticipated gold production. The intended effect of our derivative transactions was to lock in
a fixed sale price for some of our future gold production to provide some protection against a
subsequent fall in gold prices. Although we have currently ceased using derivative instruments to
protect us against low gold prices at our operations, we may in the
future determine to implement the use of
derivatives in connection with a portion of our anticipated gold production.
Derivative transactions can result in a reduction in revenue if the instrument price is less
than the market price at the time the hedged sales are recognized. Moreover, our decision to enter
into a given instrument would be based upon market assumptions. If these assumptions are not
ultimately met, significant losses or lost opportunities for significant gains may result. In all,
the use of these instruments may result in significant losses which will prevent us from realizing
the positive impact of any subsequent increase in the price of gold on the portion of production
covered by the instrument.
Our underground project at Loulo, developing two mines at Yalea and Gara, is subject to all of the
risks associated with project development and underground mining.
Development of the underground mine at Yalea commenced in December 2006 and first ore was
mined in April 2008. These planned mines represent our entry into the business of underground
mining, and the commencement of underground mining in Mali by any mining company. In connection
with the development of the underground mines, we must build the necessary infrastructure, the
costs of which are substantial. The underground mines may experience unexpected problems and
delays during their development and construction. Delays in the commencement of gold production
could occur and the development costs could be larger than expected, which could affect our results
of operations and profitability.
14
Since the commencement of the underground operations at Yalea, in working with a mining
contractor, we have experienced a number of challenges which have led to delays and slower build up
of production. These challenges included the availability of the underground fleet, the ability to
drill and blast up holes and the contractors poor safety record.
Following these setbacks experienced during 2009, we terminated the underground mining
contract with the contractor and have assumed responsibility for underground mining at Loulo. At
the beginning of 2010, we appointed a new contractor to develop the Gara underground mine, and
subsequently extended their contract at the end of 2010 to include the development of the Yalea
underground mine. The development and operation of the underground mine has been negatively
impacted by these issues and resulting delays, and we cannot assure you that such issues are fully
resolved or that we will not have future delays.
The business of underground mining by its nature involves significant risks and hazards. In
particular, as the development commences the operation could be subject to:
|
|
|
rockbursts; |
|
|
|
|
seismic events; |
|
|
|
|
underground fires; |
|
|
|
|
cave-ins or falls of ground; |
|
|
|
|
discharges of gases or toxic chemicals; |
|
|
|
|
flooding; |
|
|
|
|
accidents; and |
|
|
|
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other conditions resulting from drilling, blasting and the removal of material from an
underground mine. |
We are at risk of experiencing any and all of these hazards. The occurrence of any of these
hazards could delay the development of the mine, production, increase cash operating costs and
result in additional financial liability for us.
Our success may depend on our social and environmental performance.
Our ability to operate successfully in communities will likely depend on our ability to
develop, operate and close mines in a manner that is consistent with the health, safety and
well-being of our employees, the protection of the environment, and the creation of long-term
economic and social opportunities in the communities in which we operate. We seek to promote
improvements in health and safety, environmental performance and community relations. However, our
ability to operate could be adversely impacted by accidents or events detrimental (or perceived to
be detrimental) to the health, safety and well-being of our employees, the environment or the
communities in which we operate.
In July 2009, the Loulo mine experienced some disruption, caused by a small group of
disaffected people unable to secure long term employment at the mine. The disruption resulted in
some damage to the tailings pipeline as well as to some accommodation units and other property.
All operations were suspended for 36 hours, following which all mining and processing operations
were restored and operating back at normal capacity. We cannot assure you that similar events will
not happen in the future, or that such events will not adversely affect our results of operations
and properties.
Actual cash costs of production, production results and economic returns may differ significantly
from those anticipated by our feasibility studies and scoping studies for new development projects.
It typically takes a number of years from initial feasibility studies of a mining project
until development is completed and, during that time, the economic feasibility of production may
change. The economic feasibility of development projects is based on many factors, including the
accuracy of estimated reserves, metallurgical recoveries, capital and operating costs and future
gold prices. The capital expenditures and time required to develop new mines or other projects are
considerable, and changes in costs or construction schedules can affect project economics. Thus it
is possible that actual costs and economic returns may differ materially from our estimates.
15
In addition, there are a number of uncertainties inherent in the development and construction
of any new mine, including:
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the availability and timing of necessary environmental and governmental permits; |
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the timing and cost necessary to construct mining and processing facilities, which can
be considerable; |
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the availability and cost of skilled labor, power, water and other materials; |
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the accessibility of transportation and other infrastructure, particularly in remote
locations; and |
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the availability of funds to finance construction and development activities. |
During 2010, we completed the feasibility study for the Gounkoto project. Mining at Gounkoto
commenced in January 2011 and processing is anticipated to commence by mid-year. Also in 2010, we
completed an update to the Kibali project feasibility study. The study will now go through a
series of internal and external reviews and optimizations of the mining and processing rates and
capital estimates and in particular the scheduling of the capital development ahead of final design
and approval targeted for mid-2011. Exploration at our Massawa project has been slowed down as we
have advanced Gounkoto and Kibali providing the time to fully evaluate the metallurgy and
development strategies. Our goal is to progress the Massawa project to complete a feasibility
study in 2011. We cannot provide any assurance that the projects will ultimately result in new
commercial mining operations, or that new commercial mining operations will be successful.
We conduct mining, development and exploration activities in countries with developing economies
and are subject to the risks of political and economic instability associated with these countries.
We currently conduct mining, development and exploration activities in countries with
developing economies. These countries and other emerging markets in which we may conduct
operations have, from time to time, experienced economic or political instability. It is difficult
to predict the future political, social and economic direction of the countries in which we
operate, and the impact government decisions may have on our business. Any political or economic
instability in the countries in which we currently operate could have a material and adverse effect
on our business and results of operations.
The countries of Mali, Senegal, Burkina Faso, DRC and Côte dIvoire have, since independence,
experienced some form of political upheaval with varying forms of changes of government taking
place.
Goods are supplied to our operations in Mali through Ghana and Senegal, which routings have,
to date, functioned satisfactorily. Our operations at Morila have been adversely affected by the
higher transportation costs for diesel that now has to be delivered via Senegal. Any present or
future policy changes in the countries in which we operate may in some way have a significant
effect on our operations and interests.
The mining laws of Mali, Côte dIvoire, Senegal, Burkina Faso, and DRC stipulate that, should
an economic orebody be discovered on a property subject to an exploration permit, a permit that
allows processing operations to be undertaken must be issued to the holder. Legislation in these
countries currently provides for the relevant government to acquire a free ownership interest in
any mining project. The requirements of the various governments as to the foreign ownership and
control of mining companies may change in a manner which adversely affects us.
We are subject to various political and economic uncertainties associated with operating in the
Democratic Republic of the Congo, and the success of the Kibali project will depend in large part
on our ability to overcome significant challenges.
We are subject to risks associated with operating the Kibali project in the Democratic
Republic of the Congo (DRC). The Kibali project is located in the north-east region of the DRC
and is subject to various levels of political, economic and other risks and uncertainties
associated with operating in the DRC. Some of these risks include political and economic
instability, high rates of inflation, severely limited infrastructure, lack of law enforcement,
labor unrest, and war and civil conflict. In addition, the Kibali project is subject to the risks
inherent in operating in any foreign jurisdiction including changes in government policy,
restrictions on foreign exchange, changes in taxation policies, and renegotiation or nullification
of existing concessions, licenses, permits and contracts.
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The DRC is an impoverished country with physical and institutional infrastructure that is in a
debilitated condition. It is in transition from a largely state-controlled economy to one based on
free market principles, and from a non-democratic political system with a centralized ethnic power
base to one based on more democratic principles. There can be no assurance that these changes will
be effected or that the achievement of these objectives will not have material adverse consequences
for the Kibali project. It is anticipated that presidential elections should take place during the
latter part of 2011.
Any changes in mining or investment policies or shifts in political attitude in the DRC may
adversely affect operations and/or profitability of the Kibali project. Operations may be affected
in varying degrees by government regulations with respect to, but not limited to, restrictions on
production, price controls, export controls, currency remittance, income taxes, foreign investment,
maintenance of claims, environmental legislation, land use, land claims of local people, water use
and mine safety. These changes may impact the profitability and viability of the Kibali project.
Furthermore, the Kibali project is located in a remote area of the DRC, which lacks basic
infrastructure, including adequate roads and other transport, sources of power, water, housing,
food and transport. In order to develop any of the mineral interests, facilities and material
necessary to support operations in the remote locations in which they are situated must be
established. The remoteness of the mineral interests would affect the potential viability of
mining operations, as we would also need to establish substantially greater sources of power,
water, physical plant, roads and other transport infrastructure than are currently present in the
area. More specifically, we must obtain necessary licenses from the government to construct and
operate hydropower stations, which will necessarily involve reconfiguring, refurbishing and
maintaining existing stations. Our ability to produce sufficient power for the Kibali will be
adversely affected to the extent such licenses cannot be obtained, or we are unable to comply with
the conditions of such licenses.
Moreover, the north-east region of the DRC has undergone civil unrest and instability that
could have an impact on political, social or economic conditions in the DRC generally. Stability
must be maintained in order for us to build and operate a mine at the Kibali project site. The
impact of unrest and instability on political, social or economic conditions in the DRC could
result in the impairment of the exploration, development and operations at the Kibali project.
The communities near the Kibali project need to be resettled in an orderly manner and peaceful
manner to allow the development and operation of a mine at the site. The first phase of houses are
currently being built which will allow the management to commence the resettlement program, which
has been implemented following agreement with the local authorities and communities affected by the
project. We have committed to assist the DRC government in these efforts. Any failure to complete
the settlement plan successfully will materially and adversely affect our ability to build and
operate a mine at the Kibali project site.
Under our joint venture agreements with AngloGold Ashanti Limited, or AngloGold Ashanti, we operate
Morila and the Kibali project through a joint venture agreement and joint venture committee, and
any disputes with AngloGold Ashanti over the management of Morila or the Kibali project could
adversely affect our business.
We jointly control Morila SA, the owner of the Morila mine, and Kibali Goldmines SPRL, the
owner of the Kibali project, with AngloGold Ashanti under joint venture agreements. We are
responsible for the day-to-day operations of Morila and the Kibali project, subject to the overall
management control of the Morila SA and Kibali Goldmines boards, respectively. Substantially all
major management decisions, including approval of a budget for Morila and the Kibali project, must
be approved by the Morila SA and Kibali Goldmines boards, respectively. We and AngloGold Ashanti
retain equal representation on the boards, with neither party holding a deciding vote. If a
dispute arises between us and AngloGold Ashanti with respect to the management of Morila SA or
Kibali Goldmines, and we are unable to amicably resolve the dispute, we may have to participate in
arbitration or other proceeding to resolve the dispute, which could materially and adversely affect
our business.
The use of mining contractors at certain of our operations may expose it to delays or suspensions
in mining activities.
Mining contractors are used at Loulo and Morila to mine and deliver ore to processing plants.
These mining contractors rely on third-party vendors to supply them with required mining equipment,
many of which have been adversely affected by the global economic slowdown. Consequently, at these
mines, we do not own all of the mining equipment and may face disruption of operations and incur
costs and liabilities in the event that any of the mining contractors at these mines, or any of the
vendors that supply them, has financial difficulties, or should there be a dispute in renegotiating
a mining contract, or a delay in replacing an existing contractor.
Following setbacks experienced during 2009 at Loulo, we terminated the underground mining
contract with the contractor and assumed responsibility for the underground mining.
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We may be required to seek funding from the global credit and capital markets to develop our
properties, and the recent weaknesses in those markets could adversely affect our ability to obtain
financing and capital resources.
We require substantial funding to develop our properties, and may be required to seek funding
from the credit and capital markets to finance these activities. Our ability to obtain outside
financing will depend upon the price of gold and the markets perception of its future price, and
other factors outside of our control. We may not be able to obtain funding on acceptable terms
when required, or at all.
The credit and capital markets experienced significant deterioration in 2008, including the
failure of significant and established financial institutions in the US and abroad, which continued
throughout 2009 and 2010 and may continue in 2011 and beyond, all of which will have an impact on
the availability and terms of credit and capital in the near term. If uncertainties in these
markets continue, or these markets deteriorate further, it could have a material adverse effect on
our ability to raise capital. Failure to raise capital when needed or on reasonable terms may have
a material adverse effect on our business, financial condition and results of operations.
Regulations and pending legislation governing issues involving climate change could result in
increased operating costs which could have a material adverse effect on our business.
A number of governments or governmental bodies have introduced or are contemplating regulatory
changes in response to various climate change interest groups and the potential impact of climate
change. Legislation and increased regulation regarding climate change could impose significant
costs on us, our venture partners and our suppliers, including increased energy, capital equipment,
environmental monitoring and reporting and other costs to comply with such regulations. Any
adopted future climate change regulations could also negatively impact our ability to compete with
companies situated in areas not subject to such limitations. Given the emotion, political
significance and uncertainty around the impacts of climate change and how it should be dealt with,
we cannot predict how legislation and regulation will affect our financial condition, operating
performance and ability to compete. Furthermore, even without such regulation, increased awareness
and any adverse publicity in the global marketplace about potential impacts on climate change by us
or other companies in our industry could harm our reputation. The potential physical impacts of
climate change on our operations are highly uncertain, and would be particular to the geographic
circumstances in areas in which we operate. These may include changes in rainfall and storm
patterns and intensities, water shortages, changing sea levels and changing temperatures. These
impacts may adversely impact the cost, production and financial performance of our operations.
We may not pay dividends to shareholders in the near future.
We have proposed the payment of our fifth dividend to ordinary shareholders, subject to
approval by our shareholders at our AGM in May 2011. It is our policy to pay dividends if profits
and funds are available for that purpose. Whether or not funds are available depends on a variety
of factors, including capital expenditures. We cannot guarantee that dividends will be paid in the
future.
If we are unable to attract and retain key personnel our business may be harmed.
Our ability to bring additional mineral properties into production and explore our extensive
portfolio of mineral rights will depend, in large part, upon the skills and efforts of a small
group of management and technical personnel, including D. Mark Bristow, our Chief Executive
Officer. If we are not successful in retaining or attracting highly qualified individuals in key
management positions our business may be harmed. The loss of any of our key personnel could
adversely impact our ability to execute our business plan.
Our insurance coverage may prove inadequate to satisfy future claims against us.
We may become subject to liabilities, including liabilities for pollution or other hazards,
against which we have not insured adequately or at all, or cannot insure. Our insurance policies
contain exclusions and limitations on coverage. Our current insurance policies provide worldwide
indemnity of £50 million in relation to legal liability incurred as a result of death, injury,
disease of persons and/or loss of or damage to property. Main exclusions under this insurance
policy, which relates to our industry, include war, nuclear risks, silicosis, asbestosis or other
fibrosis of the lungs or diseases of the respiratory system with regard to employees, and gradual
pollution. In addition, our insurance policies may not continue to be available at economically
acceptable premiums. As a result, in the future our insurance coverage may not cover the extent of
claims against us.
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It may be difficult for you to affect service of process and enforce legal judgments against us or
our affiliates.
We are incorporated in Jersey, Channel Islands and a majority of our directors and senior
executives are not residents of the United States. Virtually all of our assets and the assets of
those persons are located outside the United States. As a result, it may not be possible for you
to effect service of process within the United States upon those persons or us. Furthermore, the
United States and Jersey currently do not have a treaty providing for the reciprocal recognition
and enforcement of judgments (other than arbitration awards) in civil and commercial matters.
Consequently, it may not be possible for you to enforce a final judgment for payment rendered by
any federal or state court in the United States based on civil liability, whether or not predicated
solely upon United States Federal securities laws against those persons or us.
In order to enforce any judgment rendered by any Federal or state court in the United States
in Jersey, proceedings must be initiated by way of common law action before a court of competent
jurisdiction in Jersey. The entry of an enforcement order by a court in Jersey is conditional upon
the following:
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that the court which pronounced the judgment has jurisdiction to entertain the case
according to the principles recognized by Jersey law with reference to the jurisdiction of
the foreign courts; |
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that the judgment is final and conclusive it cannot be altered by the courts which
pronounced it; |
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that there is payable pursuant to a judgment a sum of money, not being a sum payable in
respect of tax or other charges of a like nature or in respect of a fine or other penalty; |
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that the judgment has not been prescribed; |
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that the courts of the foreign country have jurisdiction in the circumstances of the
case; |
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that the judgment was not obtained by fraud; and |
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that the recognition and enforcement of the judgment is not contrary to public policy
in Jersey, including observance of the rules of natural justice which require that
documents in the United States proceeding were properly served on the defendant and that
the defendant was given the right to be heard and represented by counsel in a free and fair
trial before an impartial tribunal. |
Furthermore, it is doubtful whether you could bring an original action based on United States
Federal securities laws in a Jersey court.
We are subject to significant corporate regulation as a public company and failure to comply with
all applicable regulations could subject us to liability or negatively affect our share price.
As a publicly traded company, we are subject to a significant body of regulation. While we
have developed and instituted a corporate compliance program based on what we believe are the
current best practices in corporate governance and continue to update this program in response to
newly implemented or changing regulatory requirements, we cannot provide absolute assurance that we
are or will be in compliance with all potentially applicable corporate regulations. For example,
we cannot provide assurance that in the future our management will not find a material weakness in
connection with its annual review of our internal control over financial reporting pursuant to
Section 404 of the US Sarbanes-Oxley Act of 2002. If we fail to comply with any of these
regulations, we could be subject to a range of regulatory actions, fines or other sanctions or
litigation. If we must disclose any material weakness in our internal control over financial
reporting, our share price could decline.
In addition, we are subject to the U.S. Foreign Corrupt Practices Act and the recently enacted
UK Bribery Act, which generally prohibit companies and their intermediaries from making improper
payments to officials for the purpose of obtaining or retaining business. The compliance
mechanisms and monitoring programs that we have in place may not adequately prevent or detect
possible violations under applicable anti-bribery and corruption legislation. Failure to comply
with such legislation could expose us to civil and criminal sanction, including fines, prosecution,
potential debarment from public procurement and reputational damage, all of which could have a
material adverse effect on our financial results and could cause our share price to decline.
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Risks Relating to Our Industry
The exploration of mineral properties is highly speculative in nature, involves substantial
expenditures, and is frequently unproductive.
We must continually seek to replenish our ore reserves depleted by production to maintain
production levels over the long term. Ore reserves can be replaced by expanding known ore bodies
or exploring for new deposits. Exploration for gold is highly speculative in nature. Our future
growth and profitability will depend, in part, on our ability to identify and acquire additional
mineral rights, and on the costs and results of our continued exploration and development programs.
Many exploration programs, including some of ours, do not result in the discovery of
mineralization and any mineralization discovered may not be of sufficient quantity or quality to be
profitably mined. Our mineral exploration rights may not contain commercially exploitable reserves
of gold. Uncertainties as to the metallurgical recovery of any gold discovered may not warrant
mining on the basis of available technology. Our operations are subject to all of the operating
hazards and risks normally incident to exploring for and developing mineral properties, such as:
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encountering unusual or unexpected formations; |
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environmental pollution; |
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personal injury and flooding; and |
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decrease in reserves due to a lower gold price. |
If we discover a viable deposit, it usually takes several years from the initial phases of
exploration until production is possible. During this time, the economic feasibility of production
may change.
Moreover, we will use the evaluation work of professional geologists, geophysicists, and
engineers for estimates in determining whether to commence or continue mining. These estimates
generally rely on scientific and economic assumptions, which in some instances may not be correct,
and could result in the expenditure of substantial amounts of money on a deposit before it can be
determined whether or not the deposit contains economically recoverable mineralization. As a
result of these uncertainties, we may not successfully acquire additional mineral rights, or
identify new proven and probable reserves in sufficient quantities to justify commercial operations
in any of our properties.
If management determines that capitalized costs associated with any of our gold interests are
not likely to be recovered, we would recognize an impairment provision against the amounts
capitalized for that interest. All of these factors may result in losses in relation to amounts
spent which are found not to be recoverable.
Title to our mineral properties may be challenged which may prevent or severely curtail our use of
the affected properties.
Title to our properties may be challenged or impugned, and title insurance is generally not
available. Each sovereign state is the sole authority able to grant mineral property rights, and
our ability to ensure that we have obtained secure title to individual mineral properties or mining
concessions may be severely constrained. Our mineral properties may be subject to prior
unregistered agreements, transfers or claims, and title may be affected by, among other things,
undetected defects. In addition, we may be unable to operate our properties as permitted or to
enforce our rights with respect to our properties.
Our ability to obtain desirable mineral exploration projects in the future may be adversely
affected by competition from other exploration companies.
We compete with other mining companies in connection with the search for and acquisition of
properties producing or possessing the potential to produce gold. Existing or future competition
in the mining industry could materially and adversely affect our prospects for mineral exploration
and success in the future.
Our operations are subject to extensive governmental and environmental regulations, which could
cause us to incur costs that adversely affect our results of operations.
Our mining facilities and operations are subject to substantial government laws and
regulations, concerning mine safety, land use and environmental protection. We must comply with
requirements regarding exploration operations, public safety, employee health
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and safety, use of explosives, air quality, water pollution, noxious odor, noise and dust controls,
reclamation, solid waste, hazardous waste and wildlife as well as laws protecting the rights of
other property owners and the public.
Any failure on our part to be in compliance with these laws, regulations, and requirements
with respect to our properties could result in us being subject to substantial penalties, fees and
expenses, significant delays in our operations or even the complete shutdown of our operations. We
provide for estimated environmental rehabilitation costs when the related environmental disturbance
takes place. Estimates of rehabilitation costs are subject to revision as a result of future
changes in regulations and cost estimates. The costs associated with compliance with government
regulations may ultimately be material and adversely affect our results of operations and financial
condition.
If our environmental and other governmental permits are not renewed or additional conditions are
imposed on our permits, our financial condition and results of operations may be adversely
affected.
Generally, compliance with environmental and other government regulations requires us to
obtain permits issued by governmental agencies. Some permits require periodic renewal or review of
their conditions. We cannot predict whether we will be able to renew these permits or whether
material changes in permit conditions will be imposed. Non-renewal of a permit may cause us to
discontinue the operations requiring the permit, and the imposition of additional conditions on a
permit may cause us to incur additional compliance costs, either of which could have a material
adverse effect on our financial condition and results of operations.
Labor disruptions could have an adverse effect on our operating results and financial condition.
Our operations in West Africa are highly unionized, and strikes are legal in the countries in
which we operate. Therefore, our operations are at risk of having work interrupted for indefinite
periods due to industrial action, such as strikes by employee collectives. Should long disruptions
take place on our operations, the results from our operations and their financial condition could
be materially and adversely affected.
AIDS poses risks to us in terms of productivity and costs.
The incidence of AIDS in Mali, Côte dIvoire, Senegal and the DRC, which has been forecast to
increase over the next decade, poses risks to us in terms of potentially reduced productivity and
increased medical and insurance costs. The exact extent to which our workforce is infected is not
known at present. The prevalence of AIDS in the countries in which we operate and among our
workforce could become significant. Significant increases in the incidence of AIDS infection and
AIDS-related diseases among members of our workforce in the future could adversely impact our
operations and financial condition.
Item 4. Information on the Company
A. HISTORY AND DEVELOPMENT OF THE COMPANY
Randgold Resources Limited was incorporated under the laws of Jersey, Channel Islands in
August 1995, to engage in the exploration and development of gold deposits in Sub-Saharan Africa.
Our principal executive offices are located at 3rd Floor Unity Chambers, 28 Halkett
Street, St. Helier, Jersey, JE2 4WJ Channel Islands and our telephone number is (011 44) 1534
735-333. Our agent in the United States is CT Corporation System, 111 Eighth Avenue, New York, New
York 10011.
We discovered the Morila deposit during December 1996 and we subsequently financed, built and
commissioned the Morila mine.
During July 2000, we concluded the sale of 50% of our interest in Morila Limited (and also a
shareholder loan made by us to Morila Limited) to AngloGold Ashanti for $132 million in cash.
We have an 80% controlling interest in Société des Mines de Loulo SA, or Somilo, through a
series of transactions culminating in April 2001. The Loulo mine commenced operations in October
2005 and mines the Gara (formerly Loulo 0) and Yalea deposits. We discovered the Yalea deposit in
1997.
We have an 89% controlling interest in Société des Mines de Tongon SA, or Tongon.
We conduct our mining operations through:
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a 50% joint venture interest in Morila Limited (which in turn owns an 80% interest in
the Morila mine); |
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an 80% interest in Somilo; and |
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an 89% interest in Tongon. |
In July 2002, we completed a public offering of 5,000,000 of our ordinary shares, including
American Depositary Shares, or ADSs, resulting in gross proceeds to us of $32.5 million. These
proceeds were used to repay a syndicated term loan and revolving credit facility in November 2002
and for feasibility studies and development activities. In connection with this offering, we
listed our ADSs on the Nasdaq National Market (our ADSs are now listed on the Nasdaq Global Select
Market).
In February 2004, we announced that we would develop a new mine at Loulo in western Mali.
Construction continued through 2005 and the new open pit mine went into production in October 2005.
In addition, our board agreed to proceed with the development of the underground mine and, after
the award of the development contract, work commenced with the construction of the boxcut at the
Yalea mine in August 2006. We accessed first ore at Yalea in April 2008 with full production
beginning in 2010. We commenced development of Loulos second underground mine, Gara, in 2010 with
first ore scheduled to be delivered to the plant by the second quarter of 2011.
In April 2004, Resolute Mining Limited, or Resolute, acquired the Syama mine from us.
Resolute has subsequently paid us $6 million in cash and has assumed liabilities of $7 million, of
which $4 million owing to ourselves has been settled. The agreement entered into in June 2004
between the parties provides for the payment of a production royalty by Resolute to us relating to
Syamas production equal to $10 per ounce on the first million ounces produced by Syama and $5 per
ounce on the next three million ounces produced by Syama. This royalty payment is capped at $25
million. We received our first royalties in 2009.
Effective on June 11, 2004, we undertook a split of our ordinary shares, which increased our
issued share capital from 29,263,385 to 58,526,770 ordinary shares. In connection with this share
split our ordinary shareholders of record on June 11, 2004 received two $0.05 ordinary shares for
every one $0.10 ordinary share they held. Following the share split, each shareholder held the
same percentage interest in us; however, the trading price of each share was adjusted to reflect
the share split. ADS holders were affected the same way as shareholders and the ADS ratio remains
one ADS to one ordinary share.
On November 1, 2005, we completed a public offering of 8,125,000 of our ordinary shares,
including ADSs, resulting in gross proceeds to us of $109.7 million. The new shares were allocated
to institutional shareholders in the United Kingdom, the United States, Canada and the rest of the
world.
On December 6, 2007, we completed a public offering of 6,821,000 of our ordinary shares,
including ADSs, resulting in gross proceeds to us of $240 million. A portion of the proceeds from
the offering were used for the development of the Tongon project, and any remaining proceeds will
be used for such organic and corporate opportunities, including possible acquisitions, as might
arise.
During 2007, peace initiatives in Côte dIvoire continued and we completed a feasibility study
which allowed our board to approve the development of the new mine at Tongon subject to the
approval of the mining convention by the Côte dIvoire Minister of Mines and Energy. Construction
of the mine started at the end of 2008 and its first gold was produced in November 2010.
On August 4, 2009, we completed a public offering of 5,750,000 of our ordinary shares,
including ADSs, resulting in gross proceeds to us of $341.8 million. The proceeds from the
offering are being used to fund the feasibility studies for the Gounkoto and Massawa projects, to
develop the Gounkoto, Massawa and Kibali projects, and for other organic and corporate
opportunities, including possible acquisitions.
On October 15, 2009, we completed the acquisition of 50% of Moto Goldmines Limited (Moto
Goldmines), in conjunction with AngloGold Ashanti, which resulted in a 50:50 joint venture control
of the Kibali project in the DRC. On December 22, 2009 we completed a further acquisition of a 20%
interest, on behalf of the joint venture, from Société des Mines dOr de Kilo-Moto (Sokimo), the
parastatal mining company of the DRC, resulting in an effective interest in the Kibali project of
45%.
During November 2009, we completed the sale of our Kiaka gold project to Volta Resources Inc.,
for $2 million in cash and 20 million Volta Resources Inc. shares. During 2010, we sold 15.5
million Volta Resources Inc. shares for a net profit of $19.3 million.
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Developments during 2010 relating to MDM are discussed more fully in Item 4. Information on
the Company B. Business Overview Legal Proceedings.
Principal Capital Expenditures
Capital expenditures incurred for the year ended December 31, 2010 totaled $410.8 million
compared to $196.7 million for the year ended December 31, 2009, and $85 million for the year ended
December 31, 2008. As of December 31, 2010, our capital commitments amounted to $85 million,
principally for the Loulo underground project, Tongon mine, Gounkoto project and the Kibali
project. The capital expenditures will be financed out of internal funds. The capital cost for
both Loulo underground mines is expected to amount to approximately $137 million for the next three
years. The capital cost for the Tongon mine is expected to amount to approximately $66 million for
the next three years. The capital cost for Gounkoto is expected to amount to approximately $98
million for the next three years. The capital cost for our share of the Kibali project is expected
to amount to approximately $363 million for the next three years. The capital cost for Massawa is
expected to amount to approximately $26 million for the next three years.
Recent Developments
During 2010, we completed the feasibility study for the Gounkoto project. The feasibility
study is based on a toll treat project whereby the ore is mined and fed through an onsite fixed
crusher. The crushed ore is then loaded onto dedicated haul trucks and trucked approximately 25
kilometers to Loulo and fed directly into the Loulo plant. Mining at Gounkoto commenced in January
2011 and processing is anticipated to commence by mid-year.
Also in 2010, we completed an update to the Kibali project feasibility study. The study will
now go through a series of internal and external reviews and optimizations of the mining and
processing rates and capital estimates and in particular the scheduling of the capital ahead of
final design and approval targeted for mid-2011. The Kibali projects Resettlement Action Plan has
progressed with the construction of the first houses in the resettlement area commencing in January
2011.
B. BUSINESS OVERVIEW
OVERVIEW
We engage in gold mining, exploration and related activities. Our activities are focused on
West and Central Africa, some of the most promising areas for gold discovery in the world. In
Mali, we have an 80% controlling interest in the Loulo mine through Somilo SA. The Loulo mine is
currently mining from two large open pits, several smaller satellite pits and one underground mine
and is developing a further underground mine. We also own 50% of Morila Limited, which in turn
owns 80% of Morila SA, the owner of the Morila mine in Mali. In addition, we own an effective 89%
controlling interest in the Tongon mine located in the neighboring country of Côte dIvoire, which
was commissioned in November 2010. We also own an effective 83.25% controlling interest in the
Massawa project in Senegal where we completed a prefeasibility study in December 2009. In 2009, we
announced a new discovery on our Loulo permit, Gounkoto, which is located approximately 25
kilometers south of the existing mine. Also in 2009, we acquired a 45% interest in the Kibali
project, which is located in the DRC. We also have exploration permits and licenses covering
substantial areas in Burkina Faso, Côte dIvoire, DRC, Mali, and Senegal. At December 31, 2010, we
declared proven and probable reserves of 16.39 million ounces attributable to our percentage
ownership interests in Loulo, Morila, Tongon, Gounkoto, Massawa and Kibali.
Our strategy is to create value for all our stakeholders by finding, developing and operating
profitable gold mines. We seek to discover significant gold deposits, either from our own phased
exploration programs or the acquisition of early stage to mature exploration programs. We actively
manage both our portfolio of exploration and development properties and our risk exposure to any
particular geographical area. We also routinely review opportunities to acquire development
projects and existing mining operations and companies.
Loulo
In February 2004, we announced that we would develop a new mine at Loulo in western Mali. In
2005, we commenced open pit mining operations at the Gara and Yalea pits. In 2010, its fifth year
of production, the Loulo mine produced 316,539 ounces of gold at a total cash cost of $712 per
ounce. We estimate that the mine will produce between 420,000 to 440,000 ounces in 2011. We
currently anticipate that mining at Loulo will continue through 2029.
23
We commenced development of the Yalea underground mine in August 2006, first ore was accessed
in April 2008 and we are ramping up to full production anticipated in 2011. We commenced
development of Loulos second underground mine, Gara, in 2010 with first ore scheduled to be
delivered to the plant by the second quarter of 2011.
The focus of exploration at Loulo is to continue to explore and discover additional orebodies
within the 372 square kilometer permit.
Gounkoto
Gounkoto is located approximately 25 kilometers south of Loulos plant.
Following the completion of the feasibility in early 2010 a full feasibility was completed by
the end of 2010, following a large drill program and follow up studies. The geological modeling is
based on 114 RC holes totaling 11,583 meters and 194 diamond holes totaling 57,613 meters. The
Gounkoto structure hosting the Gounkoto orebody has now been intersected over the 1.7km of strike
length and down to 520 vertical meters. The feasibility study has led to the declaration of open
pit ore reserves totaling 17.11 million tonnes at a grade of 5.10g/t for 2.80 million ounces. The
P64 target, which features 250 strike meters of similar alteration and mineralization, is located
300 meters to the northwest of Gounkoto, while the Faraba deposit, with mineralized material of
6.78 million tonnes at an average grade of 2.60g/t for 565,000 ounces, is located 2.5 kilometers to
the southeast.
It is anticipated that an updated underground economic scoping study will be completed during
2011.
Morila
In 1996, we discovered the Morila deposit, which we financed and developed and was our major
gold producing asset through 2009. Since production began in October 2000, Morila has produced
approximately 5.8 million ounces of gold at a total average cash cost of $216 per ounce. Morilas
total production for 2010 was 238,607 ounces at a cash cost of $669 per ounce. Consistent with the
mine plan, Morila ceased pit mining in April 2009 and is currently processing lower grade
stockpiles, which will continue through 2013. During 2010 a study of the reprocessing of the
Morila Tailings Storage Facility was completed and it is anticipated that a bankable feasibility
study will be undertaken in 2011.
Tongon
The Tongon project is located within the Nielle exploitation permit in the north of Côte
dIvoire, 55 kilometers south of the border with Mali.
We commenced construction of the Tongon gold mine at the end of 2008 and commissioned the
first stream in the fourth quarter of 2010 and produced 28,126 ounces at an average cash cost of
$459 per ounce for the year, with first official gold production being recorded. We are forecast
to complete and commission the second stream including secondary and tertiary crushing circuit and
the sulfide circuit of the processing plant by midyear 2011. Gold production is projected to build
up to between 260,000 and 270,000 ounces in 2011 and average 270,000 ounces per annum over a ten
year period.
The focus of exploration at Tongon is to continue to explore and discover additional orebodies
within the 751 square kilometer Nielle permit.
Kibali
Our interest in the Kibali project was acquired following the acquisition of Moto Goldmines,
in conjunction with AngloGold Ashanti, and the further acquisition of a 20% interest from Sokimo on
behalf of the joint venture. The Kibali project is located approximately 560 kilometers northeast
of the city of Kisangani and 180 kilometers west of the Ugandan border town of Arua in the
northeast of the DRC.
During the year the feasibility was updated. Revised ore reserves reflect an increase in
underground probable ore reserves to in excess of 6 million ounces, bringing the total probable ore
reserve number to 10.05 million ounces.
The overall program to complete the initial investment phase to establish gold production at
Kibali is estimated to take approximately three years, with first gold expected at the end of 2013.
24
The exploration team completed the analysis of the Karagba Chauffeur Durba (KCD) deposit,
resulting in a new geological model. Continuity of mineralization was confirmed between the
Sessenge and KCD deposits and remains open down plunge. This will be tested by a program of deep
drilling in 2011.
Massawa
Our Massawa project consists of a greenfields exploration find located in eastern Senegal
during 2008. The Massawa target was first identified in 2007 and is located approximately 60
kilometers west of the Malian border. A successful scoping study was completed for Massawa in the
first quarter of 2009 which met all of our investment criteria and we advanced the project to
prefeasibility. The prefeasibility study was completed at the end of 2009 which highlighted the
complex nature of the ore, which requires pressure oxidation of the sulfides to liberate the gold.
During 2010 significantly more work was conducted in this regard to improve the geochemical and
metallurgical understanding of the ore. All studies point towards the Massawa deposit requiring
high levels of energy to recover the gold and thus our focus in 2011 will be on defining a power
strategy for Massawa and finding further non refractory mineralization. Further infill and twin
drilling was completed in 2010 which resulted in a revised geological model. The feasibility
modifying factors were applied to this resulting in updated probable open pit mineral reserves of
17.42 million tonnes at a grade of 3.36g/t for 1.88 million ounces.
While the exploration work concentrated on the Massawa feasibility during 2010, the
exploration team has been mobilized to delineate and test the large number of satellite targets in
the area with the focus of finding additional non-refractory mineralization that could
incrementally add to the project.
Exploration
We have an extensive portfolio of exploration projects in both West and Central Africa. In
2010, we concentrated our exploration activities on the continued evaluation of the Massawa deposit
in Senegal, the discovery of the new multi-million ounce high grade gold deposit at Gounkoto in
Mali, the definition of satellite deposits at Loulo, and geological modeling and update of the ore
reserves at the Kibali gold deposit in the DRC. We completed a detailed analysis of the KCD
deposit, resulting in a new geological model which supported a growth in reserves from 4.5 million
ounces at the acquisition to 10.05 million ounces at the end of December 2010. Continuity of
mineralization was confirmed between the Sessenge and KCD deposits and remains open down plunge.
This will be tested by a program of deep drilling in 2011. We are exploring in five African
countries with a portfolio of 275 targets on 13,583 square kilometers of groundholding. We target
profitable gold deposits that have the potential to host mineable gold reserves of three million
ounces or more. Our business strategy of organic growth through exploration has been validated by
our discovery and development track record, including the Morila and Loulo mines, the Tongon
project and the Massawa and Gounkoto discoveries.
OWNERSHIP OF MINES AND SUBSIDIARIES
Morila is owned by a Malian company, Société des Mines de Morila SA (Morila), which in turn is
owned 80% by Morila Limited and 20% by the State of Mali. Morila Limited is jointly owned by
ourselves and AngloGold Ashanti Limited and the mine is controlled by a 50:50 joint venture
management committee. Responsibility for the day-to-day operations rests with us.
Loulo is owned by a Malian company, Société des Mines de Loulo SA (Somilo), which is owned 80%
ourselves and 20% by the State of Mali.
Tongon is owned by an Ivorian company, Société des Mines de Tongon SA, in which we have
an 89% interest, the State of Côte dIvoire 10% and 1% is held by a local Ivorian company.
The Kibali project is controlled by a 50:50 joint venture, between ourselves and AngloGold
Ashanti Limited, which holds an effective 90% interest in Kibali Goldmines SPRL. The remaining 10%
of the shares are held by Sokimo, the parastatal mining company of the Democratic Republic of
Congo. We thus have an effective 45% interest in the Kibali project. Our interest in this
project was acquired following the acquisition of Moto Goldmines Limited, in conjunction with
AngloGold Ashanti, and the further acquisition of a 20% interest from Sokimo on behalf of the joint
venture.
25
The Gounkoto project is located on the Loulo Exploitation Permit. Accordingly, we hold an
effective 80% interest in the Gounkoto project through our interest in Loulo. We are currently
engaged in the process of applying for the formation of the new Gounkoto Exploitation Permit, which
will be owned by a separate company, Société des Mines de Gounkoto S.A.
We hold an effective 83.25% interest in the Massawa project. The government of Senegal
retains a 10% carried interest in the project, with the balance held by our Senegalese joint
venture partner.
GEOLOGY
West Africa is one of the more geologically prospective regions for gold deposits in the
world. Lower Proterozoic rocks are known to contain significant gold occurrences and exist in West
Africa in abundance. The Birimian greenstone belts, part of the Lower Proterozoic, which are
younger than the Archaean greenstones of Canada, Australia and South Africa, contain similar types
of ore deposits and are located in Ghana, Côte dIvoire, Burkina Faso, Guinea, Mali, Senegal and
Niger. Although a significant amount of geological information has been collected by government
and quasi-government agencies in West Africa, the region has largely been under-explored by mining
and exploration companies using modern day technology. Most of our exploration properties are
situated within the Birimian Formation, a series of Lower Proterozoic volcanic and sedimentary
rocks. The West African Birimian sequences host a number of world class gold deposits and
producing gold mines.
The Central African gold belts have a long history of gold production, particularly during the
colonial era but due to regional instability they have seen little modern exploration. The
Kibalian greenstone belts of northeastern DRC are comprised of Archaean Kibalian (Upper and Lower)
volcanisedimentary rocks and ironstone-chert horizons metamorphosed to greenschist facies. They
are cut by regional-scale north, east, northeast and northwest trending faults and are bounded to
the north by the Middle Achaean West Nile granite-gneiss complex and cut to the south by the Upper
Congo granitic complex. Our Kibali gold project is located within the Moto greenstone.
Our strategy was initiated before the current entry of our competitors into West Africa and we
believe that this enabled us to secure promising exploration permits in the countries of Côte
dIvoire, Mali, Burkina Faso, and Senegal at relatively low entry costs.
ORE RESERVES
Only those reserves which qualify as proven and probable reserves for purposes of the SECs
Industry Guide Number 7 are presented in this Annual Report. Pit optimization and open pit designs
are carried out at a gold price of $800 per ounce. Underground reserves are also based on a gold
price of $800 per ounce.
