Our winning strategy is all about profitable investments. Graham Shuttleworth

Transcription

1 Our winning strategy is all about profitable investments Graham Shuttleworth Investor Days November 2016

2 Changes in African mining codes AFRICA Mining code legislation changes Mining codes currently under review Sources: EY, Deloitte, Randgold

3 Côte d Ivoire Mining Code MINING CODE SUMMARY Côte d Ivoire (2014 Code) Tongon Convention State participation (free carried) Fiscal Stability Arrangements Right to International Arbitration 10% 10% The State guarantees the stability of the tax and customs regime. In the event of a more favourable regime, the more favourable tax and customs regime may be adopted, provided it is done in its entirety. Yes, if provided for in Establishment Agreement The State guarantees the stability of the tax and customs regime Corporate tax rate 25% 25% Tax holiday Corporate tax 5 years subsequent to first production 5 years subsequent to first production Royalties Sliding scale depending on Gold Price (GP) : *GP < $1000/oz : 3% *GP $1000/oz to $1300/oz : 3.5% 3% *GP $1300/oz to $1600/oz : 4% GP $1600/oz to $2000/oz : 5% *GP > $2000/oz :6% Import duties Exemption to first production Exemption from duties on fuel and reagents for mine life Exemption to first production Exemption from duties on fuel and reagents for mine life Yes Withholding tax on dividends 12% 12%

4 Senegal Mining Code MINING CODE SUMMARY Senegal (2003 Code) State participation (free carried) 10% The State guarantees the stability of the tax and customs regime. Fiscal Stability Arrangements In the event of a more favourable regime, the more favourable tax and customs regime may be adopted, provided it is done in its entirety. Right to International Arbitration Yes, if provided for in Establishment Agreement Corporate tax rate 25% Tax holiday Corporate tax 7 years subsequent to award of the mining permit Royalties 3% Import duties Exemption to up to 7 years subsequent to award of mining permit Withholding tax on dividends 10%

5 Mali Mining Codes MINING CODE SUMMARY Mali (1991 Code) Mali (1999 Code) Mali (2012 Code) State participation (free carried) Fiscal Stability Arrangements 10% 10% 10% Yes, may adopt more favourable conditions. No need to adopt in entirety Yes. More favourable conditions can be opted for if adopted in their entirety Yes. More favourable conditions can be opted for if adopted in their entirety Right to International Arbitration Corporate tax rate Yes Yes Yes 45% initially. Now 30% 35% initially. Now 30% 25% for first 15 years after first production. Then 30% Tax holiday Corporate tax 5 years subsequent to first None None production Royalties 6% 3% 6% Import duties Exempted first 3 years of production Exemption from duties on fuel for mine life Exempted first 3 years of production Exemption from duties on fuel for mine life Exempted first 3 years of production Exemption from duties on fuel for mine life Withholding tax on dividends Exempt Exempt 10%

6 20 years of investment in Mali $4.7 billion to economy (taxes, royalties, salaries, local suppliers and community initiatives) Randgold has contributed between 6% and 10% of Mali GDP GDP % 10% 8% 6% 4% 2% 0% June Loulo Gounkoto Morila Source; World Bank Randgold has paid $2.8 billion to stakeholders over 20 years Dividends to Randgold Gold price US$/oz 2000 Dividends to State Royalties to State Taxes and royalties US$m Randgold paid $832 million in taxes and royalties from 2011 to Au Price Supplementary taxes paid in 2016 Gounkoto Loulo Morila Loulo Exploration Syama Gold price US$/oz Randgold has invested $2.7 billion in capital since 1996 Morila Gounkoto Direct and Indirect taxes

7 Top ten risks facing mining industry EY Annual Survey Resource Nationalism has now dropped out of the top ten Cash / Capital Access now the biggest issue for the industry Social License to Operate has remained consistently high, and is an area which has consistently received focused attention from Randgold

8 Randgold country ranking Morocco Tunisia Dependent on a qualitative assessment combining: Western Sahara Senegal Guinea Bissau Guinea Sierra Leone Liberia Mauritania Cote d Ivoire Algeria Libya Mali Niger Chad Burkina Faso Nigeria Benin Togo CAR Cameroon Ghana Gabon Congo Eq Guinea DRC Rwanda Burundi Egypt N Sudan S Sudan Tanzania Ethiopia Uganda Kenya Eritrea Somalia geological opportunity political stability economic and fiscal regime infrastructure A B C D Angola Zambia Zimbabwe Namibia Botswana South Africa Malawi Lesotho Mozambique Swaziland Madagascar

9 Group Cash Operating Cost by Element 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Proportionate Cost Components (%) 2015 Monthly Operating Cost ($'000) YTD Key drivers of changing cost structure: fuel price and increased reliance on non diesel generated power sources (Hydro, Grid) Switch to owner mining at Loulo (lower UG contractors and higher employment and stores) Increased group throughput and operational challenges at Kibali and Tongon higher stores and reagents consumed

