How can mining companies maximise shareholder return creating value for all stakeholders Mines and Money December 214 Gold price 22 to 214 longest rally in history US$/oz 2 18 16 14 12 1 8 6 4 2 1
Gold mining industry fails to deliver value 4 35 3 Euromoney Global Gold Index 25 2 15 1 B A 5-22 214 Source: SNL Higher revenue and steady production recipe for profits? Tonnes produced 35 3 25 2 15 1 5 2 21 22 23 24 25 26 27 28 29 21 211 212 213 Mine Production Gold Price Gold price $/oz 1 8 1 6 1 4 1 2 1 8 6 4 2 - Source: SNL 2
Cumulative free cash flow burn for top gold companies shareholders footing the bill $16bn cumulative negative FCF since 2 Number of shares in issue trebled This was despite a 4-fold rise in the gold price during this period We expect this trend to accelerate in a low gold price environment $ Bn Shares Bn 1 6 Shares outstanding Bn (RHS) 5,5 5 5 4,5 4-5 3,5 3-1 2,5-15 Cumulative Free Cash Flow US$m (LHS) 2 1,5-2 -$16bn 1 2 21 22 23 24 25 26 27 28 29 21 211 212 213 Source: Citi Research, Bloomberg (global gold mining companies under City coverage) Capital expenditure grows without delivering benefits US$m 3 25 2 15 1 5 Production Moz Capex US$m Moz 35 3 25 2 15 1 5 FY FY1 FY2 FY3 FY4 FY5 FY6 FY7 FY8 FY9 FY1 FY11 FY12 FY13 Source: Citi Research, Bloomberg 3
Industry failed to replace what it mined for more than a decade 1 8 6 4 2 Moz US$m 7 6 5 4 3 2 1 3-yr Running Avg of Potential Au Prd from Discoveries** (mil oz) CPM's World Gold Mine Production (mil oz) Exploration Budgets Aimed at Discovery* (US$ mil) Lack of exploration success drives decline in grade 3,5 3, g/t Reserve Grade Mining Head Grade Reserve grade vs Mining head grade 2,5 2, 1,5 1,,5 2 21 22 23 24 25 26 27 28 29 21 211 212 Major gold producers reserve calculation prices 24-214 $/oz 16 14 12 1 8 6 4 2 Eldorado Goldcorp Agnico Eagle Iamgold Centerra Kinross Polymetal Barrick Newmont Randgold AngloGold Ashanti Harmony Gold Source: Scotiabank September 213 4
Gap between gold production and replacement threatens sustainability Moz 2 18 16 14 12 1 8 6 4 2 Gold price 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 US$/oz 18 16 14 12 1 8 6 4 2 Source: SNL Creating profitable partnerships is core to the mining industry Responsibility of mining companies: Attract first world finance Guard against exploitation of equity markets at expense of host country Deal honestly and transparently with governments Create jobs Transfer skills Support local suppliers Have meaningful social responsibility programmes Mine profitably, pay taxes Mining Companies and Investors Governments NGO s and Regulators Employees and communities Responsibility of Governments: Provide enabling platform for business Provide or incentivise development of infrastructure Mining legislation to enable investment, conducive to fiscal and legal stability, as well as good governance Provide regional safety and security 5
Expand capacity in the trough and take profits at the peak taking profits in the peaks $ $ $ expansion at peak in gold price expanding capacity in the troughs BUST in the trough Gold production costs vs gold price Source: Scotia equity research 6
Where to find >3Moz gold deposits major global gold districts Americas - 628 2.2Boz /.5g/t Africa - 222 1.4Boz / 1.4g/t Europe / Central Asia - 247.9Boz /.8g/t Australasia - 268 1.3Boz /.6g/t Alaska Canada Central Asia Russia USA Central America South America West Africa Central Africa SE Asia Australia South Africa Total global gold resources 1 465 5.8Boz /.6g/t Source: Metals Economics Group includes all global assets with >5oz contained Au Feasibility studies should be banked Orebodies drive profitability returns set by capital costs and reserve grade Gatekeepers to ensure reserves pass our filters Geological, resource and geotechnical models define mining method Trade off studies on principal concepts Open pit vs UG decline vs shaft cave or open stope, backfill options CAF vs paste Optimisation and Mine Design capital mine design and production schedule Geometallurgy drives metallurgical testwork representativity of samples critical 7
Making investment decisions Does it apply principally to gold? Have we identified and understood the country risks? Does it fit our values? Will we have active management participation? Will it enhance our partnering network? Does it diversify our geographical exposure? Does it have a reserve potential greater than 3 million ounces of gold? Does it have the potential to be +2 oz per year producer? Can we move it up the value curve? Does it have the potential to be in the lowest total unit cost quartile? Can it produce an IRR in excess of 2%? Does it have a payback of less than 2 years? Is it accretionary to our share value? Value creation in the gold industry is possible Indexed: 1 July 22=1 35 Randgold 3 25 2 15 1 5 Euromoney Global Gold Index A B 22 214 8
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. CAUTIONARY NOTE TO US INVESTORS: The SEC permits companies, in their filings with the SEC, to disclose only proven and probable ore reserves. We use certain terms in this release, such as resources, that the SEC does not recognise and strictly prohibits us from including in our filings with the SEC. Investors are cautioned not to assume that all or any parts of our 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. Randgold reports its mineral resources and mineral reserves in accordance with the JORC 212 code. As such numbers are reported to the second significant digit. They are equivalent to National Instrument 43-11. Mineral resources are reported at a cut-off grade based on a gold price of US$1 5/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 /oz, except for Morila which is reported at US$1 3/oz. Mineral reserves are reported at a cut-off grade based on US$1 /oz gold price within the pit designs. Underground reserves are also based on a gold price of US$1 /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. 9