Morila reserves have been estimated by Mr. Stephen Ndede, an officer of the company and
competent person. The Loulo open cast mineral reserves were calculated by Mr. Inigo Osei under
supervision by Mr. Onno ten Brinke, an officer of the company and competent person. The Loulo
underground mineral reserves were calculated by Mr. Chris Moffat, an officer of the company and
competent person. The Tongon open pit mineral reserves were calculated by Mr. Samuel Baffoe, an
officer of the company under the supervision of Mr. Onno ten Brinke, an officer of the company and
competent person. The Gounkoto, Kibali and Massawa project open pit mineral reserves were
estimated by Mr. Onno ten Brinke, an officer of the company and competent person, while the Kibali
project underground mineral reserves were calculated by Mr. Paul Kerr, an officer of SRK Consulting
Perth and competent person. All reserves were verified and approved by Mr. Rodney Quick, our
General Manager: Evaluation and Environment and competent person.
Total reserves as of December 31, 2010 amounted to 203.93 million tonnes at an average grade
of 3.78g/t, for 24.76 million ounces of gold of which 16.39 million ounces are attributable to us.
In calculating proven and probable reserves, current industry standard estimation methods are
used. The geological estimates were calculated using classical geostatistical techniques,
following geological modeling of the borehole information. The sampling and assaying is done to
internationally acceptable standards and routine quality control procedures are in place.
All reserves are based on feasibility or prefeasibility level studies. Factors such as grade
distribution of the orebody, planned production rates, forecast working costs, dilution and mining
recovery factors, geotechnical parameters and metallurgical factors as well as current forecast
gold price are all used to determine a cut-off grade from which a life of mine plan is developed in
order to optimize the profitability of the operation.
26
The following table summarizes the declared reserves at our mines and s as of December 31,
2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proven Reserves |
|
Probable Reserves |
|
Total Reserves |
Operation/ |
|
Tonnes |
|
Grade |
|
Gold |
|
Tonnes |
|
Grade |
|
Gold |
|
Tonnes |
|
Grade |
|
Gold |
Project++ |
|
(Mt) |
|
(g/t) |
|
(Moz) |
|
(Mt) |
|
(g/t) |
|
(Moz) |
|
(Mt) |
|
(g/t) |
|
(Moz) |
Morila + |
|
|
5.86 |
|
|
|
1.68 |
|
|
|
0.32 |
|
|
|
6.69 |
|
|
|
1.14 |
|
|
|
0.24 |
|
|
|
12.55 |
|
|
|
1.39 |
|
|
|
0.56 |
|
Loulo + |
|
|
4.54 |
|
|
|
2.98 |
|
|
|
0.43 |
|
|
|
40.89 |
|
|
|
4.63 |
|
|
|
6.09 |
|
|
|
45.43 |
|
|
|
4.47 |
|
|
|
6.52 |
|
Tongon + |
|
|
0.42 |
|
|
|
1.93 |
|
|
|
0.03 |
|
|
|
36.69 |
|
|
|
2.47 |
|
|
|
2.91 |
|
|
|
37.11 |
|
|
|
2.46 |
|
|
|
2.94 |
|
Gounkoto + |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17.11 |
|
|
|
5.10 |
|
|
|
2.80 |
|
|
|
17.11 |
|
|
|
5.10 |
|
|
|
2.80 |
|
Massawa + |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17.42 |
|
|
|
3.36 |
|
|
|
1.88 |
|
|
|
17.42 |
|
|
|
3.36 |
|
|
|
1.88 |
|
Kibali+ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74.32 |
|
|
|
4.21 |
|
|
|
10.05 |
|
|
|
74.32 |
|
|
|
4.21 |
|
|
|
10.05 |
|
Total |
|
|
10.82 |
|
|
|
2.23 |
|
|
|
0.78 |
|
|
|
193.12 |
|
|
|
3.86 |
|
|
|
23.98 |
|
|
|
203.93 |
|
|
|
3.78 |
|
|
|
24.76 |
|
|
|
|
+ |
|
Our attributable share of Morila is 40%, Loulo 80%, Gounkoto is 80%, Tongon 89%, Massawa 83.25%
and Kibali 45%. |
|
++ |
|
Our reserves are calculated at a weighted average cut off grade of 2.38g/t for Loulo, 0.97g/t
for Morila, 0.85g/t for Tongon, 1.40g/t for Gounkoto, 1.10g/t for Massawa, and 1.59g/t for Kibali. |
At Loulo, a 10% mining dilution at zero grade and an ore loss of 5% has been incorporated into
the estimates of reserves and are reported as mill delivered tonnes and head grades. At the Tongon
project a dilution of 15% at zero grade and an ore loss of 2% has been modeled for the Southern
zone and for the Northern zone, dilution has been set at 10% with ore loss at 3%. At Gounkoto and
Massawa a dilution of 10% and an ore loss of 3% has been used. Metallurgical recovery factors have
not been applied to the reserve figures since these are the estimates of the material to be
delivered to the mill. Metallurgical recovery is used to determine the cut off grade at which to
report mineral reserves. The average metallurgical recovery factors used are 89% for the Morila
mine, 93.5% for the Loulo open pit material and 90.5% for Loulo underground material, 90.8% for the
Tongon project, 92% for the Gounkoto project, 90% for the Massawa project and between 83 and 86%
for Kibali open pit projects depending on ore type and 91% for Kibali underground material.
MINING OPERATIONS
Loulo
Loulo is controlled by a Malian company, Société des Mines de Loulo SA (Somilo), which is
owned 80% by us and 20% by the Malian government. The Loulo mine complex is comprised of two open
pit operations, Yalea and Gara, and two corresponding underground mines, the first of which has
commenced operations and the second which is now in construction.
Loulo is located in western Mali, bordering Senegal, adjacent to the Falémé River. The mine
is located within the Kedougou-Kéniéba inlier of Birimian rocks which hosts several major gold
deposits, namely Gara, Yalea and Gounkoto on the Loulo lease as well as Sadiola and Yatela in Mali
and the Senegalese deposits of Massawa and Sabodala.
In 2010, Loulo produced 316,539 ounces of gold at a total cash cost of $712 per ounce. The
mine reported gold sales of $363.7 million and profit from mining of $140.7 million.
|
|
|
|
|
|
|
|
|
Production results for the 12 |
|
|
|
|
months ended December 31, |
|
2010 |
|
2009 |
Mining |
|
|
|
|
|
|
|
|
Tonnes mined (000) |
|
|
38,932 |
|
|
|
27,977 |
|
Ore tonnes mined (000) |
|
|
4,597 |
|
|
|
3,353 |
|
Milling |
|
|
|
|
|
|
|
|
Tonnes processed (000) |
|
|
3,158 |
|
|
|
2,947 |
|
Head grade milled (g/t) |
|
|
3.4 |
|
|
|
4.2 |
|
Recovery (%) |
|
|
92.5 |
|
|
|
87.7 |
|
Ounces produced |
|
|
316,539 |
|
|
|
351,591 |
|
Ounces sold |
|
|
313,122 |
|
|
|
349,660 |
|
Average price received+ ($/oz) |
|
|
1,162 |
|
|
|
864 |
|
Cash operating costs ($/oz) |
|
|
647 |
|
|
|
475 |
|
Total cash costs ($/oz) |
|
|
712 |
|
|
|
525 |
|
27
|
|
|
|
|
|
|
|
|
Production results for the 12 |
|
|
|
|
months ended December 31, |
|
2010 |
|
2009 |
Profit from mining activity ($000) |
|
|
140,717 |
|
|
|
118,326 |
|
Gold sales+ ($000) |
|
|
363,717 |
|
|
|
301,963 |
|
|
|
|
+ |
|
Includes 41,748 ounces for the year ended 31 December 2010 (31 December 2009: 84,996 ounces)
delivered into the hedge at $500/oz (year ended 31 December 2009; $435/oz). |
Higher revenues were partially offset by higher mining costs, primarily due to increased open
pit mining costs resulting from increased tonnes mined, deepening pits, revised mining rates and
the introduction of a second mining contractor at the site, necessitated in part by the slower
build up in tonnes from the underground mine.
Ore Reserves
Total ore reserves for the years ended December 31, 2010 and 2009 are inclusive of depletions
due to mining and additions from the Loulo 3 open pit.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
gold** |
|
|
|
|
|
|
|
Tonnes |
|
Grade |
|
Gold |
|
(Moz) |
|
|
(Moz) |
|
|
|
|
|
|
|
(MT) |
|
|
(Mt) |
|
|
(g/t) |
|
|
(g/t) |
|
|
(Moz) |
|
|
(Moz) |
|
|
(80%) |
|
|
(80%) |
|
at 31 December |
|
Category |
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
Mineral reserves*** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
o Stockpiles |
|
Proven |
|
|
2.15 |
|
|
|
1.11 |
|
|
|
1.65 |
|
|
|
1.78 |
|
|
|
0.11 |
|
|
|
0.06 |
|
|
|
0.09 |
|
|
|
0.05 |
|
o Open pit |
|
Proven |
|
|
2.38 |
|
|
|
4.44 |
|
|
|
4.19 |
|
|
|
3.91 |
|
|
|
0.32 |
|
|
|
0.56 |
|
|
|
0.26 |
|
|
|
0.45 |
|
|
|
Probable |
|
|
1.66 |
|
|
|
2.46 |
|
|
|
2.48 |
|
|
|
2.47 |
|
|
|
0.13 |
|
|
|
0.20 |
|
|
|
0.11 |
|
|
|
0.16 |
|
o Underground |
|
Proven |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Probable |
|
|
39.23 |
|
|
|
41.45 |
|
|
|
4.72 |
|
|
|
4.66 |
|
|
|
5.96 |
|
|
|
6.22 |
|
|
|
4.76 |
|
|
|
4.97 |
|
TOTAL MINERAL
RESERVES* |
|
Proven and probable |
|
|
45.43 |
|
|
|
49.45 |
|
|
|
4.47 |
|
|
|
4.42 |
|
|
|
6.52 |
|
|
|
7.03 |
|
|
|
5.22 |
|
|
|
5.63 |
|
|
|
|
* |
|
Open pit mineral reserves are reported at a gold price of $800/oz and an average cut-off of
1.23g/t and include dilution and ore loss factors. Open pit mineral reserves were calculated by
Mr. Inigo Osei, under supervision of Mr. Onno ten Brinke, an officer of the company and competent
person. Underground mineral reserves are reported at a gold price of $800/oz and a cut-off of 2.5
g/t and include dilution and ore loss factors. Underground mineral reserves were calculated by Mr.
Chris Moffatt, an officer of the company and competent person. |
|
** |
|
Attributable gold (Moz) refers to the quantity
attributable to ourselves based on its 80%
interest in Loulo. |
|
*** |
|
Loulo reserves calculated at a weighted average cut off grade of 2.38g/t. |
Operations
Gold production of 316,539 ounces for the year was below managements guidance of 400,000
ounces mainly due to lower plant throughput as a result of reduced plant availability and
efficiency during the first six months of the year and the impact of lower run of mine grades due
to the slower than planned build-up of underground production.
Lower gold production negatively impacted gold sales which totaled $363.7 million for the
year. This was offset by the higher gold price received. Total royalties paid during the year
amounted to $20.4 million and cash operating costs totaled $202.6 million, resulting in profit from
mining activities of $140.7 million for 2010.
The total cash cost for the year was $712/oz of gold sold. Capital expenditure for the year
was $86.9 million and this was covered by the cash flows generated by the mine during the year.
Underground Mining and Development
Following the termination due to poor health, safety and environmental performance of the
former underground contractor at the end of 2009, African Underground Mining Services Mali SARL
(AUMS) has been contracted for the underground development of
28
Gara and
recently joined us in the further development of the Yalea underground mine with the
commencement of another decline from the base of the Yalea pit.
Yalea Underground Development: During 2010, a total of 4,806 meters of development was
completed and 647,810 tonnes of ore at a grade of 3.69g/t was hauled to surface. The Yalea
declines have now been advanced to a distance of 2,004 meters from surface and a vertical depth of
327 meters. Overall development was down on budget and against 2009. Stoping saw an improved
performance during 2010 against 2009 but was also below target.
Gara Underground Development: During 2010, a total of 1,879 meters development was completed.
The Gara declines have now been advanced to a distance of 614 meters and a vertical depth of 127
meters. Overall development is down on plan, due to the influx of water during the fourth quarter
and a starting date delay, but development rates picked up towards the end of the year.
The following table shows a summary of the underground sections progress to date:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development |
|
Ore |
|
|
|
|
|
Ounces |
|
|
at 31 December 2010 |
|
(meters) |
|
(tonnes) |
|
Grade (g/t) |
|
mined (oz) |
|
Total (tonnes) |
|
YALEA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 |
|
|
1,611 |
|
|
|
158,944 |
|
|
|
4.32 |
|
|
|
22,056 |
|
|
|
215,461 |
|
Q2 |
|
|
1,501 |
|
|
|
123,880 |
|
|
|
3.88 |
|
|
|
15,471 |
|
|
|
187,363 |
|
Q3 |
|
|
909 |
|
|
|
157,196 |
|
|
|
3.40 |
|
|
|
17,174 |
|
|
|
196,894 |
|
Q4 |
|
|
785 |
|
|
|
207,790 |
|
|
|
3.30 |
|
|
|
22,071 |
|
|
|
275,895 |
|
TOTAL 2010 |
|
|
4,806 |
|
|
|
647,810 |
|
|
|
3.69 |
|
|
|
76,772 |
|
|
|
875,613 |
|
Total 2009 |
|
|
5,788 |
|
|
|
500,267 |
|
|
|
4.38 |
|
|
|
70,395 |
|
|
|
763,677 |
|
Total 2008 |
|
|
3,860 |
|
|
|
105,411 |
|
|
|
4.13 |
|
|
|
13,982 |
|
|
|
288,298 |
|
TOTAL YALEA |
|
|
14,454 |
|
|
|
1,253,488 |
|
|
|
4.14 |
|
|
|
161,149 |
|
|
|
1,927,588 |
|
GARA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 |
|
|
265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,346 |
|
Q3 |
|
|
628 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,613 |
|
Q4 |
|
|
986 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
94,742 |
|
TOTAL 2010 |
|
|
1,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
175,701 |
|
TOTAL GARA |
|
|
1,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
175,701 |
|
Processing
The utilization of mills and crusher was 84.9% and 70.9% respectively during 2010, while the
average engineering availability was 90.5% and 81.1%. The mill and crusher have engineering
standards of 95% and 85%. The negative variance for the mills is attributed to downtime due to
various technical issues including a power outage.
Major projects completed in 2010 include the upgrade of the secondary ore crushing circuit, a
new warehouse, the Gara portal frames, vehicles and conveyor decline, the mill rotary magnet, the
fourth tailing pump, and the installation of the Acacia module for gravity gold recovery. In 2011,
the focus will be on the installation of the third mill, upgrading the power plant with additional
medium speed energy efficient engines and the conversion of the medium speed engines to Heavy Fuel
Oil (HFO) in order to increase the plants fuel efficiency.
Exploration
In 2010, exploration continued to delineate open pit resource ounces from satellite deposits
near the Loulo plant. Work concentrated on two main structures which not only host the Gara and
Yalea deposits but also Loulo 3, Loulo 2, Loulo 1 and PQ10. While
underground grade control drilling
at Yalea extended the high grade mineralization associated with the purple patch.
Morila
Morila is owned by a Malian company, Société des Mines de Morila SA (Morila), which in turn is
owned 80% by Morila Limited and 20% by the Malian government. Morila Limited is jointly owned by
ourselves and AngloGold Ashanti Limited and the mine is controlled by a 50:50 joint venture
management committee. Responsibility for the day-to-day operations
rests with us.
29
The mine was commissioned in October 2000 and, since the start of production to December 2010,
has produced approximately 5.8 million ounces of gold at a total cash cost of $216 per ounce.
As planned, the mine was converted in April 2009 from open pit mining to a 100% stockpile
treatment operation. Gold production for 2010 was 238,607 ounces. Total cash cost for the year
was $669 per ounce, including stockpile adjustments of $246 per ounce. The operation is expected
to come to an end in 2013, although the mine is currently investigating the opportunity to retreat
the TSF material, which would extend the mine life by approximately 5 years. Despite the drop in
grade associated with processing the stockpiles, the mine still reported $133.9 million in profits
from mining activity in 2010.
In order to leave a sustainable source of economic activity for the local community after the
closure, an agribusiness feasibility study has been advanced in conjunction with USAID.
|
|
|
|
|
|
|
|
|
Production results for the 12 months ended December 31, |
|
2010 |
|
|
2009 |
|
Mining |
|
|
|
|
|
|
|
|
Tonnes mined (000) |
|
|
16 |
|
|
|
3,657 |
|
Ore Tonnes mined (000) |
|
|
13 |
|
|
|
1,620 |
|
Milling |
|
|
|
|
|
|
|
|
Tonnes processed (000) |
|
|
4,354 |
|
|
|
4,303 |
|
Head grade milled (g/t) |
|
|
1.9 |
|
|
|
2.7 |
|
Recovery (%) |
|
|
90.7 |
|
|
|
91.4 |
|
Ounces produced |
|
|
238,607 |
|
|
|
341,661 |
|
Ounces sold |
|
|
238,607 |
|
|
|
341,661 |
|
Average price received ($/oz) |
|
|
1,230 |
|
|
|
968 |
|
Cash operating costs ($/oz) |
|
|
595 |
|
|
|
422 |
|
Total cash costs ($/oz) |
|
|
669 |
|
|
|
480 |
|
Profit from mining activity |
|
|
|
|
|
|
|
|
($000) |
|
|
133,855 |
|
|
|
166,713 |
|
Stockpile adjustment# ($/oz) |
|
|
246 |
|
|
|
98 |
|
Attributable (40% proportionately consolidated) |
|
|
|
|
|
|
|
|
Gold sales ($000) |
|
|
117,427 |
|
|
|
132,231 |
|
Ounces produced |
|
|
95,443 |
|
|
|
136,664 |
|
Ounces sold |
|
|
95,443 |
|
|
|
136,664 |
|
Profit from mining activity |
|
|
|
|
|
|
|
|
($000) |
|
|
53,542 |
|
|
|
66,685 |
|
|
|
|
# |
|
The stockpile adjustment per ounce reflects the charge expensed/(credit deferred) in respect of
stockpile movements during the period divided by the number of ounces sold. The total cash cost
per ounce includes non-cash stockpile adjustments. |
Ore Reserves
Remaining reserves were lower than last year after mining depletion has been taken into
account. Open pit mining activities ended in April 2009, and therefore the current reserves are
based on already mined stockpiles only.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
gold** |
|
|
|
|
|
|
|
Tonnes |
|
Grade |
|
Gold |
|
(Moz) |
|
|
(Moz) |
|
|
|
|
|
|
|
(MT) |
|
|
(Mt) |
|
|
(g/t) |
|
|
(g/t) |
|
|
(Moz) |
|
|
(Moz) |
|
|
(40%) |
|
|
(40%) |
|
at 31 December |
|
Category |
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
Mineral reserves*** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
o Stockpiles |
|
Proven |
|
|
5.86 |
|
|
|
9.85 |
|
|
|
1.68 |
|
|
|
1.74 |
|
|
|
0.32 |
|
|
|
0.55 |
|
|
|
0.13 |
|
|
|
0.22 |
|
|
|
Probable |
|
|
6.69 |
|
|
|
6.91 |
|
|
|
1.14 |
|
|
|
1.14 |
|
|
|
0.24 |
|
|
|
0.25 |
|
|
|
0.10 |
|
|
|
0.10 |
|
TOTAL MINERAL
RESERVES |
|
Proven and probable |
|
|
12.55 |
|
|
|
16.76 |
|
|
|
1.39 |
|
|
|
1.49 |
|
|
|
0.56 |
|
|
|
0.80 |
|
|
|
0.22 |
|
|
|
0.32 |
|
30
|
|
|
* |
|
Stockpile mineral reserves are those stockpiles which are economic at a $800/oz gold price and
reported at a 0.97g/t cut-off. Stockpile mineral reserves were calculated by Mr. Stephen Ndede, an
officer of the company, and competent person. |
|
** |
|
Attributable gold (Moz) refers to the quantity
attributable to ourselves based on its 40%
interest in Morila. |
|
*** |
|
Cutoff grade of 0.97g/t used to calculate the Morila reserves. |
Operations
In April 2009, Morila managed a successful transition from the open pit operation to stockpile
retreatment, operated by Mining and Rehandling Services.
Initially, the conventional Carbon in Leach plant had been designed to treat 260,000 tonnes of
ore. This plant was upgraded in 2004 to treat 360,000 tonnes and by the end of 2010, 4,353,877
tonnes of sulfide had been treated. In spite of the low grade ore being treated, good gold
recoveries were achieved due to improved oxygen plant availability, good control of the leach
parameters, the increase in the gravity recovery and the oxygenation system upgrade.
Total ounces of 238,607 were produced during 2010 at a total cash cost of $669/oz sold. This
translated into profit from mining of $133.9 million for the year which enabled the mine to pay
dividends of $135.0 million to shareholders during 2010.
The 91.5% engineering availability was in line with the 2010 plan despite the downtime
associated with the SAG mill gearbox changeover in February and December, cyclone pump conversion
in May and extended crusher maintenance during January. Planned maintenance using the PRAGMA
system helped to further enhance the mine maintenance program.
The mine generates its own power via a diesel electrical generating station equipped with five
Allen engines (6 Mwatts each). Three are producing power, one is on maintenance and one is on
standby. 2010 consumption at 130.7 mkWh was well contained and also contributed to cost savings.
Tailings Project
During 2010, a study on the Morila Tailing Storage Facility (TSF) retreatment project was
completed. Based on managements estimates and reclamation scoping, the project showed marginal
economics at a gold price of $1,200/oz but demonstrated significant benefits and costs savings as
far as mine closure plans were concerned. Based on these conclusions, the board agreed that the
project should proceed to a bankable feasibility study.
Mine Closure
Currently the plan provides for mine closure in 2013. However, the outcome of the TSF
retreatment feasibility study could impact on the closure plan, its costs and risks as well as its
timing.
An internal closure coordinator has been appointed and the Ministry of Mines has revived the
closure committee (including representatives from government, the local community, employees and
management). The committee met quarterly in Bamako to review the closure plan and the mines
activities related to closure.
A communication campaign was conducted at local and regional level to inform all the
stakeholders of the closure plan and the possible options.
Work continued on the agribusiness project which is planned to ameliorate the impact of mine
closure on the local economy by offering alternative employment and economic opportunities to the
local community. During the year the project, which has now partnered with a number of NGO
agencies, progressed to a stage in which pilot poultry, animal husbandry, honey production and
fishing projects are being initiated to test the viability and sustainability potential of each
activity.
The key next steps to be addressed in order to roll out the larger project is the completion
of a final comprehensive integrated feasibility study and business plan along with a solution
regarding land ownership issues.
31
Tongon
Tongon is owned by an Ivorian company, Société des Mines de Tongon SA, in which we have an 89%
interest, the State of Côte dIvoire a 10% interest, and the remaining 1% held by a local Ivorian
company.
The Tongon project is located within the Nielle exploitation permit in the north of Côte
dIvoire, 55 kilometers south of the border with Mali.
Tongon is an open-cut mining operation and employs the four standard mining practices of
drill, blast, load and haul. Mining started in April 2010 and Tongon has a ten year Life of Mine
(LOM). Two main pits are scheduled in the LOM as follows:
|
|
South Zone pit will be mined from 2010 to 2016 to the final pit bottom; and |
|
|
|
North Zone pit, which is smaller than the South Zone, will be mined from 2015 to 2019. |
|
|
|
|
|
Production results for the 12 |
|
|
|
months ended December 31, |
|
2010 |
|
Mining |
|
|
|
|
Tonnes mined (000) |
|
|
7,520 |
|
Ore tonnes mined (000) |
|
|
898 |
|
Milling |
|
|
|
|
Tonnes processed (000) |
|
|
355 |
|
Head grade milled (g/t) |
|
|
2.67 |
|
Recovery (%) |
|
|
92.2 |
|
Ounces produced |
|
|
28,126 |
|
Ounces sold |
|
|
4,698 |
|
Average price received ($/oz) |
|
|
1,389 |
|
Cash operating costs ($/oz) |
|
|
418 |
|
Total cash costs ($/oz) |
|
|
459 |
|
Profit from mining activity ($000) |
|
|
4,369 |
|
Gold sales+ ($000) |
|
|
6,527 |
|
Ore Reserves
Ore reserves at Tongon are sourced within two open pits, the Northern and Southern Zone.
Mining commenced in the Southern pit in April 2010. Ore reserves are slightly lower this year
compared to 2009 due to depletion from mining in and geological model changes form the inclusion of
advanced grade control drilling over the two open pit reserves, which saw reserves increase in the
northern pit but decrease in the southern pit.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable |
|
|
|
|
|
|
Tonnes |
|
Grade |
|
Gold |
|
gold** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Moz) |
|
(Moz) |
|
|
|
|
|
|
(Mt) |
|
(Mt) |
|
(g/t) |
|
(g/t) |
|
(Moz) |
|
(Moz) |
|
(89%) |
|
(89%) |
at 31 December |
|
Category |
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
Mineral reserves*** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
o Stockpiles |
|
Proven |
|
|
0.42 |
|
|
|
|
|
|
|
1.93 |
|
|
|
|
|
|
|
0.03 |
|
|
|
|
|
|
|
0.02 |
|
|
|
|
|
o Open pit |
|
Probable |
|
|
36.69 |
|
|
|
38.02 |
|
|
|
2.47 |
|
|
|
2.63 |
|
|
|
2.91 |
|
|
|
3.22 |
|
|
|
2.59 |
|
|
|
2.87 |
|
TOTAL MINERAL
RESERVES* |
|
Proven and probable |
|
|
37.11 |
|
|
|
38.02 |
|
|
|
2.46 |
|
|
|
2.63 |
|
|
|
2.94 |
|
|
|
3.22 |
|
|
|
2.62 |
|
|
|
2.87 |
|
|
|
|
* |
|
Open pit mineral reserves are reported at a gold price of $800/oz and 0.85g/t cut-off and include
dilution and ore loss factors. Open pit ore reserves were calculated by Mr. Samuel Baffoe, an
officer of the company, under the supervision of Mr. Onno ten Brinke, an officer of the company and
competent person. |
|
** |
|
Attributable gold (Moz) refers to the quantity attributable to ourselves based on its 89%
interest in Tongon. |
|
*** |
|
Cutoff grade of 0.85g/t used to calculate the Tongon reserves. |
32
Operations
Tongon started production during the fourth quarter of 2010 and 355,000 tonnes of ore was
milled at a grade of 2.67g/t. The mine produced 28,126 ounces at a total cash cost of $459/oz
sold. Profit from mining was $4.4 million. This was impacted by 23,428 ounces that were unsold at
year end resulting from disruptions in Côte dIvoire following the disputed elections in November
2010.
Mining
Mining operations are carried out by Mine de Tongonaise SA (ToMi), a contract mining company
and subsidiary of DTP Terrassement. The mine operates 24 hours a day based on a working roster of
three eight-hour shifts. The major load and haul mobile fleet consists of one Liebherr 984 and
three Liebherr 9350 diggers and 15 Cat 777F haul trucks. The mining feet has an annual capacity of
approximately 26Mtpa at a strip ratio of 4:1.
Processing
The Tongon plant design is based on well-established gravity/flotation and Carbon in Leach
technology. The plant is designed to treat 3.6 million tonnes per annum of oxide, transition and
sulfide ores which can be campaigned through the plant separately or fed in a combination if
required. There is a common primary crushing plant for oxides and sulfides. Oxides, which may at
times contain high clay quantities and moisture content, have been identified to potentially cause
material handling problems when processed through the full crushing circuit. As a result, the
design allows the plant to bypass the secondary and tertiary crushing circuit, thus feeding primary
jaw crusher product of size 100% passing 300 millimeters directly onto the ball mill feed conveyor,
bypassing the stockpiling facility.
Transition and sulfide ores are treated through a primary, secondary and tertiary crushing
circuit to produce a ball mill feed of size 100% passing 20 millimeters. The primary crushing
plant consists of a complete standby circuit, which allows higher, but also more consistent
throughput and better maintenance planning. Milling consists of two ball mills when treating
oxide, transition or sulfides. The discharge from each is pumped in separate cyclone feed pump and
classifier systems.
First ore was fed through mill no. 1 in October 2010. The feed rate was steadily increased
via one mill, as the process circuits and systems were debugged, up to the designed throughput rate
of 456tph.
Gold recovery of 92.2% was better than forecast and overall 28,126 ounces of gold was
produced.
Engineering
Overall mill availability was 72.6% for 2010. A gradual increase in mill availability was
obtained from 69.7% in October to 77.6% in December. Commissioning issues mainly associated with
feeding the softer clay containing ore through the system were systematically addressed by the
engineering team as part of the commissioning process which included ongoing modifications and
operational enhancements with respect to the relevant process sections to facilitate ease of
tonnage throughput and improvement in efficiency of key process circuits.
The power plant availability and utilization were 90% and 51% respectively for 2010. All 20
of the power plant generators, including the PLC automatic synchronization, were commissioned ahead
of the plant start-up.
Developments
Grid Power
The Korogho substation is 90% complete. The main outstanding items are the installation of
the related equipment and the 33kV link to the national grid. The forecast grid power line
completion date is the second quarter of 2011.
Tongon and Poungbe Village Electrification
33
An agreement between Tongon and Enterprise dElectricite, CIE and Power Management and
Electrical Services was reached with respect to the electrification of Tongon and Poungbe villages.
The project started in January 2011 and is scheduled for completion in the second quarter of 2011.
Maintenance Planning
The software system On Key from Pragma which was chosen as the CMMS system to be used at our
operating mines has been 80% installed at Tongon. Loading of the lubrication and preventative
maintenance tasks for the process plant is complete. Extensive configuration work remains to
streamline the generation of job cards for these tasks and ensure these fit in with the existing
business processes and staffing configurations.
Exploration
In terms of exploration, 2010 was a critical year which saw great improvements in our
understanding of the Senoufo Greenstone Belt. This followed the completion of an airborne EM
survey flown in January, which enabled not only a reinterpretation of the geological and structural
framework but also a target generating and prioritization exercise. Since then, follow-up work was
focused on the most prospective targets within a 15 kilometer radius from the plant. These have
been advanced through mapping, RAB, RC drilling and trenching.
Gounkoto
The Gounkoto project is located approximately 25 kilometers south of the Loulo gold plant on
the Loulo Exploitation Permit. We hold an effective 80% interest in the project.
The project moved rapidly in 2009 from a greenfields exploration find through a scoping study
and completed a prefeasibility study in the first quarter of 2010. In addition, the environmental
and social impact assessment and feasibility study were completed during 2010.
We
are currently engaged in the process of applying for the formation of the new Gounkoto
Exploitation Permit which is planned to be split from the current Loulo permit, and which will be
owned by a separate company, Société des Mines de Gounkoto SA.
The Gounkoto mine development (Gounkoto) is located within the Kedougou-Kenieba erosional
inlier which is underlain by Lower Proterozoic Birimian metasedimentary-volcanic sequences. The
area is extensively laterized and covered by depositional regolith, with approximately only 6%
outcrop. The host rocks to the Gounkoto mineralization are a sequence of the grained arkoses which
have suffered an early silica carbonate alteration event. More than 95% of the sulfide is pyrite
(with minor arsenopyrite and chalcopyrite) and additionally gold tellurides are present.
Mineralization is bounded by a hangingwall shear and footwall mylonite. In the hangingwall there
is a prominent limestone unit which is used as a marker horizon.
Ore Reserves
Following the completion of the mineral reserve in September 2010, drilling continued and
completion of a revised geological model was incorporated into the feasibility study to produce
mineral reserves as at December 31, 2010.
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable |
|
|
|
|
|
|
Tonnes |
|
Grade |
|
Gold |
|
gold** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Moz) |
|
(Moz) |
|
|
|
|
|
|
(Mt) |
|
(Mt) |
|
(g/t) |
|
(g/t) |
|
(Moz) |
|
(Moz) |
|
(80%) |
|
(80%) |
at 31 December |
|
Category |
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
2010 |
|
2009) |
|
2010 |
|
2009 |
|
Mineral reserves*** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
o Open pit |
|
Probable |
|
|
17.11 |
|
|
|
7.47 |
|
|
|
5.10 |
|
|
|
6.83 |
|
|
|
2.80 |
|
|
|
1.64 |
|
|
|
2.24 |
|
|
|
1.31 |
|
TOTAL MINERAL RESERVES* |
|
Probable |
|
|
17.11 |
|
|
|
7.47 |
|
|
|
5.10 |
|
|
|
6.83 |
|
|
|
2.80 |
|
|
|
1.64 |
|
|
|
2.24 |
|
|
|
1.31 |
|
|
|
|
* |
|
Open pit mineral reserves are reported at a gold price of $800/oz and 1.40g/t cut-off and
include dilution and ore loss factors. Open pit mineral reserves were calculated by Mr. Onno
ten Brinke, an officer of the company and competent person. |
|
** |
|
Attributable gold (Moz) refers to the quantity attributable to ourselves based on its 80%
interest in Gounkoto. |
|
*** |
|
Cutoff grade of 1.40g/t used to calculate the Gounkoto reserves. |
34
Further potential exists below the present design pit where an additional 11.04 million tonnes
at 5.54g/t for 1.96 million ounces of mineralized material supports the potential of underground
extensions. Drilling is currently underway to test depth and strike extensions and these results
will be used to evaluate upside potential from extending the Gounkoto orebody together with
incremental material from Faraba and P64.
Feasibility Study
A feasibility study was completed on the revised open pit mineral reserve calculated in
September 2010. The feasibility is based on a toll treat project whereby the ore is mined and fed
through an onsite fixed crusher at Gounkoto. The crushed ore is then to be loaded onto dedicated
haul trucks and trucked and direct fed into the Loulo plant. Infrastructural development will
include two diversion dams and a diversion trench to divert the seasonal rain flows from the east.
Support facilities will include accommodation, workshops and offices. The use of the Loulo plant
to process Gounkoto as opposed to building a standalone operation at Gounkoto is better utilization
of the current infrastructure and human capital and has reduced the environmental footprint. It
has significant synergies with the present open pit mining fleet which are nearing the completion
of open pit mining at Loulo, while it also allows for the faster realization of value from Gounkoto
as opposed to a standalone operation and as such is better use of our capital.
An economic assessment on the financial viability of the Gounkoto project open pit reserve has
been carried out, based on the following parameters summarized below:
|
|
|
Total ore mined of 13.79 million tonnes of ore containing 2.3 million ounces of gold at
a strip ratio of 9.7:1, to give total tonnes mined of 147 million tonnes; |
|
|
|
|
Mining costs average $2.86/tonne over the life of mine; |
|
|
|
|
Crush and haul costs average $5.22/tonne ore; |
|
|
|
|
Mill throughput of 100,000 tonnes per month to be treated at the Loulo plant; |
|
|
|
|
Plant costs average $21.69/tonne; |
|
|
|
|
Average plant recovery of 93%; |
|
|
|
|
G&A cost is $5.19/tonne over life of mine, including outside engineering costs; |
|
|
|
|
Capital cost is $84.7 million including site construction, plant upgrade, preproduction
and ongoing capital. |
A financial model was run using a $1,000/oz gold price with an average 1.2M tonnes per year
throughput, together with a 5 year tax holiday and 6% royalty which produced the following:
|
|
|
|
|
|
|
|
|
Initial capital payback period
|
|
2.0 years
|
|
|
|
|
|
|
|
|
|
Mine Life (post processing plant commissioning)
|
|
11 years
|
|
|
|
|
|
|
|
|
|
Net after tax cashflow
|
|
$ |
747m |
|
|
|
|
|
|
|
|
|
|
IRR
|
|
|
69 |
% |
|
|
|
|
|
|
|
|
|
Total cash cost
|
|
$420/oz
|
Based on the positive financial results the board approved the development of Gounkoto
project.
Development
Mining started in January 2011 with ore currently stockpiled until the crusher station is
ready, which is expected to be in the third quarter of 2011. The dam and river diversion together
with support facilities are planned for completion by midyear. Project work will continue to
develop the underground resources and complete the initial design studies on the underground
opportunities. In addition, a heap leach prefeasibility study is being carried out to potentially
process the low grade Gounkoto material and the satellite deposits of Faraba and P64.
Exploration
The exploration team at Gounkoto has been solely focused on completing the fast-tracked
feasibility study and has succeeded in progressing the field work for the project from first
borehole to submitted feasibility document in 26 months. Work at Gounkoto has included all
resource definition drilling on the main orezone and the footwall and hangingwall structures.
35
The team has also completed the metallurgical, piezometric, geotechnical drilling and advanced
grade control drilling and has sterilized the area around the pit to allow for the construction of
the infrastructure.
Massawa
The Massawa project is situated in eastern Senegal, approximately 75 kilometers west of the
border with Mali. We hold an effective 83.25% interest in the project. The government of Senegal
retains a 10% carried interest in the project while the balance is held by a Senegalese joint
venture partner.
Massawa is located within the Kedougou-Kenieba erosional inlier which is underlain by Lower
Proterozoic Birimian metasedimentary-volcanic sequences. Regionally it is located on the plus 150
kilometer long northeast-southwest trending Main Transcurrent Shear Zone (MTZ) which is a
significant transcrustal dislocation between the Mako Supergroup (basaltic flow rocks, minor
intercalated volcaniclastics, and ultramafic sub volcanic intrusions) and the Diale-Dalema
Supergroup (volcano-sedimentary to sedimentary rocks) within the Kedougou-Kenieba inlier.
Mineralization at Massawa locates in various lithologies but is structurally controlled within
anatomizing shears which converge to the north.
Prefeasibility study
A prefeasibility study was completed by the end of 2009 and highlighted the complex nature of
the metallurgy. Dedicated metallurgical drilling and extensive metallurgical testwork was
undertaken this year to improve our understanding of geochemical and metallurgical characterization
of the ore. Batch testwork completed has shown pressure oxidation to be very effective in
releasing the gold from the sulfides. Significant additional bondwork testwork was also
conducted which confirmed the hardness of the ore. This combined with the PoX process will make
the Massawa project a high energy user and thus alternative options to diesel and heavy fuel oil
power generation are required. Additional drilling was also conducted
to test the geological model of
the central zone which resulted in a revised geological model of higher tonnage and lower grade.
Ore Reserves
Ore reserves were calculated by incorporating the new geological model into the 2009
prefeasibility, using a $800 per ounce gold price, for the pit design.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
gold** |
|
|
|
|
|
|
Tonnes |
|
Grade |
|
Gold |
|
(Moz) |
|
(Moz) |
|
|
|
|
|
|
(Mt) |
|
(Mt) |
|
(g/t) |
|
(g/t) |
|
(Moz) |
|
(Moz) |
|
(83.25%) |
|
(83.25%) |
at 31 December |
|
Category |
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
Mineral reserves*** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
o Open pit |
|
Probable |
|
|
17.42 |
|
|
|
10.51 |
|
|
|
3.36 |
|
|
|
4.62 |
|
|
|
1.88 |
|
|
|
1.56 |
|
|
|
1.56 |
|
|
|
1.30 |
|
|
TOTAL MINERAL
RESERVES* |
|
Proven and probable |
|
|
17.42 |
|
|
|
10.51 |
|
|
|
3.36 |
|
|
|
4.62 |
|
|
|
1.88 |
|
|
|
1.56 |
|
|
|
1.57 |
|
|
|
1.30 |
|
|
|
|
|
* |
|
Open pit mineral reserves are reported at a gold price of $800/oz and 1.1g/t cut-off and include
dilution and ore loss factors. Open pit mineral reserves were calculated by Mr. Onno ten Brinke,
an officer of the company and competent person. |
|
** |
|
Attributable gold (Moz) refers to the quantity
attributable to ourselves based on its 83.25%
interest in the Massawa gold project. |
|
*** |
|
Cutoff grade of 1.1g/t used to calculate the Massawa reserves. |
Development
Due to the time required to secure a power solution, further pilot plant testwork has been put
on hold. The exploration team has been mobilized to delineate and test the large number of
satellite targets in the area with the focus of finding additional non-refractory mineralization
that could incrementally add to the project.
A heap leach study will also be undertaken to determine if this could be a viable option for
the low grade non-refractory material available that will be delineated further by the ongoing
exploration programs.
Exploration
36
The exploration team focused on determining the geological controls within the Massawa orebody
and followed up with further exploration on Sofa, Delaya, Bakan Corridor and Bambaraya.
Kibali
The Kibali project is controlled by a 50:50 joint venture, between ourselves and AngloGold
Ashanti Limited, which holds an effective 90% interest in Kibali Goldmines SPRL.
The remaining 10% of the shares are held by Sokimo, the parastatal mining company of the DRC.
We acquired our interest in this project following the acquisition of Moto Goldmines, in
conjunction with AngloGold Ashanti, and the further acquisition of a 20% interest from Sokimo on
behalf of the joint venture. The Kibali project is located some 560 kilometers northeast of the
city of Kisangani and 150 kilometers west of the Ugandan border town of Arua in the northeast of
the DRC.
Geology and Mineralization
The goldfields at the Kibali gold project are located within the Moto greenstone belt, which
is comprised of the Archaean Kibalian (Upper and Lower) volcanisedimentary rocks and
ironstone-chert horizons that have been metamorphosed to greenschist facies. The goldfields at
Kibali are transgressed by regional-scale north, east, northeast and northwest trending faults and
are bounded to the north by the Middle Archaean West Nile granite-gneiss complex and cut to the
south by the Upper Congo granitic complex. The stratigraphy consists of a volcanisedimentary
sequence comprising fine-grained sedimentary rocks, several varieties of pyroclastic rocks,
basaltic flow rocks, mafic-intermediate intrusions (dykes and sills) and intermediate-felsic
intrusive rocks (stocks, dykes and sills). The sequence is variably altered from slight (texture
benign) to intense (texture destructive) such that in some cases the protolith rock is
unrecognizable. In the Kibali district the majority of gold mineralization identified to date is
disseminated style, hosted within a sequence of volcaniclastics, coarse volcaniclastics,
sedimentary rocks and banded ferruginous cherts. The mineralization is generally structurally
controlled and associated with quartz-carbonate alteration and pyrite.