10 Mines Cash Operating Costs (cont.) 20,0% 15,0% Loulo Complex YTD 20% 15% Kibali YTD 10,0% 10% 5,0% 5% 0,0% 0% Key Drivers: Switch to UG owner mining Resulting increased UG employment and consumables use own equipment Decrease in oil price and fuel cost Overall $ costs decreased by 8%, with further opportunities related to localisation of labour Key Drivers: Decreased oil price and fuel cost and increased hydro utilisation driving down power costs UG mining ramping up production (increased % of costs) Multiple ore sources = increased reagent and stores consumption/additional engineering costs in plant, in H Decrease in OC Mining total tonnes vs 2015

11 Mines Cash Operating Costs (cont.) 30% 25% 20% 15% 10% 5% 0% Tongon YTD 30% 25% 20% 15% 10% 5% Morila YTD 0% Key Drivers: Decreased oil price and fuel cost & increased grip power utilisation Increased engineering costs (stores/other) relating to the plant to deal with crushing optimisation and the mill journal failure/repair Total $ costs in line with 2015 Key Drivers: Reduced mining operations Increased tonnes though the plant (TSF) resulting in higher reagent consumption Decrease in total monthly $ costs of 25% vs (so while some of these are proportionately higher, they are down in absolute terms)

12 Mines Power Costs 0,80 0,75 0,70 0,65 0,60 0,55 0,50 0,45 0,40 0,35 0,30 Loulo Power Cost - Processing Plant Diesel Price ($c) HFO Price ($c) $/t Processed ,60 1,40 1,20 1,00 0,80 0,60 0,40 0,20 - Kibali Power Cost Processing Plant Diesel Price ($c) $/t Processed Key Drivers: Decreased fuel price HFO and LFO Better generating efficiency and higher proportion of power from HFO (cheaper) Better power management and distribution (MV upgrade) Improved efficiency in use of power in the plant (kwh per tonne processed) Key Drivers: Decreased fuel price Commissioning and optimisation of hydro power stations, with another scheduled to come on line imminently Seasonality effect of rain on hydro availability

13 Mines Power Costs (cont.) 1 0,9 0,8 0,7 0,6 Tongon Power Cost - Processing Plant ,5 0,4 0,3 Diesel Price ($/l) $/t Processed 4 3 0,2 2 At current prices Tongon s diesel power is roughly 50% more expensive than grid in $/kwh terms Biggest driver of cost is therefore the mix of grid to diesel power generated / consumed Targeted mix is 97% grid however instability of the supply has resulted in greater reliance on diesel 2016 YTD is 12% (i.e. only 88% grid) Lower tonnes, especially during Q mill failure, resulted in higher cost / tonne substantial improvement in Q3 2016

14 Cost by Activity group Group ($/t) by Activity Total Cash Cost $/t 20 68, , $/t 2015 $/t YTD 48,0 38,0 28,0 Stockpile Royalties Trucking & Hauling G&A 6 18,0 Processing 4 Mining UG 2 8,0 Mining OC 0 Mining OC Mining UG Processing G&A Truck & Haul Royalties -2, YTD In terms of $/t processed, costs have dropped by 6% year on year Strong operation performance from Loulo complex partially offset by challenging operating conditions at Kibali and Tongon (1H 2016) Improved power costs and higher throughput Higher gold price increasing royalties

15 Cost by Activity by mine per tonne processed 40,0 35,0 30,0 25,0 20,0 15,0 10,0 5,0 - Loulo Complex ($/t) $/t 2015 $/t YTD 20,0 18,0 16,0 14,0 12,0 10,0 8,0 6,0 4,0 2,0 - Kibali ($/t) $/t 2015 $/t YTD Mining OC Mining UG Processing G&A Royalties Tongon ($/t) Morila ($/t) 25,0 20,0 15,0 10,0 5,0 - $/t 2015 $/t YTD Mining OC Processing G&A Royalties 10,0 9,0 8,0 7,0 6,0 5,0 4,0 3,0 2,0 1,0 - Mining OC / Ore Handling $/t 2015 $/t YTD Processing G&A Royalties

16 Major Consumables Reagents & Grinding Media 12,7% 12,8% 6,8% 2,9% 2,2% 4,1% 5,00 4,50 4,00 3,50 3,00 2,50 2,00 Negotiating Better Prices Stores Price Dec 2013 ($/kg) Contracted Price Q ($/kg) 22,9% 1,50 35,6% 1,00 0,50 - Cyanide Grinding Media Lime Lime Grinding Media Activated Carbon Hydrogen Peroxide Cyanide Caustic Soda Flocculant Other Reagents and grinding media made up approximately 12% of cash operating costs for 2016 Since the start of 2014, these costs have dropped by approximately 25% over the key components