The majority of mineralization currently being delineated occurs within two broad mineralized
trends. The first group lies within a northeast trending structural-alteration corridor; from the
Kibali prospect in the southwest to the Ndala prospect in the northeast, called the
Kibali-Durba-Karagba Trend. The second group lies within a northwest trending zone that stretches
from the Pakaka prospect in the southeast to the Mengu Hill prospect in the northwest and is called
the Pakaka-Mengu Trend.
Ore Reserves
Following the completion of the Moto acquisition, we have moved swiftly to update the ore
reserves, retaining the services of SRK Consulting in Perth, supported by
in-house skills from both ourselves and AngloGold Ashanti, to ensure continuity with regards to the
updates.
Open pit reserves have been calculated in house, while SRK Consulting completed an update of the
underground ore reserves based on a $800 gold price. New reserve numbers are presented below and
reflect a significant increase in underground ore reserves to almost 7 million ounces, bringing the
total ore reserve number to 10.05 million ounces. The
main changes to the ore reserve resulted from the inclusion of additional stopes in the mine design.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable |
|
|
|
|
|
|
Tonnes |
|
Grade |
|
Gold |
|
Gold** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Moz) |
|
(Moz) |
|
|
|
|
|
|
(Mt) |
|
(Mt) |
|
(g/t) |
|
(g/t) |
|
(Moz) |
|
(Moz) |
|
(45%) |
|
(45%) |
at 31 December |
|
Category |
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
2010 |
|
2009) |
|
2010 |
|
2009 |
|
Mineral reserves*** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
o Open pit |
|
Probable |
|
|
37.38 |
|
|
|
33.55 |
|
|
|
2.67 |
|
|
|
3.02 |
|
|
|
3.21 |
|
|
|
3.26 |
|
|
|
1.44 |
|
|
|
1.47 |
|
o Underground |
|
Probable |
|
|
36.94 |
|
|
|
30.25 |
|
|
|
5.76 |
|
|
|
6.10 |
|
|
|
6.84 |
|
|
|
5.93 |
|
|
|
3.08 |
|
|
|
2.67 |
|
|
TOTAL MINERAL
RESERVES* |
|
Probable |
|
|
74.32 |
|
|
|
63.80 |
|
|
|
4.21 |
|
|
|
4.48 |
|
|
|
10.05 |
|
|
|
9.19 |
|
|
|
4.52 |
|
|
|
4.14 |
|
37
|
|
|
* |
|
Open pit mineral reserves are reported at a gold price of $800/oz and an average cut-off of
1.08g/t and include dilution and ore loss factors. Open pit mineral reserves were calculated by
Mr. Onno ten Brinke, an officer of the company and competent person. Underground mineral reserves
are reported at a gold price of $800/oz and a cut-off of 2.1g/t and include dilution and ore loss
factors. Underground mineral reserves were calculated by Mr. Paul Kerr, an officer of SRK Consulting
and competent person. |
|
** |
|
Attributable gold (Moz) refers to the quantity attributable to ourselves based on its 45%
interest in the Kibali gold project. |
|
*** |
|
Kibali reserves calculated at a weighted average cut off grade of 1.59g/t. |
Progress
All key pre-production targets set for 2010 have been met by the Kibali development team and
the project is on track for the start-up of construction by the middle of 2011, six months earlier
than was originally scheduled.
The implementation of the RAP is already underway, with the acquisition from the State of the
site for a new town, to be known as Kokiza, as well as farmland. Model homes have been built and
the process of house selection by each of the families involved has started. The company and its
partners continue to work with the local community to alleviate the loss of income derived from
illegal informal mining, which has been ended on the site. Alternative work programs have already
been created and these include the production of basic building materials to be used for the
construction of the RAP houses as well as the mine. Progress on other fronts includes the
substantial upgrading of the regional infrastructure through the completion ahead of schedule of
the roads between Aru/Doko, Nzoro and Aru/Arriwara the latter being a contribution towards the
presidents priority fund aimed at improving infrastructure. The completion of these roads has
already directly benefited the local communities by improving the availability of basic goods and
therefore significantly cutting their cost of living. The Aru/Doko road is particularly
significant as it links Kibali with international ports.
Feasibility Study
An update to the feasibility study along with an updated financial model was generated based
on a new mining plan which incorporated an integrated mining plan including multi open pit and
underground schedule. The study will now go through a process of further internal and external
review and optimization of the mining and processing rates, capital estimate scheduling ahead of
final design and approval which is targeted for mid 2011. The revised open pit and underground
mining designs and schedules support a 4Mtpa operation over an estimated 19 year mine life.
Updated processing costs and G&A costs have been generated based on the larger plant throughput. A
full flotation plant is expected to be commissioned on plant start-up, planned for late 2013. Full
flotation and flash flotation circuits will be incorporated due to an overall increase in gold
recovery. Carbon in Leach (CIL) treatment of the flotation tailings stream will be utilized as
this significantly enhances the overall process recovery. During the update of the feasibility an
opportunity for a larger project of 6Mt throughput was also identified, due to the large build up
in ore stockpiles. As the feasibility update continues, more work will be done to optimize the
project for the benefit of all stakeholders.
The underground mine design was completed by SRK Perth and consists of an initial single
decline that accesses the ore beneath the KCD pit and then connects with a vertical shaft ore
hoisting system to exploit the high tonnage stopes of the 5,000 lode and deeper 9,000 lodes. A
trade off investigation points towards a blind sink of the vertical shaft being the preferred
method, thus divorcing the capital sink from the operating mine as opposed to a drill and ream
method of shaft sinking which would intrinsically link the decline development to the shaft
progress. RSV Perth has been awarded the feasibility study for the shaft, which is targeted for
completion in May 2011, pending the completion of geotechnical drilling.
The updated study, which is based only on existing reserves, currently anticipates:
|
|
|
Total open pit ore mined of 37 million tonnes of ore containing 3.2 million ounces of
gold at a strip ratio of 3.8:1, to give total tonnes mined of 141 million tonnes; |
|
|
|
|
Total underground ore mined of 37 million tonnes of ore containing 6.8 million ounces of
gold; |
|
|
|
|
Open pit mining costs average $3.40/tonne over the life of mine; |
|
|
|
|
Underground mining costs of between $31 and $34/tonne |
|
|
|
|
Mill throughput of 4 million tonnes per year; |
|
|
|
|
Plant costs average $11.79/tonne; |
|
|
|
|
Open pit metallurgical recoveries between 83 and 86% depending on ore type |
|
|
|
|
Underground metallurgical recoveries of 91% |
|
|
|
|
G&A cost is $4.43/tonne over life of mine, including outside engineering costs; |
38
|
|
|
Life of Mine capital cost, including 2010 expenditure, is $1.4 billion including site
construction, plant, hydropower installations, preproduction and ongoing capital |
The financial model carried out using a $1,000/oz gold price gave the following returns and
cash costs of production:
|
|
|
IRR |
|
21% |
Total Cash Cost per ounce |
|
$388/oz |
Development
The first six months of 2011 will be dominated by the completion of the detailed costing and
designs for the underground operation, shaft complex and detailed Tailings Storage Facility design
and the costing to optimize the feasibility. Hydropower technical feasibility and environmental
and social impact assessment studies are to be completed. This will be coupled with the start of
pre-construction and establishment of the construction camp and brick making facilities. Advanced
grade control drilling on the KCD pit is planned for the third quarter of 2011 in preparation of
mining works. The physical implementation of the RAP started with the construction of the first
houses in February 2011. The program is expected to take 24 months to complete.
Specification of long lead time items will be completed in the second quarter to enable
finalization of tender bids for the start of the construction phase for underground, surface
operations and hydropower projects at the beginning of the third quarter of 2011.
Exploration
Following the acquisition of Moto Goldmines at the beginning of the fourth quarter of 2009, we
established a geological team on site at Kibali. The primary objective was to complete a detailed
geological analysis of the KCD deposit, to understand the geology, structure, alteration and
mineralization, and to construct a geological model, as well as to look at the possibility of a
lateral link between the KCD and Gorumbwa deposits.
Work undertaken included: diamond drilling (44 holes completed, 8,484 meters); core review of
selective KCD holes (60 holes) and geological modeling; surface mapping of the KCD Gorumbwa
area; the completion of two strategic holes (1,557 meters) in the KCD Gorumbwa gap; ongoing soil
geochemistry over block 1 west of KCD, where four new gold anomalies were identified; sampling of
the old Durba mill (251 samples); first pass interpretation of the airborne magnetic data; and
reconnaissance pitting (10 pits) on the ATF concession.
Objectives in 2010 at Kibali included continued reserve determination, not only on the KCD
deposit but also the satellite deposits; the identification of new near mine ore reserves; and
generative work on the wider lease area through the completion of soil sampling and an airborne
electro-magnetic survey.
The exploration team completed a detailed analysis of the KCD deposit, resulting in a new
geological model which supported a growth in reserves from 4.5 million ounces at acquisition to
10.05 million ounces at the end of December 2010. Continuity of mineralization was confirmed
between the Sessenge and KCD deposits and remains open down plunge. This will be tested by a
program of deep drilling in 2011.
An airborne electromagnetic survey was flown over the permit holding. Three-dimensional
modeling and the integration of additional geological datasets has prioritized targets for drilling
in 2011.
EXPLORATION REVIEW
We have a portfolio of projects within some of the most prospective gold belts of both West
and Central Africa. We have exploration projects in five African countries hosting 275 targets on
13,583 square kilometers of groundholding. We have an exploration team of more than 70
geoscientists.
Mali
Loulo
In 2010 exploration delivered on two key objectives:
39
|
|
|
Completion of a positive feasibility study at Gounkoto |
|
|
|
|
Delivery of additional open pittable mineral resources to the Loulo plant |
Gounkoto
At Gounkoto, a positive feasibility was completed on the back of mineralized material totaling
5.53 million ounces at 5g/t. Work included drilling for mineralized material definition, metallurgical
testwork, piezometry, sterilization of infrastructure and advanced grade control. All forms of
drilling totaled 99,120 meters during 2010.
The host rocks to the Gounkoto mineralization are a sequence of fine grained arkoses which
have suffered an early silica carbonate alteration event. More than 95% of the sulfide is pyrite
(with minor arsenopyrite and chalcopyrite) and additionally gold tellurides are present.
Mineralization is bounded by a hangingwall shear and footwall mylonite. In the hangingwall there
is a prominent limestone unit which is used as a marker horizon.
The mineralization at Gounkoto has now been intersected over a 1.9 kilometer strike length and
down to a depth of 642 vertical meters. The geometry of the Gounkoto system varies along its
length as well as down dip and variations in strike, dip and thickness are closely related to grade
distribution. Structural intersections also played an essential role in focusing fluid flow and
multiple plunging zones projected from surface have been confirmed by deeper drilling, highlighting
the good potential for underground mineable resources. Additional upside has been identified in
the deposit as detailed below:
Southern pit area: near-surface drilling has identified an area of wide, high grade
mineralization in the southern part of the deposit: GKAGCRC119 61.00 meters at 8.09g/t from
35.00 meters and GKAGCRC120 78.00 meters at 4.74g/t from 28.00 meters. Drilling is ongoing and
results suggest this is a dilation zone within the main structure which plunges to the north and
has a strike potential of 125 meters to a vertical depth of nearly 90 meters.
Fe structure: A north-south orientated iron rich structure which locates to the west of the
main zone is providing further upside following RC drilling. Drill hole GKAGCRC293 19.00 meters
at 10.72g/t from 3.00 meters and GKAGCRC294 26.00 meters at 14.56g/t from 32.00 meters. The
weighted average gold grade from drilling is 4.4g/t over a strike length of 275 meters, to vertical
depths of 120 meters and a true thickness of 12 meters.
Jog zone: A broad zone of high grade mineralization has been intersected at the base of the
$700 pit shell, over a strike length of 100 meters. GKDH281 100.00 meters at 8.37g/t from 197.20
meters, GKDH285 93.45 meters at 5.51g/t from 182.00 meters, GKDH286 47.05 meters at 6.20g/t
from 122.95 meters and GKDH283 55.30 meters at 11.60g/t from 187.50 meters.
Hangingwall: Drilling on the hangingwall has confirmed continuity of gold mineralization
associated with Si-Alb-CO3 alteration within a brittle fault, striking approximately
north-south; average gold grade from drilling is 2.2g/t over a 500 meter strike length.
Mineralization is open in all directions with both shallow and steep high grade plunges evident.
The follow-up of these will be prioritized as part of a program to advance the underground
conceptual study in 2011.
Gounkoto Region
The southern half of the Loulo mining permit is developing into a new, significantly
mineralized district. At the P64 target, 300 meters northwest of Gounkoto, previous work including
trenching, diamond core and RC drilling, identified a 145 meter long strongly mineralized zone with
the following intercepts: P64C13 26 meters at 6.29g/t, P64C4 34.45 meters at 8.85g/t, P64C5 -
21 meters at 4.87g/t, P64C6 24 meters at 2.81g/t, P64C7 25 meters at 2.40g/t, P64RC05 71
meters at 1.67g/t, and P64RC06 81 meters at 1.75g/t. Mineralization is hosted in a tourmalinized
greywacke with weak chlorite alteration.
Two kilometers southeast of Gounkoto is Faraba where mineralized material of 567,000 ounces at
2.60g/t has been previously delineated. Mineralization at Faraba locates where the north-south
striking shear system intersects favorable coarse grained lithological layers. The resulting
mineralization occurs as sub-horizontal to gently plunging shoots with blade-like morphology.
In 2011, drill programs will further test P64 and Faraba as well as Toronto and additional
targets highlighted by an update generative study.
Loulo 3
40
The Loulo 3 target has developed into a significant satellite deposit and a 1.7 kilometer long
open pit. During 2010 a total of 1.93 million tonnes of ore were mined at a grade of 3.05g/t for
189,491 ounces. Geologically the deposit trends northeast and is bound both in the hangingwall and
footwall by fine grained semi-pelitic units termed SQR (after the French term schistose quartz rosé
meaning argillaceous pink quartzite). Mineralization is hosted within a coarse grained greywacke
which has been variably altered by silica and tourmaline. Intersecting north-south to
north-northwest orientated structures, which are shallow dipping to the east, control high grade
plunging shoots.
A program of nine diamond holes for 2,380 meters is ongoing to test Loulo 3 at 160 to 180
meters vertical depth, testing beneath the base of the $1,000 pit shell, the extent of which is
limited by data constraints. To date, four diamond holes totaling 1,102 meters have been drilled
along the entire strike length of the deposit at approximately 400 meters spacing. The holes
confirmed the geological model and returned very encouraging mineralization: L3DH33 4.7 meters
at 2.50g/t from 235.1 meters, L3DH35 6.0 meters at 4.59g/t from 224 meters, L3DH36 10.4 meters
at 10.22g/t from 221.15 meters and L3DH39 9.5 meters at 7.59g/t from 183 meters.
Yalea Structure
The Yalea structure is highly mineralized, hosting the deposits of Yalea and Loulo 3, as well
as a number of surface targets.
At Loulo 1, 22 RC holes totaling 1,623 meters were drilled over a 630 meter strike length to a
vertical depth of 50 meters. Mineralization (5 to 15 meter thickness) follows the strike and dip
of the lithological layering, trending northnortheast-northeast and dipping east at between 50 and
60 degrees. Sulfides are present predominantly as disseminated pyrite within the tourmalinized
greywacke and quartz tourmaline. Results from the RC drilling include: L1RC18 5 meters at
4.43g/t from 7 meters, L1RC21 8 meters at 5.21g/t from 12 meters, L1RC22 8 meters at 4.71g/t
from 62 meters and L1RC30 11 meters at 4.54g/t from 22 meters. Global mineral resource estimates
amount to 23,858 ounces at 2.65g/t.
The priority in 2011 for exploration is the five kilometer segment from Loulo 3 to Loulo 1,
which is a zone of continual gold anomalism and mineralization including the surface targets of
Loulo 2 and the Loulo 2-3 Gap. An initial program of deeper diamond drilling will be completed on
500 meter drill centers to vertical depths of 200 meters. Surface RC drilling will also continue
to define satellite open pits.
Yalea Underground Drilling
Grade control drilling defined additional high grade mineralization on the margins of the
purple patch: YUDH109 25.60 meters at 10.65g/t and YUDH112 21.35 meters at 10.88g/t.
In 2011, as underground development advances, grade control drilling will continue to target extensions
to high grade mineralization as geological models are updated and refined.
Gara Structure
PQ10: On the Gara structure, attention focused on the PQ10 target. Forty-six holes for 3,504
meters were drilled over a strike length of 600 meters testing the western mineralized structure.
The geology consists of finely laminated sediments units which bound mineralized pink quartzite
(QR) units. The SQR units are weakly foliated, striking 185 to 195 degrees and dipping 50 to 70
degrees west. Brittle-ductile shears are present in the QR units. Subsequently a small resource
was mined: 60,806 tonnes at 4.11g/t (8,035 ounces). The eastern structure is narrow with a true
width of 7 meters and average grade of 1.8g/t. Additional upside has been identified at PQ10 South
7 RC holes defined mineralization along a steep east-dipping shear which cross-cuts the western
limb of an open antiform. The weighted average gold grade is 2.2g/t over a true width of 6 meters.
Other Loulo Targets
During the year the potential of all the Loulo satellites was evaluated. This involved a data
review and updated geological estimates, fieldwork and in the case of Bolibanta, drilling.
Additionally, pit shells and resources have been calculated for the most promising of the
satellites around Loulo and these will be further evaluated by exploration in 2011. The combined
potential from all the Loulo satellites is approximately 270,000 ounces at 2.8 g/t.
41
Senegal
Bambadji
On the Bambadji permit in Senegal, adjacent to both Loulo and Gounkoto, work progressed from
reconnaissance exploration, through RAB and RC drilling and culminated in diamond drilling on
specific targets which have analogies to Gara, Yalea and Gounkoto styles of mineralization. By the
year end, six holes had been drilled on two targets: Kolya and Waraba. The program has
intersected strongly deformed and altered rocks containing pyrite mineralization at both targets.
However, intersections from the Kolya target have so far confirmed a narrow mineralized quartz
tourmaline (QT) system beneath strong gold mineralization at the surface. At Waraba, the holes
intersected a large alteration system on the margin of an albitite intrusive. The remaining
priority targets for this initial phase of drilling are Kach, Gefa, Baqata and Mananord.
Massawa
The Massawa gold project is located within the Kounemba permit in eastern Senegal which
geologically lies within the 150 kilometer long Mako greenstone belt. The Mako greenstone belt,
comprises mafic-ultramafic and felsic volcanic rocks intruded by granitoids. A regional crustal
scale shear zone, the Main Transcurrent Shear Zone (MTZ) with northeast-southwest trend exploits
the lithological contact between the Mako and the Dialé-Daléma Supergroups and is the host
structure to mineralization at Massawa.
A total strike length of 8.5 kilometers has been drilled, but only a 4 kilometer portion of
this has been evaluated for the present mineral resource modeling and has been drill tested to a 50
meter by 50 meter spacing to a maximum vertical depth of 640 meters. In 2010, 50 diamond
holes for 19,835 meters, 47 dedicated metallurgical diamond holes for 8,620 meters and 15
geotechnical diamond holes for 3,697 meters were drilled. Additionally 105 shallow RC holes for
7,204 meters were drilled.
The four kilometer strike at Massawa currently being evaluated contains two zones of
mineralization: northern and central. However, they are part of the same northeast trending
mineralized structure, which has been offset by north-south belt discordant structures. Geological
logging of core and interpretation confirms that the mineralized system occurs at a
volcanic/sedimentary contact, where a prominent and continuous lapilli tuff sequence acts as a
marker horizon. The average bedding strikes 020 and dips 60 to 76 degrees to the west.
Graded-bedding is common and suggests the sequence is overturned. The host sequences have been
intruded by felsic dykes, gabbros and granitic bodies, particularly in the central area.
Mineralization is hosted in a variety of rocks including: greywackes, volcaniclastics and both
mafic (gabbros) and felsic intrusive. The mineralized system is however structurally controlled
and deformation is essentially brittle-ductile. The alteration assemblage is composed of sericite,
silica, carbonate, pyrite and arsenopyrite. Gold mineralization formed in two phases: an early
phase composed of fine disseminated pyrite and arsenopyrite, and a later stage which is a shallow
level gold system where quartz-stibnite and a large range of antimony-bearing minerals host coarse
native gold.
During 2010, as well as the resource drilling, deep drilling has confirmed continuity of the
lithological sequence, structure, alteration and gold mineralization to a maximum depth of 640
meters below the surface, results include: 17.15 meters at 3.49g/t, including 4 meters at 6g/t in
the central zone and 29.20 meters at 3.75g/t, including 12.60 meters at 5.98g/t in the northern
zone. Step out drilling, testing the mineralization along strike confirmed continuity of high
grades, 200 meters, north of Lion Extension with 1.60 meters at 15.49g/t. In Massawa South,
drilling returned broad low grade intersections (MWDDH464 22.85 meters at 0.59g/t) but revealed a
similar geological and alteration package as the central zone.
Exploration on Massawa has been slowed down as we have advanced Gounkoto and Kibali providing
the time to fully evaluate the metallurgy and development strategies. The aim is to progress the
project to final feasibility in 2011.
Satellite Targets: As well as Massawa, there are a number of targets which have had varying
degrees of follow-up work completed on them from trenching through to RAB and diamond drilling, and
all highlight the possibility of providing additional ounces within a 15 kilometer radius of
Massawa. Our key objective is the discovery of at least 2 million ounces of non-refractory ore to
supplement the ore from Massawa. These targets are summarized below:
Sofia: 56 RC holes for 5,571 meters were drilled at 100 meter spacing along a strike
length of 4 kilometers. The mineralization is continuous along strike, the weighted average
gold grade is 1.45g/t over a true thickness of 18 meters and includes intersections of: SFRC001
31 meters at 2.5g/t, SFRC007 29 meters at 3.16g/t, SFRC010 16 meters at 4.6g/t and SFRC021
15 meters at 4.08g/t. Geologically the target is underlain by a sequence of andesite and
volcaniclastic rocks intruded
42
by quartz feldspar porphyries and gabbros. Mineralization is associated with disseminated
pyrite accompanied with silica-K feldspar-carbonate alteration.
Delya: Is defined by a 6 kilometer by 100 meter plus 20ppb gold in soil anomaly. A
program of 2,761 meters of RC drilling, on 100 meter spaced centers, was completed over a strike
length of 1 kilometer. Intersections from this program include DLRC005 5 meters at 5.59g/t,
DLRC010 4 meters at 7.22g/t, DLRC013 11 meters at 9.50g/t and DLRC014 9 meters at 14.95g/t
from a structure which averages 5 meters width and a weighted average gold grade of 4.5g/t.
Mineralization is hosted within a package of schists, strongly sheared and altered by
silica-sericite-iron and disseminated pyrite and arsenopyrite.
Bakan Corridor: The Bakan Corridor groups together a number of anomalous gold in soil
targets (Bakan, Tizia, Khosa, Tiwana and Tina) along a 10 kilometer segment of the northeast
trending Kossanto structural corridor which is sub-parallel to the MTZ. The geology comprises a
sequence of ultramafc units, felsic and intermediate volcanics (andesites, dacites and
rhyodacites), cherts and igneous rocks ranging from diorite to monzonite. By year end a total
of 5 RC holes for 531 meters, out of a program of 11 RC holes, had been drilled at the Bakan
target. The first hole returned 29 meters at 1.9g/t, including 10 meters at 4.5g/t. A further
13 RC holes (1,175 meters) are designed to test mineralized felsic intrusive at Tina along a
1.25 kilometer strike. Additional holes are being planned at Khosa where intensively northeast
sheared felsic intrusive and silicifed bodies (cherts) were mapped.
Bambaraya: At Bambaraya, 5 RC holes for 588 meters were completed as infill drilling to
previous work over a 1 kilometer strike. Results returned narrow, low grade intersections:
BBRC03 3 meters at 2.12g/t, BBRC04 3 meters at 1.57g/t and BBRC08 18 meters at 1.8g/t and
9 meters at 1.26g/t. Mineralization is hosted within northeast trending pillow basalts and is
associated with silica-sericite-tourmaline-iron carbonate-pyrite alteration. No further work is
planned on this target for the time being.
As well as RC drilling on known satellite targets the team commenced the evaluation of the
next level of targets for drilling in 2011: Kawsara, Manja, Galama, Sira, Kaldou, Makana, KB and
KA. Additionally, work also started on generating new targets at Nouma, Makana East and Sofia
South.
Côte dIvoire
With the commissioning of the new mine at Tongon and the first commercial gold production,
exploration has now shifted focus to the evaluation of satellite targets.
An 11,647 line kilometer airborne electromagnetic geophysical survey was flown over the
Senoufo Greenstone Belt in northern Côte dIvoire, covering the Nielle permit and portions of the
Diaouala and Fapoha permits. The survey provided the foundation to an improved geological and
structural interpretation of the belt; the resultant prospectivity analysis identified 79 new
targets, of which 18 ranked high to medium are located within a 15 kilometer radius of the Tongon
plant.
The prioritization of targets resulted in exploration programs being performed at: Seydou,
Jubula, Tongon West, Sekala, Belokolo and Nafoun. Encouraging results were returned from:
Seydou: trenching and drilling 12.3 meters at 2.3g/t, 19 meters at 5.32g/t and 21 meters
at 3.76g/t.
Sekala: RAB drilling returned multiple mineralized zones including 23 meters at 2.18g/t
and 15 meters at 1.11 g/t.
Jubula: trenching 61 meters at 1.31g/t, 16.5 meters at 3.52g/t and 12 meters at 1.7g/t.
Tongon West: RC drilling 10 meters at 4.47g/t and 14 meters at 3.08g/t.
In 2011 RAB, RC and diamond drilling are all planned to progress these targets as well as to
advance stand-alone opportunities within our permit portfolio.
Democratic Republic of Congo
Kibali
43
Exploration completed a detailed analysis of the KCD deposit resulting in a new geological
model which supported a substantial increase in mineral reserves to 10 million ounces at 4.21g/t
within global mineral resources of 18.4 million ounces at 3.1g/t. Drilling connected the Sessenge
deposit to KCD and confirmed over 2 kilometers of continuous mineralization: DDD472 14.80 meters
at 4.18g/t, DDD475 25.95 meters at 4.28g/t, DDD484 29.70 meters at 3.92g/t and DDD485 39.60
meters 6.65g/t.
There is additional upside within the current Sessenge-KCD deposit both near surface and at
depth. The deposit comprises a series of stacked lodes, which have been labeled by their
elevation: 3,000 series, 5,000 series and 9,000 series plunging moderately to the northeast. The
outlines of these lodes, rather than being limited by the extent of mineralization, are in fact
limited by drilling.
There are three key upside opportunities:
|
|
|
Expand the open pit to the northeast by testing extensions to the 3,000 lode within the
drained Lake Durba |
|
|
|
|
Sessenge-KCD gap requires infill drilling for resource conversion |
|
|
|
|
Test the continuity and extensions to the underground lodes down plunge (9,000 and 5,000
series) |
Kibali Exploration
Airborne Geophysics
A 12,277 line kilometer SPECTREM airborne electromagnetic (EM) survey was flown over the
Kibali concession during the second quarter of 2010.
The key highlights of this survey were:
|
|
|
Igneous intrusions are more widespread than previously mapped. |
|
|
|
|
A corridor of strong northeast trending structural grain is coincident with the main
areas of mineralization. |
|
|
|
|
Strong EM conductor coincident with the KCD area, interpreted to be the response from
carbonaceous shales +/- the Durba hill ironstone. |
|
|
|
|
Strong east-west conductors along the West Nile Gneiss contact possibly related to
carbonaceous shale unit that was exploited by early thrusting and subsequently crosscut
by a later northeast structural grain. |
|
|
|
|
Conductive and magnetic trend running along or parallel to the main mineralized
trend. |
Three-dimensional modeling of the data has identified a number of northeast plunging shoots
of highly conductive material that are interpreted to represent mainly graphitic carbonaceous
shale.
Several of these shoots are associated with areas of known mineralization, for example at
KCD and Pakaka. The shoots are thought to represent intersections of important mineralizing
northeast trending S2 structures and northwest trending S1 thrusts that have exploited
carbonaceous shale horizons.
Although the EM anomalies do not map actual gold mineralization it is thought the
conductive shoots highlight structurally important traps especially as they daylight coincident
with gold in soil anomalies.
In 2011, exploration programs will target the upside opportunities within the Sessenge-KCD
deposit. In evaluating satellite targets, priority will be given to Gorumbwa and Agbarabo,
which were high grade underground mines during the Belgium era, as well as testing conceptual
ideas generated from the geophysical survey.
MINERAL RIGHTS AND ORE RESERVES
Table of mineral rights at December 31, 2010:
|
|
|
|
|
|
|
|
|
Country |
|
Type |
|
Area (km2) |
|
Area (sq miles) |
|
Equity (%) |
MALI |
|
|
|
|
|
|
|
|
Loulo |
|
EP |
|
372 |
|
144 |
|
80.0 |
Morila |
|
EP |
|
200 |
|
77 |
|
40.0 |
Bena |
|
EEP |
|
16 |
|
6 |
|
80.0 |
Zaniena |
|
EEP |
|
250 |
|
97 |
|
80.0 |
44
|
|
|
|
|
|
|
|
|
Country |
|
Type |
|
Area (km2) |
|
Area (sq miles) |
|
Equity (%) |
Dinfora |
|
EEP |
|
139 |
|
54 |
|
80.0 |
Konyi |
|
EEP |
|
250 |
|
97 |
|
80.0 |
CÔTE DIVOIRE |
|
|
|
|
|
|
|
|
Nielle |
|
EP |
|
751 |
|
290 |
|
89.0 |
Boundiali |
|
EEP |
|
1,314 |
|
507 |
|
81.0 |
Dabakala |
|
EEP |
|
191 |
|
74 |
|
81.0 |
Dignago |
|
EEP |
|
1,000 |
|
386 |
|
81.0 |
Apouasso |
|
EEP |
|
1,000 |
|
386 |
|
81.0 |
Diaouala |
|
EEP |
|
977 |
|
377 |
|
81.0 |
Mankono |
|
EEP |
|
704 |
|
272 |
|
81.0 |
Tiorotieri |
|
EEP |
|
86 |
|
33 |
|
89.0 |
Kouassi Datekro |
|
EEP |
|
922 |
|
356 |
|
89.0 |
SENEGAL |
|
|
|
|
|
|
|
|
Kanoumba |
|
EEP |
|
621 |
|
240 |
|
83.0 |
Miko |
|
EEP |
|
84 |
|
32 |
|
83.0 |
Dalema |
|
EEP |
|
401 |
|
155 |
|
83.0 |
Tomboronkoto |
|
EEP |
|
225 |
|
87 |
|
83.0 |
Bambadji |
|
EEP |
|
315 |
|
122 |
|
51.0 |
BURKINA FASO |
|
|
|
|
|
|
|
|
Basgana |
|
EEP |
|
250 |
|
97 |
|
81.0 |
Bourou |
|
EEP |
|
122 |
|
47 |
|
81.0 |
Tanema |
|
EEP |
|
247 |
|
95 |
|
81.0 |
Yibogo |
|
EEP |
|
247 |
|
95 |
|
81.0 |
Nakomgo |
|
EEP |
|
237 |
|
92 |
|
81.0 |
Safoula |
|
EEP |
|
249 |
|
96 |
|
81.0 |
Dawaro |
|
EEP |
|
250 |
|
97 |
|
81.0 |
Tiakane |
|
EEP |
|
196 |
|
76 |
|
81.0 |
DEMOCRATIC REPUBLIC OF THE CONGO |
|
|
|
|
|
|
|
|
Kibali |
|
|
|
|
|
|
|
|
11447 |
|
EP |
|
227 |
|
88 |
|
45.0 |
11467 |
|
EP |
|
249 |
|
96 |
|
45.0 |
11468 |
|
EP |
|
46 |
|
18 |
|
45.0 |
11469 |
|
EP |
|
92 |
|
36 |
|
45.0 |
11470 |
|
EP |
|
31 |
|
12 |
|
45.0 |
11471 |
|
EP |
|
113 |
|
44 |
|
45.0 |
11472 |
|
EP |
|
85 |
|
33 |
|
45.0 |
5052 |
|
EP |
|
302 |
|
117 |
|
45.0 |
5073 |
|
EP |
|
399 |
|
154 |
|
45.0 |
5088 |
|
EP |
|
292 |
|
113 |
|
45.0 |
|
TOTAL AREA |
|
|
|
13,583 |
|
5,245 |
|
|
|
|
|
EP |
|
Exploitation Permit |
|
EEP |
|
Exclusive Exploration Permit |
Annual ore reserve declaration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tonnes |
|
Tonnes |
|
Grade |
|
Grade |
|
Gold |
|
Gold |
|
Attributable |
|
Attributable |
|
|
|
|
|
|
(Mt) |
|
(Mt) |
|
(g/t) |
|
(g/t) |
|
(Moz) |
|
(Moz) |
|
Gold (Moz) |
|
Gold (Moz) |
At December 31, |
|
Category |
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
2010 |
|
2009 |
PROVEN AND PROBABLE
RESERVES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kibali |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45 |
% |
|
|
45 |
% |
|
|
Probable |
|
|
74.32 |
|
|
|
63.80 |
|
|
|
4.21 |
|
|
|
4.48 |
|
|
|
10.05 |
|
|
|
9.19 |
|
|
|
4.52 |
|
|
|
4.14 |
|
Sub total |
|
Proven and probable |
|
|
74.32 |
|
|
|
63.80 |
|
|
|
4.21 |
|
|
|
4.48 |
|
|
|
10.05 |
|
|
|
9.19 |
|
|
|
4.52 |
|
|
|
4.14 |
|
Loulo |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80 |
% |
|
|
80 |
% |
|
|
Proven |
|
|
4.54 |
|
|
|
5.55 |
|
|
|
2.98 |
|
|
|
3.48 |
|
|
|
0.43 |
|
|
|
0.62 |
|
|
|
0.35 |
|
|
|
0.50 |
|
|
|
Probable |
|
|
40.89 |
|
|
|
43.91 |
|
|
|
4.63 |
|
|
|
4.54 |
|
|
|
6.09 |
|
|
|
6.41 |
|
|
|
4.87 |
|
|
|
5.13 |
|
Sub total |
|
Proven and probable |
|
|
45.43 |
|
|
|
49.45 |
|
|
|
4.47 |
|
|
|
4.42 |
|
|
|
6.52 |
|
|
|
7.03 |
|
|
|
5.22 |
|
|
|
5.63 |
|
Gounkoto |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80 |
% |
|
|
80 |
% |
|
|
Probable |
|
|
17.11 |
|
|
|
7.47 |
|
|
|
5.10 |
|
|
|
6.83 |
|
|
|
2.80 |
|
|
|
1.64 |
|
|
|
2.24 |
|
|
|
1.31 |
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tonnes |
|
Tonnes |
|
Grade |
|
Grade |
|
Gold |
|
Gold |
|
Attributable |
|
Attributable |
|
|
|
|
|
|
(Mt) |
|
(Mt) |
|
(g/t) |
|
(g/t) |
|
(Moz) |
|
(Moz) |
|
Gold (Moz) |
|
Gold (Moz) |
At December 31, |
|
Category |
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
2010 |
|
2009 |
Sub total |
|
Proven and probable |
|
|
17.11 |
|
|
|
7.47 |
|
|
|
5.10 |
|
|
|
6.83 |
|
|
|
2.80 |
|
|
|
1.64 |
|
|
|
2.24 |
|
|
|
1.31 |
|
Morila |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40 |
% |
|
|
40 |
% |
|
|
Proven |
|
|
5.86 |
|
|
|
9.85 |
|
|
|
1.68 |
|
|
|
1.74 |
|
|
|
0.32 |
|
|
|
0.55 |
|
|
|
0.13 |
|
|
|
0.22 |
|
|
|
Probable |
|
|
6.69 |
|
|
|
6.91 |
|
|
|
1.14 |
|
|
|
1.14 |
|
|
|
0.24 |
|
|
|
0.25 |
|
|
|
0.10 |
|
|
|
0.10 |
|
Sub total |
|
Proven and probable |
|
|
12.55 |
|
|
|
16.76 |
|
|
|
1.39 |
|
|
|
1.49 |
|
|
|
0.56 |
|
|
|
0.80 |
|
|
|
0.22 |
|
|
|
0.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
89 |
% |
|
|
89 |
% |
Tongon |
|
Proven |
|
|
0.42 |
|
|
|
|
|
|
|
1.93 |
|
|
|
|
|
|
|
0.03 |
|
|
|
|
|
|
|
0.02 |
|
|
|
|
|
|
|
Probable |
|
|
36.69 |
|
|
|
38.02 |
|
|
|
2.47 |
|
|
|
2.63 |
|
|
|
2.91 |
|
|
|
3.22 |
|
|
|
2.59 |
|
|
|
2.86 |
|
|
|
Proven and probable |
|
|
37.11 |
|
|
|
38.02 |
|
|
|
2.46 |
|
|
|
2.57 |
|
|
|
2.94 |
|
|
|
3.22 |
|
|
|
2.62 |
|
|
|
2.86 |
|
Massawa |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83 |
% |
|
|
83 |
% |
|
|
Probable |
|
|
17.42 |
|
|
|
10.51 |
|
|
|
3.36 |
|
|
|
4.62 |
|
|
|
1.88 |
|
|
|
1.56 |
|
|
|
1.57 |
|
|
|
1.30 |
|
Sub total |
|
Proven and probable |
|
|
17.42 |
|
|
|
10.51 |
|
|
|
3.36 |
|
|
|
4.62 |
|
|
|
1.88 |
|
|
|
1.56 |
|
|
|
1.57 |
|
|
|
1.30 |
|
TOTAL RESERVES |
|
Proven and probable |
|
|
203.93 |
|
|
|
178.54 |
|
|
|
3.78 |
|
|
|
3.80 |
|
|
|
24.76 |
|
|
|
21.80 |
|
|
|
16.39 |
|
|
|
15.56 |
|
The reporting of Ore Reserves is in accordance with SEC Industry Guide 7.
Pit optimization is carried out at a gold price of $800 per ounce; underground reserves are also
based on a gold price of $800 per ounce. Dilution and ore loss are incorporated into the
calculation of reserves.
Addition of individual line items may not sum to sub totals because of rounding off to two decimal
places.
Our reserves are calculated at a weighted average cut off grade of 2.38g/t for Loulo, 0.97g/t for
Morila, 0.85g/t for Tongon, 1.40g/t for Gounkoto, 1.10g/t for Massawa, and 1.59g/t for Kibali.
Locality of the Loulo and Morila Mines in Mali
Mineral Rights and Permits
The following maps show the position of our current permits in West and Central Africa:
46
West Africa: location of mines and permits
47
Central Africa: location of mines and permits
Although we believe that our exploration permits will be renewed when they expire, based on
the current applicable laws in the respective countries in which we have obtained permits, we
cannot assure you that those permits will be renewed on the same or
48
similar terms, or at all. In addition, although the mining laws of Mali, Côte dIvoire,
Senegal, Burkina Faso and DRC provide a right to mine should an economic orebody be discovered on a
property held under an exploration permit, we cannot assure you that the relevant government will
issue a permit that would allow us to mine. All mineral rights within the countries in which we
are currently prospecting are state-owned. Our interests effectively grant us the right to develop
and participate in any mine development on the permit areas.
GENERATIVE AND NEW BUSINESS
As well as advancing the key strategic areas, generative work and research continues to
identify new exploration opportunities within Archaean and Proterozoic age rocks across the African
continent.
SOCIAL RESPONSIBILITY AND ENVIRONMENTAL SUSTAINABILITY
We believe that a successful mining company is one which is profitable while meeting its
social responsibilities in the countries and communities in which it operates.
Strong local relationships are one of the foundation stones on which the company has been
built. For each new development, a process of assessment and engagement is undertaken to ensure
that the positive impacts of the operation are maximized and the negative impacts minimized.
Our general approach is guided by the IFC Guidelines on Environmental, Safety and Health and
specifically on IFC Guidelines related to Mining and Performance Standards on Social and
Environmental Sustainability OHSAS 18001, the Occupational Health and Safety Advisory Services
occupational health and safety standards, and ISO 14001, the international environmental standards,
guide health, safety and environmental management practices on our operations. All social and
environmental assessments are reviewed by an independent party to ensure compliance to these codes.
During the early exploration stage our aim is to make as small a social impact as possible.
Once a target progresses to feasibility, full social, medical and environmental baseline studies
are conducted, which define the pre-mining conditions and are used as benchmarks while the project
develops and when it moves into production. Full environmental and social impact assessments are
generated including public participation programs with the local communities where the impacts,
both negative and positive, are communicated and considered. During the past year a full
environmental and social impact assessment was completed for Gounkoto, while good progress was made
with the completion of specialist studies on flora, fauna, aquatics, water and sediment quality and
archeology were completed..
Community liaison committees, consisting of a broad spectrum of community representatives, are
set up prior to production and provide a forum for regular, open dialogue where problems can be
tabled and mutually acceptable solutions found. Our exploration team represents our first
interface with the community and it is instrumental in allaying suspicions and conflicts, while
building relationships based on trust between future mines and the community.
To keep environmental and social issues in the forefront of our business, the executive social
and environmental committee was met quarterly to review all environmental and social action plans.