17 Effect of Oil Price and Forex Oil Price - $/bbl Fuel Price USD cents / l Oil Price vs. LFO and HFO West Africa Brent crude $/bbl (1 month lag) LFO Price cents / l (fully landed) HFO Price cents / l (fully landed) Fuel made up around 16% of group costs in 2016, a decrease from 20% 2 years ago The oil price is the key driver of the landed fuel price as can be seen above At current prices ($50/bbl) a 10% change in the price of oil would result in an approximate $6/oz change in total cash cost 25% Currency Exposure 7% 3% 65% USD EUR & XOF ZAR Other The group s Euro denominated cost is approximately 25% YTD Some of the larger Euro based supplier contracts are concluded with an annually agreed rate A 10% change in the US$ / Euro exchange rate would have a $14/oz effect on total cash cost

18 Looking Ahead Unit Costs 70,0 Group Total Cash Costs - $/t 4,5 60,0 50,0 40,0 30,0 20,0 10,0 4,0 3,5 3,0 2,5 2,0 1,5 Stockpile Royalties Trucking & Hauling G&A Processing Mining UG Mining OC Grade (g/t) FOR ,0 Lower costs in 2017 driven by: Fixed cost efficiencies and lower strip ratio of Gounkoto super pit Steady state processing compared with higher costs at Tongon and Kibali in H Costs increase in 2020 as grades increase: Kibali grade increases in each year to 2020 and then Tongon starts to fall away, so the average goes up

19 Looking Ahead - All-in group cost per ounce Cost $ / oz Breakdown Depreciation $ /oz Corporate Tax $ /oz Corporate & Exploration $ /oz Total Cash Cost $ /oz ACT 2015 ACT 2016 ACT/FOR Profile reflects the lower total cash costs Depreciation increases slightly given the assets brought into use especially related to increased UG production and lower production in 2021 (this excludes the Massawa project)

20 Group consolidated production, cash cost and capital spend Production Oz 000 Total cash cost/oz Capex $m Grade g/t Oz actual Oz forecast Total Cash Cost/oz Capital Grade 0

21 A cash generative business 700 Free cash before $1200/oz Total Capital Spend ($m) Free Cash Per Year ($m)

22 Group cumulative cash balance 3000 Cash on $1200/oz Closing Cash Assuming Flat Dividend ($62m)

23 Group consolidated production, cash cost and capital spend including Massawa 1600 Production Oz 000 Total cash cost/oz Capex $m Grade g/t Oz actual Oz forecast Total Cash Cost/oz Capital Grade 0

24 Group cumulative cash including Massawa Cash on $1200/oz 900 Free cash before $1200/oz Closing Cash Assuming Flat Dividend ($62m) Total Capital Spend ($m) Free Cash Per Year ($m) A cash generative business, after capital expenditure and taxes Including funding for dividends, exploration and new projects With the ability to increase dividends substantially And still take advantage of any acquisition opportunities that might meet our investment filters

25 Disclaimer CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: Except for the historical information contained herein, the matters discussed in this presentation are forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933 and Section 21E of the US Securities Exchange Act of 1934, and applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to the future price of gold, the estimation of mineral reserves and resources, the realisation of mineral reserve estimates, the timing and amount of estimated future production, costs of production, reserve determination and reserve conversion rates. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as will, plans, expects or does not expect, is expected, budget, scheduled, estimates, forecasts, intends, anticipates or does not anticipate, or believes, or variations of such words and phrases or state that certain actions, events or results may, could, would, might or will be taken, occur or be achieved. Assumptions upon which such forward-looking statements are based are in turn based on factors and events that are not within the control of Randgold Resources Limited ( Randgold ) and there is no assurance they will prove to be correct. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Randgold to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to mining operations, including political risks and instability and risks related to international operations, actual results of current exploration activities, conclusions of economic evaluations, changes in project parameters as plans continue to be refined, as well as those factors discussed in Randgold s filings with the US Securities and Exchange Commission (the SEC ). Although Randgold has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Randgold does not undertake to update any forward-looking statements herein, except in accordance with applicable securities laws. Randgold reports its mineral resources and mineral reserves in accordance with the JORC 2012 code. As such numbers are reported to the second significant digit. They are equivalent to National Instrument Mineral resources are reported at a cut-off grade based on a gold price of US$1 500/oz. The reporting of mineral reserves is also in accordance with Industry Guide 7. Pit optimisations are carried out at a gold price of US$1 000/oz, except for Morila which is reported at US$1 300/oz. Mineral reserves are reported at a cut-off grade based on US$1 000/oz gold price within the pit designs. Underground reserves are also based on a gold price of US$1 000/oz. Dilution and ore loss are incorporated into the calculation of reserves. Cautionary note to US investors: The United States Securities and Exchange Commission (the SEC) permits mining companies, in their filings with the SEC, to disclose only proven and probable ore reserves. Randgold uses certain terms in this annual report such as resources, that the SEC does not recognise and strictly prohibits the company from including in its filings with the SEC. Investors are cautioned not to assume that all or any parts of the company s resources will ever be converted into reserves which qualify as proven and probable reserves for the purposes of the SEC s Industry Guide number 7.