A summary of this review is presented at each group board meeting.
Our integrated social and environmental management process identifies potentially negative and
positive impacts. The implementation of sustainable environmental and social responsibility
strategies aim to minimize negative impacts and maximize the positive impacts of our activities,
commensurate with our business strategy and with national and IFC standards. The implementation
and effectiveness of these strategies is audited by independent external consultants Digby Wells
Associates (DWA) and monitored internally on a quarterly basis by the groups environmental and
social oversight committee.
Environmental Management
Monthly monitoring programs incorporating dust fallout levels, physiochemical, cyanide, oil,
grease and bacteriological levels of surface and groundwater across the mine sites and tailings
storage facilities as well as surrounding water courses continued throughout the year. No
pollution or breach of World Bank guidelines occurred.
49
Morila successfully renewed its ISO 14001 certification and Loulo achieved its certification
in 2010. Tongon is planned to achieve certification in 2011.
Environmental management plans have been implemented in Tongon on start up of production which
are in line with ISO 14001 to allow for the rapid accreditation of the mine.
Closure studies of the Morila Tailings Storage Facility have identified an option of
processing the surface tailings storage facility as being economic after the completion of a
sampling exercise over the dam with full environmental leach testwork to determine the
environmental implications. Closure plans at Loulo and Tongon continue to be updated with the
changing mining environment to ensure appropriate reclamation costs are allocated.
Environmental Performance Data
Our environmental performance data is reported for calendar years and reported on an
operational control basis at each managed operation, even though only partial ownership may exist.
We are in the process of implementing measurement systems on each site in line with Global
Reporting Initiative. Principal performance areas currently reported include Greenhouse Gas
Emissions, Energy Use, Freshwater Withdrawal and Land Disturbed.
Greenhouse gas (GHG) emissions
As a growing company, operating in remote areas with poor infrastructure, on site diesel
generation of power is required. This makes it more of a challenge for us to reduce our total
greenhouse gas emissions while sustaining company growth. However we aware that the reduction of
emissions intensity is intrinsically linked to improved operating efficiencies and where the
opportunity presents itself we are aggressively working to reduce greenhouse gas emissions per
production unit and have a five year strategy to achieve this. These activities include
transforming to more fuel efficient low speed diesel generating machines at Loulo, linking into the
predominantly hydro and gas generated national electricity grid at Tongon in the Ivory Coast and
coming up with innovative solutions at Kibali in eastern DRC to maximize the generation of hydro
power generation for the project. We are thus expecting to improve and materially reduce our
greenhouse gas emission per production unit performance from 2011 to 2016. The company has filed
its 2009 greenhouse emissions in the 2010 Carbon Disclosure Project (CDP) and will continue to do
so in order to demonstrate its progress in this regard.
Our total unverified GHG emissions for 2010, defined as the sum of onsite emissions were 314
thousand tonnes of carbon dioxide equivalent. The disclosure is currently undergoing independent
verification and final verified numbers will be presented in the 2011 Carbon Disclosure Project in
May 2011. Our total gross Scope 1 GHG emissions were calculated using The Greenhouse
Gas Protocol: A Corporate Accounting and Reporting Standard. Scope 1 emissions are direct
emissions occurring from sources that are owned or controlled by a company, while Scope 2 emissions
include emissions from the generation of purchased electricity. We generate the vast
majority of its electricity on-site through diesel generation. Scope 2 emissions therefore only
reflect electricity purchased for offsite offices. This will change once we connect to the Ivory
Coast national grid in 2011. Emissions are reported as per operational control and is based on the
assumption that a company accounts for 100% of the GHG emissions from operations over which it has
operational control. Financial GHG emissions intensity reported on an operational basis were 645
metric tonnes CO2 equivalent per $ million revenue for 2010.
Energy use
We generate all the energy used by its operations. Our mineral processing
operations are energy intensive and currently depend on diesel power generation to keep them
running. This year our energy generation and use increased from 256 to 271 thousand megawatt
hours. This change has been influenced by the increase in tonnage throughput and hardness of ore
at Loulo and the start up of the Tongon operation in Ivory Coast. Notwithstanding the increase in
overall energy use we have been able to reduce our energy use per tonne milled from 35.3 kWh/t to
34.4 kWh/t, due to the fact the additional tonnes milled at Tongon have been oxide and thus used
less energy. Once political stability returns to Ivory Coast we would expect to change over to the
hydro and gas generated national grid. We are working at ways to maximize the hydro power
opportunities available in the DRC project of Kibali and minimising the use of diesel generation.
We are working on a concept to reduce the energy intensity of new projects
50
that come on line around the Loulo complex by having a centrally powered generating complex from
which power could be distributed.
Water Use
Our water policy has focussed this year on maximizing the return of water from Tailings
Storage Facilities in an attempt to minimize the off take of fresh water from the environment. All
our operations withdraw fresh water from either adjacent river systems or from purpose built water
storage dams as well as dewatering of mining operations. The amount of water we removed from the
environment has increased this year due to the addition of the Tongon operation to our portfolio.
Water management plans are aimed at increasing the reuse of water whenever we can, and to return it
to the environment meeting regulatory limits. Our freshwater withdrawal increased by 3 per cent to
7,300 million litres in 2010 but our water withdrawal per tonne milled decreased from 0.98 to 0.93
kl/tonne, due to better reuse of tailings water.
Land
Our mining concessions cover a total of 3,159 km2 of land excluding our exploration
leases. At the end of 2010 our activities had impacted 1.1 per cent of this area up from 0.8 per
cent in 2009, principally due to the construction of the Tongon mine. In line with IFC guidelines
on mining, we aim to implement incremental rehabilitation of land rather than waiting until all
operations at the site have ceased. Internal annual rehabilitation review and closure estimation
helps to drive the process.
Community development
To survive and prosper, we must be an integral part of and benefit the communities of which it
is a corporate citizen. Establishing and maintaining good relations with the communities requires
constant and effective two-way communication and in pursuit of such relationships we have a
sustainable community development strategy backed by a budget and community development
departments. We believe we have been more successful in community endeavors than most other mining
companies operating in Africa. However, the need to stay focused and continually improve was
brought home to us when we suffered a setback in July 2009 in community relations at our Loulo
mine. Members of the community mainly but not exclusively young job seekers newly arrived in
the area became upset about the method of recruitment of the new surface mining contractor,
which had brought its mining team with it from Morila. The group disrupted operations which were
suspended for 36 hours, allowing the authorities to restore the situation to normal. We have had
an independent audit carried out and have implemented its recommendations, such as intensifying our
interaction with the communities surrounding our operations.
In 2010, $7 million was contributed to community development projects which focused on basic
education, potable water and basic health provisions, food security and local infrastructure. This
more than doubled the amount spent in 2009. This amount excluded the direct community and social
work undertaken by ourselves as part of our normal operations and capital projects, including the
Resettlement Action Plans and related compensation and infrastructure establishment such as road
building related to Tongon, Gounkoto and the Kibali projects.
Further payments exceeding $340.0 million were made to governments, local employees and local
suppliers. The governments received taxes, royalties and dividends; employees received salaries
while local suppliers and contractors were paid for goods and services received.
We have been championing the establishment of a world class center of excellence to provide
West Africans and others in Sub-Saharan Africa with the opportunity to study disciplines at the
African School of Mines (ASM), based in Bamako. We are working in collaboration with the
Government of Mali, the Nelson Mandela Institution, the World Bank and several leading universities
in South Africa, Europe and North America. To date we have set aside $1 million for this purpose
and have provided assistance from our chairman, Philippe Liétard, and the chairman of the audit
committee, Karl Voltaire. The Nelson Mandela Institute and the World Bank have undertaken to
provide sufficient funds to build the campus and the Malian Government has provided the land for
the ASM on which a college will open in 2012
Projects
During the year community development spending on projects identified by the representatives
of the communities situated close to our operations was in excess of $2 million. This excludes the
direct community and social work undertaken by the group, including the RAP at Tongon, the
provision of medical care to villagers living close to our operations, the excellent community work
done on
51
our exploration sites and the work at Kibali to carry out medical and other baseline studies and
social/economic/human rights and other impact studies.
The focus areas for our community development efforts have remained the creation of
sustainable employment opportunities, primary health care, education, food security, and potable
water provision.
Human Resources Report
Group manpower
Group manpower levels, inclusive of contractor labor, rose during the year by 1,459 to 7,257,
the most significant increases occurred at Tongon, where numbers employed, including contractor
staff, increased from 1,510 to 2,445. Manning levels related to employees working on our
operations and projects are shown in the following table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December |
|
December |
|
|
Mine/function |
|
2010 |
|
2009 |
|
Variance |
MORILA |
|
|
|
|
|
|
|
|
|
|
|
|
Mine |
|
|
352 |
|
|
|
486 |
|
|
|
(134 |
) |
Contractors |
|
|
430 |
|
|
|
395 |
|
|
|
35 |
|
Total |
|
|
782 |
|
|
|
881 |
|
|
|
(99 |
) |
LOULO |
|
|
|
|
|
|
|
|
|
|
|
|
Mine |
|
|
486 |
|
|
|
314 |
|
|
|
172 |
|
Contractors |
|
|
2,709 |
|
|
|
2,550 |
|
|
|
159 |
|
Total |
|
|
3,195 |
|
|
|
2,864 |
|
|
|
331 |
|
TONGON |
|
|
|
|
|
|
|
|
|
|
|
|
Mine |
|
|
283 |
|
|
|
8 |
|
|
|
275 |
|
|
Contractors |
|
|
2,162 |
|
|
|
1,502 |
|
|
|
660 |
|
Total |
|
|
2,445 |
|
|
|
1,510 |
|
|
|
935 |
|
KIBALI |
|
|
|
|
|
|
|
|
|
|
|
|
Project |
|
|
197 |
|
|
|
245 |
|
|
|
(48 |
) |
Contractors |
|
|
335 |
|
|
|
75 |
|
|
|
260 |
|
Total |
|
|
532 |
|
|
|
320 |
|
|
|
212 |
|
EXPLORATION |
|
|
|
|
|
|
|
|
|
|
|
|
Field |
|
|
206 |
|
|
|
151 |
|
|
|
55 |
|
Other |
|
|
15 |
|
|
|
10 |
|
|
|
5 |
|
Total |
|
|
221 |
|
|
|
161 |
|
|
|
60 |
|
CORPORATE |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and operational centers |
|
|
82 |
|
|
|
62 |
|
|
|
19 |
|
TOTAL GROUP |
|
|
7,257 |
|
|
|
5,798 |
|
|
|
1,459 |
|
Industrial relations
We continued to support the role of unions and representative committees to strengthen our
pact with labor which is structured through internal establishment agreements. Employee
participation is enhanced by the presence of local mine shop stewards at quarterly mine board
meetings.
At Tongon, the political instability of the country resulted in a challenging period towards
the end of 2010. Presidential elections were held resulting in extended absence of staff as they
were required to vote in the areas where they were registered. At the same time the operation
released a number of construction staff in line with the completion of various construction phases.
The release of these employees compounded the general feeling of uncertainty and members of the
community and some ex-workers blockaded the entrance of the mine preventing employees from entering
the mine for a number of days until settlement could be reached for the redeployment of the
released employees to other construction projects.
52
At Loulo, a second union was established on the mine. This union has recently gained dominant
representation. While mine agreements made between management and the original union has been
respected, allowance is made for their renegotiation every two years and this is expected to take
place in 2011.
Employee health
One of our key objectives is the reduced exposure to airborne contaminants and noise on our
sites. Personal protective equipment is supplied as required in the relevant areas. Malaria
remains the most significant health risk for our operations. We carried out annual entomological
surveys to determine the most effective insecticide to use in the spraying programs that are
carried out on site as well as in surrounding villages. At Loulo, the annual incidence rate of
Malaria was 30.4% in 2010 compared to 30.9% in 2009; and 26.6% in 2010 at Morila compared to 20.7%
in 2009. The incidence rate was 30.8% at Tongon and at 23.2% at Kibali in 2010.
Awareness education of employees and local communities on HIV/AIDS and its prevention is
another important health issue addressed on all sites. This is generally conducted by our medical
departments in conjunction with NGOs.
Safety
During the year, a standardized health and safety reporting format, agreed by all the medical
officers, was introduced across the group. The safety statistics produced comply with OHSAS 18001
and industry best practice. Morila maintained its OHSAS 18001 accreditation and work has been
ongoing during 2010 in conjunction with NOSA consultants preparing Loulo to become OHSAS 18001
accredited on the latter half of 2011. Work has also commenced at Tongon on preparing the mine for
OHSAS 18001 accreditation expected in 2012.
While low injury frequency rates do not always translate into low fatality rates the Lost Time
Injury Frequency Rate (LTIFR) (number of LTI per number of hours worked) x 1,000,000 was 1.36 at
Loulo, 0.55 at Morila and 3.83 at Tongon. Daily toolbox meetings are held in workplaces across
our mines to constantly remind employees of the need for each to be safety conscious. These
meetings are based on the principle of personal responsibility with regard to safety where the onus
is transferred to the individual to practice a high level of safety in the workplace.
LOULO
|
|
|
|
|
|
|
|
|
Safety statistics |
|
2010 |
|
2009 |
Lost time injury * |
|
|
8 |
|
|
|
13 |
|
Lost time injury frequency rate** |
|
|
1.36 |
|
|
|
2.71 |
|
Minor injury |
|
|
83 |
|
|
|
169 |
|
Minor injury frequency rate |
|
|
14.10 |
|
|
|
35.27 |
|
Total injury |
|
|
91 |
|
|
|
182 |
|
Total injury frequency rate |
|
|
15.46 |
|
|
|
37.98 |
|
Fatal injury |
|
|
1 |
|
|
|
4 |
|
Fatal injury rate |
|
|
0.17 |
|
|
|
0.83 |
|
|
|
|
* |
|
Fatal Accidents are included in LTI cases. |
|
** |
|
Man hours are calculated based on 2,000 hours worked per employee a year. LTIFR = Number of
LTIs/ Number of hours worked x 1,000,000 |
53
MORILA
|
|
|
|
|
|
|
|
|
Safety statistics |
|
2010 |
|
2009 |
Lost time injury |
|
|
1 |
|
|
|
2 |
|
Lost time injury frequency rate |
|
|
0.55 |
|
|
|
0.92 |
|
Minor injury |
|
|
15 |
|
|
|
39 |
|
Minor injury frequency rate |
|
|
8.38 |
|
|
|
17.97 |
|
Total injury |
|
|
16 |
|
|
|
41 |
|
Total injury frequency rate |
|
|
8.94 |
|
|
|
18.4 |
|
Fatal injury |
|
|
0 |
|
|
|
0 |
|
Fatal injury rate |
|
|
0 |
|
|
|
0 |
|
TONGON
|
|
|
|
|
|
|
|
|
Safety statistics |
|
2010 |
|
2009 |
Lost time injury |
|
|
18 |
|
|
|
0 |
|
Lost time injury frequency rate |
|
|
3.83 |
|
|
|
0 |
|
Minor injury |
|
|
129 |
|
|
|
62 |
|
Minor injury frequency rate |
|
|
27.45 |
|
|
|
5.89 |
|
Total injury |
|
|
147 |
|
|
|
62 |
|
Total injury frequency rate |
|
|
31.28 |
|
|
|
5.89 |
|
Fatal injury |
|
|
0 |
|
|
|
0 |
|
Fatal injury rate |
|
|
0 |
|
|
|
0 |
|
54
KIBALI
|
|
|
|
|
Safety statistics |
|
2010 |
Lost time injury |
|
|
11 |
|
Lost time injury frequency rate |
|
|
5.6 |
|
Minor injury |
|
|
23 |
|
Minor injury frequency rate |
|
|
11.7 |
|
Total injury |
|
|
34 |
|
Total injury frequency rate |
|
|
17.3 |
|
Fatal injury |
|
|
0 |
|
Fatal injury rate |
|
|
0 |
|
RANDGOLD RESOURCES GROUP STATISTICS FOR LAST 3 YEARS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTI Freq |
|
All |
|
|
No. Of |
|
Fatalities / |
|
Rate / 1m |
|
Incident / |
Year |
|
Fatalities |
|
1000 |
|
hours |
|
Accident |
2010 |
|
|
1 |
|
|
|
0.06 |
|
|
|
1.75 |
|
|
|
14.88 |
|
2009 |
|
|
4 |
(a) |
|
|
0.51 |
|
|
|
0.96 |
|
|
|
18.25 |
|
2008 |
|
|
1 |
|
|
|
0.26 |
|
|
|
1.71 |
|
|
|
30.26 |
|
|
|
|
(a) |
|
Three of the fatalities relate to contractor employees working on developing our Yalea
underground mine. These fatalities significantly affected the decision to terminate the
services of the contractor at the end of 2009. |
Training
Courses given on the operations in 2010 comprised of driving competency; first aid; community
development; environmental law and rehabilitation; cyanide safety; hazardous substances; metallurgy
processes; engineering maintenance; electrical and mechanical practice; air conditioner repair;
occupational health; computer literacy; supervision; Sanvic mechanical training; compressor
maintenance; and electrical competency. A total of 536 employees attended courses during the year.
In addition, we sponsored a number of employees to further extend their tertiary qualifications at
universities in South Africa, Senegal, the Netherlands and the United Kingdom.
REGULATORY AND ENVIRONMENTAL MATTERS
Our business is subject to extensive government and environment-related controls and
regulations, including the regulation of the discharge of pollutants into the environment,
disturbance of and threats to endangered species and other environmental matters. Generally,
compliance with these regulations requires us to obtain permits issued by government agencies.
Some permits require periodic renewal or review of their conditions. We cannot predict
whether we will be able to renew those permits or whether material changes in permit conditions
will be imposed. To the extent that the countries in which we have
exploration and mining permits have no established environmental laws, we are currently working to
ensure that our operations are in compliance with environmental performance standards set by the
IFC in relation to air emissions and water discharges. In accordance with our stated policy, we
provide for estimated environmental rehabilitation costs based on the net present value of future
rehabilitation cost estimates for disturbance to date.
We carry out our operations within the guidelines outlined in our social responsibility policy
and in accordance with Equator Principles and IFC performance standards.
The Morila Mine maintained its International Standard Organization (ISO14001) certification
during 2007 and the Loulo mine achieved its ISO14001 certification. The Tongon mine has now
commenced procedures with the aim of attaining ISO14001 certification.
55
Our environmental reporting committee comprising senior executives and chaired by our CEO
continued to meet on a quarterly basis. The committee considers all issues affecting the
environment.
MARKETING
We derive the majority of our income from the sale of gold produced by Morila, Loulo and
Tongon in the form of dorè, which we sell under agreement to a refinery. Under these agreements,
we receive the ruling gold price on the day after dispatch, less refining and freight costs, for
the gold content of the dorè gold. We have only one customer with whom we have an agreement to
sell all of our gold production. The customer is chosen periodically on a tender basis from a
selected pool of accredited refineries and international banks to ensure competitive refining and
freight costs. Unlike other precious metal producers, gold mines do not compete to sell their
product given that the price is not controlled by the producers.
PROPERTY
Our operational mining area is comprised of Morila operations of 200 square kilometers, the
Loulo mining permit of 372 square kilometers and the Tongon project located within the 751 square
kilometer Nielle exploitation permit. Our exploration permits are detailed above.
We also lease offices in London, Dakar, Abidjan, Bamako, Ouagadougou, Mwanza, Accra,
Johannesburg, Jersey, Kinshasa and Entebbe.
LEGAL PROCEEDINGS
In August 2004, we entered into a fixed lump sum turnkey contract for $63 million for the
design, supply, construction and commissioning of the Loulo processing plant and infrastructure
with MDM Ferroman (Pty) Ltd, or MDM. At the end of 2005, after making advances and additional
payments to MDM totaling $26 million in excess of the contract, we determined that MDM was unable
to perform its obligations under the MDM Contract, at which time we enforced a contractual remedy
which allowed us to act as our own general contractor and to complete the remaining work on the
Loulo project that was required under the MDM Contract.
We believe that we are entitled to recover certain amounts from MDM, including advances of
$10.7 million included in receivables as at December 31, 2010. Of this amount, $7 million is
secured by performance bonds and the remainder is secured by various personal guarantees and other
assets. In January 2009 and 2010, the liquidator declared and paid dividends of $1.6 million from
the insolvent estate, leaving an outstanding balance of $10.7 million (stated net of an impairment
provision of $1.3 million) as at December 31, 2010.
As part of our efforts to recoup the monies owed to us, MDM was put into liquidation on
February 1, 2006. This resulted in a South African Companies Act Section 417 investigation into
the business and financial activities of MDM, its affiliated companies and their directors. This
investigation was completed in the last quarter of 2007 and the liquidators issued their report
that confirms that MDMs liabilities exceeded its assets. During the second quarter of 2011 we will
be involved in arbitration proceedings with the providers of the performance bonds, which have been
the subject of legal proceedings in the South African Courts.
Recovery of the other $47.2 million is dependent on the extent to which the groups claim is
accepted by the liquidators and the amount in the free residue. The ultimate outcome of this claim
cannot be determined at present. The financial statements do not reflect any adjustment to the
cost of the Loulo development that may arise from this claim, or any additional income that may
arise
from the claim for damages, or any charge that may arise from MDMs inability to settle amounts
that are determined to be payable by MDM to the group in respect of the Loulo development.
As of December 31, 2010, we had approximately $366.4 million of cash and cash equivalents. In
addition, we had available-for-sale financial assets with a carrying value of approximately $15.9
million. The available-for-sale financial assets consists primarily of an investment in 6 million
Volta Resources Inc. shares with a market value at year end of $14.4 million.
Other than as disclosed above we are not party to any material legal or arbitration
proceedings, nor is any of our property the subject of pending material legal proceedings.
56
HEALTH AND SAFETY REGULATIONS
Mali
The primary laws, regulations and standards governing Safety and Health in our Malian operations
are as follows:
|
|
|
Law 1992-020 Code du travail (the Labor Code); |
|
|
|
|
Ordonnance No. 99-032 le code minier, Ordonnance 200-013 le code minier modifications
2000 (the Mining Code); |
|
|
|
|
Decree No. 91-278 / PM-RM Approving the Establishment Agreement Covering Research and
Mining in the Republic of Mali (the Decree) |
|
|
|
|
Code de la Sécurité (INPS Institute National de Prevoyance Social); |
|
|
|
|
Social du Mali (Social Security Code); |
|
|
|
|
Convention Collective (National Collective Agreement for the Mining Industry). |
Labor Code
The Labor Code provides generally for the following:
|
|
|
General provision for protection, prevention and hygiene, |
|
|
|
|
Dangerous goods handling, |
|
|
|
|
Employer responsibility regarding safety and health (implementation of safety
system), |
|
|
|
|
Labor inspector duty (control of employer safety system) |
|
|
|
|
Injury notification to Labour Inspector within 48 hours, |
|
|
|
|
Requirement to ensure medical service on site, and |
|
|
|
|
Medical leave (up to 12 months) and medical separation compensation. |
|
|
|
|
Establishment of a Joint Management and employees health and safety committee, |
Mining Code
The Mining Code provides generally for an Occupational Health and Safety Committee (Joint
management and employee safety committee), PPE, safety guide, emergency procedure, means of
education and sensitization, employees obligation regarding occupational health.
The Decree
The Decree provides generally for the following:
|
|
|
Must carry out research or mining work to ensure the safety and health of the public, |
|
|
|
|
Must inform the local administrative authorities and the Director in the event of a
fatal accident or serious injury or any natural phenomenon which may have an adverse
effect on the safety of the area, the safety and hygiene of the personnel or
conservation of the mine, neighboring mines or public roads, |
|
|
|
|
In the case of imminent danger or an accident, the local administrative authorities
and the Director may requisition the necessary material and personnel to alleviate the
danger, at the expense of the mining company, |
Code de la Sécurité (INPS
Institute National de Prevoyance Social)
The Code de la
Sécurité provides generally for the following:
|
|
|
Requirement to have medical service on work site for occupational health and primary
health care purposes, |
|
|
|
|
Requirement for pre-employment medical check, |
|
|
|
|
Requirement for periodical medical check of employees, |
|
|
|
|
Requirement for general hygiene (ablutions, change house, potable water, workplace) |
57
|
|
|
Protection against injury, environmental pollutants, occupational disease), |
|
|
|
|
Ergonomic conditions, |
|
|
|
|
Notification of occupational disease to the employer by the occupational health
practitioner |
|
|
|
|
Requirement for first aid training for one employee per section of work or shift, |
|
|
|
|
Requirement for compensation in case of debilitating injury, occupational disease, |
|
|
|
|
Requirement for notifying injury and or occupational disease to INPS/Labor
inspection, and |
|
|
|
|
Redeployment of employee following injury and/or occupational disease. |
Morila and Loulo have a Hygiene and Security Committee made up of elected labor and specialist
management representatives, as outlined in the respective labor code. This committee designates,
from its members, a consultative technical sub-committee charged with the elaboration and
application of a concerted policy of improvement of health and security conditions at work. Its
composition, attributions and operational modalities are determined by legal provisions and
regulations.
The chairman of this committee coordinates monthly committee meetings, sets the agendas with
his secretariat, monitors resolutions and signs off on committee determinations.
The committees secretariat ensures under the supervision of the chairman that:
|
|
|
follow-up activities such as action resulting from the regular surveys and inspections
are carried out; and |
|
|
|
|
health and safety manuals and updates are distributed, posters are posted on notice
boards and safety committee minutes and reports are distributed. |
|
|
Each mines medical officer sits on the Hygiene and Security Committee and advises on the
following: |
|
|
|
working conditions improvements; |
|
|
|
|
general hygiene on the operation; |
|
|
|
|
ergonomics; |
|
|
|
|
protection of workers safety in the workplace; and |
|
|
|
|
medical checks and eye and ear testing. |
The Hygiene and Security Committee forms, from within its membership, two consultative
commissions, the Commission of Inquiry and the Educational Commission. The Commission of Inquiry:
|
|
|
investigates accidents and makes recommendations to avoid repetitions; |
|
|
|
|
ensures plant, machinery and equipment have adequate protection to avoid injury; and |
|
|
|
|
updates and revises safety and health manuals. |
|
|
The Educational Commission: |
|
|
|
provides information and training on safe practices and potential risks; |
|
|
|
|
provides first aid training; |
|
|
|
|
administers and promotes the safety suggestion scheme; and |
58
|
|
|
explains, where necessary, the contents of the safety and health manual. |
All employees are covered by the states social security scheme and our medical reimbursement
scheme, that reimburses a large portion of expenses related to medical treatment and medicines.
Dental and optical expenses are also covered to 50%.
No post-employment medical aid liability exists for the group.
Côte dIvoire
The primary laws, regulations and standards governing Safety and Health in our Côte dIvoire
operations is the Mining Code (95-553) of July 15, 1995.
The Mining Code provides generally for the following:
|
|
|
Any individual or legal entity carrying out works for prospecting or mining mineral
substances is required to undertake such works in a way that the safety of the people
and goods is assured, |
|
|
|
|
Must adopt and comply with internal regulations concerning safety and specific
hygiene measures, subject to approval by the Mining Authority, |
|
|
|
|
Any accident in a mine or quarry or in their dependencies and any identified cause
of accident must be reported to the Mining Authority as soon as possible, and |
|
|
|
|
In case of impending danger or accident in a mine, mining engineers and other
authorized agents of the Mining Authority must take all necessary measures, at the
expense of the individual or legal entity, to stop the danger and prevent it from
occurring again. |
Safety Performance
Officials from the Labour Ministry, INPS and officials from the Ministry of Mines regularly visit
and audit our operations. Both Morila and Loulo have received safety awards and commendations from
INPS.
The national statistics in the countries of West Africa in which we operate are not generally
available, with only fatalities cases and lost time/compensable injuries being reported.
Our safety programs are based on the outcome of the risk assessment and continual improvement
strategy. The statistical measures we use to monitor our performance, such as LTIFR, are based on
international good practice (OHSAS 18001) which we believe is the most accepted by our peers and
best standard specification for such statistics.
We are progressing with the implementation of occupational health and safety assessment series
OHSAS 18001 at all of our operations as part of our health and safety strategy to continuously
improve safety in our operations.
59
C. ORGANIZATIONAL STRUCTURE
The following table identifies our subsidiaries and joint venture and our percentage ownership
in each subsidiary:
|
|
|
|
|
Countries of Incorporation |
|
% effective |
Name of Company |
|
ownership |
Jersey |
|
|
|
|
Randgold Resources Limited |
|
|
|
|
Randgold Resources (Burkina) Limited |
|
|
100 |
|
Randgold Resources (Côte dIvoire) Limited |
|
|
100 |
|
Randgold Resources (Kibali) Limited |
|
|
100 |
|
Randgold Resources (Mali) Limited |
|
|
100 |
|
Randgold Resources (Senegal) Limited |
|
|
100 |
|
Randgold Resources (Somilo) Limited |
|
|
100 |
|
Randgold Resources T1 Limited |
|
|
100 |
|
Randgold Resources T2 Limited |
|
|
100 |
|
Randgold Resources (Jersey) Limited |
|
|
100 |
|
Randgold Resources (Gounkoto) Limited |
|
|
100 |
|
Mining Investments (Jersey) Limited |
|
|
100 |
|
Morila Limited |
|
|
50 |
|
Moto (Jersey) 1 Limited |
|
|
100 |
|
Moto (Jersey) 2 Limited |
|
|
100 |
|
RAL 1 Limited |
|
|
50 |
|
Kibali (Jersey) Limited |
|
|
50 |
|
Kibali 2 (Jersey) Limited |
|
|
50 |
|
Kibali Services Limited |
|
|
50 |
|
Australia |
|
|
|
|
Moto Goldmines Australia (Pty) Limited |
|
|
50 |
|
Border Energy (Pty) Limited |
|
|
50 |
|
Westmount Resources NL |
|
|
50 |
|
Border Resources NL |
|
|
50 |
|
Burkina Faso |
|
|
|
|
Randgold Resources Burkina Faso SARL |
|
|
100 |
|
Canada |
|
|
|
|
Moto Goldmines Limited |
|
|
50 |
|
0858065 B.C. Limited |
|
|
50 |
|
Côte dIvoire |
|
|
|
|
Randgold Resources (CôtedIvoire) SARL |
|
|
100 |
|
Société des Mines de Tongon SA |
|
|
89 |
|
Democratic Republic of Congo |
|
|
|
|
Kibali Goldmines S.P.R.L. |
|
|
45 |
|
Mali |
|
|
|
|
Randgold Resources Mali SARL |
|
|
100 |
|
Société des Mines de Morila SA |
|
|
40 |
|
Société des Mines de Loulo SA |
|
|
80 |
|
Kankou Moussa SARL |
|
|
75 |
|
South Africa |
|
|
|
|
Seven Bridges Trading 14 (Pty) Limited |
|
|
100 |
|
Tanzania |
|
|
|
|
Randgold Resources Tanzania (T) Limited |
|
|
100 |
|
The Netherlands |
|
|
|
|
Kibali Cooperatief UA |
|
|
50 |
|
Uganda |
|
|
|
|
Border Energy East Africa (Pty) Limited |
|
|
50 |
|
United Kingdom |
|
|
|
|
Randgold Resources (UK) Limited |
|
|
100 |
|
60
D. PROPERTY, PLANT AND EQUIPMENT
For a discussion of our principal properties, including mining rights and permits, see Item
4. Information on the Company A. History and Development of the Company and Item 4.
Information on the Company B. Business Overview. We have all material legal rights necessary
to entitle us to exploit such deposits in respect of the Morila mine in Mali to April 2022, Loulo
in Mali to 2029 and Tongon in Côte dIvoire to 2020.
The exploration permits in Côte dIvoire, Mali, Senegal, Burkina Faso and DRC give us the
exclusive right for a fixed time period, which is open to renewal, to prospect on the permit area.
Once a discovery is made, we, as the permit holder, then commence negotiations with the
respective governments as to the terms of the exploration or mining concession. Depending on the
country, some of the terms are more open to negotiation than others, but the critical areas which
can be agreed to are the governments interest in the mine, taxation rates and taxation holidays,
repatriation of profits and the employment of expatriates and local labor.
Item 4A. Unresolved Staff Comments
None.
Item 5. Operating and Financial Review and Prospects
Statements in this Annual Report concerning our business outlook or future economic
performance; anticipated revenues, expenses or other financial items; and statements concerning
assumptions made or expectations as to any future events, conditions, performance or other matters,
are forward-looking statements as that term is defined under the United States Federal securities
laws. Forward-looking statements are subject to risks, uncertainties and other factors which could
cause actual results to differ materially from those stated in such statements. Factors that could
cause or contribute to such differences include, but are not limited to, those set forth under
Item 3. Key Information D. Risk Factors in this Annual Report as well as those discussed
elsewhere in this Annual Report and in our other filings with the Securities and Exchange
Commission.
General
We earn substantially all of our revenues in US dollars and a large proportion of our costs
are denominated or based in US dollars, excluding the Morila mining contract which is partially
denominated in Euros. We also have South African Rand, Communauté Financière Africaine franc,
Congolese franc and Pound Sterling denominated costs, which are primarily wages and material
purchases.
Impact of Malian Economic and Political Environment
We are a Jersey incorporated company and are subject to income tax at a rate of zero percent in Jersey. Our
current significant operations are located in Mali and are therefore subject to various economic,
fiscal, monetary and political policies and factors that affect companies operating in Mali, as
discussed under Item 3. Key Information D. Risk Factors Risks Relating to Our Operations.
Impact of Favorable Tax Treaties
We are subject to income tax at a rate of zero percent in Jersey. Somilo SA benefited from a five year tax holiday
until November 7, 2010. Tongon SA also benefits from a five year tax holiday in Cote dIvoire
which commenced on December 1, 2010. The benefit of the tax holidays to the group was to increase
its net profit by $30.2 million, $26.7 million, and $9 million for the years ended December 31,
2010, 2009, and 2008, respectively.
Under Malian tax law, income tax is based on the greater of 35% of taxable income or 0.75% of
gross revenue. Under Ivorian tax law, income tax is based on the greater of 25% of taxable income
or 0.5% of gross revenue.
61
The Morila, Loulo and Tongon operations have no assessable capital expenditure carry forwards
or assessable tax losses, as at December 31, 2010 and 2009 respectively, for deduction against
future mining income.
Revenues
Substantially all of our revenues are derived from the sale of gold. As a result, our
operating results are directly related to the price of gold. Historically, the price of gold has
fluctuated widely. The gold price is affected by numerous factors over which we have no control.
See Item 3. Key Information D. Risk Factors Risks Relating to Our Operations The
profitability of our operations, and the cash flows generated by our operations, are affected by
changes in the market price for gold which in the past has fluctuated widely.
We have followed a hedging strategy the aim of which is to secure a minimum price which is
sufficient to protect us in periods of significant capital expenditure and debt finance, while at
the same time allowing significant exposure to the spot gold price. Accordingly, we have made use
of hedging arrangements. Under the terms of the Morila project loan, we were required to hedge 50%
of approximately 36% of Morilas first 5 years of production. The last remaining hedges were
closed out during 2004.
Our prior financing arrangements for the development of Loulo included provisions for gold
price protection. Although the facility was fully repaid in December 2007, these instruments were
in place until the last remaining hedges were delivered into during 2010. The group is now fully
exposed to the spot gold price on gold sales.
Significant changes in the price of gold over a sustained period of time may lead us to
increase or decrease our production, which could have a material impact on our revenues.
Our Realized Gold Price
The following table sets out the average, high and low afternoon London Bullion Market fixing
price of gold and our average US dollar realized gold price during the years ended December 31,
2010, 2009, and 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
2010 |
|
2009 |
|
2008 |
Average |
|
|
1,224 |
|
|
|
972 |
|
|
|
871 |
|
High |
|
|
1,421 |
|
|
|
1,213 |
|
|
|
1,011 |
|
Low |
|
|
1,058 |
|
|
|
810 |
|
|
|
712 |
|
Average realized gold price |
|
|
1,180 |
(1) |
|
|
893 |
(1) |
|
|
792 |
(1) |
|
|
|
(1) |
|
Our average realized gold price differs from the average gold price as a result of the timing
of our gold deliveries and different realized prices achieved on the hedge book. |
Costs and Expenses
Our operations currently comprise three operations. Mining operations at both Loulo and
Tongon are being conducted by contractors and managed by the company. Morila is currently
processing stockpiles only as mining ceased in April 2009. Milling operations are undertaken by
the groups own employees. Total cash costs in the year ended December 31, 2010 as defined by
guidance issued by the Gold Institute made up approximately 78% of total costs and expenses and
comprised mainly mining and milling costs, including labor and consumable stores costs. Consumable
stores costs include diesel and reagent costs. Contractor costs represented 46% of total cash
costs, with diesel and reagent costs making up 25% of total cash costs. Direct labor costs
accounted for approximately 5% of total cash costs. For a definition of total cash costs, please
refer to Item 3 Key Information.
The price of diesel for the Loulo, Morila and Tongon operations were consistent from 2009 to
2010. Should prices increase, this could significantly impact total cash costs mainly as a result
of the high volume of diesel consumed to generate power and to run the mining fleet. A significant
portion of the costs at Loulo and Morila are denominated in CFA and therefore costs are exposed to
fluctuations in the Euro/dollar exchange rate. The Euro weakened slightly against the dollar
during 2010. The remainder of our total
62
costs and expenses consists primarily of amortization and
depreciation, exploration costs, exchange losses, interest expense and general administration or
corporate charges.
Looking Forward
Despite the challenges of 2010 our four year organic growth profile remains
intact. Assuming the situation in the Côte dIvoire does not impact upon operations much longer,
the group forecast production for 2011 is 750,000 to 790,000 ounces which is a 70% increase on
2010. On an equity attributable basis this equates to approximately 640,000 to 670,000 ounces
compared to 373,706 ounces in 2010.
Considering the situation in the Côte dIvoire and given the ongoing remedial work planned for
the Yalea underground in the first quarter, as well as the anticipated contribution from Gounkoto
starting in July, the production forecast is skewed towards the second half of the year.
Notwithstanding the additional non-cash adjustments relating to the Morila stockpiles, management
is targeting total cash costs per ounce for the group, after royalties and taxes, of less than
$600/oz for 2011, assuming current prevailing oil price and Euro-Dollar exchange rates, which
movements have a significant impact on operating costs. Continued growth in production over the
following four years is forecast from increasing grades out of Loulo, Gara and Gounkoto with Kibali
adding to production in 2014. Consequently, on the back of this forecast increase in grade, the
group total cash costs based on current prevailing input cost parameters, are forecast to reduce to
the lower $400/oz range over the same period.
Given our exploration success, exploration expenditure is expected to remain high in
the coming year. Significant capital expenditure will also be incurred across the group as part of
our planned growth in production, including on the Massawa feasibility project in Senegal, targeted
to be concluded by the end of the year, and at Kibali in the DRC, where the mine construction
start-up is targeted for mid-year. At Gounkoto, capital expenditure will be focused on the first
six months of the year, leading up to production anticipated to start in the second half of the
year. Capital expenditure at Loulo will be focused on the Yalea and Gara
underground mine developments as well as the plant upgrade as part of the Gounkoto start-up. Total
group capital expenditure for 2011 is anticipated to be approximately $310 million.
We continue to maintain our focus on organic growth through discovery and
development of world class orebodies, and have a pipeline of high quality projects and exploration
targets. Notwithstanding this core strategy, management routinely reviews corporate and asset
acquisition opportunities, focused on gold in Africa.
Critical Accounting Policies
Our significant accounting policies are more fully described in note 2 to our consolidated
financial statements. Some of our accounting policies require the application of significant
judgment by management in selecting the appropriate assumptions for calculating financial
estimates. By their nature, these judgments are subject to an inherent degree of uncertainty and
are based on our historical experience, terms of existing contracts, managements view on trends in
the gold mining industry and information from outside sources.
Management believes the following critical accounting policies, among others, affect the more
significant judgments and estimates used in the preparation of our consolidated financial
statements and could potentially impact our financial results and future financial performance.
Joint Venture Accounting
We account for our investment in joint ventures by incorporating our proportionate share of
the joint ventures assets, liabilities, income, expenses and cash flows in the consolidated
financial statements under appropriate headings. Should this method of accounting not be permitted
in the future, the results of each joint venture would need to be equity accounted. This would
require the recognition in the consolidated statement of comprehensive income, on a separate line,
of our share of the joint ventures profit or loss for the year. Our interest in the joint venture
would be carried on the statement of financial position at an amount which would reflect our share
of the net assets of the joint venture.
This would result in a presentation of our statement of financial position and statement of
comprehensive income that differs significantly from the current presentation, but would have no
impact on our net income or our net asset value.
63
Depreciation and Amortization of Mining Assets
Depreciation and amortization charges are calculated using the units of production method and
are based on tonnes processed through the plant as a percentage of total expected tonnes to be
processed over the lives of our mines. A unit is considered to be produced at the time it is
physically removed from the mine. The lives of the mines are based on proven and probable reserves
as determined in accordance with the Securities and Exchange Commissions industry guide number 7.
The estimates of the total expected future lives of our mines could be materially different from
the actual amounts of gold mined in the future and the actual lives of the mines due to changes in
the factors used in determining our mineral reserves. These factors could include: (i) an
expansion of proven and probable reserves through exploration activities; (ii) differences between
estimated and actual cash costs of mining, due to differences in grade, metal recovery rates and
foreign currency exchange rates; and (iii) differences between actual gold prices and gold price
assumptions used in the estimation of reserves. Such changes in reserves could similarly impact
the useful lives of assets depreciated on a straight-line basis, where those lives are limited to
the life of the mine, which in turn is limited to the life of the proven and probable reserves.
Valuation of Long-Lived Assets
Management compares the carrying amounts of property, plant and equipment to the recoverable
amount of the assets whenever events or changes in circumstances indicate that the net book value
may not be recoverable. In determining if the asset can be recovered, we compare the recoverable
amount to the carrying amount. If the carrying amount exceeds the recoverable amount, we will
record an impairment charge in profit or loss to write down the asset to the recoverable amount.
The recoverable amount is assessed by reference to the higher of value in use (being the net
present value of expected future cash flows of the relevant case generating unit) and fair value
less cost to sell. To determine the value in use amount, management makes its best estimate of
the future cash inflows that will be obtained each year over the life of the mine and discounts the
cash flow by a rate that is based on the time value of money adjusted for the risk associated with
the applicable project. In estimating future cash flows, assets are grouped at the lowest level
for which there is identifiable cash flows that are largely independent of future cash flows from
other asset groups.
With the exception of mine-related exploration potential, all assets at a particular operation are
considered together for purposes of estimating future cash flows.
These reviews are based on projections of anticipated future cash flows to be generated by
utilizing the long-lived assets. While management believes that these estimates of future cash
flows are reasonable, different assumptions regarding projected gold prices and production costs as
discussed above under depreciation and amortization of mining assets could materially affect the
anticipated cash flows to be generated by the long-lived assets. The ability to achieve the
estimated quantities of recoverable minerals from exploration stage mineral interests involves
further risks in addition to those factors applicable to mineral interests where proven and
probable reserves have been identified, due to the lower level of confidence that the identified
mineralized material can ultimately be mined economically.
Environmental Rehabilitation Costs
We provide for environmental rehabilitation costs and related liabilities based on our
interpretations of current environmental and regulatory standards with reference to World Bank
guidelines. Final environmental rehabilitation obligations are estimated based on these
interpretations and in line with responsible programs undertaken by similar operations elsewhere in
the world. While management believes that the environmental rehabilitation provisions made are
adequate and that the interpretations applied are appropriate, the amounts estimated may differ
materially from the costs that will actually be incurred to rehabilitate our mine sites in the
future.
Exploration and evaluation costs
We expense all exploration and evaluation expenditures until the directors conclude that a
future economic benefit is more likely than not of being realized, i.e. probable. While the
criteria for concluding that an expenditure should be capitalized are always probable, the
information that the directors use to make that determination depends on the level of exploration.
Exploration and evaluation expenditure on greenfield sites, being those where we do not have
any mineral deposits which are already being mined or developed, is expensed until such time as our
directors have sufficient information to determine that future economic benefits are probable,
after which the expenditure is capitalized as a mine development costs. The information required
by directors is typically a final feasibility study, however, a prefeasibility study may be deemed
to be sufficient where the additional work required to prepare a final feasibility study is not
significant.
64
Exploration and evaluation expenditure on brownfield sites, being those adjacent to mineral
deposits which are already being mined or developed, is expensed as incurred until our directors
are able to demonstrate that future economic benefits are probable through the completion of a
prefeasibility study, after which the expenditure is capitalized as a mine development cost. A
prefeasibility study consists of a comprehensive study of the viability of a mineral project that
has advanced to a stage where the mining method, in the case of underground mining, or the pit
configuration, in the case of an open pit, has been established, and which, if an effective method
of mineral processing has been determined, includes a financial analysis based on reasonable
assumptions of technical, engineering, operating economic factors and the evaluation of other
relevant factors. The prefeasibility study, when combined with existing knowledge of the mineral
property that is adjacent to mineral deposits that are already being mined or developed, allow the
directors to conclude that it is more likely than not that the group will obtain future economic
benefit from the expenditures.
Exploration and evaluation expenditure relating to extensions of mineral deposits which are
already being mined or developed, including expenditure on the definition of mineralization of such
mineral deposits, is capitalized as a mine development cost following the completion of an economic
evaluation equivalent to a prefeasibility study. This economic evaluation is distinguished from a
prefeasibility study in that some of the information that would normally be determined in a
prefeasibility study is instead obtained from the existing mine or development. This information
when combined with existing knowledge of the mineral property already being mined or developed
allow our directors to conclude that more likely than not we will obtain future economic benefit
from the expenditures. Costs relating to property acquisitions are also capitalized within
development costs.
Receivables
Receivables are recognized initially at fair value. There is a rebuttable presumption that
the transaction price is fair value unless this could be refuted by reference to market indicators.
Subsequently, receivables are measured at amortized cost using the effective interest method, less
provision for impairment. A provision for impairment of trade receivables is established when
there is objective
evidence that we will not be able to collect all amounts due according to the original terms of
receivables. Significant financial difficulties of the debtor, probability that the debtor will
enter bankruptcy or financial reorganization, and default or delinquency in payments are considered
indicators that the trade receivable is impaired.
The amount of the provision is the difference between the assets carrying amount and the
present value of estimated future cash flows, discounted at the effective interest rate. The
amount of the provision is recognized in the statement of comprehensive income.
Share-based payments
The fair value of the employee services received in exchange for the grant of options or
restricted shares is recognized as an expense. The total amount to be expensed over the vesting
period is determined by reference to the fair value of the options or restricted shares determined
at the grant date, including any market performance conditions and excluding the impact of any
service and non-market performance vesting conditions (for example profitability, sales growth
targets and remaining an employee of the entity over a specified time period). Non-market vesting
conditions are included in assumptions about the number of options that are expected to become
exercisable or the number of shares that the employee will ultimately receive. This estimate is
revised at each statement of financial position date and the difference is charged or credited to
the statement of comprehensive income, with a corresponding adjustment to equity. Market
performance conditions are included in the fair value assumptions on the grant date with no
subsequent adjustment. The proceeds received on exercise of the options net of any directly
attributable transaction costs are credited to equity. When the options are exercised, the company
issues new shares. The proceeds received net of any directly attributable transaction costs are
credited to share capital (nominal value) and share premium when the options are exercised.
Mineral properties
Mineral properties acquired are recognized at fair value at the acquisition date. Mineral
properties are tested annually for impairment on the same basis that property, plant and equipment
are when there is an indication of impairment. Mineral properties will be amortized on a units of
production basis when the related mine commences production.
Recent accounting pronouncements
The group and company have adopted the following standards, amendments to standards and
interpretations which are effective for the first time this year. Their impact is discussed below.
Those standards, amendments to standards and interpretations that are
65
effective for the first time
this year but have no impact on the group, and are not expected to have an impact in the future,
have not been included below:
Amendments to IFRIC 9 and IAS 39: Embedded Derivatives (effective for annual periods beginning on
or after 30 June 2009).
This amendment clarifies the treatment of embedded derivatives in host contracts that are
reclassified out of fair value through profit or loss following the changes introduced by the
Amendments to IAS 39 and IFRS 7: Reclassification of Financial Instruments. This has not had an
impact on the group in the current year but may have an impact in future.
Revised IFRS 3: Business Combinations (effective for annual periods beginning on or after 1 July
2009).
The basic approach of the existing IFRS 3 to apply acquisition accounting in all cases and
identify an acquirer is retained in this revised version of the standard. It also includes much of
the current guidance for the identification and recognition of intangible assets separately from
goodwill. However, in some respects the revised standard may result in very significant changes,
including: The requirement to write off all acquisition costs to profit or loss instead of
including them in the cost of investment; the requirement to recognize an intangible asset even if
it cannot be reliably measured; and, an option to gross up the statement of financial position for
goodwill attributable to minority interests (which are renamed non-controlling interests). The
revised standard does not require the restatement of previous business combinations. This has not
had an impact on the group in the current year but may have an impact in future.
Amendment to IAS 27: Consolidated and Separate Financial Statements (effective for annual periods
beginning on or after 1 July 2009).
This amendment affects in particular the acquisition of subsidiaries achieved in stages and
disposals of interests, with significant differences in the accounting depending on whether or not
control is obtained as a result of the transaction, or where a transaction
results only in a change in the percentage of a controlling interest. The amendment does not
require the restatement of previous transactions. This has not had an impact on the group in the
current year but may have an impact in future.
Amendment to IAS 39: Financial Instruments Recognition and Measurement: Eligible Hedged Items
(effective for annual periods beginning on or after 1 July 2009).
This amendment clarifies how the principles that determine whether a hedged risk or portion of
cash flows is eligible for designation should be applied in the designation of a one-sided risk in
a hedged item, and inflation in a financial hedged item. This has not had an impact on the group
or company in the current year but may have an impact in future.
Improvements to IFRSs: 2010 (effective for annual periods beginning on or after 1 January 2010).
The improvements in this amendment clarify the requirements of IFRSs and eliminate
inconsistencies within and between standards. This has not had a significant impact on the group.
Amendments to IFRS 2: Group Cash-settled Share-based Payment Transactions (effective for annual
periods beginning on or after 1 January 2010).
This amendment clarifies that, where a parent (or another group entity) has an obligation to
make a cash-settled share-based payment to another group entitys employees or suppliers, the
entity receiving the goods or services should account for the transaction as equity-settled. The
amendment also moves the IFRIC 11 requirements in respect of equity-settled share-based payment
transactions among group entities and the clarification of the scope of IFRS 2 contained within
IFRIC 8 into IFRS 2 itself. This has not had an impact on the group in the current year but may
have an impact in future.
The following standards, amendment to standards and interpretations which have been recently
issued or revised have not been adopted early by the group or company but may have an impact in the
future; their expected impact is discussed below. Standards, amendments to standards and
interpretations that are not expected to impact the group, are not included below.
Classification of Rights Issues (Amendment to IAS 32) (effective for annual periods beginning on or
after 1 February 2010).
66
This Amendment addresses the accounting for rights issues (rights, options or warrants) that
are denominated in a currency other than the functional currency of the issuer. Previously such
rights issues were accounted for as derivative liabilities. However, the Amendment requires that,
provided the entity offers the rights, options or warrants pro rata to all of its existing owners
of the same class of its own non-derivative equity instruments, such rights issues are classified
as equity regardless of the currency in which the exercise price is denominated. This will be
applied in the year ending 31 December 2011 but is not expected to have an immediate impact on the
group.
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments (effective for annual periods
beginning on or after 1 July 2010).
This Interpretation addresses transactions in which an entity issues equity instruments to a
creditor in return for the extinguishing of all or part of a financial liability. Broadly, it
applies to transactions where the two parties are acting only in their capacity as lender and
borrower. It does not address the appropriate treatment for the creditor and does not apply to
arrangements in which liabilities are extinguished in return for equity instruments in accordance
with the original terms of the financial liability. For transactions within its scope, where the
whole liability is extinguished, the Interpretation requires the equity instruments issued to be
measured at their fair value and the difference between that fair value and the carrying value of
the financial liability extinguished to be recognized in profit or loss. Where only part of the
financial liability is extinguished, some allocation of the consideration between the extinguished
portion of the liability and the part of the liability that remains outstanding may be required.
This will be applied in the year ending 31 December 2011 but is not expected to have an immediate
impact on the group.
Revised IAS 24 Related Party Disclosures (effective for annual periods beginning on or after 1
January 2011).
The revision to IAS 24 is in response to concerns that the previous disclosure requirements
and the definition of a related party were too complex and difficult to apply in practice,
especially in environments where government control is pervasive. The revised standard addresses
these concerns by:
|
|
Providing a partial exemption for government related entities Until now, if a government
controlled, or a significantly influenced, an entity, the entity was required to disclose
information about all transactions with other entities controlled, or significantly influenced
by the same government. The revised Standard requires such entities to disclose information
about individually and collectively significant related party transactions only. |
|
|
Providing a revised definition of a related party The structure of definition of a
related party has been simplified and inconsistencies eliminated. Illustrative examples have
also been added. The revised definition will mean that some entities will have more related
parties for which disclosures will be required. The entities that are most likely to be
affected are those that are part of a group that includes both subsidiaries and associates,
and entities with shareholders that are involved with other entities. |
This will be applied in the year ending 31 December 2011 but is not expected to have an immediate
impact on the group.
Improvements to IFRSs (2010) (effective for annual periods beginning on or after 1 January 2011).
The improvements in this Amendment clarify the requirements of IFRSs and eliminate
inconsistencies within and between Standards. The changes include amendments to:
|
|
IFRS 3 (Revised 2008) Business combinations including: (i) Clarification that the
treatment of contingent consideration arising in business combinations occurring before the
effective date of IFRS 3(R) continues to be treated under the old requirements. (ii) Limiting
the choice to measure non-controlling interests at a proportionate share in recognized amounts
of the acquirees identified net assets to present ownership interests with other components
of the non-controlling interest being measured at fair value. (iii) The inclusion or otherwise
in the cost of investment of replacement share-based payment awards provided to employees of
the acquiree. |
|
|
IFRS 7 Financial instruments: Disclosures including clarification that an entity should
provide qualitative disclosures in the context of quantitative disclosures to enable users to
link related disclosures and hence form an overall picture of the nature and extent of risks
arising from financial instruments. |
|
|
IAS 1 (Revised 2007) Presentation of financial statements clarifying that the analysis of
components of other comprehensive income in the statement of changes in equity may be
presented in a note. |
67
|
|
IAS 34 Interim financial reporting clarifying the disclosures required in respect of
significant events and transactions during the period. |
Improvements to IFRSs (2010) also made minor amendments to the wording of IFRIC 13 Customer
loyalty programs regarding the valuation of award credits and the transitional arrangements for
amendments to IAS 21 The effects of changes in foreign exchange rates and IAS 28 Investments in
associates in respect of the loss of control or significant influence which were introduced by IAS
27 (as amended 2008) Consolidated and separate financial statements. This will be applied in the
year ending 31 December 2011 but is not expected to have an immediate impact on the group.
Disclosures Transfers of Financial Assets (Amendments to IFRS 7) (effective for annual periods
beginning on or after 1 July 2011).
This Amendment requires the disclosure of information in respect of all transferred financial
assets that are not derecognized and for any continuing involvement in a transferred asset,
existing at the reporting date, irrespective of when the related transfer transaction occurred.
The disclosures are intended to enable users of financial statements: (a) to understand the
relationship between transferred financial assets that are not derecognized in their entirety and
the associated liabilities; and (b) to evaluate the nature of, and risks associated with, the
entitys continuing involvement in derecognized financial assets.
These enhanced disclosures are likely to affect, among others, entities that have debt
factoring arrangements. These amendments are not yet endorsed by the EU. This will be applied in
the year ending December 31, 2012 but is not expected to have an immediate impact on the group.
Deferred Tax: Recovery of Underlying Assets (Amendments to IAS 12) (effective for annual periods
beginning on or after 1 January 2012).
IAS 12 requires an entity to measure the deferred tax relating to an asset depending on
whether the entity expects to recover the carrying amount of the asset through use or sale. It can
be difficult and subjective to assess whether recovery will be through use or through sale when the
asset is measured using the fair value model in IAS 40 Investment Property. The amendment provides
a practical solution to the problem by introducing a presumption that recovery of the carrying
amount will, normally, be through sale. As a result of the amendments, SIC-21 Income Taxes -
Recovery of Revalued Non-Depreciable Assets would no longer apply to investment properties carried
at fair value. The amendments also incorporate into IAS 12 the remaining guidance previously
contained in SIC-21, which is accordingly withdrawn. These amendments are not yet endorsed by the
EU. This will be applied in the year ending December 31, 2012 but is not expected to have an
immediate impact on the group.
IFRS 9 Financial Instruments (effective for annual periods beginning on or after 1 January 2013).
IFRS 9 will eventually replace IAS 39 in its entirety. However, the process has been divided
into three main components: Classification and measurement; impairment; and, hedge accounting. As
each phase is completed, it will delete the relevant portions of IAS 39 and create new chapters in
IFRS 9.
To date IFRS 9 addresses only the classification and measurement of financial instruments.
The requirements for financial assets are that they should be:
|
|
Classified on the basis of the entitys business model for managing the financial assets
and the contractual cash flow characteristics of the financial asset; |
|
|
measured at amortized cost if it meets two conditions: (a) The entitys business model is
to hold the financial asset in order to collect the contractual cash flows; and, (b) the
contractual terms of the asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principle outstanding; and, |
|
|
subsequently measured at amortized cost or fair value depending on the business model of
the entity and the terms of the instrument. |
Hybrid contracts with a host that is within the scope of IFRS 9 (i.e. a financial host) must
be classified in its entirety in accordance with the classification approach stated above. This
eliminates the existing IAS 39 requirements to separately account for an embedded derivative and a
host contract. The embedded derivative requirements under IAS 39 continue to apply where the host
contract is a non-financial asset and for financial liabilities.
68
The requirements for classifying and measuring financial liabilities are mostly unchanged from
those set out in IAS 39.
IFRS 9 includes an accounting policy choice allowing investments in equity instruments to be
measured at fair value through other comprehensive income. This is an irreversible election made,
on an instrument by instrument basis, at the date of initial recognition. Where this option is not
taken, all equity instruments with the scope of IFRS 9 will be classified as fair value through
profit or loss. Irrespective of the policy choice made, dividends received on equity instruments
will always be recognized in profit or loss. Subsequent reclassification of financial assets
between the amortized cost and fair value categories is permitted only when an entity changes its
business model for managing its financial assets. The held to maturity and available for sale
classifications have been eliminated. This standard has not yet been endorsed by the EU. This
will be applied in the year ending 31 December 2013. We will review the impact on the group closer
to the date of implementation, but it is currently expected that it will result in a
reclassification of available for sale assets.
Our operating and financial review and prospects should be read in conjunction with our
consolidated financial statements, accompanying notes thereto, and other financial information
appearing elsewhere in this Annual Report.
Years Ended December 31, 2010 and 2009
Total revenue
Total revenues from gold sales for the year ended December 31, 2010 increased by $51.8
million, or 12%, from $432.8 million to $484.6 million. This is mainly due to a 32% increase in
the average gold price received from $893/oz in 2009 to $1,180/oz in 2010,
partially offset by a 15% decrease in group ounces sold to 413,262 in 2010, mainly due to a
decrease in grade at Loulo, which is expected to improve in 2011.
Other Income
Other income of $22.6 million for the year ended December 31, 2010 compared to $9 million for
the year ended December 31, 2009. Other income includes a profit of $19.3 million (2009: $10.7
million) in respect of the sale of 15.5 million Volta Resources shares. The amount recognized in
2009 relates to the profit realized on the sale of the Kiaka project in Burkina Faso.
Costs and Expenses
Total Cash Costs
The following table sets out our total ounces sold and total cash cost and production cost per
ounce sold for the years ended December 31, 2010 and 2009:
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Year Ended December 31, |
|
|
|
|
|
|
2010 |
|
2009 |
|
|
Ounces sold |
|
$ Per Ounce |
|
Ounces sold |
|
$ Per Ounce |
Morila (40% share) cash costs |
|
|
95,443 |
|
|
|
669 |
|
|
|
136,664 |
|
|
|
480 |
|
Loulo (100% share) cash costs |
|
|
313,122 |
|
|
|
712 |
|
|
|
351,591 |
|
|
|
522 |
|
Tongon (100% share) cash costs |
|
|
4,698 |
|
|
|
459 |
|
|
|
|
|
|
|
|
|
Total ounces (sold) |
|
|
413,263 |
|
|
|
|
|
|
|
488,255 |
|
|
|
|
|
Group total cash costs* |
|
|
|
|
|
|
699 |
|
|
|
|
|
|
|
510 |
|
|
Total production costs per ounce under IFRS |
|
|
|
|
|
|
767 |
|
|
|
|
|
|
|
569 |
|
|
|
|
* |
|
For a definition of cash costs, please see Item 3. Key Information A. Selected Financial
Data. |
|
|
|
Total production cost includes total cash costs and also the depreciation and amortization cost
which is discussed below. Total cash cost per ounce has been restated following the change in the
bases for these calculations. Refer to page 9 for more information. |
69
Total cash costs for the year ended December 31, 2010 of $289 million increased by 16% from
2009, mainly due to increased mining costs at Loulo primarily due to increased open pit mining
costs resulting from deepening pits, revised mining rates and general cost increases in reagents
and other consumables. Cash costs also increased at Morila during 2010, due to the continued
impact of processing lower grade ore. The total cash costs per ounce of $699/oz increased by 37%
year on year.
Royalties increased by $2.3 million, or 9%, to $27.7 million for the year ended December 31,
2010 from $25.4 million for the year ended December 31, 2009. The increased royalties reflect the
higher average gold price received.
Other mining and processing costs comprise various expenses associated with providing on mine
administration support services to the Morila, Loulo and Tongon mines. These charges amounted to
$20.6 million for the year ended December 31, 2010 and $19.1 million for the year ended December
31, 2009. The increase in other mining and processing costs also reflect the commencement of
operations at the Tongon mine towards the end of 2010.
Depreciation and Amortization
Depreciation and amortization of $28.1 million for the year ended December 31, 2010 is
consistent with the depreciation of $28.5 million that was charged for the year ended December 31,
2009. This includes depreciation charged at Loulo, Morila and Tongon since production commenced at
Tongon in the fourth quarter of 2010.
Exploration and Corporate Expenditure
Exploration and corporate expenditure was $47.2 million for the year ended December 31, 2010
and $51.1 million for the year ended December 31, 2009. Following the successful completion of
prefeasibility studies at the Massawa project in Senegal (now at feasibility stage) and the
Gounkoto project in Mali (now in construction), a higher proportion of expenditure was capitalized
in 2010. During 2010, $2.5 million and $1.4 million were expensed for Massawa and Gounkoto,
respectively, before these projects moved into feasibility stage and expenses thereon could be
capitalized as per our accounting policies. In 2009, $14.3 million and $1.8 million were expensed
on the Massawa and Gounkoto project, respectively.
Other expenses
Other expenses for the year ended December 31, 2010 of $14.1 million mainly comprised
operational foreign exchange losses of $13.4 million. Other expenses for the year ended December
31, 2009 of $0.24 million consisted of an increase in the loss related to the ineffective portion
of hedging contracts. All gold price forward sales contracts were delivered into during the year.
Finance Income
Finance income amounts consist primarily of interest received on cash held at banks of $1.3
million (2009:$1.9 million). Finance income of $3.4 million for the year ended December 31, 2009
also included a net foreign exchange gain of $1.6 million. The decrease in finance income was due
to lower cash balances during 2010 compared to 2009.
Finance costs
Finance costs for the year ended December 31, 2010 was $5.3 million compared to finance costs
for the year ended December 31, 2009 of $1.9 million. Finance costs for the year ended December
31, 2010 included net foreign exchange losses on financing activities of $3.6 million, while a net
foreign exchange gain of $1.6 million was achieved during the year ended December 31, 2009 and
included in finance income.
Provision for financial assets
The auction rate securities (ARS) have now been disposed following a settlement that was
reached in relation to these investments. The gain on settlement was $13 million. During 2009, we
made a provision of $9.6 million against these assets.
70
Income Tax Expense
The income tax expense amounted to $24.5 million for the year ended December 31, 2010 and
$21.5 million for the year ended December 31, 2009. The increase in the tax expense is the result
of the expiration of the Loulo tax exoneration period in November 2010. Morila SA benefited from a
five year tax holiday until November 14, 2005. Loulo SA also benefited from a five year tax
holiday in Mali until November 7, 2010. Tongon SA benefits from a five year tax holiday in Cote
dIvoire from December 1, 2010. Under Malian tax law, income tax is based on the greater of 35%
taxable income or 0.75% of gross revenue. Under Ivorian tax law, income tax is based on the
greater of 25% of taxable income or 0.5% of gross revenue.
Non-controlling interests
The non-controlling interests for the year ended December 31, 2010 represent the Malian
governments 20% share of the profits at Loulo since production commenced in November 2005, the
Ivorian governments 10% share and other outside shareholders 1% share of the profits at Tongon
since production commenced in November 2010 and Sokimos 5% share of Kibali. We have 45% interest
in Kibali, but as we gross proportionally consolidate our interest, as at December 31, 2009 we
recognized 50% of Kibali and a 5% non-controlling interest.
Years Ended December 31, 2009 and 2008
Total revenue
Total revenues from gold sales for the year ended December 31, 2009 increased by $94.2
million, or 28%, from $338.6 million to $432.8 million. This is mainly due to a 14% increase in
attributable ounces sold to 486,324 ounces year on year, as well as an increase in the average gold
price received of $101/oz from $792/oz in 2008 to $893/oz in 2009.
Other Income
Other income of $9.0 million for the year ended December 31, 2009 compared to $4.2 million for
the year ended December 31, 2008. Other income for 2009 included management fees received from
Morila ($2 million net of eliminations) since we assumed operations of the mine from February 15,
2008 (2008: $2 million). Other income also included a profit of $10.7 million (2008: $0) realized
on the sale of the Kiaka project in Burkina Faso. This was partially offset by foreign exchange
losses included in other income during 2009.
Costs and Expenses
Total Cash Costs
The following table sets out our total ounces produced and total cash cost and production cost
per ounce for the years ended December 31, 2009 and 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
|
|
|
|
2009 |
|
|
|
|
|
|
2008 |
|
|
|
Ounces |
|
|
$ Per Ounce |
|
|
Ounces |
|
|
$ Per Ounce |
|
Morila (40% share) cash costs |
|
|
136,664 |
|
|
|
480 |
|
|
|
170,331 |
|
|
|
400 |
|
Loulo (100% share) cash costs |
|
|
349,660 |
|
|
|
525 |
|
|
|
259,382 |
|
|
|
512 |
|
Total ounces (attributable sales) |
|
|
486,324 |
|
|
|
|
|
|
|
427,713 |
|
|
|
|
|
Group total cash costs* |
|
|
|
|
|
|
512 |
|
|
|
468 |
|
|
|
|
|
Total production costs per ounce under IFRS |
|
|
|
|
|
|
571 |
|
|
|
517 |
|
|
|
|
|
|
|
|
* |
|
For a definition of cash costs, please see Item 3. Key Information A. Selected Financial
Data. |
|
|
|
Total production cost includes total cash costs and also the depreciation and amortization cost
which is discussed below. Total cash cost per ounce has been restated following the change in the
bases for these calculations. Refer to page 9 for more information. |
71
Total cash costs for the year ended December 31, 2009 of $249.2 million increased by 25% from
2008, mainly due to the incremental increases associated with higher production, increased open
cast mining costs at Loulo and the full transitioning of Morila into a stockpile treatment
operation. The total cash costs per ounce of $510/oz increased by 9% year on year.
Royalties increased by $5.7 million, or 29%, to $25.4 million for the year ended December 31,
2009 from $19.7 million for the year ended December 31, 2008. The increased royalties reflect
increased gold sales and a higher gold price received.
Other mining and processing costs comprise various expenses associated with providing on mine
administration support services to the Morila and Loulo mine. These charges amounted to $19.1
million for the year ended December 31, 2009 and $13.7 million for the year ended December 31,
2008. The increase in other mining and processing costs also reflect the increase in operating
activity at Loulo resulting from the development of the underground mines.
Depreciation and Amortization
Depreciation and amortization of $28.5 million for the year ended December 31, 2009 compares
to $21.3 million for the year ended December 31, 2008. This includes depreciation charged at both
operations. The increase in depreciation year on year is a result of the increase in capital
expenditure at Loulo as a result of the development of the underground mines and the amortization
of the capital items in use during 2009. Capital expenditure at Tongon has not attracted
depreciation during 2009, as the mine development is currently in the construction phase.
Exploration and Corporate Expenditure
Exploration and corporate expenditure was $51.1 million for the year ended December 31, 2009,
and $45.2 million for the year ended December 31, 2008. The increase during 2009 was due to the
increase in exploration expenditure during the year as a result of continued commitment to
exploration and prefeasibility drilling, especially at the Massawa project in Senegal.
Other expenses
Other expenses for the year ended December 31, 2009 of $0.24 million and $0.36 million for the
year ended December 31, 2009 both consisted of an increase in the loss related to the ineffective
portion of hedging contracts.
Finance Income
Finance income amounts consist primarily of interest received on cash held at banks ($1.9
million), as well as exchange gains on financing activities ($1.6 million). Finance income of $3.4
million for the year ended December 31, 2009 compared to $9.3 million for the year ended December
31, 2008. The decrease in finance income was due to a lower effective interest rate for 2009
(0.35%) compared to 2008 (2.7%). This was partially offset by higher cash balances during 2009
compared to 2008, resulting from the $329.7 million capital raising that was concluded in August
2009.
Finance costs
Finance costs for the year ended December 31, 2009 was $1.9 million compared to finance costs
for the year ended December 31, 2008 of $3.3 million. Finance costs for the year ended December
31, 2008 included net foreign exchange losses on financing activities of $1.3 million, while a net
foreign exchange gain of $1.6 million was achieved during the year ended December 31, 2009 and
included in finance income.
Provision for financial assets
At the end of 2007, we transferred $49.0 million from cash and cash equivalents to
available-for-sale financial assets which were attributable to our portfolio of ARS. The trading
market for these instruments became substantially illiquid as a result of the
conditions in the credit markets. During 2009, following the continued deterioration of the
underlying credit ratings of the collateral of certain of the ARS, we provided $9.6 million
(2008: $10.4 million) against these assets, and the assets were reclassified into the
non-current section of available-for-sale financial assets during 2008.
72
Income Tax Expense
The income tax expense amounted to $21.5 million for the year ended December 31, 2009 and
$24.6 million for the year ended December 31, 2008. The decrease in the tax expense is the result
of a decrease in profit before tax at Morila. Morila SA benefited from a five year tax holiday
until November 14, 2005. Loulo SA also benefits from a five year tax holiday in Mali. The tax
holiday commenced on November 8, 2005. Under Malian tax law, income tax is based on the greater of
35% taxable income or 0.75% of gross revenue.
Non-controlling interests
The non-controlling interests for the years ended December 31, 2009 and December 31, 2008
represent the Malian Governments 20% share of the profits at Loulo since production commenced in
November 2005 and Sokimos share of Kibali. We have 45% interest in Kibali, but as we gross
proportionally consolidate our interest, as at December 31, 2009 we recognized 50% of Kibali and a
5% non-controlling interest.
B. LIQUIDITY AND CAPITAL RESOURCES
Cash Resources
The group had $366.4 million cash and cash equivalents for the year ended December 31, 2010
and $589.7 million for the year ended December 31, 2009.
Operating Activities
Net cash generated from operating activities was $107.8 million for the year ended December
31, 2010 and $63.7 million for the year ended December 31, 2009. The $44.1 million increase was
due mainly to the changes in operating working capital items. Cash flows related to receivables
increased by $26.4 million during 2010, due to the settlement of TVA balances at Loulo and Morila,
the settlement of contractor receivables and improved debtor management. Cash flows related to
inventories and ore stockpiles decreased significantly during 2010 by $61.4 million, due to the
Tongon stockpiles now being included following commencement of mining activities in 2010, as well
as significant dore balances on hand at Tongon at year end ($11.3 million). Cash flows related to
trade and other payables increased by $10.8 million from December 31, 2009 to December 31, 2010,
mainly due to the effect of additional contractors and accruals at the Tongon mine at year end.
Net cash generated from operating activities was $63.7 million for the year ended December 31,
2009 and $57.5 million for the year ended December 31, 2008. The $6.2 million increase was due
mainly to the changes in operating working capital items, offset by movements in the actual tax
paid for 2009 compared to 2008. Cash flows related to trade and other payables increased
significantly ($25.6 million) from December 31, 2008 to December 31, 2009, mainly due to the timing
of payments of creditors. Cash flows related to receivables decreased by $73.7 million during 2009
and increased by $8.6 million during 2008, mainly as a result of the timing of receipts of gold
sales and loans made to contractors.
Net cash provided by operating activities was $57.5 million for the year ended December 31,
2008 and $62.2 million for the year ended December 31, 2007. The $4.7 million decrease was mainly
the result of the changes in operating working capital items, as well as movements in the actual
tax paid for 2008 compared to 2007.
Investing
Investing activities for the year ended December 31, 2010 utilized $410.8 million compared to
$196.7 million utilized for the year ended December 31, 2009 and consisted primarily of expenditure
related to bringing the Tongon mine into production of $232.7 million, expenditure incurred on the
Yalea and Gara underground developments, the plant expansion and the power plant at Loulo amounting
to $86.9 million and $33.2 million related to the Kibali project.
Investing activities for the year ended December 31, 2009 utilized $82.4 million compared to
$85 million utilized for the year ended December 31, 2008. Investing activities in 2009 consisted
primarily of expenditures incurred on the underground development work at Loulo amounting to $74
million at Yalea and Gara, crusher upgrade stockpile reclaim facility, overland conveyer
expenditure, power plant expansion and the oxygen plant expansion at Loulo. Capital expenditure at
Tongon included costs related to earthworks, site establishment, infrastructure, design and
engineering, as well as progress payments on the mills, crushers and fleet amounting to $120
million. Investing activities also includes the acquisition of the Moto group as well as the
acquisition of a further 10% interest in
73
the Kibali project amounting to $56 million. The overall net cash inflow in respect of the
acquisition of Moto and Kibali was $114 million as a result of the joint agreement with AngloGold
in which they paid cash for their share of the acquisition.
Financing
Financing activities for the year ended December 31, 2010 generated $14 million. This
comprised $30.6 million received on exercise of share options offset by a dividend payment of $15.3
million and repayment of long term loans of $1.3 million.
Financing activities for the year ended December 31, 2009 generated $350.8 million. This
comprised mainly of the proceeds from our equity placement in July 2009 ($329.7 million) less a
payment of dividends to our shareholders amounting to $10 million. $32.6 million was further
received on the exercise of share options during 2009.
Credit and Loan Facilities
During the year ended December 31, 2000, Morila entered into a finance lease for five
Rolls-Royce generators under the terms of a Deferred Terms Agreement between Morila and
Rolls-Royce. The lease is repayable over ten years commencing April 1, 2001 and bears interest at
a variable rate which at December 31, 2010 was approximately 38% (2009: 38%) per annum. Our
attributable share of this finance lease obligation amounted to $0.2 million at December 31, 2010
and $1.1 million at December 31, 2009. We have guaranteed the repayment of the lease.
Morila had a finance lease with Air Liquide relating to three oxygen generating units. The
lease was fully repaid in 2010.
Somilo SA has a $0.6 million loan from the Government of Mali. This loan is uncollateralized
and bears interest at the base rate of the Central Bank of West African States plus 2% per annum.
The accrual of interest ceased in the last quarter of 2005 per mutual agreement between
shareholders. This loan is repayable from cash flows of the Loulo mine after the repayment of all
other loans.
The Loulo project finance loan was arranged by NM Rothschild & Sons Limited and SG Corporate &
Investment Banking, who were joined in the facility by Absa Bank and HVB Group, and was repaid in
December 2007.
The Loulo project finance facility was replaced in May of 2007 with a $60 million corporate
revolving credit facility to Randgold Resources (Somilo) Limited. The facility was with NM
Rothschild, Société Générale, Fortis and Barclays. It carried interest at rates of between LIBOR +
1.4% and LIBOR + 1.6%. The facility was fully repaid in December 2007. The corporate facility was
cancelled during the year, ended December 31, 2009.
Loulo had a Euro denominated Caterpillar finance facility relating to fifteen 3512B HD
generator sets and ancillary equipment purchased from JA Delmas and financed by a loan from
Caterpillar Finance. The lease was payable quarterly over 42 months commencing on August 1, 2005,
and bore interest at a fixed rate of 6.03% per annum. Together with Randgold Resources (Somilo)
Limited, we jointly guaranteed the repayment of this lease. The average lease payments of $0.5
million were payable in installments over the term of the lease.
Corporate, Exploration, Development and New Business Expenditures
Our expenditures on corporate, exploration, development and new business activities for the
past three years are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
$000 |
|
Area |
|
2010 |
|
|
2009 |
|
|
2008 |
|
Rest of Africa |
|
|
498 |
|
|
|
430 |
|
|
|
200 |
|
Burkina Faso |
|
|
558 |
|
|
|
653 |
|
|
|
1,886 |
|
Mali |
|
|
3,432 |
|
|
|
3,484 |
|
|
|
4,334 |
|
Tanzania |
|
|
97 |
|
|
|
236 |
|
|
|
1,105 |
|
Côte dIvoire |
|
|
4,203 |
|
|
|
2,360 |
|
|
|
2,129 |
|
Senegal |
|
|
2,210 |
|
|
|
14,330 |
|
|
|
4,768 |
|
Ghana |
|
|
85 |
|
|
|
336 |
|
|
|
846 |
|
|
|
|
|
|
|
|
|
|
|
Total exploration expenditure |
|
|
11,083 |
|
|
|
21,829 |
|
|
|
15,268 |
|
|
|
|
|
|
|
|
|
|
|
74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
$000 |
|
Area |
|
2010 |
|
|
2009 |
|
|
2008 |
|
Corporate expenditure |
|
|
36,095 |
|
|
|
29,282 |
|
|
|
29,895 |
|
|
|
|
|
|
|
|
|
|
|
Total exploration and corporate expenditure |
|
|
47,178 |
|
|
|
51,111 |
|
|
|
45,163 |
|
The Group has various exploration programs, ranging from substantial to early stage in Mali,
Senegal, Burkina Faso, Côte dIvoire and the Democratic Republic of the Congo.
Working Capital
Management believes that our working capital resources, by way of internal sources are
sufficient to fund our currently foreseeable future business requirements.
C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
We are not involved in any research and development and have no registered patents or licenses.
D. TREND INFORMATION
Our financial results are subject to the movement in gold prices. In the past fiscal year,
the general trend has been upwards and this has had an impact on revenues. However it should be
noted that fluctuations in the price of gold remain a distinct risk to us.
Gold Market
The gold market is relatively liquid compared with many other commodity markets, with the
price of gold generally quoted in US dollars. The physical demand for gold is primarily for
fabrication purposes, and gold is traded on a world-wide basis. Fabricated gold has a variety of
uses, including jewelry, electronics, dentistry, decorations, medals and official coins. In
addition, central banks, financial institutions and private individuals buy, sell and hold gold
bullion as an investment and as a store of value.
Historically, gold has been used as a store of value because it tends to retain its value in
relative terms against basic goods in times of inflation and monetary crisis. Therefore, large
quantities of gold in relation to annual mine production are held for this purpose. This has meant
that, historically, the potential total supply of gold has been far greater than annual demand.
Thus, while current supply and demand play some part in determining the price of gold, this does
not occur to the same extent as for other commodities.
Instead, gold prices have been significantly affected, from time to time, by macro-economic
factors such as expectations of inflation, interest rates, exchange rates, changes in reserve
policy by central banks, and global or regional political and economic crises. In times of
inflation, currency devaluation, and political and economic crises, gold has traditionally been
seen as refuge, leading to increased purchases of gold and a support for the price of gold.
Interest rates affect the price of gold on several levels. High real interest rates increase
the cost of holding gold, and discourage physical buying in developed economies. High Dollar
interest rates also make hedging by forward selling attractive because of the higher contango
premiums (differential between LIBOR and gold lease rates) obtained in the forward prices.
Increased forward selling in turn has an impact on the spot price at the time of sale.
Changes in reserve policies of central banks have affected the gold market and gold price on
two levels. On the physical level, a decision by a central bank to decrease or to increase the
percentage of gold in bank reserves leads to either sales or purchases of gold, which in turn has a
direct impact on the physical market for the metal. In practice, sales or purchases by central
banks have often involved substantial tonnages within a short period of time and this
selling/buying can place strong pressure on the markets at the time they occur. As important as
the physical impact to official sales, announcements of rumors of changes in central bank policies
which might lead to the sale of gold reserves historically had an effect on market sentiment and
encouraged large speculative positions against gold in the futures market for the metal.
75
The volatility of gold prices is illustrated in the following table, which shows the
approximate annual high, low and average of the afternoon London Bullion Market fixing price of
gold in Dollars for the past ten years.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price Per Ounce ($) |
|
Year |
|
High |
|
|
Low |
|
|
Average |
|
2001 |
|
|
293 |
|
|
|
256 |
|
|
|
271 |
|
2002 |
|
|
349 |
|
|
|
278 |
|
|
|
310 |
|
2003 |
|
|
416 |
|
|
|
320 |
|
|
|
363 |
|
2004 |
|
|
454 |
|
|
|
375 |
|
|
|
409 |
|
2005 |
|
|
537 |
|
|
|
411 |
|
|
|
444 |
|
2006 |
|
|
725 |
|
|
|
525 |
|
|
|
604 |
|
2007 |
|
|
841 |
|
|
|
608 |
|
|
|
695 |
|
2008 |
|
|
1,011 |
|
|
|
712 |
|
|
|
871 |
|
2009 |
|
|
1,213 |
|
|
|
810 |
|
|
|
972 |
|
2010 |
|
|
1,421 |
|
|
|
1,058 |
|
|
|
1,224 |
|
2011 (through February) |
|
|
1,411 |
|
|
|
1,319 |
|
|
|
1,364 |
|
E. OFF-BALANCE SHEET ARRANGEMENTS
None.
F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
Our contractual obligations and commercial commitments consist primarily of credit facilities,
as described below. The related obligations as at December 31, 2010 are set out below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
than 1 |
|
|
1-3 |
|
|
3-5 |
|
|
More than |
|
|
|
Total |
|
|
Year |
|
|
Years |
|
|
Years |
|
|
5 Years |
|
Contractual Obligations |
|
(dollars in thousands) |
|
Capital lease obligations(1) |
|
|
334 |
|
|
|
334 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease obligations |
|
|
2,624 |
|
|
|
328 |
|
|
|
656 |
|
|
|
656 |
|
|
|
984 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Environmental rehabilitation |
|
|
29,564 |
|
|
|
67 |
|
|
|
953 |
|
|
|
4,812 |
|
|
|
23,732 |
|
Loans from minority shareholders in subsidiaries |
|
|
2,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contractual cash obligations |
|
|
35,240 |
|
|
|
729 |
|
|
|
1,609 |
|
|
|
5,468 |
|
|
|
27,434 |
|
Contracts for capital expenditure |
|
|
85,008 |
|
|
|
85,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes total interest of $0.1 million calculated at the interest rate existing at year
end. |
Item 6. Directors, Senior Management and Employees
A. DIRECTORS AND SENIOR MANAGEMENT
Our Articles of Association provide that the board must consist of no less than two and no
more than 20 directors at any time. During January 2010, Dr. K. Dagdelen was appointed as a
non-executive director. Mr. J.K. Walden resigned from the board on July 1, 2010. The board
currently consists of 8 directors.
Our Articles of Association provide that any new director should be re-elected by the
shareholders at the annual general meeting following the date of the directors appointment. As a
result of his appointment in January 2010, Dr. K. Dagdelen was re-elected at the annual general
meeting held on May 4, 2010, as required by our Articles of Association. At the annual general
meeting Mr. P. Liétard, Mr. R.I. Israel, Mr. N.P. Cole Jr and Dr. K. Voltaire were re-elected,
According to the Articles of Association, the board meets at intervals determined by the board
from time to time.
76
The address of each of our executive directors and non-executive directors is the address of
our principal executive offices, 3rd Floor, Unity Chambers, 28 Halkett Street, St.
Helier, Jersey, JE2 4WJ, Channel Islands.
Executive Directors
D. Mark Bristow (52) Chief Executive Officer. Chief executive since our incorporation, which was founded on his pioneering exploration work in West Africa. He has subsequently
led our growth through the discovery and development of world-class assets into a major gold mining
business with a market capitalization of more than $7 billion. He also played a significant part
in promoting the emergence of a sustainable mining industry in West Africa. A geologist with more
than 28 years experience in the mining industry and a PhD from Natal University, South Africa, he
has held board positions at a number of global mining companies and is currently a non-executive
director of Rockwell Resources International.
Graham P. Shuttleworth (42) Chief Financial Officer; Financial Director. Mr. Shuttleworth
joined us as Chief Financial Officer and Financial Director in July 2007 but has been associated
with the company since its inception, initially as part of the management team involved in our
listing on the London Stock Exchange in 1997, and subsequently as an advisor. A chartered
accountant, he was a managing director and the New York-based head of metals and mining for the
Americas in the global investment banking division of HSBC before taking his new position with us.
At HSBC he led or was involved in a wide range of major mining industry transactions, including our
Nasdaq listing, and subsequent equity offerings.
Non-Executive Directors
Philippe Liétard (62) Non-Executive Chairman; Chairman of the nomination and governance
committee. Mr. Liétard was managing director of the Global Natural Resources Fund from 2000 to
2003. Prior to July 2000, he was director of the Oil, Gas and Mining Department of the
International Finance Corporation. His experience in corporate and project finance with UBS, IFC
and the World Bank extends over 30 years, most of them in the minerals business and in Africa. Mr.
Liétard is now an independent consultant and a promoter of mining and energy investments. He was
appointed a director in February 1998 and chairman in November 2004. He is also a director of
CellMark AB of Sweden, the worlds largest independent marketer of forest products.
Norborne P. Cole (69) Senior Independent Non-Executive Director. Chairman of the remuneration
committee and member of the governance and nomination committee. Mr. Cole started working for the
Coca-Cola Company as a field representative in the USA in 1996 and advanced steadily through the
organization, becoming chief executive of Coca-Cola Amatil in Australia in 1994, a position he held
until 1998. Under his leadership, Coca-Cola Amatil grew into the second largest Coca-Cola bottler
in the world. Now based in San Antonio, Texas, he serves on the boards of a number of US
companies. He was appointed a director in May 2006.
Christopher L. Coleman (42) Non-Executive Director; member of the governance and nomination,
remuneration and audit committees. Mr. Coleman is co-head of banking and a managing director of NM
Rothschild, chairman of Rothschild Bank International in the Channel Islands and serves on a number
of other boards and committees of the Rothschild Group, which he joined in 1989. A BSc (Econ)
graduate from the London School of Economics, he served as a non-executive director of the Merchant
Bank of Central Africa from 2001 to 2008. He was appointed a director in November 2008.
Kadri Dagdelen (56) Non-Executive Director; Member of the audit committee. Dr. Dagdelen is a
professor and head of the Department of Mining Engineering at the Colorado School of Mines in the
US. He began his professional career as a mining engineer at Homestake Mining Co (now Barrick Gold
Corporation) and was the technical services manager when he left for academia in 1992. He holds a
PhD in Mining Engineering and an ME in Geostatistics and has been involved in numerous research and
consulting projects worldwide, also serving on the board of directors of the Society of Mining,
Exploration and Metallurgy in the US for six years and chairing other professional societies that
support the mining industry. He was appointed a director in January 2010.
Robert I. Israel (61) Non-Executive Director; Member of the governance and nomination
committee. He is currently the managing partner of One Stone Energy Partners, a private equity
fund. Until April 2000, a managing director of Schroder & Co Inc and head of its energy
department, and until 2010 he was a partner at Compass Advisers, LLP. He holds a BA from
Middlebury College and an MBA from Harvard Business School. His experience in corporate finance,
especially in the natural resources sector, extends over 30 years. He was appointed a director in
June 1997.
Karl Voltaire (60) Non-Executive Director; Chairman of the audit committee since May 5, 2009
and member of the remuneration committee. A graduate in mineral resources engineering from the
Ecole des Mines in Paris, he holds an MBA and a PhD in economics and finance from the University of
Chicago. He started his career as a mining engineer in Haiti and subsequently spent 23
77
years in the World Bank Group in Washington DC, the bulk of these at the International Finance
Corporation (IFC) where his last position was that of director of global financial markets.
Subsequently he was director of the Office of President at the African Development Bank. He was
the CEO of the Nelson Mandela Institution from 2005 to 2009, and is currently a member of the Board
of Trustees of the African University of Science and Technology. He was appointed a director in
May 2006.
Executive Officers
Luiz Correia (49) General Manager Tongon. A metallurgist with 25 years experience in the
gold mining industry, he has a BSc Eng as well as a BCom degree. He joined us in 2005 and in
2006 was appointed operations manager responsible for the mining, planning, processing, maintenance
and engineering functions at Loulo. He was recently appointed general manager of the Tongon mine
in Côte dIvoire, which is scheduled to be commissioned in the last quarter of 2010.
Edouard de Villiers (57) Group general manager mining. A mining engineer, he has 34
years experience in gold and base metal mining operations, mining contracting and consulting. He
joined us in December 2010, having executive responsibility for the groups rapidly expanding
mining operations in Africa. He brings a wealth of mining knowledge to the group.
David Haddon (53) General Counsel and Secretary. Having overseen our administrative
obligations from our incorporation in 1995, Mr. Haddon assumed full secretarial responsibility when
we became listed on the London Stock Exchange in July 1997. He has over 26 years of legal and
administrative experience. He assumed the responsibility as general counsel in January 2004. He
is a director of Seven Bridges Trading 14 (Pty) Limited.
Paul Harbidge (41) General Manager Exploration. Mr. Harbidge is a geologist with 17 years
experience, mainly in West Africa. He joined us in 2000 and was appointed exploration manager in
2004 and general manager exploration in November 2006.
Bill Houston (63) General Manager Human Capital and Social Responsibility. Mr. Houston
joined us in 1992 as group training and development manager and currently heads the human resources
function. He has 30 years of human resources experience. He is a director of Morila Ltd, Somilo
SA and Seven Bridges Trading 14 (Pty) Limited.
Willem Jacobs (52) General Manager Operations Central and East Africa. With a BPL(Hons)
and DCom he is a seasoned executive. Having served as a director of listed and private companies
in the areas of mining, engineering and manufacturing in Southern, Central and Eastern Africa for
the past 15 years, he joined the group in January 2010.
Amadou Konta (53) General Manager Loulo. Mr. Konta has a degree in civil engineering as
well as several management and project management qualifications. He was appointed mine foreman
and superintendent at Syama mine and served as mine manager from 1997. In 2001 he was promoted as
our construction manager in Mali and was appointed Loulo general manager on October 1, 2004.
Victor Matfield (46) General Manager Corporate Finance. Mr. Matfield is a chartered
accountant with 18 years experience in the mining industry. He was appointed corporate finance
manager in August 2001, prior to that he served as financial manager of the Syama mine and of the
Morila capital project. He is a director of Seven Bridges Trading 14 (Pty) Limited.
Philip Pretorius (47) Human Resources Executive. Joined us in 2008, bringing with him
22 years of human resources experience of which the last 14 years were spent exclusively dealing
with the West African gold mining industry. With a post-graduate diploma in management practice,
he has been involved in establishing various gold mining projects in Mali.
Chris Prinsloo (60) General Manager Commercial and Operations. Mr. Prinsloo was appointed
general manager commercial and operations in April 2009 and prior to that he was group commercial
and financial manager. He has 37 years of experience in the mining industry. He is a director of
Somilo SA, Morila SA, Tongon SA, Kankou Moussa SARL, RAL 1 Limited and Randgold Resources (UK) Ltd.
Rodney Quick (39) General Manager Evaluation and Environment. Mr. Quick is a geologist
with 17 years experience in the gold mining industry. Since joining us in 1996, he has been
involved in the exploration, evaluation and production phases of the Morila, Loulo and Tongon
deposits and was appointed the Somilo resource manager in 2006. He is now responsible for all
project development, evaluation and environmental issues.
78
Mahamadou Samaké (63) General Manager West Africa. Mr. Samaké is the general manager for
West Africa and is a director of our Malian subsidiaries. He was a professor of company law at the
University of Mali.
Ngolo Sanogo (48) General Manager Mali. Has a masters degree in economics from the
National School of Administration of Bamako as well as several management, accounting and financial
qualifications. Qualified as an auditor in 1992 before joining BHP Mali in 1995. Appointed
material manager in 1998 and management accountant in 2001 at the Syama mine. Following the sale
of Somisy SA in 2004, joined us as Mali financial controller. He was appointed Mali general
manager in March 2009.
John Steele (50) Technical and Capital Projects Executive. Mr. Steele has overseen the
capital expansion program at the Syama mine, and at the beginning of July 1998, assumed the
position of general manager capital projects for the group, overseeing the
construction of Morila. He is a director of Somilo SA and Morila Limited and is currently leading
the Tongon construction project.
Samba Touré (57) General Manager Operations: West Africa. Mr. Touré has a masters degree
in chemical engineering and geochemistry and was part of the team that set up Malis first research
laboratory for the mining and petroleum industries in 1985. As country manager for BHP Minerals,
he oversaw that companys exploration programs in West Africa. He joined Morila in 2000 and was
promoted to operations manager in 2004 and general manager in 2007.
Tania de Welzim (35) Chief Accounting Officer; Group Financial Manager. Ms. de Welzim was
appointed group financial manager in April 2009 and prior to that she was group financial
controller. She is a chartered accountant with 12 years experience in finance including nine
years in the mining industry. She is responsible for financial reporting in the group as well as
internal control procedures.
Lois Wark (55) Group Corporate Communications Manager. A member of our team since our
inception who assumed management of the cartography department in 1995, Ms. Wark is responsible for
the coordination of the groups communication and investor relations programs as well as for the
management of its South African subsidiary, Seven Bridges. She holds a diploma in land surveying:
cadastral and topographical.
Louis Watum (48) General Manager Kibali Gold Project; Country Manager DRC. A
metallurgist with 21 years experience in base metals, coal and gold processing, he has an MSc in
Chemical Engineering. He joined us in 2009 and was appointed general manager and
country manager responsible for: Building and leading the Kibali team; communicating with the DRC
government and local authorities; directing and managing Kibali business; and, delivering on
strategies, objectives and the Kibali business plan.
Our Articles of Association provide that the longest serving one-third of directors retire
from office at each annual general meeting. Retiring directors normally make themselves available
for re-election and are re-elected at the annual general meeting on which they retire. Our
officers who are also directors retire as directors in terms of the Articles of Association, but
their service as officers is regulated by standard industry employment agreements.
The date of appointment, date of expiration and length of service for each of our directors is
set forth in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of |
|
|
|
|
Date of |
|
Expiration |
|
Number of |
Director |
|
Appointment |
|
Term |
|
Years Served |
Executive |
|
|
|
|
|
|
|
|
|
|
|
|
D.M. Bristow |
|
|
8/05/95 |
|
|
|
5/03/11 |
* |
|
|
16 |
|
G.P. Shuttleworth |
|
|
7/01/07 |
|
|
|
5/03/11 |
* |
|
|
4 |
|
Non-Executive |
|
|
|
|
|
|
|
|
|
|
|
|
R.I. Israel |
|
|
6/12/97 |
|
|
|
5/03/11 |
* |
|
|
14 |
|
P. Liétard |
|
|
2/11/98 |
|
|
|
5/03/11 |
* |
|
|
13 |
|
N.P. Cole |
|
|
5/03/06 |
|
|
|
5/03/11 |
* |
|
|
6 |
|
K. Voltaire |
|
|
5/03/06 |
|
|
|
5/03/11 |
* |
|
|
6 |
|
C.L. Coleman |
|
|
11/03/08 |
|
|
|
5/03/11 |
* |
|
|
3 |
|
K. Dagdelen |
|
|
1/29/10 |
|
|
|
5/03/11 |
* |
|
|
1 |
|
|
|
|
* |
|
The UK Corporate Governance Code issued in June 2010 requires that all directors should stand for
re-election on an annual basis. |
79
None of our directors and executive officers was selected under any arrangements or
understandings between that director or executive officer and any other person. All of our
non-Executive directors are considered independent directors.
B. COMPENSATION
Our objective is to provide senior management, including executive directors, with a
competitive remuneration package which will attract and retain executives of the highest caliber
and will encourage and reward superior performance in the manner consistent with the interests of
our shareholders. The remuneration committees policies are designed to meet these objectives and
to ensure that the individual directors are fairly and responsibly rewarded for their respective
contributions to our performance.
We have no liability in respect of retirement provisions for executive directors. We do,
however, provide a vehicle in the form of a defined contribution fund into which employees,
including executive directors, may contribute for the purpose of providing for retirement. While
we make an annual contribution on behalf of our employees, we do not do so on behalf of our
executive directors.
Each executive director receives a basic salary. Executive directors do not receive any fees.
Executive directors are paid an annual bonus which is determined in accordance with set
performance criteria agreed between the executive directors and the board.
The fees paid to non-executive directors have remained unchanged since the 2010 annual general
meeting save for a proposal at the next annual general meeting, which proposes that the chairman,
in addition to the general retainer, which will remain unchanged, will receive a fee increasing
annually from $170,000 to $200,00 in addition to an additional award of 2,400 restricted shares per
annum. The fees paid to our non-executive directors, including the chairman, and are:
|
|
|
A general retainer to all non-executive directors of $50,000; |
|
|
|
|
An annual committee assignment fee per committee served: |
|
|
|
Audit committee $35,000; |
|
|
|
|
Remuneration committee $25,000; and |
|
|
|
|
Governance and Nomination committee $10,000. |
|
|
|
The chairman of a board committee to receive an additional premium to the committee
assignment fee of $15,000; |
|
|
|
|
The senior independent director, in addition to the general annual retainer but in lieu
of any committee assignment fee, to receive an additional $85,000; |
|
|
|
|
The non-executive chairman, in addition to the general annual retainer but in lieu of
any committee assignment fee, to receive an additional $200,000; |
|
|
|
|
An award to each director of restricted shares being 1,200 ordinary shares per year
and an additional award of 2,400 ordinary shares per year to the Non-executive chairman.
The shares are to vest over a three year period from the date of the award, being January
1, 2012. |
In the circumstances listed in paragraph (i) and (ii) below, a Director shall be entitled to
retain all his vested and unvested awards and all such awards shall vest immediately, if not
already vested, on the date on which the relevant event occurs:
(i) |
|
a change of control of the Company other than as a result of an internal reorganization or
restructuring such that the shareholdings in the Company and any acquiring company remain
substantially the same both before and after the relevant event. |
|
(ii) |
|
the Director ceasing to hold office after a minimum of three years service as a Director, in
the following circumstances: |
|
(a) |
|
resignation after a minimum of three years service as a Director; |
80
|
(b) |
|
giving notice to terminate his office under the terms of his appointment where
he has decided not to seek re-election as a director but has completed a minimum of
three years service as a Director; |
|
|
(c) |
|
not being re-elected as a director at a meeting of the Companys shareholders
where the Director has stood for re-election with board support; |
|
|
(d) |
|
injury, ill-health or disability proved to the satisfaction of the Board; |
|
|
(e) |
|
death. |
Where a Director ceases to hold office for any of the reasons specified in paragraphs (f) or (g)
below, the Director shall retain all his vested awards and the Board may in its absolute discretion
determine whether the Director may retain all or any of his unvested awards and the conditions of
vesting.
|
(f) |
|
termination of the Directors appointment by the Company other than where the
Director: |
|
(i) |
|
has committed any serious breach or (after warning in writing) any
repeated or continued material breach of his obligations to the Company (which
include an obligation not to breach his fiduciary duties); |
|
|
(ii) |
|
has been guilty of any act of dishonesty or serious misconduct or
any conduct which in the reasonable opinion of the Board tends to bring the
Director concerned or the Company into disrepute; or |
|
|
(iii) |
|
has been declared bankrupt or have made an arrangement or
composition for the benefit of his creditors; |
the Director ceasing to hold office for any reason other than a reason specified in
paragraphs (i), (ii) and (a) to (f) above.
A non-executive director must hold shares at least equal in value (as at the beginning of the
year) to the general annual retainer. A director would be granted three years in which to acquire
the required shareholding and this period could be extended by the unanimous approval of the
uninterested directors. If the number of shares were to fall below the threshold due to a fall in
the share price, no additional purchase of shares would be required. Except for Dr. K. Dagdelen,
who was appointed to the board in January 2010 and only obtained his first restricted shares with
effect from January 1, 2011, the remaining non-executive directors hold shares equal to the value
of the general annual retainer.
There is now a proposal that the requirement for executive directors to hold shares in the
company at least equal in value (as at the beginning of the year) of $50,000 has been amended and
it is now proposed, for approval by shareholders, that the executive directors should hold shares
equal to at least two times their base salary (being $1,500,000 per annum for Dr. D.M. Bristow and
£330,212 per annum for Mr. G. P. Shuttleworth). Both Dr. D.M. Bristow and Mr. G.P. Shuttleworth
hold shares at least equal in value to twice their base salary. New directors will be allowed three
years in which to acquire the required shareholding and this period may be extended at the
discretion of the remuneration committee.
In the past non-executive directors have been granted options to purchase our ordinary shares.
However, all options have been exercised by the respective non-executive directors. Details of
the options exercised by the non-executive directors are shown below.
On February 13, 2006 the second $30,000 award was allocated to each of the non-executive
directors for the purpose of acquiring restricted stock. The price of the restricted stock
calculation was the Nasdaq National Market closing price on February 10, 2006, or $17.11. In terms
of the policy, 584 shares were issued directly to each non-executive director and 1,169 shares were
held as restricted stock. Non-executive directors were issued the second tranche of 584 ordinary
shares on January 3, 2007 and the final balance was issued on January 1, 2008.
On January 3, 2007 the third $30,000 award was allocated to each of the non-executive
directors for the purpose of acquiring restricted stock. The price of the restricted stock
calculation was the Nasdaq Global Select Market closing price on January 3, 2007, or $22.37. In
terms of the policy 447 shares were issued directly to each non-executive director and 894 shares
were held as restricted stock. Non-executive directors were issued the second and third tranches
on January 1, 2008 and January 1, 2009, respectively.
81
On January 3, 2008, the fourth $30,000 award was allocated to each of the non-executive
directors for the purpose of acquiring restricted stock. The price of the restricted stock
calculation was the Nasdaq Global Select Market closing price on January 2, 2008, or $38.15. In
terms of the policy 262 shares were issued directly to each non-executive director and 524 shares
were held as restricted stock. Non-executive directors were issued the second tranche and the
third tranches on January 1, 2009 and January 1, 2010 respectively.
On January 1, 2009, the first award of 1,200 restricted shares was allocated to the
non-executive directors as approved by shareholders at our 2008 annual general meeting. The price
of the restricted stock calculation was the Nasdaq Global Select market closing price on January 2,
2009, or $43.92. In terms of the policy, 400 shares were issued directly to each non-executive
director and 800 shares were held as restricted stock. Non-executive directors were issued the
second tranche on January 1, 2010 and to the final tranche was issued on and January 1, 2011.
On January 1, 2010, the second award of 1,200 restricted shares was allocated to the
non-executive directors as approved by shareholders at our 2009 annual general meeting. The price
of the restricted stock calculation was the Nasdaq Global Select market closing price on January 4,
2010 or $82.25. In terms of the policy, 400 shares were issued directly to each non-executive
director and 800 shares are held as restricted stock. Non-executive directors were issued the
second tranche on January 1, 2011 and subject to agreed conditions, the final tranche will be
issued on January 1, 2012.
On January 1, 2011, the third award of 1,200 restricted shares was allocated to the
non-executive directors as approved by shareholders at our 2010 annual general meeting. This price
of the restricted stock calculation was the Nasdaq Global Select market closing price on January 3,
2011, or $81.60. In terms of the policy, 400 shares were issued directly to each non-executive
director and 800 shares are held as restricted stock. Non-executive directors will be issued the
second and third tranches subject to agreed conditions on January 1, 2012 and January 1, 2013,
respectively.
During the year ended December 31, 2010, the aggregate compensation paid or payable to our
directors and executive officers as a group was approximately $18 million, of which $10.7 million
was payable to directors and recognized as a remuneration expense.
The remuneration of the executive directors comprised:
|
|
|
Basic salary and benefits (fixed remuneration). |
|
|
|
|
An annual bonus opportunity. |
|
|
|
|
Participation in the Restricted Share Scheme, measuring performance over the longer term. |
The total executive directors remuneration for the year ended December 31, 2010, was $10.3
million (2009: $9.3 million).
Fixed remuneration comprises a basic salary, from which executive directors can elect to
contribute into a defined contribution pension scheme, and pay for certain other benefits such as
medical aid. Fixed remuneration normally represents less than 50% of the individuals remuneration
package (based on target performance and expected values of share awards).
Base salaries are determined by the committee, taking into account the performance of the
individual and pay practice among a comparable group of FTSE 100 companies as well as individual
companies in the mining industry. When setting base salaries, the committee also takes into
consideration executives personal commitment to extensive travel and time spent at the companys
operations overseas. This is considered critical in effective management of the companys
business.
Executive directors can elect to sacrifice up to 20% of their base salary to contribute to a
defined contribution provident fund. The company does not make any contribution to the fund.
Executive directors can elect to receive other benefits including, medical aid and group life
insurance. All such benefits are funded out of the executives base salary and are nonpensionable.
Where appropriate, executive directors may be provided with other benefits such as security
services for executives while travelling for work, social club fees to facilitate the entertainment
of business associates and professional association membership costs. All such benefits authorized
by the board are paid for by the company and end when the employee leaves the companys service,
for whatever reason.
82
Executive directors are eligible to receive an annual bonus, subject to the achievement
of stretching performance criteria. The performance criteria for 2010 focus on achieving
challenging strategic and financial targets that contribute to the creation of sustainable
shareholder value. The committee may make adjustments to the criteria used for measuring
performance on an annual basis taking into account the strategic objectives of the company for the
year.
Based on exceptional performance achieved against all targets during the 2010 financial year,
the remuneration committee determined that both Dr. D.M. Bristow and Mr. G.P. Shuttleworth should
receive their maximum annual bonus of $4.5 million and $800,000 respectively.
The companys policy is to incentivize executives over the long term by awarding shares under
the Restricted Share Scheme. Neither Dr. D.M. Bristow nor Mr. G.P. Shuttleworth participate in the
companys share option scheme. The Restricted Share Scheme was approved by shareholders on July
28, 2008. Awards are made periodically, generally not every year, at the discretion of the
committee.
The companys policy is that the shares awarded are normally expressed as a specific number of
shares, rather than a percentage of salary. The CEO received an award of 40,000 shares on January
1, 2010. The CFO will not receive an award in 2010. (Both executive directors received awards in
2009, as described below). Shares awarded under the scheme generally vest in three equal tranches
over a relevant three year period as specified at the date of award.
In 2009, the CEO received the following restricted share awards:
|
|
|
40,000 restricted shares with an award date of January 1, 2009. Two thirds vested on
January 1, 2010 and the remaining third was to vest on January 1, 2011. However, no
vesting occurred because the company TSR performance fell below that of the HSC Global
Gold Index over the performance period. The issue price of these shares was $43.26. |
|
|
|
|
40,000 restricted shares with an award date of January 1, 2009, one third vesting on
January 1, 2010, one third vesting on January 1, 2011 and the remaining third vesting on
January 1, 2012. The issue price of these shares was $43.26. |
In 2009, the CFO received 54,000 restricted shares at an issue price of $56.99. The first
tranche of the restricted shares vests on September 2, 2011, with the second and third tranches
vesting on September 2, 2012 and September 2, 2013, respectively.
The following tables set forth the aggregate compensation for each of the directors, firstly
the executive directors and secondly the non-executive directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Salary |
|
Annual Bonus |
|
Other Payments* |
|
Total** |
|
|
December 31, |
|
December 31, |
|
December 31 |
|
December 31, |
|
|
2010 ($) |
|
2009 ($) |
|
2010 ($) |
|
2009 ($) |
|
2010 ($) |
|
2009 ($) |
|
2010 ($) |
|
2009 ($) |
Executive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D.M. Bristow (CEO) |
|
|
1,500,000 |
|
|
|
1,250,000 |
|
|
|
4,400,000 |
|
|
|
3,750,000 |
|
|
|
1,730,400 |
|
|
|
2,626,000 |
|
|
|
7,730,400 |
|
|
|
7,626,000 |
|
G.P. Shuttleworth (CFO) |
|
|
509,901 |
|
|
|
424,047 |
|
|
|
800,00 |
|
|
|
400,000 |
|
|
|
1,244,444 |
|
|
|
821,933 |
|
|
|
2,554,345 |
|
|
|
1,645,980 |
|
TOTAL |
|
|
2,009,901 |
|
|
|
1,674,047 |
|
|
|
5,300,000 |
|
|
|
4,150,000 |
|
|
|
2,974,844 |
|
|
|
3,447,933 |
|
|
|
10,284,745 |
|
|
|
9,271,980 |
|
|
|
|
* |
|
Other payments include expenses for restricted share award, which have been costed in
accordance with IFRS 2 based on the valuation at the date of grant. Performance is measured
against the HSBC Global Gold Index for each tranche of the restricted share awards. No
vesting occurred on January 1, 2011, in respect of Dr. D. M. Bristows shares over the past 12
month period, as the companys performance fell below that of the HSBC Global Gold Index over
the performance period, however, $1.7 million is still included in the figures above for Dr.
D. M. Bristow, in line with the accounting requirements. |
|
** |
|
The total remuneration disclosed in our Annual Report on Form 20-F for the year ended
December 31, 2010 was therefore $11,084,745. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees |
|
|
Other Payments* |
|
|
Total |
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
2010 ($) |
|
|
2009 ($) |
|
|
2010 ($) |
|
|
2009 ($) |
|
|
2010 ($) |
|
|
2009 ($) |
|
Non-Executive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. Liétard |
|
|
220,000 |
|
|
|
220,000 |
|
|
|
98,700 |
|
|
|
52,704 |
|
|
|
318,700 |
|
|
|
272,704 |
|
B.H. Asher** |
|
|
|
|
|
|
45,000 |
|
|
|
|
|
|
|
52,704 |
|
|
|
|
|
|
|
97,704 |
|
83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees |
|
|
Other Payments* |
|
|
Total |
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
2010 ($) |
|
|
2009 ($) |
|
|
2010 ($) |
|
|
2009 ($) |
|
|
2010 ($) |
|
|
2009 ($) |
|
Non-Executive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.I. Israel |
|
|
60,000 |
|
|
|
65,000 |
|
|
|
98,700 |
|
|
|
52,704 |
|
|
|
158,700 |
|
|
|
117,704 |
|
A.L. Paverd** |
|
|
|
|
|
|
28,334 |
|
|
|
|
|
|
|
52,704 |
|
|
|
|
|
|
|
81,083 |
|
N.P. Cole Jr. |
|
|
135,000 |
|
|
|
123,333 |
|
|
|
98,700 |
|
|
|
52,704 |
|
|
|
233,700 |
|
|
|
177,704 |
|
K. Voltaire |
|
|
125,000 |
|
|
|
120,000 |
|
|
|
98,700 |
|
|
|
52,704 |
|
|
|
223,700 |
|
|
|
172,704 |
|
C.L. Coleman |
|
|
120,000 |
|
|
|
100,000 |
|
|
|
98,700 |
|
|
|
52,704 |
|
|
|
218,700 |
|
|
|
151,037 |
|
J.K. Walden |
|
|
42,500 |
|
|
|
85,000 |
|
|
|
98,700 |
|
|
|
52,704 |
|
|
|
141,200 |
|
|
|
137,704 |
|
K. Dagdelen |
|
|
77,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,917 |
|
|
|
|
|
TOTAL |
|
|
780,417 |
|
|
|
786,667 |
|
|
|
592,200 |
|
|
|
421,632 |
|
|
|
1,372,617 |
|
|
|
1,208,299 |
|
|
|
|
* |
|
Other payments The awards of 1,200 restricted shares allocated on January 1, 2009 and
January 1, 2010, vest over a three year period from the date of the award. |
|
** |
|
Dr. A.L. Paverd and Mr. B.H. Asher retired from the board on May 5, 2009. |
|
*** |
|
Mr. J.K. Walden resigned from the board on July 1, 2010. |
The executive directors do not receive any benefits in kind and the only long term incentive
scheme in which they are anticipated to participate is our Restricted Share Scheme.
Share options exercised by the directors during 2009 and up to December 31, 2009 are detailed
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average market |
|
|
Number of Options |
|
Average Exercise |
|
Price at date of |
Name |
|
Exercised |
|
Price ($) |
|
exercise ($) |
B.H. Asher |
|
|
25,400 |
|
|
|
1.65 |
|
|
|
66.66 |
|
The high and low share prices for our ordinary shares for the year on the London Stock
Exchange were (pounds sterling) £67.55 and (pounds sterling) £41.26, respectively, and our high and
low price for our ADSs on the Nasdaq Global Select Market were $106.44 and $64.91, respectively.
The ordinary share price on the London Stock Exchange and the price of an ADS on the Nasdaq Global
Select Market at December 31, 2010, the last day of trading, were (pounds sterling) £52.75 and
$82.33, respectively.
Share options outstanding at February 28, 2011 and held by executive officers were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options to |
|
|
|
|
|
|
Purchase Ordinary |
|
|
|
|
|
|
Shares |
|
Expiration Date |
|
Exercise Prices ($) |
Officers |
|
|
|
|
|
|
|
|
|
|
|
|
L.C. Correia |
|
|
15,000 |
|
|
|
8/20/17 |
|
|
|
22.19 |
|
D.J. Haddon |
|
|
20,000 |
|
|
|
8/20/17 |
|
|
|
22.19 |
|
P.D. Harbidge |
|
|
20,000 |
|
|
|
8/20/17 |
|
|
|
22.19 |
|
W.R.A. Houston |
|
|
25,000 |
|
|
|
8/05/17 |
|
|
|
22.19 |
|
A. Konta |
|
|
25,000 |
|
|
|
8/20/17 |
|
|
|
22.19 |
|
V. Matfield |
|
|
75,000 |
|
|
|
8/05/14 |
|
|
|
8.05 |
|
V. Matfield |
|
|
60,000 |
|
|
|
8/20/17 |
|
|
|
22.19 |
|
P. Pretorius |
|
|
30,000 |
|
|
|
5/22/18 |
|
|
|
45.27 |
|
C.J. Prinsloo |
|
|
20,000 |
|
|
|
8/05/17 |
|
|
|
22.19 |
|
R.B. Quick |
|
|
20,000 |
|
|
|
8/20/17 |
|
|
|
22.19 |
|
M. Samaké |
|
|
20,000 |
|
|
|
8/20/17 |
|
|
|
22.19 |
|
N. Sanogo |
|
|
7,000 |
|
|
|
8/20/17 |
|
|
|
22.19 |
|
J. Steele |
|
|
40,000 |
|
|
|
8/20/17 |
|
|
|
22.19 |
|
S. Touré |
|
|
30,000 |
|
|
|
5/22/18 |
|
|
|
45.27 |
|
L.V. Wark |
|
|
25,000 |
|
|
|
8/20/17 |
|
|
|
22.19 |
|
T. de Welzim |
|
|
2,000 |
|
|
|
11/30/16 |
|
|
|
22.50 |
|
T. de Welzim |
|
|
15,000 |
|
|
|
8/20/17 |
|
|
|
22.19 |
|
Restricted shares outstanding at February 28, 2011 and held by executive officers were as follows:
84
|
|
|
|
|
|
|
Number of |
Name |
|
Shares |
J. Steele |
|
|
30,000 |
|
M. Samaké |
|
|
18,000 |
|
P.D. Harbidge |
|
|
18,000 |
|
W.R.A. Houston |
|
|
18,000 |
|
C.J. Prinsloo |
|
|
18,000 |
|
R.B. Quick |
|
|
18,000 |
|
S. Touré |
|
|
18,000 |
|
P. Pretorius |
|
|
18,000 |
|
L. Watum |
|
|
18,000 |
|
W. Jacobs |
|
|
18,000 |
|
A. Konta |
|
|
12,000 |
|
V. Matfield |
|
|
12,000 |
|
D.J. Haddon |
|
|
12,000 |
|
L.V. Wark |
|
|
12,000 |
|
T. de Welzim |
|
|
12,000 |
|
L. Correia |
|
|
12,000 |
|
N. Sanogo |
|
|
7,500 |
|
Expiration date January 1, 2020
C. BOARD PRACTICES
Directors Terms of Employment
We have entered into contracts of employment with Dr. D.M. Bristow and Mr. G.P. Shuttleworth
with the period of employment set as one year.
We have entered into letters of appointment with our non-executive directors. Each
non-executive director is now subject to re-election annually by our shareholders in accordance
with the provisions of the 2010 UK Corporate Governance Code.
Board of Directors Committees
In order to ensure good corporate governance, the board has formed an audit committee, a
remuneration committee and a governance and nomination committee. The audit, remuneration, and
governance and nomination committees are comprised of a majority of non-executive directors.
Audit Committee
Our audit committee charter, which defines the terms of reference for the audit committee
members, sets out the framework through which the audit committee reviews our annual results, the
effectiveness of our systems of internal control, internal audit procedures and legal and
regulatory compliance and the cost effectiveness of the services provided by the external auditors.
The audit committee also reviews the scope of work carried out by our external auditors and holds
discussions with the external auditors at least twice a year. The audit committee is comprised of
three independent non-executive directors. The members of the audit committee are Dr. K. Voltaire
(chairman), Mr. C.L. Coleman and Dr. K. Dagdelen, was appointed a member of the audit committee on
January 29, 2010. Mr. J.K. Walden resigned from the board on July 1, 2010.
Remuneration Committee
The remuneration committee reviews the remuneration of directors and senior management and
determines the structure and content of the senior executives remuneration packages by reference
to a number of factors including current business practice and our prevailing business conditions
and the mining and exploration industry. The members of the remuneration committee are Mr. N.P.
Cole Jr. (chairman), Dr. K. Voltaire and Mr. C.L. Coleman.
Governance and Nomination Committee
85
The governance and nomination committee reviews our corporate governance and sets out the
framework in which such policies are established to guide our operations and activities. In
addition, the committee at the instance of the board interviews and recruits any future board
members. The members of the governance and nomination committee are Messrs. P. Liétard (chairman),
N.P. Cole, Jr., C.L. Coleman and R.I. Israel.
D. EMPLOYEES
At the end of each of the past three years, the breakdown of employees, including our
subsidiaries by main categories of activity was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
December 31, 2009 |
|
December 31, 2008 |
Category of Activity |
|
|
|
|
|
|
|
|
|
|
|
|
Mining and related engineering |
|
|
202 |
|
|
|
136 |
|
|
|
241 |
|
Processing and related engineering |
|
|
767 |
|
|
|
631 |
|
|
|
668 |
|
Management and technical |
|
|
125 |
|
|
|
105 |
|
|
|
100 |
|
Exploration |
|
|
221 |
|
|
|
161 |
|
|
|
164 |
|
Administration |
|
|
290 |
|
|
|
261 |
|
|
|
253 |
|
TOTAL* |
|
|
1,605 |
|
|
|
1,294 |
|
|
|
1,426 |
|
|
|
|
* |
|
Tongon became fully commissioned in the fourth quarter of 2010. |
E. SHARE OWNERSHIP
See Item 7 Major Shareholders and Related Party Transactions.
Employee Share Option Scheme
Since 1996, we have operated a share option scheme under which senior management may be
offered options to purchase our ordinary shares. The aggregate number of shares available for
issuance under the option scheme may not exceed 15% of our issued share capital. Share options
granted since 2007 are subject to performance criteria for individual employees. Any options
provided to an individual employee as defined by the rules of the scheme, are subject to an upper
limit of 2% of our issued ordinary share capital.
The exercise price of any new share options is determined as the closing price of the share on
the trading day preceding that on which the person was granted the option. Under the rules of the
share option scheme, all option holders, inclusive of executive and non-executive directors, were
granted additional options to subscribe for shares in the open offer which was concluded in
November 1998. These additional options are exercisable at the open offer price and otherwise on
the same terms as the initial grant.
The scheme provides for the early exercise of all options in the event of an acquisition of a
number of shares that would require an offer to be made to all of our other shareholders.
Restricted Share Scheme
On July 28, 2008, our shareholders approved the creation of a restricted share scheme for
employees and executive directors. At that time, the Board elected to limit eligibility for awards
to executive directors. The Board has subsequently decided that all employees would be eligible to
receive restricted shares in the future. The aggregate number of shares available for issuance
under the restricted share scheme may not exceed 5% of our issued share capital. The awards of
shares under the restricted share scheme are subject to the attainment of performance criteria
agreed between the remuneration committee and the individual executive director on an annual basis.
No options were awarded to staff in terms of the Employee Share Option Scheme during 2010.
Item 7. Major Shareholders and Related Party Transactions
A. MAJOR SHAREHOLDERS
86
As of February 28, 2011, our issued share capital consisted of 91,097,370 ordinary shares
with a par value of $0.05 per share. To our knowledge we are not, directly or indirectly, owned or
controlled by another corporation, any foreign government or other person.
The following table sets forth information regarding the beneficial ownership of our ordinary
shares as of February 28, 2011, by:
|
|
|
Any person of whom the directors are aware that is interested directly or indirectly in
3% or more of our ordinary shares; |
|
|
|
|
Each of our directors; and |
|
|
|
|
All of our executive officers and directors as a group. |
Beneficial ownership is determined in accordance with the rules of the SEC and generally
includes voting or investment power with respect to securities. Ordinary shares issuable pursuant
to options, to the extent the options are currently exercisable or convertible within 60 days of
February 28, 2011, are treated as outstanding for computing the percentage of the person holding
these securities but are not treated as outstanding for computing the percentage of any other
person.
Unless otherwise noted, each person or group identified possesses sole voting and investment power
with respect to the shares, subject to community property laws where applicable. Unless indicated
otherwise, the business address of the beneficial owners is: Randgold Resources Limited, 3rd Floor
Unity Chambers, 28 Halkett Street, St. Helier, Jersey JE2 4WJ, Channel Islands.
|
|
|
|
|
|
|
|
|
|
|
Shares Beneficially Owned |
Holder |
|
Number |
|
% |
D.M. Bristow |
|
|
697,584 |
|
|
|
0.77 |
|
G.P. Shuttleworth |
|
|
28,000 |
|
|
|
0.03 |
|
N.P. Cole Jr. |
|
|
4,572 |
|
|
|
0.01 |
|
C. Coleman |
|
|
3,800 |
|
|
|
0.00 |
|
K. Dagdelen |
|
|
400 |
|
|
|
0.00 |
|
R.I. Israel |
|
|
39,463 |
|
|
|
0.04 |
|
P. Liétard |
|
|
4,572 |
|
|
|
0.01 |
|
K. Voltaire |
|
|
|
|
|
|
|
|
BNY (Nominees) Limited (1) 30 Cannon Street London EC4M XH |
|
|
60,158,282 |
|
|
|
66.04 |
|
Wells Fargo & Company (2) 420 Montgomery Street San Francisco, CA 94104 |
|
|
4,685,031 |
|
|
|
5.14 |
|
FMR LLC(3) 82 Devonshire Street, Boston, MA 02109 |
|
|
11,812,915 |
|
|
|
12.97 |
|
BlackRock Inc.(4) 40 East 52nd Street New York, NY 10022 |
|
|
10,622,151 |
|
|
|
11.66 |
|
Van Eck Associates Corporation(5) 335 Madison Ave, 19th Floor New York, NY 10017 |
|
|
5,939,876 |
|
|
|
6.53 |
|
Directors and executive officers (6) |
|
|
792,293 |
|
|
|
0.87 |
|
|
|
|
(1) |
|
Shares held by BNY (Nominees) Limited are held for and on behalf of our ADS holders. |
|
(2) |
|
Wells Fargo & Company reported in its Schedule 13G filed with the Securities and Exchange
Commission on January 25, 2011 that its beneficial ownership in us amounted to 4,685,031
ordinary shares (5.15%) on a consolidated basis. These shares are included in the shares held
by BNY (Nominees) Limited. |
|
(3) |
|
FMR LLC reported in its Schedule 13G/A filed with the Securities and Exchange Commission that
as at February 14, 2011 its beneficial ownership in us amounted to 11,812,915 ordinary shares
(12.98%) on a consolidated basis. These shares are included in the shares held by BNY
(Nominees) Limited. |
|
(4) |
|
BlackRock Inc. reported in its Schedule 13G/A filed with the Securities and Exchange
Commission on January 10, 2011 that its beneficial ownership in us amounted to 10,622,151
ordinary shares (11.67%) on a consolidated basis. These shares are included in the shares
held by BNY (Nominees) Limited. |
87
|
|
|
(5) |
|
Van Eck Associates Corporation reported in its Schedule 13G filed with the Securities and
Exchange Commission on February 14, 2011 that its beneficial ownership in us amounted to
5,939,876 ordinary shares (6.53%) on a consolidated basis. These shares are included in the
shares held by BNY (Nominees) Limited. |
|
(6) |
|
No executive officer beneficially owns in excess of 1% of the outstanding ordinary shares. |
To the knowledge of management, none of the above shareholders hold voting rights which are
different from those held by our other shareholders.
As of February 28, 2011, there were 4 record holders of our ordinary shares in the United
States, holding an aggregate of 1,691 ordinary shares or 0.0%.
As of February 28, 2011, there were 51 record holders of our ADSs in the United States,
holding an aggregate of 60,160,282 ADSs or 100%.
B. RELATED PARTY TRANSACTIONS
None of our directors, officers or major shareholders or, to our knowledge, their families, had any
interest, direct or indirect, in any transaction during the last fiscal year or in any proposed
transaction which has affected or will materially affect us or our investment interests or
subsidiaries, other than as stated below.
The Randgold Name
Under an agreement dated June 26, 1997, Randgold & Exploration Group has licensed us to carry on
business under the name Randgold. The license has been provided to us on a royalty free
perpetual basis. The U.K. Trademark Registry granted a registration certificate to us for
Randgold on February 16, 2001.
C. INTERESTS OF EXPERTS AND COUNSEL
Not applicable.
Item 8. Financial Information
See Item 18.
Item 9. The Offer and Listing
A. OFFER AND LISTING DETAILS
The following table sets forth, for the periods indicated, the high and low sales prices of
our ordinary shares, as reported by the London Stock Exchange, and of our ADSs, as reported by the
Nasdaq Global Select Market. Effective March 10, 2003, we changed the ratio of ordinary shares to
ADSs from two ordinary shares per ADS to one ordinary share per ADS, so that each ADS now
represents one ordinary share. In March 2003 we changed the currency in which the price of our
ordinary shares that are traded on the London Stock Exchange are quoted. The ordinary shares are
now quoted in pound sterling and not in US dollars. The ADSs continue to be quoted on the London
Stock Exchange and the Nasdaq Global Select Market in US dollars.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price Per Ordinary Share |
|
Price Per ADS |
Financial Period Ended |
|
High (£) |
|
Low (£) |
|
High ($) |
|
Low ($) |
December 31, 2010 |
|
|
67.55 |
|
|
|
41.26 |
|
|
|
106.44 |
|
|
|
64.91 |
|
December 31, 2009 |
|
|
54.50 |
|
|
|
24.25 |
|
|
|
90.30 |
|
|
|
36.24 |
|
December 31, 2008 |
|
|
30.00 |
|
|
|
15.57 |
|
|
|
55.65 |
|
|
|
23.45 |
|
December 31, 2007 |
|
|
19.50 |
|
|
|
10.53 |
|
|
|
38.86 |
|
|
|
21.04 |
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December 31, 2006 |
|
|
14.08 |
|
|
|
9.09 |
|
|
|
26.32 |
|
|
|
15.88 |
|
88
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Price Per Ordinary Share |
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Price Per ADS |
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Calendar Period |
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High (£) |
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Low (£) |
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High ($) |
Low ($) |
|
2011 |
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|
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|
|
|
|
|
|
|
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|
First Quarter (through February 28, 2011) |
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|
53.30 |
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|
|
47.24 |
|
|
|
83.55 |
|
|
|
75.05 |
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2010 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter |
|
|
67.55 |
|
|
|
50.85 |
|
|
|
106.44 |
|
|
|
80.66 |
|
Third Quarter |
|
|
66.20 |
|
|
|
53.55 |
|
|
|
104.22 |
|
|
|
85.11 |
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Second Quarter |
|
|
66.00 |
|
|
|
50.40 |
|
|
|
99.67 |
|
|
|
77.39 |
|
First Quarter |
|
|
54.00 |
|
|
|
41.26 |
|
|
|
86.83 |
|
|
|
64.91 |
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter |
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|
54.50 |
|
|
|
39.30 |
|
|
|
90.30 |
|
|
|
63.57 |
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Third Quarter |
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|
46.49 |
|
|
|
33.51 |
|
|
|
76.08 |
|
|
|
55.06 |
|
Second Quarter |
|
|
44.49 |
|
|
|
28.23 |
|
|
|
73.96 |
|
|
|
41.59 |
|
First Quarter |
|
|
37.76 |
|
|
|
25.10 |
|
|
|
54.35 |
|
|
|
36.65 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price Per Ordinary Share |
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Price Per ADS |
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Calendar Month |
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High (£ ) |
|
Low (£) |
|
High ($) |
Low ($) |
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February |
|
|
52.40 |
|
|
|
47.62 |
|
|
|
83.50 |
|
|
|
76.85 |
|
January |
|
|
53.30 |
|
|
|
47.24 |
|
|
|
83.55 |
|
|
|
75.05 |
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2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December |
|
|
61.15 |
|
|
|
50.85 |
|
|
|
95.72 |
|
|
|
80.66 |
|
November |
|
|
63.30 |
|
|
|
57.65 |
|
|
|
101.92 |
|
|
|
92.00 |
|
October |
|
|
67.55 |
|
|
|
57.35 |
|
|
|
106.44 |
|
|
|
90.48 |
|
September |
|
|
66.20 |
|
|
|
58.85 |
|
|
|
104.22 |
|
|
|
90.74 |
|
B. PLAN OF DISTRIBUTION
Not applicable.
C. MARKETS
Our ordinary shares are listed on the London Stock Exchange, which currently constitutes the
principal non-United States trading market for those shares, under the symbol RRS and our ADSs
trade in the United States on the Nasdaq Global Select Market under the trading symbol GOLD, in the
form of American Depositary Receipts. The American Depositary Receipts are issued by The Bank of
New York Mellon, as Depositary. Each American Depositary Receipt represents one American
Depositary Share. Each American Depositary Share represents one of our ordinary shares.
D. SELLING SHAREHOLDERS
Not applicable.
E. DILUTION
Not applicable.
F. EXPENSES OF THE ISSUE
Not applicable.
Item 10. Additional Information
A. SHARE CAPITAL
Not applicable.
B. MEMORANDUM AND ARTICLES OF ASSOCIATION
89
General
We are a company organized with limited liability under the laws of Jersey, Channel Islands.
Our registered number is 62686.
The authorized share capital is $6,000,000 divided into 120,000,000 ordinary shares of $0.05
each, of which 91,097,370 were issued as of February 28, 2011 and 28,902,630 were available for
issue.
At the annual general meeting held on May 4, 2010, shareholders approved a resolution which
authorized an increase in the authorized share capital of the company from $5,000,000 divided into
100,000,000 ordinary shares of $0.05 each to $6,000,000 divided into 120,000,000 ordinary shares of
$0.05 each.
Memorandum of Association
Clause 2 of our Memorandum of Association provides that we shall have all the powers of a
natural person including but not limited to the power to carry on mining, exploration or
prospecting.
Changes in Capital or Objects and Powers
Subject to the 1991 Law and our Articles of Association, we may by special resolution at a
general meeting:
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increase our authorized or paid up share capital; |
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consolidate and divide all or any part of our shares into shares of a larger amount; |
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sub-divide all or any part of our shares having a par value; |
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convert any of our issued or unissued shares into shares of another class; |
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convert any of our paid-up shares into stock, and reconvert any stock into any number
of paid-up shares of any denomination; |
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convert any of our issued shares into redeemable shares which can be redeemed; |
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cancel shares which, at the date of passing of the resolution, have not been taken or
agreed to be taken by any person, and diminish the amount of the authorized share capital
by the amount of the shares so cancelled; |
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reduce the authorized share capital; |
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reduce our issued share capital; or |
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alter our Memorandum or Articles of Association. |
Articles of Association
We adopted our Articles of Association by special resolution passed on June 24, 1997. Our
Articles of Association include provisions to the following effect:
General Meeting of Shareholders
We may at any time convene general meetings of shareholders. We hold an annual general
meeting for each fiscal year within nine months of the end of each fiscal year. No more than
eighteen months may elapse between the date of one annual general meeting and the next.
Annual general meetings and meetings calling for the passing of a special resolution require
twenty-one days notice of the place, day and time of the meeting in writing to our shareholders.
Any other general meeting requires no less than fourteen days notice in writing. Our business may
be transacted at a general meeting only when a quorum of shareholders is present. Two persons
entitled to attend and to vote on the business to be transacted, each being a member or a proxy for
a member or a duly authorized representative
90
of a corporation which is a member, constitute a quorum. Nasdaqs marketplace rules, which apply
to all companies listed on the Nasdaq Global Select Market, state in Rule 4350(f) that the minimum
quorum for any meeting of holders of a companys common stock is 33 1/3% of the outstanding shares.
As a result, we requested, and Nasdaq granted to us, an exemption from compliance with the Rule
4350(f) requirement.
The annual general meetings deal with and dispose of all matters prescribed by our Articles of
Association and by the 1991 Law including:
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the consideration of our annual financial statements and report of our independent
accountants; |
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the election of directors; and |
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the appointment of independent auditors. |
Voting Rights
Subject to any special terms as to voting on which any shares may have been issued or may from
time to time be held, at a general meeting, every shareholder who is present in person (including
any corporation present by its duly authorized representative) shall on a show of hands have one
vote and every shareholder present in person or by proxy shall on a poll have one vote for each
share of which he is a holder. In the case of joint holders, the vote of the senior who tenders a
vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other
joint holders.
Unless we otherwise determine, no shareholder is entitled to vote at a general meeting or at a
separate meeting of the holders of any class of shares, either in person or by proxy, or to
exercise any other right or privilege as a shareholder in respect of any share held by him unless
all calls presently payable by him in respect of that share, whether alone or jointly with any
other person, together with interest and expenses, if any, have been paid to us.
Dividends
Subject to the provisions of the 1991 Law and of the Articles of Association, we may, by
ordinary resolution, declare dividends to be paid to shareholders according to their respective
rights and interests in our profits. However, no dividend shall exceed the amount recommended by
us. Subject to the provisions of the 1991 Law, we may pay an interim dividend, including a
dividend payable at a fixed rate, if an interim dividend appears to us to be justified by our
profits available for distribution.
Except as otherwise provided by the rights attached to any shares, all dividends shall be
declared and paid according to the amounts paid up, otherwise than in advance of calls, on the
shares on which the dividend is paid. All dividends unclaimed for a period of 12 years after
having been declared or become due for payment shall, if we so resolve, be forfeited and shall
cease to remain owing by us.
We may, with the authority of an ordinary resolution, direct that payment of any dividend
declared may be satisfied wholly or partly by the distribution of assets, and in particular of paid
up shares or debentures of any other company, or in any one or more of those ways.
We may also with the prior authority of an ordinary resolution, and subject to such conditions
as we may determine, offer to holders of shares the right to elect to receive shares, credited as
fully paid, instead of the whole, or some part, to be determined by us, of any dividend specified
by the ordinary resolution.
Ownership Limitations
Our Articles of Association and the 1991 Law do not contain limits on the number of shares
that a shareholder may own.
Distribution of Assets on a Winding-Up
If we are wound up, the liquidator may, with the sanction of a special resolution and any
other sanction required by law, divide among the shareholders in specie the whole or any part of
our assets and may, for that purpose, value any assets and determine how
91
the dividend shall be carried out as between the shareholders or vest the whole or any part of the
assets in trustees on such trusts for the benefit of the shareholders as he with the like sanction
shall determine but no shareholder shall be compelled to accept any assets on which there is a
liability.
Transfer of Shares
Every shareholder may transfer all or any of his shares by instrument of transfer in writing
in any usual form or in any form approved by us. The instrument must be executed by or on behalf
of the transferor and, in the case of a transfer of a share which is not fully paid up, by or on
behalf of the transferee. The transferor is deemed to remain the holder until the transferees
name is entered in the register of shareholders.
We may, in our absolute discretion and without giving any reason, refuse to register any
transfer of a share or renunciation of a renounceable letter of allotment unless:
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it is in respect of a share which is fully paid up; |
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it is in respect of only one class of shares; |
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it is in favor of a single transferee or not more than four joint transferees; |
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it is duly stamped, if so required; and |
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it is delivered for registration to our registered office for the time being or another
place that we may from time to time determine accompanied by the certificate for the shares
to which it relates and any other evidence as we may reasonably require to prove the title
of the transferor or person renouncing and the due execution of the transfer or
renunciation by him or, if the transfer or renunciation is executed by some other person on
his behalf, the authority of that person to do so; provided that we shall not refuse to
register any transfer of partly paid shares which are listed on the grounds they are partly
paid shares in circumstances where our refusal would prevent dealings in those shares from
taking place on an open and proper basis. |
Variation of Rights
If at any time our share capital is divided into shares of different classes, any of the
rights for the time being attached to any share or class of shares may be varied or abrogated in
the manner, if any, that is provided by the rights or, in the absence of any such provision, either
with the consent in writing of the holders of not less than three-quarters in nominal value of the
issued shares of the class or with the sanction of a resolution passed by the holders of not less
than three-quarters in nominal value of the issued shares of that class at a separate general
meeting of the holders of shares of the class. The quorum at that meeting shall be not less than
two persons holding or representing by proxy at least one-third of the nominal amount paid up on
the issued shares of the class in question and at an adjourned meeting not less than one person
holding shares of the class in question or his proxy.
Subject to the terms of issue of or rights attached to any shares, the rights or privileges
attached to any class of shares shall be deemed not to be varied or abrogated by the creation or
issue of any new shares ranking equally in all respects, except as to the date from which those new
shares shall rank for dividend, with or subsequent to those already issued or by the reduction of
the capital paid up on those shares or by the purchase or redemption by us of our own shares in
accordance with the provisions of the 1991 Law and the Articles.
Capital Calls
Subject to the terms of allotment of shares, we may from time to time make calls on the
members in respect of any monies unpaid on the shares, whether in respect of nominal value or
premium, and not payable on a fixed date. A member must receive fourteen days notice of any call
and any call is deemed to be made when the resolution of the board authorizing such call was
passed.
If any call is not paid on or before the date appointed for payment, the person liable to pay
that call shall pay all costs, charges and expenses of ours in connection with the non-payment,
including interest on the unpaid amount, if requested by us.
92
Unless we otherwise determine, no member shall be entitled to receive any dividend or to be
present and vote at any general meeting, or be included in a quorum, or to exercise any other right
or privilege as a shareholder unless and until any outstanding calls in respect of his shares are
paid.
Borrowing Powers
We may exercise all of our powers to borrow money and to mortgage or charge all or any part of
our undertaking, property and assets, present and future, and uncalled capital and, subject to the
provisions of the 1991 Law, to create and issue debenture and other loan stock and other
securities, whether outright or as collateral security for any debt, liability or obligation of
ours or of any third party.
Issue of Shares and Preemptive Rights
Subject to the provisions of the 1991 Law and to any special rights attached to any shares, we
may allot or issue shares with those preferred, deferred or other special rights or restrictions
regarding dividends, voting, transfer, return of capital or other matters as we may from time to
time determine by ordinary resolution, or if no ordinary resolution has been passed or an ordinary
resolution does not make specific provision, as we may determine. We may issue shares that are
redeemable or are liable to be redeemed at our option or the option of the holder in accordance
with our Articles of Association. Subject to the provisions of the 1991 Law the unissued shares at
the date of adoption of the Articles of Association and shares created thereafter shall be at our
disposal. We cannot issue shares at a discount.
There are no pre-emptive rights for the transfer of our shares either within the 1991 Law or
our Articles of Association.
Meetings of the Board of Directors
Any director may, and the secretary at the request of a director shall, call a board meeting
at any time on reasonable notice. A director may waive this notice requirement.
Subject to our Articles of Association our board of directors may meet for the conducting of
business, adjourn and otherwise regulate its proceedings as it sees fit. The quorum necessary for
the transaction of business may be determined by the board of directors and unless otherwise
determined shall be two persons, each being a director or an alternate director. A duly convened
meeting of the board of directors at which a quorum is present is necessary to exercise all or any
of the boards authorities, powers and discretions.
Our board of directors may delegate or entrust to and confer on any director holding an
executive office any of its powers, authorities and discretions for such time, on such terms and
subject to such conditions as it sees fit. Our board of directors may also delegate any of its
powers, authorities and discretions for such time and on such terms and subject to such conditions
as it sees fit to any committee consisting of one or more directors and one or more other persons,
provided that a majority of the members of the committee should be directors.
Remuneration of Directors
Our directors (other than alternate directors) shall be entitled to receive by way of fees for
their services as directors any sum that we may from time to time determine, not exceeding in
aggregate $300,000 per annum or any other sum as we, by ordinary resolution in a general meeting,
shall from time to time determine. That sum, unless otherwise directed by ordinary resolution of
us by which it is voted, shall be divided among the directors in the proportions and in the manner
that the board determines or, if the board has not made a determination, equally. The directors
are entitled to be repaid all traveling, hotel and other expenses properly incurred by them in or
about the performance of their duties as directors.
The salary or remuneration of any director appointed to hold any employment or executive
office may be either a fixed sum of money, or may altogether or in part be governed by business
done or profits made or otherwise determined by us, and may be in addition to or in lieu of any fee
payable to him for his services as director.
Pensions and Gratuities for Directors
93
We may exercise all of our powers to provide and maintain pensions, other retirement or
superannuation benefits, death or disability benefits or other allowances or gratuities for persons
who are or were directors of any company in our group and their relatives or dependants.
Directors Interests in Contracts
Subject to the provisions of the 1991 Law and provided that his interest is disclosed as soon
as practicable after a director becomes aware of the circumstances which gave rise to his duty to
disclose in accordance with the Articles of Association, a director, notwithstanding his office,
may enter into or otherwise be interested in any contract, arrangement, transaction or proposal
with us, or in which we are otherwise interested, may hold any other office or place of profit
under us (except that of auditor of, or of a subsidiary of ours) in conjunction with the office of
director and may act by himself or through his firm in a professional capacity for us, and in any
such case on such terms as to remuneration and otherwise as we may arrange, and may be a director
or other officer of, or employed by, or a party to any transaction or arrangement with, or
otherwise interested in, any company promoted by us or in which we are otherwise interested and
shall not be liable to account to us for any profit, remuneration or other benefit realized by any
such office, employment, contract, arrangement, transaction or proposal.
No such contract, arrangement, transaction or proposal shall be avoided on the grounds of any
such interest or benefit.
Restrictions on Directors Voting
Except as provided in our Articles of Association, a director shall not vote on, or be counted
in the quorum in relation to, any resolution of the board or of a committee of the board concerning
any contract, arrangement, transaction or any other proposal whatsoever to which we are or will be
a party and in which he has an interest which (together with an interest of any person connected
with him) is to his knowledge a material interest otherwise than by virtue of his interests in
shares or debentures or other securities of or otherwise in or through us, unless the resolution
concerns any of the following matters:
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the giving of any guarantee, security, or indemnity in respect of money lent or
obligations incurred by him or any other person at the request of or for the benefit of us
or any of our subsidiary undertakings; |
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the giving of any guarantee, security or indemnity in respect of a debt or obligation
of ours or any of our subsidiary undertakings for which he himself has assumed
responsibility in whole or in part under a guarantee or indemnity or by the giving of
security; |
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any proposal concerning an offer of shares or debentures or other securities of or by
us or any of our subsidiary undertakings in which offer he is or may be entitled to
participate as a holder of securities or in the underwriting or sub-underwriting of which
he is to participate; |
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any proposal concerning any other body corporate in which he (together with persons
connected with him) does not to his knowledge have an interest in 1% or more of the issued
equity share capital of any class of that body corporate or of the voting rights available
to shareholders of that body corporate; |
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any proposal relating to an arrangement for the benefit of our employees or the
employees of any of our subsidiary undertakings which does not award him any privilege or
benefit not generally awarded to the employees to whom the arrangement relates; or |
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any proposal concerning insurance which we propose to maintain or purchase for the
benefit of directors or for the benefit of persons who include directors. |
A director shall not vote or be counted in the quorum for any resolution of the board or
committee of the board concerning his own appointment (including fixing or varying the terms of his
appointment or termination) as the holder of any office or place of profit with us or any company
in which we are interested.
Number of Directors
Unless and until otherwise determined by a special resolution, the number of directors shall be not
less than two or more than 20.
94
Directors Appointment and Retirement by Rotation
Directors may be appointed by ordinary shareholder resolution or by the board. If appointed
by ordinary resolution, a director holds office only until the next annual general meeting and
shall not be taken into account in determining the number of directors who are to retire by
rotation. A director shall not be required to hold any of our shares.
At each annual general meeting, one-third of the directors who are subject to retirement by
rotation will retire by rotation and be eligible for re-election. Subject to the provisions of the
1991 Law and to the Articles, the directors to retire will, first, be any director who wishes to
retire and not offer himself for re-election and secondly, will be those who have been longest in
office since their last appointment or re-appointment, but as between those who have been in office
an equal length of time, those to retire shall (unless they otherwise agree) be determined by lot.
There is no age limit imposed upon directors.
Untraced Shareholders
Subject to the Articles, we may sell any of our shares registered in the name of a shareholder
remaining untraced for 12 years who fails to communicate with us following advertisement of an
intention to make such a disposal. Until we can account to the shareholder, the net proceeds of
sale will be available for use in our business or for investment, in either case at our discretion.
The proceeds will not carry interest.
CREST
The Companies (Amendment No. 4) (Jersey) Law 1998 and the Companies (Uncertificated
Securities) (Jersey) Order 1999 allow the holding and transfer of shares under CREST, the
electronic system for settlement of securities in the United Kingdom. Our Articles of Association
already provide for our shares to be held in uncertificated form under the CREST system.
Purchase of Shares
Subject to the provisions of the 1991 Law, we may purchase any of our own shares of any class.
The 1991 Law provides that we may, by special resolution approve the acquisition of our own shares
from any source, but only if they are fully paid.
Non-Jersey Shareholders
There are no limitations imposed by Jersey law or by our Articles of Association on the rights
of non-Jersey shareholders to hold or vote on our ordinary shares or securities convertible into
our ordinary shares.
Rights of Minority Shareholders and Fiduciary Duties
Majority shareholders of Jersey companies have no fiduciary obligations under Jersey law to
minority shareholders. However, under the 1991 Law, a shareholder may, under some circumstances,
seek relief from the court if he has been unfairly prejudiced by us. The provisions of the 1991
Law are designed to provide relief from oppressed shareholders without necessarily overriding the
majoritys decision. There may also be common law personal actions available to our shareholders.
Jersey Law and Our Memorandum and Articles of Association
The content of our Memorandum and Articles of Association is largely derived from an
established body of corporate law and therefore they mirror the 1991 Law. Jersey company law draws
very heavily from company law in England and there are various similarities between the 1991 Law
and the English Companies Act 1985 (as amended). However, the 1991 Law is considerably shorter in
content than the English Companies Act 1985 and there are some notable differences between English
and Jersey company law. There are, for example, no provisions under Jersey law (as there are under
English law):
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controlling possible conflicts of interests between us and our directors, such as loans
by us or directors, and contracts between us and our directors other than a duty on
directors to disclose an interest in any transaction to be entered into by us or any of our
subsidiaries which to a material extent conflicts with our interest; |
95
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specifically requiring particulars to be shown in our accounts of the amount of loans
to officers or directors emoluments and pensions, although these would probably be
required to be shown in our accounts in conformity to the requirement that accounts must be
prepared in accordance with generally accepted accounting principles; |
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requiring us to file details of charges other than charges of Jersey realty; or |
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as regards statutory preemption provisions in relation to further issues of shares. |
Under Article 143 of the 1991 Law, the court may make an order giving relief, including
regulation of our affairs requiring us to refrain from doing or continuing to do an act complained
of, authorizing civil proceedings and providing for the purchase of shares by any of our other
shareholders.
The court has wide powers within its inherent jurisdiction and a shareholder could
successfully bring an action in a variety of circumstances. Although there is no statutory
definition of unfairly prejudicial conduct, authority suggests that it includes oppression and
discrimination and that the test is objective.
There are no provisions in our Memorandum or Articles of Association concerning changes of
capital where these provisions would be considered more restrictive than that required by the 1991
Law.
Proposed Amended Articles of Association
We will be submitting a proposal to amend the Articles of Association to our stockholders at
our 2011 annual general meeting to be held on May 3, 2011. The Articles of Association will be
amended primarily take account of changes to law and practice since the current Articles of
Association were last updated and incorporate certain amendments required as a result of changes to
the laws and regulations to which we are subject. In particular, the amended Articles of
Association will reflect certain amendments to the Companies (Jersey) Law 1991 (as amended) and
certain requirements of the UK Listing Rules which come into effect for companies incorporated
outside of the UK who have a premium listing of equity securities on the Official List of the UK
Financial Services Authority.
C. MATERIAL CONTRACTS
1. Arrangement Agreement dated August 5, 2009 between Randgold Resources Limited, 0858065 B.C.
Limited and Moto Goldmines Limited.
We entered into the arrangement agreement in connection with the acquisition of Moto Goldmines
Limited.
2. Protocole dAccord dated October 31, 2009 between Randgold Resources Limited, AngloGold Ashanti
Limited, Moto Goldmines Limited, Kibali Goldmines S.P.R.L. and the Government of the Democratic
Republic of The Congo.
We entered into the Protocole dAccord in connection with the development of the Moto Gold Project.
3. Share Purchase Agreement dated October 31, 2009 between LOffice des Mines de Kilo-Moto,
Randgold Resources Limited, AngloGold Ashanti Limited, Moto Goldmines Limited, Border Energy Pty
Limited, Kibali (Jersey) Limited and Kibali Goldmines S.P.R.L.
We entered into a share purchase agreement for the indirect acquisition of 10% of the issued share
capital of Kibali Goldmines S.P.R.L.
4. Agreement between Randgold Resources Limited and DTP Terrassement, dated July 26, 2010.
We entered into an Agreement with DTP Terrassment with respect to the equipment for the Gounkoto
mine.
5. Joint Venture Agreement between Anglogold Ashanti Limited and Randgold Resources Limited, dated
July 16, 2009.
We entered into a Joint Venture Agreement in connection with the acquisition of Moto Goldmines
Limited.
6. Employment Contract between Randgold Resources Limited and Graham P. Shuttleworth, dated August
3, 2010.
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We entered into an employment contract with Mr. Shuttleworth in respect of his position as Chief
Financial Officer. Pursuant to the employment contract, Mr. Shuttleworth is deemed to have been
employed by us from July 1, 2007. The employment contract provides that Mr. Shuttleworths base
remuneration is £330,212 per annum beginning January 1, 2010, and a bonus based on the achievement
of certain performance targets.
D. EXCHANGE CONTROLS
There are currently no Jersey or United Kingdom foreign exchange control restrictions on the
payment of dividends on our ordinary shares or on the conduct of our operations. Jersey is in a
monetary union with the United Kingdom. There are currently no limitations under Jersey law or our
Articles of Association prohibiting persons who are not residents or nationals of the United
Kingdom from freely holding, voting or transferring our ordinary shares in the same manner as
United Kingdom residents or nationals.
E. TAXATION
Material Jersey Tax Consequences
General
The following summary of the anticipated tax treatment in Jersey in relation to the payments
on the ordinary shares and ADSs is based on the taxation law and practice in force at the date of
this Annual Report, and does not constitute legal or tax advice and prospective investors should be
aware that the relevant fiscal rules and practice and their interpretation may change. We
encourage you to consult your own professional advisers on the implications of subscribing or
buying, holding, selling, redeeming or disposing of ordinary shares or ADSs and the receipt of
interest and distributions, whether or not on a winding-up, with respect to the ordinary shares or
ADSs under the laws of the jurisdictions in which they may be taxed.
Following amendments to the Income Tax (Jersey) Law 1961 (the Income Tax Law), our tax
position (along with all other companies incorporated in Jersey) has changed. Up until December
31, 2008, we were an exempt company within the meaning of Article 123A of the Income Tax Law. As
an exempt company we were not liable for Jersey income tax other than on Jersey source income,
except by concession bank deposit interest on Jersey bank accounts. For as long as we were an
exempt company, payments in respect of the ordinary shares and ADSs were not subject to any
taxation unless a shareholder was resident in Jersey, and no withholding in respect of taxation was
required on those payments to any holder of the ordinary shares or ADSs.
We are now subject to Jersey income tax at the rate of zero percent in accordance with Article
123C of the Income Tax Law with effect from January 1, 2009.
The Income Tax Law now provides that the standard rate of income tax on profits of a
non-financial service company regarded as resident in Jersey or having a permanent establishment in
Jersey will be zero percent. The Income Tax Law also provides that the new tax regime will apply
for the year of assessment 2008 in relation to non-financial service companies which are first
regarded as resident in Jersey or which have a permanent establishment in Jersey on or after June
3, 2008.
As a non-financial service company subject to tax at the rate of zero percent, we will not be
liable for Jersey income tax other than on income arising from Jersey land or property. For so
long as we are subject to tax at the rate of zero percent, payments in respect of the ordinary
shares and ADSs will not be subject to any taxation in Jersey and no withholding in respect of
taxation will be required on those payments to any holder of the ordinary shares or ADSs.
Currently, there is no double tax treaty or similar convention between the US and Jersey.
Taxation of Dividends
Dividends are declared and paid gross in US dollars. Under the existing Jersey law, payments
in respect of the ordinary shares and ADSs, whether by dividend or other distribution paid to
shareholders (other than to residents in Jersey), will not be subject to any taxation in Jersey and
no withholding in respect of taxation will be required on those payments to any holder of our
ordinary shares or ADSs.
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Taxation of Capital Gains and Estate and Gift Tax
Under current Jersey law, there are no death or estate duties, capital gains, gift, wealth,
inheritance or capital transfer taxes. No stamp duty is levied in Jersey on the issue or transfer
of ordinary shares or ADSs. In the event of the death of an individual sole shareholder, duty at
rates of up to 0.75% of the value of the ordinary shares or ADSs held may be payable on the
registration of Jersey probate or letters of administration which may be required in order to
transfer or otherwise deal with ordinary shares or ADSs held by the deceased individual sole
shareholder.
Material United States Federal Income Tax Consequences
The following summary describes the material US Federal income tax consequences to US holders
(as defined below) arising from the purchase, ownership and disposition of our ordinary shares or
ADSs. This summary is based on the provisions of the Internal Revenue Code of 1986, as amended,
which we refer to as the Code, final, temporary and proposed US Treasury Regulations promulgated
under the Code, and administrative and judicial interpretations of the Code and the US Treasury
Regulations, all as in effect as of the date of this summary, and all of which are subject to
change, possibly with retroactive effect. In addition, this discussion assumes that the
representations contained in the deposit agreement are true and that the obligations in the deposit
agreement and any related agreement have been and will be complied with in accordance with their
terms.
This summary has no binding effect or official status of any kind; we cannot assure holders
that the conclusions reached below would be sustained by a court if challenged by the Internal
Revenue Service.
For purposes of this discussion, a US holder is a holder of our ordinary shares or ADSs that
is a beneficial owner of such shares or ADSs and is:
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a US citizen; |
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an individual resident in the United States for US Federal income tax purposes; |
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a domestic corporation, or other entity taxable as a corporation, organized under the
laws of the United States or of any US state or the District of Columbia; |
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an estate the income of which is includible in its gross income for US Federal income
tax purposes without regard to its source; or |
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a trust, if either: a US court is able to exercise primary supervision over the
administration of the trust and one or more US persons have the authority to control all
the substantial decisions of the trust, or the trust has a valid election in effect under
applicable US Treasury regulations to be treated as a US person. |
This summary does not address all aspects of US Federal income taxation that may be relevant
to particular US holders in light of their particular circumstances, or to US holders subject to
special rules, including, without limitation:
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retirement plans; |
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insurance companies; |
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persons that hold ordinary shares or ADSs as part of a straddle, synthetic
security, hedge, conversion transaction or other integrated investment; |
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persons that enter into constructive sales involving our ordinary shares or ADSs or
substantially identical property with other transactions; |
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persons whose functional currency is not the US Dollar; |
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expatriates or former long-term residents of the United States; |
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financial institutions; |
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dealers in securities or currencies; |
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tax-exempt organizations; |
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persons that own, actually or constructively, 10% or more of our outstanding voting
stock; |
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persons subject to the alternative minimum tax; |
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regulated investment companies; |
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real estate investment trusts; |
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persons who trade in securities who elect to apply a mark-to-market method of
accounting; and |
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persons who acquired their shares or ADSs pursuant to the exercise of employee stock
options or otherwise as compensation. |
In addition, this summary does not address the effect of any applicable US state, local or
non-US tax laws or any federal, estate or gift tax consequences, does not consider the tax
treatment of persons who own our ordinary shares or ADSs through a partnership or other
pass-through entity, and deals only with ordinary shares or ADSs held by US holders as capital
assets as defined in Section 1221 of the Code. If a partnership (including for this purpose, any
entity treated as a partnership for US Federal income tax purposes) holds shares or ADSs, the tax
treatment of a partner generally will depend upon the status of the partner and the activities of
the partnership. If a US holder is a partner in a partnership that holds shares or ADSs, the
holder is urged to consult its own tax advisor regarding the specific tax consequences of the
ownership and disposition of the shares or ADSs.
We encourage holders of our ordinary shares or ADSs to consult with their own tax advisors
with respect to the US Federal, state and local tax consequences, as well as the tax consequences
in other jurisdictions, of the purchase, ownership and disposition of our ordinary shares or ADSs
applicable in their particular tax situations.
Ownership of Ordinary Shares or ADSs
For purposes of the Code, US holders of ADSs should be treated for US Federal income tax
purposes as the owner of the ordinary shares represented by those ADSs. Accordingly, exchanges of
ordinary shares for ADSs and ADSs for ordinary shares generally should not be subject to US Federal
income tax. The US Treasury has, however, expressed concerns that intermediaries in the chain of
ownership between the US holder of an ADS and the issuer of the security underlying the ADS may, in
some circumstances, be taking actions that are inconsistent with the beneficial ownership of the
underlying security (for example, pre-releasing ADSs to persons that do not have the beneficial
ownership of the securities underlying the ADSs). Accordingly, the availability of the reduced tax
rate (as discussed below) for dividends received by certain non-corporate US holders, including US
holders who are individuals, could be affected by future actions that may be taken by the US
Treasury and/or intermediaries in the chain of ownership between the US holders of ADSs and us.
Subject to the discussion below under the heading Passive Foreign Investment Company Rules,
for US Federal income tax purposes, distributions with respect to our ordinary shares or ADSs,
other than distributions in liquidation and distributions in redemption of stock that are treated
as exchanges, will be taxed to US holders as ordinary dividend income to the extent that the
distributions do not exceed our current and accumulated earnings and profits as determined for
federal income tax purposes. Distributions, if any, in excess of our current and accumulated
earnings and profits will constitute a non-taxable return of capital and will be applied against
and reduce the holders basis in our ordinary shares or ADSs. To the extent that these
distributions exceed the US holders tax basis in our ordinary shares or ADSs, as applicable, the
excess generally will be treated as capital gain. We do not, however, intend to calculate our
earnings and profits under US federal income tax principles. Therefore, you should expect that any
distribution from us generally will be treated for US federal income tax purposes as a dividend.
Such dividends will not be eligible for the dividends received deduction generally allowed to a US
corporation under Section 243 of the Code.
Individual US holders are eligible for reduced rates of US Federal income tax (currently a
maximum of 15%) in respect of qualified dividend income received in taxable years beginning
before January 1, 2013. For this purpose, qualified dividend income generally includes dividends
paid by non-US corporations if, among other things, certain minimum holding periods are met and
either (i) the ordinary shares (or ADSs) with respect to which the dividend has been paid are
readily tradable on an established securities
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market in the United States, or (ii) the non-US corporation is eligible for the benefits of a
comprehensive US income tax treaty which provides for the exchange of information. For this
purpose, ADSs listed on the Nasdaq exchange are considered to be readily tradable on an established
securities market in the United States. Therefore, we currently believe that dividends paid with
respect to our ordinary shares and ADSs will constitute qualified dividend income for US federal
income tax purposes, provided the individual US holders of our shares and ADSs meet certain holding
period requirements. However, if we are a passive foreign investment company, as discussed below
under the heading Passive Foreign Investment Company Rules, in the taxable year of the
distribution or the preceding tax year, the dividends paid with respect to our ADSs will not
constitute qualified dividend income. US holders are urged to consult their own tax advisors
regarding the classification of any distributions from us as qualified dividend income.
Dividends from us generally will constitute non-US-source income for foreign tax credit
limitation purposes. The limitation on foreign taxes eligible for credit is calculated separately
with respect to specific classes of income. For this purpose, dividends distributed by us
generally will be treated as passive category income or, in the case of certain US holders, as
general category income.
Sale or Other Disposition of Ordinary Shares or ADSs
Subject to the discussion below under Passive Foreign Investment Company Rules, if a US
holder sells or otherwise disposes of its ordinary shares or ADSs in a taxable transaction, it will
generally recognize gain or loss for US Federal income tax purposes in an amount equal to the
difference between the amount realized on the sale or other taxable disposition and its tax basis
in the ordinary shares or ADSs. Such gain or loss generally will be capital gain or loss and will
be long-term capital gain or loss if the US holder has held the ordinary shares or ADSs for more
than one year at the time of the sale or other taxable disposition. In general, any gain that US
holders recognize on the sale or other taxable disposition of ordinary shares or ADSs will be US
source income for purposes of the foreign tax credit limitation and any losses recognized will
generally be allocated against US source income. Deduction of capital losses is subject to
limitations under the Code.
Additional Tax After 2012
For taxable years beginning after December 31, 2012, US holders that are individuals, estates
or trusts and whose income exceeds certain thresholds generally will be subject to an additional
3.8% Medicare contribution tax on unearned income, including, among other things, cash dividends
on, and capital gains from the sale or other taxable disposition of, our ordinary shares, subject
to certain limitations and exceptions. US holders should consult their own tax advisors regarding
the effect, if any, of such tax on their ownership and disposition of our ordinary shares.
Passive Foreign Investment Company Rules
A special and adverse set of US Federal income tax rules apply to a US holder that holds stock
in a passive foreign investment company, or PFIC. In general, we will be a PFIC if 75% or more of
our gross income in a taxable year is passive income. Alternatively, we will be considered to be a
PFIC if at least 50% of our assets in a taxable year, averaged over the year and determined based
on fair market value, are held for the production of, or produce, passive income.
In determining whether a non-US corporation is a PFIC, a proportionate share of the income and
assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by
value) is taken into account.
We believe that we currently are not a PFIC and do not expect to become a PFIC in 2011.
However, there is significant uncertainty in the application of the PFIC rules to mining
enterprises such as ourselves as a result of the interplay of several sets of tax rules. In
addition, because the tests for determining PFIC status are applied as of the end of each taxable
year and are dependent upon a number of factors, some of which are beyond our control, including
the value of our assets, the market price of our ordinary shares, and the amount and type of our
gross income, we cannot assure you that we will not become a PFIC in the future or that the US
Internal Revenue Service will agree with our conclusion that we are not a PFIC now.
If we are a PFIC for US Federal income tax purposes for any year during a US holders holding
period of our ADSs or ordinary shares and the US holder does not make a mark-to-market election
or a QEF election, both as described below:
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any gain recognized by a US holder upon the sale of ADSs or ordinary shares, or the
receipt of some types of distributions, would be treated as ordinary income; |
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this income generally would be allocated ratably over a US holders holding period with
respect to our ADSs or ordinary shares; and |
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the amount allocated to prior years, with certain exceptions, will be subject to tax at
the highest tax rate in effect for those years and an interest charge would be imposed on
the amount of deferred tax on the income allocated to the prior taxable years. |
We generally will be treated as a PFIC as to any US holder if we are a PFIC for any year
during such holders holding period. However, if we cease to satisfy the requirements for PFIC
classification, a US holder may avoid PFIC classification for subsequent years if such holder
elects to recognize gain based on the unrealized appreciation in the ADSs or ordinary shares
through the close of the tax year in which we cease to be a PFIC. Additionally, if we are a PFIC,
a US holder who acquires ADSs or ordinary shares from a decedent would be denied the normally
available step-up in tax basis for our ADSs or ordinary shares to fair market value at the date of
death and instead would have a tax basis equal to the lower of the fair market value or the
decedents tax basis.
Further, if we are a PFIC, each US holder will generally be required to file an annual report
with the Internal Revenue Service for the taxable years beginning on or after March 18, 2010. US
holders are urged to consult their own tax advisors regarding this new reporting obligation and how
it may apply to their particular circumstances.
A US holder generally may be able to avoid the imposition of the special tax and interest
charge described above by electing to mark its ADSs or ordinary shares to market annually, and,
therefore, recognize for each taxable year, subject to certain limitations, ordinary income or loss
equal to the difference, as of the close of taxable year, between the fair market value of its ADSs
or ordinary shares and the adjusted tax basis of his or its ADSs or ordinary shares. Losses would
be allowed only to the extent of the net mark-to-market gain previously included by the US holder
under the election in prior taxable years. If a mark-to-market election with respect to ADSs or
ordinary shares is in effect on the date of a US holders death, the tax basis of the ADSs or
ordinary shares in the hands of a US holder who acquired them from a decedent will be the lesser of
the decedents tax basis or the fair market value of the ADSs or ordinary shares. A mark-to-market
election is available only if the ADSs or ordinary shares, as the case may be, are considered
marketable stock. Generally, stock will be considered marketable stock if it is regularly
traded on a qualified exchange within the meaning of applicable US Treasury regulations. A
class of stock is regularly traded during any calendar year during which such class of stock is
traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. The
Nasdaq constitutes a qualified exchange, and a non-US securities exchange constitutes a qualified
exchange if it is regulated or supervised by a governmental authority of the country in which the
securities exchange is located and meets certain trading, listing, financial disclosure and other
requirements set forth in US Treasury regulations.
In certain circumstances a holder of stock or ADSs in a PFIC may avoid taxation under the
rules described above by making a qualified electing fund, or QEF, election to include in
income its share of a PFICs annual income on a current basis. However, a QEF election is only
available if the PFIC annually provides its stockholders with certain tax information, and we
currently do not intend to prepare or provide such information. Accordingly, you should assume
that a QEF election is unavailable.
Rules relating to a PFIC are very complex. US holders are encouraged to consult their own tax
advisors regarding the application of the PFIC rules to their investments in our ADSs or our
ordinary shares.
Backup Withholding and Information Reporting
Payments to US holders in respect of our ordinary shares or ADSs may be subject to information
reporting to the US Internal Revenue Service and to backup withholding tax, currently imposed at a
rate of 28% (but currently scheduled to increase to 31% for taxable years beginning on or after
January 1, 2013).
However, backup withholding and information reporting will not apply to a US holder that is a
corporation or comes within an exempt category, and demonstrates the fact when so required, or
furnishes a correct taxpayer identification number and makes any other required certification. US
holders who are required to establish their exempt status generally must provide such certification
on Internal Revenue Service Form W-9.
Backup withholding is not an additional tax. Amounts withheld under the backup withholding
rules will be allowed as a refund or credit against a US holders US Federal income tax liability,
provided that the required procedures are followed.
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Recently enacted legislation requires US individuals to report an interest in any
specified foreign financial asset if the aggregate value of such assets owned by the U.S.
individual exceeds $50,000 (or such higher amount as the IRS may prescribe in future guidance).
Stock issued by a foreign corporation is treated as a specified foreign financial asset for this
purpose. US holders should consult their own tax advisors regarding this reporting obligation and
how it may apply to their particular circumstances.
United Kingdom Tax Considerations
The following statements do not constitute tax advice and are intended as a general guide only
to the U.K. tax position under current U.K. tax legislation, case law and published HM Revenue &
Customs (HMRC) practice as at the date of this document, both of which is subject to change at
any time, possibly with retrospective effect. These statements deal only with the position of
shareholders who are resident (and, in the case of individuals only, ordinarily resident and
domiciled) solely in the U.K. for tax purposes (except where the position of a non-U.K. tax
resident shareholder is expressly referred to), who hold their ordinary shares or ADSs as an
investment and who are the absolute beneficial owners of the ordinary shares or ADSs and of all
dividends of any kind paid in respect of them in circumstances where the dividends paid are
regarded for U.K. tax purposes as that persons own income (and not the income of some other
person). The tax position of certain categories of shareholders who are subject to special rules
(such as persons acquiring their shares or ADSs (or deemed to acquire their shares or ADSs) in
connection with an employment or office, dealers in securities, insurance companies and collective
investment schemes and shareholders owning 10% or more of the ordinary shares or voting power,
rights to profit or capital of the company) is not considered. Any shareholder who is in doubt as
to their tax position regarding the acquisition, ownership or disposal of their ordinary shares or
ADSs, or who are subject to tax in a jurisdiction other than the U.K., should consult their own
independent tax adviser.
Dividends
A person having an interest in ADSs or ordinary shares who is not a resident in the U.K. will
not be subject to tax in the U.K. on dividends paid on ordinary shares, unless that person carries
on a trade, profession or vocation in the U.K. (and, if that person is a company, does so through a
permanent establishment) to which the ordinary shares or ADSs in question are attributable.
A person having an interest in ADSs or ordinary shares who is resident in the U.K. and is not
a body corporate will, in general, be subject to U.K. income tax on dividends paid by us.
A U.K. resident body corporate holding an interest in ADSs or ordinary shares should not
generally be taxable on dividends paid by us after July 1, 2009. Dividends paid before this date
were, in general, subject to U.K. corporation tax.
A U.K. resident individual shareholder will be entitled to a tax credit, which may be set off
against the shareholders total income tax liability on the dividend. The value of the tax credit
is currently 10% of the aggregate of the dividend and the tax credit (the Gross Dividend), which
is also equal to one -ninth of the cash dividend received.
Such an individual U.K. resident shareholder who is liable to income tax at the basic rate
will be subject to tax on the dividend at the rate of 10% of the Gross Dividend, so that any tax
credit will satisfy in full such shareholders liability to income tax on the dividend.
An individual shareholder who is liable to income tax at the 40% tax rate will be taxed at the
rate of 32.5% on the Gross Dividend. Any tax credit will be set against, but not fully match, the
shareholders tax liability on the Gross Dividend and such shareholder will have to account for
additional income tax equal to 22.5% of the Gross Dividend (which is equal to 25% of the cash
dividend received) to the extent that the Gross Dividend, falls within the 40% tax band.
From April 6,
2010 a tax rate of 50% for taxable income above £150,000 was introduced.
Dividends which are taxable at the 50% rate will be liable to income tax at a rate of
42.5% of the Gross Dividend. Any tax credit will be set against, but not fully match, the
shareholders tax liability on the Gross Dividend and such shareholder will have to account for
additional income tax equal to 32.5% of the Gross Dividend (this equates to 36.1% of the cash
dividend received) to the extent that the Gross Dividend, when treated as the top slice of the
shareholders income, falls above the threshold for the 50% rate of tax.
An individual shareholder will not generally be able to claim repayment from HMRC of any part
of the tax credit attaching to dividends paid by us.
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Each shareholder resident outside the U.K. may also be subject to foreign taxation on dividend
income under the local law of the country(ies) in which they reside/are resident.
We are subject to tax at the rate of zero percent for the purposes of Article 123C of the
Income Tax (Jersey) Law 1961 and therefore we are taxed in Jersey at the rate of 0% on our
worldwide income. We are not required to make any deduction or withholding in respect of Jersey
taxation on any dividend we may pay.
Capital Gains
A person having an interest in ADSs or ordinary shares who is neither resident nor, in the
case of an individual shareholder, ordinarily resident in the U.K. will generally not be subject to
tax in the U.K. on gains arising on a disposal of our ordinary shares or interests in the ADSs.
However, individuals who left the U.K. on or after March 17, 1998, who were resident in the
U.K. for four out of seven tax years prior to departure, and who return to the U.K. before five
complete tax years following departure will be subject to U.K. capital gains tax on any gains
realized on the disposal during the period of absence of any assets which were owned before taking
up residence abroad.
Persons having an interest in ADSs or ordinary shares who are resident and/or, in the case of
an individual shareholder, ordinarily resident in the U.K. or who hold their ordinary shares or
interests in ADSs through a U.K. trading branch or agency (or, if that person is a company, a
permanent establishment) will, in general, be subject to U.K. taxation on gains arising on a
disposal of ordinary shares or interests in ADSs.
The first £10,100 of an individuals net chargeable gains are exempt. For gains realized on or after June 23, 2010,
the balance is taxed at 18% for gains that fall within the individuals otherwise unused basic rate income tax band
(currently £37,400) and 28% thereafter. Gains realized prior to June 23, were taxed at a flat rate of 18% irrespective
of the level of the individuals other income.
A body corporate will generally be subject to U.K. corporation tax on
chargeable gains at the standard rate of U.K. corporation tax (which
is reducing from 28% to 26% from April 1, 2011).
Inheritance Tax
Liability to U.K. inheritance tax may arise on the death of an individual having an interest
in ADSs or ordinary shares, or on a gift (or disposal at an undervalue) of ordinary shares or ADSs
by an individual, who is domiciled, or deemed to be domiciled, in the U.K.
U.K. inheritance tax may still be relevant for individuals who are neither domiciled nor deemed to be domiciled in the U.K. U.K. property is generally liable to U.K. inheritance tax subject to Double Tax Treaty provisions. This is a complicated area and individuals should consult their own independent tax adviser.
Stamp Duty and Stamp Duty Reserve Tax
No U.K. stamp duty or stamp duty reserve tax should be payable on the issue of the ordinary
shares or ADSs, or on the delivery of the ADSs into DTC.
No U.K. stamp duty should in practice be payable on the transfer of ordinary shares or ADSs
provided any instrument of transfer is executed and retained outside of the U.K. and no U.K. stamp
duty will arise in respect of any dealings in the ordinary shares or ADSs within a clearance
service, where such dealings are effected in book entry form in accordance with the procedures of
the clearance service and not by written instrument.
Stamp duty reserve tax will not be payable on an agreement to transfer ADSs or ordinary
shares, provided there is no register in the United Kingdom in respect of the ordinary shares or
ADSs.
F. DIVIDENDS AND PAYING AGENTS
Not applicable.
G. STATEMENTS BY EXPERTS
Not applicable.
H. DOCUMENTS ON DISPLAY
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You may request a copy of our US Securities and Exchange Commission filings, at no cost, by
writing or calling us at Randgold Resources Limited, 3rd Floor, Unity Chambers, 28 Halkett Street,
St. Helier, Jersey, JE2 4WJ, Channel Islands. Attention: D. J. Haddon, Telephone: (011 44)
1534-735-333. A copy of each report submitted in accordance with applicable United States law is
available for public review at our principal executive offices at 3rd Floor, Unity Chambers, 28
Halkett Street, St. Helier, Jersey, Channel Islands.
A copy of each document (or a translation thereof to the extent not in English) concerning us
that is referred to in this Annual Report, is available for public view at our principal executive
offices at 3rd Floor Unity Chambers, 28 Halkett Street, St. Helier, Jersey, Channel Islands.
Attention: D. J. Haddon, Telephone: (011 44) 1534-735-333.
I. SUBSIDIARY INFORMATION
Not applicable.
Item 11. Quantitative and Qualitative Disclosures About Market Risk Hedge Policy
Although, in general, it is not our policy to hedge our gold sales, we believe it is prudent
to hedge during times of significant capital expansion and debt and we are sometimes required to do
so under debt financing arrangements. The market price of gold has a significant effect on our
results of operations, our ability to pay dividends and undertake capital expenditures, and the
market price of our ordinary shares. Gold prices have historically fluctuated widely and are
affected by numerous industry factors over which we have no control. The aggregate effect of these
factors is impossible for us to predict.
We use hedging instruments to protect the selling price of some of our anticipated gold
production. These hedging instruments have been required by the terms of our Morila and Loulo
loans.
The Morila hedge book was closed out in 2004.
The Loulo project finance loan was entered into in 2004 with a consortium of financial
lenders, namely, Rothschild, SG Corporate and Investment Bank, ABSA Bank and HVB Group, and had as
a requirement that some hedging be put in place. The intended effect of the hedging transactions
was to lock in a fixed sale price for some of our future gold production, and reduce the adverse
impact of a future fall in gold prices.
Loulos hedging is administered by our finance department which acts upon the recommendations
of a hedging committee within the guidelines of a policy set by our board. The hedging was entered
into in terms of a requirement of the Loulo Loan. The Loulo loan and our hedging arrangements were
with a consortium of financial lenders: NM Rothschild, SG Corporate and Investment Bank, ABSA Bank
and HVB Group. The Loulo Loan had in early May 2007 been replaced by a Revolving Credit Facility,
which was terminated in 2009.
All of Loulos derivative transactions previously had to be in compliance with the terms and
conditions of the Loulo loan agreement. That agreement placed a limit on derivative transactions
of 70% of Loulos forecast production for a given year. Our board agreed as part of the financing
arrangements for the development of Loulo that some gold price protection be secured. All remaining gold
price forward sales contracts were delivered into during the year.
Foreign Currency and Commodity Price Sensitivity
In the normal course of business, the group enters into transactions denominated in foreign
currencies (primarily Euro, South African Rand, Congolese franc and Communauté Financière Africaine
Franc). As a result, the group is subject to exposure from fluctuations in foreign currency
exchange rates. In general, the group does not enter into derivatives to manage these currency
risks. Generally, the group does not hedge its exposure to gold price fluctuation risk and sells
at market spot prices. Gold sales are disclosed in US dollars and do not expose the group to any
currency fluctuation risk. However, during periods of capital expenditure or loan finance, the
company may use forward contracts or options to reduce the exposure to price movements, while
maintaining significant exposure to spot prices. These derivatives may establish a fixed price for
a portion of future production while the group maintains the ability to benefit from increases in
the spot gold price for the majority of future gold production. The group is also exposed to
104
fluctuations in the price of consumables, such as fuel, steel, rubber, cyanide and lime, mainly due
to changes in the price of oil, as well as fluctuations in exchange rates.
|
|
|
|
|
|
|
|
|
$000 |
|
2010 |
|
|
2009 |
|
Level of exposure of foreign currency risk |
|
|
|
|
|
|
|
|
Carrying value of foreign currency balances |
|
|
|
|
|
|
|
|
Cash and cash equivalents includes balances denominated in: |
|
|
|
|
|
|
|
|
Communauté Financière Africaine franc (CFA) |
|
|
24,532 |
|
|
|
7,506 |
|
|
|
|
3,439 |
|
|
|
10,987 |
|
South African rand (ZAR) |
|
|
502 |
|
|
|
(668 |
) |
|
|
|
281 |
|
|
|
59 |
|
Australian dollar (AUD) |
|
|
205 |
|
|
|
3,617 |
|
|
|
|
1,155 |
|
|
|
360 |
|
Accounts receivable and prepayments include balances denominated in: |
|
|
|
|
|
|
|
|
Communauté Financière Africaine franc (CFA) |
|
|
18,578 |
|
|
|
51,435 |
|
|
|
|
1 |
|
|
|
3,956 |
|
South African rand (ZAR) |
|
|
345 |
|
|
|
6,564 |
|
|
|
|
131 |
|
|
|
159 |
|
Australian dollar (AUD) |
|
|
12 |
|
|
|
1,171 |
|
|
|
|
|
|
|
|
47 |
|
Accounts payable includes balances denominated in: |
|
|
|
|
|
|
|
|
Communauté Financière Africaine franc (CFA) |
|
|
(5,453 |
) |
|
|
(28,264 |
) |
|
|
|
(3,949 |
) |
|
|
(5,895 |
) |
South African rand (ZAR) |
|
|
(3,583 |
) |
|
|
(3,489 |
) |
|
|
|
(51 |
) |
|
|
|
|
Australian dollar (AUD) |
|
|
(21 |
) |
|
|
(3,487 |
) |
|
|
|
(39 |
) |
|
|
|
|
The groups exposure to foreign currency arises where a company holds monetary assets and
liabilities denominated in a currency different to the functional currency of the group which is
the US dollar. Set out below is the impact of a 10.0% change in the US dollar on profit and equity
arising as a result of the revaluation of the groups foreign currency financial instruments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of 10.0% |
|
|
|
Closing |
|
|
strengthening of US |
|
|
|
exchange |
|
|
dollar on net earnings |
|
Level of exposure of foreign currency risk (continued) |
|
Rate |
|
|
and equity |
|
At December 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
0.7546 |
|
|
|
51 |
|
|
|
|
0.6465 |
|
|
|
36 |
|
Communauté Financière Africaine franc (CFA) |
|
|
504.68 |
|
|
|
3,766 |
|
South African rand (ZAR) |
|
|
6.6468 |
|
|
|
274 |
|
Australian dollar (AUD) |
|
|
1.0163 |
|
|
|
20 |
|
|
|
|
1.0001 |
|
|
|
112 |
|
At December 31, 2009 |
|
|
|
|
|
|
|
|
|
|
|
0.6977 |
|
|
|
905 |
|
|
|
|
0.6279 |
|
|
|
22 |
|
Communauté Financière Africaine franc (CFA) |
|
|
457.66 |
|
|
|
2,600 |
|
South African rand (ZAR) |
|
|
7.4174 |
|
|
|
241 |
|
Australian dollar (AUD) |
|
|
1.1199 |
|
|
|
130 |
|
|
|
|
1.0494 |
|
|
|
41 |
|
The sensitivities are based on financial assets and liabilities held at December 31 where
balances were not denominated in the functional currency of the group. The sensitivities do not
take into account the groups sales and costs and the results of the sensitivities could change due
to other factors such as changes in the value of financial assets and liabilities as a result of
non-foreign exchange influenced factors.
105
The market price of gold has a significant effect on our results of operations, our ability to
pay dividends and undertake capital expenditures and the market prices of our ordinary shares.
Gold prices have historically fluctuated widely and are affected by numerous industry factors
over which we have no control. The aggregate effect of these factors is not possible for us to
predict.
All gold price forward sales contracts were delivered into during the year.
During 2004, a hedging program totaling 365,000 ounces was put in place in terms of a
requirement of the Loulo loan. We have used four counterparties for our current hedge book. These
counterparties are international banks which have not failed to perform as required under our
hedging arrangements.
During January 2006, 10,000 ounces previously sold in even amounts over the period January
2006 to June 2006 at $430 per ounce were rolled forward into the period January 2009 to June 2009,
with a new forward price of $489 per ounce. In the same month, 6,667 ounces from the January 2006
forward sales, previously priced at $430 per ounce, were rolled forward into May and June 2006 at a
price of $437 per ounce. In February 2006, we moved 20,000 ounces previously sold forward over the
period February 2006 to April 2006 at a price of $430 per ounce, into the period June 2006 to
December 2006 at a price of $441 per ounce.
In August 2006, 5,999 ounces previously sold forward at $425.91 were rolled out in equal
quantities into January 2007 and April 2007 at prices of $431.81 and $434.06, respectively.
In December 2006, we moved 10,580 ounces previously sold forward at $435.33 in equal
quantities into February and March 2007 at new forward prices of $437.90 and $438.18, respectively.
During the first quarter of 2007, 10,752 ounces previously sold forward at $444.81 were rolled
out to the second and third quarters of 2007, 3,583 ounces at $454.51 into the second quarter and
7,168 ounces at $456.09 into the third quarter.
The Revolving Credit Facility replaced the Loulo Loan in May 2007. As the HVB Group, which
previously participated in the Loulo Loan, is not a lender in the Revolving Credit Facility, the
40,248 ounces of the remaining 2007, 2008 and 2009 hedged ounces which pertained to the HVB Group
was novated to other counterparties in May 2007. The 11,748 ounces at an average forward price of
$436.69 per ounce due for delivery in 2007 were novated and subsequently rolled forward to 2010 at
$472 per ounce. The new price is net of any novation charges. The 28,500 ounces at a previous
average forward price of $429.95 due for delivery in 2008 and 2009 were novated at $418.58, the
lower price being the result of novation charges pertaining to these ounces. Also in May 2007,
30,000 ounces previously sold forward in 2007 at an average price of $447.29 per ounce, were rolled
into 2010 at a new average forward price of $511.28 per ounce. The revolving credit facility was
cancelled during 2009.
The accounting effects of our hedging activities are as follows:
All remaining gold price forward sales contracts were delivered into during the year.
The total fair value of the above financial instruments as at December 31, 2010 was a
liability of $0 million (December 31, 2009: liability of $25.3 million).
During the year ended December 31, 2008, we sold 427,713 ounces of gold at an average price of
$792 per ounce. At the average spot gold price for the year of approximately $871 per ounce,
product sales would have amounted to approximately $373 million for the year, an increase of
approximately $34 million in sales.
During the year ended December 31, 2009, we sold 486,324 ounces of gold at an average price of
$893 per ounce. At the average spot gold price for the year of approximately $973 per ounce,
product sales would have amounted to approximately $473 million for the year, an increase of
approximately $40 million in sales.
During the year ended December 31, 2010, we sold 413,262 ounces of gold at an average price of
$1,180 per ounce. At the average spot gold price for the year of approximately $1,224 per ounce,
product sales would have amounted to approximately $506 million for the year, an increase of
approximately $21 million in sales.
106
Interest Rate Sensitivity
We generally do not undertake any specific actions to cover our exposure to interest rate risk
and at December 31, 2010 were not party to any interest rate risk management transactions.
At December 31, 2008 the fair value of our borrowings, including the short-term portion of
these liabilities, excluding loans from outside shareholders in subsidiaries, was estimated at $2.8
million. The aggregate hypothetical loss in earnings on an annual basis from a hypothetical
increase of 10% of the three month LIBOR rate is negligible.
At December 31, 2009 the fair value of our borrowings, including the short-term portion of
these liabilities, excluding loans from outside shareholders in subsidiaries, was estimated at $1.3
million. The aggregate hypothetical loss in earnings on an annual basis from a hypothetical
increase of 10% of the three month LIBOR rate is negligible.
At December 31, 2010 the fair value of our borrowings, including the short-term portion of these
liabilities, excluding loans from outside shareholders in subsidiaries, was estimated at $0.2
million. The aggregate hypothetical loss in earnings on an annual basis from a hypothetical
increase of 10% of the three month LIBOR rate is negligible.
As our net earnings exposure with respect of debt instruments was mostly to the one month
LIBOR, the hypothetical loss was modeled by calculating the 10% adverse change in one month LIBOR
multiplied by the fair value of the respective debt instrument.
Item 12. Description of Securities Other Than Equity Securities
A. DEBT SECURITIES
Not Applicable.
B. WARRANTS AND RIGHTS
Not Applicable.
C. OTHER SECURITIES
Not Applicable.
D. AMERICAN DEPOSITARY SHARES
Fees Payable by ADS Holders
Our American Depositary Shares, or ADSs, each representing the right to receive one of our
ordinary shares, are listed on the Nasdaq Global Select Market under the symbol GOLD. A copy of
our Form of Amended and Restated Deposit Agreement with The Bank of New York Mellon (the
Depositary) was filed with the SEC as an exhibit to our Form F-6 filed on October 7, 2009 (the
Deposit Agreement). Pursuant to the Deposit Agreement, holders of our ADSs may have to pay to
the Depositary, either directly or indirectly, fees or charges up to the amounts set forth in the
table below:
|
|
|
Associated Fee |
|
Depositary Action |
$5.00 or less per 100 ADSs (or portion thereof).
|
|
Execution and delivery of ADRs and the surrender of ADRs
pursuant to the Deposit Agreement. |
|
|
|
$0.02 or less per ADS (or portion thereof).
|
|
Any cash distribution made pursuant to the Deposit Agreement,
including, among other things: |
|
|
|
|
|
cash distributions or dividends, |
|
|
|
|
|
distributions other than cash, shares or rights, |
|
|
|
|
|
distributions in shares, and |
|
|
|
|
|
rights of any other nature, including rights to subscribe
for additional shares. |
107
|
|
|
Associated Fee |
|
Depositary Action |
Taxes and other governmental charges.
|
|
As applicable. |
|
|
|
Registration fees in effect for the
registration of transfers of shares generally
on the share register of the Company or foreign
registrar and applicable to transfers of shares
to or from the name of the Depositary or its
nominee or the custodian or its nominee on the
making of deposits or withdrawals.
|
|
As applicable. |
|
|
|
A fee equal to the fee for the execution and
delivery of ADSs which would have been charged
as a result of the deposit of such securities.
|
|
Distributions of securities other than cash, shares or rights. |
|
|
|
Any other charges payable by the Depositary,
any of its agents (and their agents), including
the custodian (by billing such owners for such
charge or by deducting such charge from one or
more cash dividends or other cash
distributions).
|
|
Servicing of shares or other deposited securities. |
|
|
|
Expenses incurred by the Depositary.
|
|
Cable, telex and facsimile transmission (where expressly
provided for in the Deposit Agreement) |
|
|
|
|
|
Foreign currency conversion into U.S. dollars |
Depositary Payments for 2009
For the year ended December 31, 2010, our Depositary made no payments on our behalf in
relation to our ADR program.
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
There have been no material defaults in the payment of principal, interest, a sinking fund or
purchase fund installment or any other material default with respect to any of our indebtedness.
Item 14. Material Modification to the Rights of Security Holders and Use of Proceeds
Effective on June 11, 2004, we undertook a subdivision of our ordinary shares, which increased
our issued share capital from 29,273,685 to 58,547,370 ordinary shares. In connection with this
share split, our ordinary shareholders of record on June 11, 2004 received two additional $0.05
ordinary shares for every one $0.10 ordinary share they held. Following the share split, each
shareholder held the same percentage interest in us, however, the trading price of each share was
adjusted to reflect the share split. ADS holders were affected the same way as shareholders and
the ADS ratio remains one ADS to one ordinary share.
Item 15. Controls and Procedures
(a) Disclosure Controls and Procedures: Our management, with the participation of our
Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness
of the design and operation of our disclosure controls and procedures. Based on such evaluation,
our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the
period covered by this report, our disclosure controls and procedures, including controls and
procedures that are designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Securities Exchange Act of 1934, is accumulated and
communicated to our management, including our Chief Executive Officer and Chief Financial Officer,
or persons
108
performing similar functions, as appropriate to allow timely decisions regarding
required disclosure, are effective to ensure that information required to be disclosed by us in
reports that we file or submit under the Securities Exchange Act of 1934 are recorded, processed,
summarized and reported within the required time periods.
(b) Managements Report on Internal Control over Financial Reporting: Our management
is responsible for establishing and maintaining adequate internal control over financial reporting.
The Securities Exchange Act of 1934 defines internal control over financial reporting in Rule
13a-15(f) and 15d-15(f) as a process designed by, or under the supervision of, the companys
principal executive and principal financial officers and effected by the companys board of
directors, management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and includes those policies
and procedures that:
|
|
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the company; |
|
|
|
|
Provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and |
|
|
|
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the companys assets that could have a material effect
on the consolidated financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as
of December 31, 2010. In making this assessment, our management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control-Integrated Framework.
Based upon its assessment, our management concluded that, as of December 31, 2010, our
internal control over financial reporting is effective based upon those criteria.
BDO LLP, an independent registered public accounting firm that audited the consolidated
financial statements included in this annual report on Form 20-F, has issued an attestation report
on the effectiveness of our internal control over financial reporting as of December 31, 2010.
(c) See report of BDO LLP, an Independent Registered Public Accounting Firm included under
Item 18 Financial Statements, on page F-1.
(d) Changes in Internal Control Over Financial Reporting: There were no changes in
our internal control over financial reporting that occurred during the year ended December 31, 2010
that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
During the year ended December, 31 2010, as our business has expanded, we put in place
internal controls over financial reporting for two new operational areas of the business: Kibali
and Tongon. We have experienced an increase in the number of controls operated that are consistent
with those already in place. As at December 31, 2010, due to the on-going political situation in
Côte dIvoire, a higher level of control was exercised in respect of Tongon by Randgolds group level finance
staff.
Item 16. Reserved
Item 16A. Audit Committee Financial Expert
Our board determined that Mr. B.H. Asher, the former chairman of the audit committee (through
May 5, 2009), was an audit committee financial expert as defined in Item 16A of Form 20-F. Dr.
K. Voltaire, the current chairman of the audit committee, has been determined by the board to be an
audit committee financial expert. Dr. Voltaire and each of the other members of the audit
committee (being Mr. C.L. Coleman and Dr. K. Dagdelen) are independent directors.
109
Item 16B. Code of Ethics
Our board has adopted a code of ethics that applies to the Chief Executive Officer, Chief
Financial Officer and all financial officers. This code of ethics is posted on our website,
www.randgoldresources.com.
Item 16C. Principal Accountant Fees and Services
BDO LLP has served as our independent registered public accounting firm for the financial
years ended December 31, 2010, 2009, and 2008.
The following table presents the aggregate fees for professional services and other services
rendered by our Independent Registered Public Accounting Firm to us in 2010 and 2009.
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
|
|
$ |
|
|
$ |
|
|
|
(in millions) |
|
Audit Fees (1) |
|
|
0.7 |
|
|
|
0.8 |
|
Audit-related Fees (2) |
|
|
|
|
|
|
0.2 |
|
Tax Fees |
|
|
|
|
|
|
|
|
All Other Fees (3) |
|
|
|
|
|
|
0.2 |
|
Total |
|
$ |
0.7 |
|
|
$ |
1.2 |
|
|
|
|
(1) |
|
The Audit Fees consist of fees billed for the annual audit services engagement and other
audit services, which are those services that only the external auditor reasonably can
provide, and include our audit and statutory audits. |
|
(2) |
|
Audit-related fees include fees billed relating to comfort letters and consents; attest
services; and assistance with and review of documents filed with the Securities and Exchange
Commission and UK Listing Authority. |
|
(3) |
|
Other fees relate to other work performed in respect of the documents filed with the UK
Listing Authority. |
Audit Committee Pre-Approval Policies and Procedures
Below is a summary of the Audit Committees pre-approved policies and procedures:
The Audit Committee comprises only independent non-executive directors and its mandate covers
the sphere of duties relating to accounting policies, internal control, financial reporting
practices, identification of exposure to significant risks and all corporate governance issues.
The Audit Committee is responsible for the appointment, removal and oversight of the
activities of the external auditors. In addition, the Audit Committee sets the principles for
recommending the use of external auditors for non-audit services. The Audit Committee approves all
external consulting services and other charges levied by the external auditors.
The Audit Committee met six times during 2010. At some of these meetings the committee met
with the external audit partner and the finance director, to review the audit plans of the external
auditors, to ascertain the extent to which the scope of the audit can be relied upon to detect
weaknesses in internal controls and to review the quarterly and half-yearly financial results, the
preliminary announcement of the annual results and the annual financial statements, as well as all
statutory submissions of a financial nature, prior to approval by the board.
During 2010, all Audit-related Fees provided to us by BDO LLP were approved by the Audit
Committee pursuant to the de minimis exception to the pre-approval requirement provided by
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
No work was performed by persons other than BDO LLPs full-time, permanent employees on the
BDO LLPs engagement to audit our financial statements for 2010 and 2009.
110
During 2010, the Audit Committee has overseen work undertaken to ensure compliance with the
requirements of Section 404 of the Sarbanes Oxley Act.
Item 16D. Exemptions from the Listing Standards for Audit Committees
Not Applicable.
Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers
Neither the issuer nor any affiliate of the issuer purchased any of our shares during 2009.
Item 16F. Change in Registrants Certifying Accountant
Not Applicable.
Item 16G. Corporate Governance
We are subject to a variety of corporate governance guidelines and requirements of Nasdaq, the
London Stock Exchange and the SEC. We believe that we comply with the applicable corporate
governance requirements. Although we are listed on the Nasdaq Global Select Market, we are not
required to comply with all of Nasdaqs corporate governance rules which are applicable to US
companies. The significant ways in which the Nasdaq corporate governance rules differ for us, as a
foreign company, are a reduced quorum requirement for shareholder meetings. In the year 2010 we
were required to comply with the provisions of the Combined Code on Corporate Governance which was
issued in the United Kingdom in June 2008. According to the provisions of the Combined Code we
were in compliance with the provisions throughout the year, and we disclosed that Mr. R. I. Israel
was not deemed independent in accordance with the independence definitions and was subject to
re-election on an annual basis as per such requirements. At the annual general meeting held in May
2010 Mr. Israel was re-elected. With respect to reporting periods after June 29, 2010 we are
subject to the requirements of the United Kingdoms Corporate Governance Code.
PART III
Item 17. Financial Statements
Not Applicable.
Item 18. Financial Statements
Reference is made to the financial statements, commencing on page F-1, and the financial
statement schedule on page S-1.
Item 19. Exhibits
The following exhibits are filed as part of this Annual Report:
|
|
|
Exhibit No. |
|
Exhibit |
1.1*
|
|
Memorandum of Association of Randgold Resources Limited, as amended. |
|
|
|
1.2*
|
|
Articles of Association of Randgold Resources Limited, as amended. |
|
|
|
2.1
|
|
Memorandum of Association of Randgold Resources Limited, as amended (see Exhibit 1.1). |
|
|
|
2.2+++
|
|
Form of Amended and Restated Deposit Agreement, dated as of October 14, 2009 among Randgold Resources Limited, The Bank of New York as Depositary,
and owners and holders from time to time of American Depositary receipts issued thereunder. |
|
|
|
2.3+++
|
|
Form of American Depositary Receipt. |
111
|
|
|
Exhibit No. |
|
Exhibit |
2.4*
|
|
Excerpts of relevant provisions of the Companies (Jersey) Law 1991. |
|
|
|
2.5*
|
|
Shareholders Agreement (English translation), dated June 23, 2000, between the Government of Mali and Morila Limited. |
|
|
|
4.1*
|
|
Deed Governing the Relationship Between the Parties Upon Admission between Randgold & Exploration Company Limited and Randgold Resources Limited,
dated June 26, 1997 (Relationship Agreement). |
|
|
|
4.2*
|
|
License Agreement, dated June 26, 1997, between Randgold & Exploration Company Limited and Randgold Resources Limited. |
|
|
|
4.3*
|
|
Agreement, dated December 21, 1999, between Société des Mines de Morila SA, Randgold Resources Limited and Morila Limited (loan from Randgold
Resources Limited to Morila Limited). |
|
|
|
4.4*
|
|
Sale of Shares Agreement, dated May 29, 2000, between AngloGold Limited, Randgold Resources Limited and Randgold Resources (Morila) Limited. |
|
|
|
4.5*
|
|
Joint Venture Agreement, dated May 29, 2000, between AngloGold Limited and Randgold Resources Limited. |
|
|
|
4.6*
|
|
Operator Agreement, dated May 29, 2000, between Société des Mines de Morila SA and AngloGold Services Mali SA. |
|
|
|
4.7*
|
|
Cession of Shareholders Loan Memorandum of Agreement, dated July 3, 2000, between Randgold Resources Limited and AngloGold Morila Holdings
Limited. |
|
|
|
4.8*
|
|
Deferred Terms Agreement by and between Société des Mines de Morila SA and Rolls-Royce Power Ventures Limited, dated February 25, 2000. |
|
|
|
4.9*
|
|
Deed of Guarantee, dated August 25, 2000, between Randgold Resources Limited, Randgold & Exploration Company Limited and SYPPS. |
|
|
|
4.10*
|
|
Deferred Terms Agreement by and between Société des Mines de Morila SA and Rolls-Royce Power Ventures Limited, dated December 9, 1999. |
|
|
|
4.11*
|
|
Deed of Guarantee given under the Morila Deferred Terms Agreement, dated March 3, 2000, between Randgold Resources Limited, Randgold & Exploration
Company Limited and Mopps. |
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4.12*
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Morila Exploitation Permit (English translation). |
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4.13*
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Transfer of Morila Exploitation Permit from Randgold Resources Limited to Morila SA. |
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4.14*
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Randgold Resources Limited Share Option Scheme. |
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4.15+
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Structured Precious Metals Option and Loan Confirmation, dated August 30, 2002, between Randgold Resources Limited and NM Rothschild & Sons Limited. |
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4.16+
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Third Contract of Employment between Randgold Resources Limited and Roger Ainsley Ralph Kebble. |
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4.17+
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Services Agreement between Randgold & Exploration Company Limited and Randgold Resources Limited, dated February 2, 2003. |
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4.18++
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Shareholder Loan Agreement dated August 1, 2004, between Randgold Resources Limited and Randgold Resources (Somilo) Limited. |
112
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Exhibit No. |
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Exhibit |
4.19++
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Termination Agreement, dated November 9, 2004, between Randgold Resources Limited and Mr. R.A.R. Kebble. |
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4.20++
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Deed of Assignment, dated December 20, 2004, between Randgold Resources Limited and Société des Mines de Loulo S.A. |
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4.21++
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International Swap Dealers Association Inc. Master Agreement, dated December 21, 2004, between Randgold Resources Limited and Absa Bank Limited. |
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4.22++
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Amendment to Shareholders Loan Agreement, between Randgold Resources Limited and Randgold Resources (Somilo) Limited. |
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4.23#
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|
Fifth Contract of Employment, dated January 31, 2005, between Randgold Resources Limited and Dennis Mark Bristow. |
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4.24§
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Mining Contract Agreement, dated February 15, 2005, between Société des Mine de Loulo S.A and BCM Mali S.A. |
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4.25§
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Third Contract of Employment, dated April 20, 2006, between Randgold Resources Limited and Roger A. Williams. |
|
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4.26#
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|
International Swap Dealers Association Inc. Master Agreement and Schedule thereto, dated April 23, 2007, between Fortis Bank NV/SA Limited and
Randgold Resources Limited. |
|
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4.27#
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|
International Swap Dealers Association Inc. Novation Agreement, dated April 23, 2007, between Randgold Resources Limited, Société Générale and
Fortis Bank NV/SA. |
|
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4.28#
|
|
Revolving Credit Facility Agreement, dated May 1, 2007, among Randgold Resources (Somilo) Limited, Randgold Resources Limited, various Banks and
Other Financial Institutions and NM Rothschild & Sons Limited. |
|
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4.29#
|
|
Charge Over Shares, dated May 8, 2007, between Randgold Resources Limited and NM Rothschild & Sons Limited. |
|
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4.30#
|
|
Charge Over Shares, dated May 8, 2007, between Mining Investments (Jersey) Limited and NM Rothschild & Sons Limited. |
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4.31#
|
|
Deed of Guarantee and Indemnity, dated May 8, 2007, between Randgold Resources Limited and NM Rothschild & Sons Limited. |
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4.32#
|
|
Deed of Guarantee and Indemnity, dated May 8, 2007, between Société des Mines de Loulo S.A. and NM Rothschild & Sons Limited. |
|
|
|
4.33#
|
|
Deed of Assignment, dated May 8, 2007, between Randgold Resources Limited and NM Rothschild & Sons Limited. |
|
|
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4.34#
|
|
Registered Share Pledge Agreement, dated May 9, 2007, between Randgold Resources (Somilo) Limited and NM Rothschild & Sons Limited. |
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4.35##
|
|
Joint Venture Agreement, dated April 4, 2008, between New Mining CI and Randgold Resources (Côte dIvoire) Limited. |
|
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4.36###
|
|
Addendum to the Joint Venture Agreement, dated April 4, 2008, between New Mining CI and Randgold Resources (Côte dIvoire) Limited. |
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|
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4.37###
|
|
Employment Contract, dated April 28, 2008, between Randgold Resources Limited and Dennis Mark Bristow. |
|
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4.38###
|
|
First Contract of Employment, dated April 28, 2007, between Randgold Resources Limited and Graham P. Shuttleworth. |
113
|
|
|
Exhibit No. |
|
Exhibit |
4.39###
|
|
Addendum to the Joint Venture Agreement, dated April 22, 2008, between AngloGold Ashanti Limited and Randgold Resources Limited. |
|
|
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4.40###
|
|
Addendum to the Operatorship Agreement, dated April 22, 2008, between AngloGold Ashanti Limited, AngloGold Services Mali SA, Société des Mines de
Morila SA and Mining Investments Jersey Limited. |
|
|
|
4.41%
|
|
Project Management Agreement between La Société dOpération Ivoirienne dÉlectricité (SOPIE) and Randgold Resources C.I. SARL, dated March 2009. |
|
|
|
4.42%
|
|
Letter Agreement, dated September 18, 2008, between Randgold Resources (Côte dIvoire) Limited and New Mining Côte dIvoire SARL. |
|
|
|
4.43%
|
|
Rules of the Randgold Resources Limited Restricted Share Scheme. |
|
|
|
4.44%
|
|
Contract of Employment, dated July 1, 2008, between Randgold Resources Limited and Graham P. Shuttleworth. |
|
|
|
4.45%%
|
|
Agreement between Randgold Resources Limited and AngloGold Ashanti Limited dated July 16, 2009. |
|
|
|
4.46%%
|
|
Amendment dated July 27, 2009 to Agreement between Randgold Resources Limited and AngloGold Ashanti Limited, dated July 16, 2009. |
|
|
|
4.47%%
|
|
Irrevocable Commitment from Randgold Resources Limited to Moto Goldmines Limited, dated July 27, 2009. |
|
|
|
4.48**
|
|
Arrangement Agreement, dated August 5, 2009, between Randgold Resources Limited, 0858065 B.C. Limited and Moto Goldmines Limited. |
|
|
|
4.49**
|
|
Protocole dAccord, dated October 31, 2009, between Randgold Resources Limited, AngloGold Ashanti Limited, Moto Goldmines Limited, Kibali Goldmines
S.P.R.L. and the Government of the Democratic Republic of The Congo. |
|
|
|
4.50**
|
|
Share Purchase Agreement, dated October 31, 2009, between LOffice des Mines de Kilo-Moto, Randgold Resources Limited, AngloGold Ashanti Limited,
Moto Goldmines Limited, Border Energy Pty Limited, Kibali (Jersey) Limited and Kibali Goldmines S.P.R.L. |
|
|
|
4.51***
|
|
Agreement, dated July 26, 2010 between Randgold Resources and DTP Terrassement. |
|
|
|
4.52***
|
|
Joint Venture Agreement, dated July 16, 2009 between Randgold Resources Limited and AngloGold Ashanti Limited |
|
|
|
4.53***
|
|
Appointment Letter, dated May 4, 2010, between Randgold Resources Limited and Philippe Liétard. |
|
|
|
4.54***
|
|
Appointment Letter, dated May 4, 2010, between Randgold Resources Limited and Norborne Cole Jr. |
|
|
|
4.55***
|
|
Appointment Letter, dated May 4, 2010, between Randgold Resources Limited and Christopher L Coleman. |
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|
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