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Date of event requiring this shell company report....

For the transition period from                    to                    

Commission file number: 000-49888


(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s name into English)


(Jurisdiction of incorporation or organization)

La Motte Chambers, La Motte Street, St. Helier, Jersey JE1 1BJ, Channel Islands

(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class   Name of each exchange on which registered
Ordinary Shares, US Dollar five cent par value per Share*   Nasdaq Global Select Market
American Depositary Shares each represented by one Ordinary Share    
*  Not for trading, but only in connection with the listing of American Depository 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.

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the Annual Report.

As of December 31, 2006, the Registrant had outstanding 68,763,561 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.

[X]   Yes    [ ]   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.                                                                                            [ ]   Yes    [X]   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.                                                                       [X]   Yes    [ ]   No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of ‘‘accelerated filer and large accelerated filer’’ in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer   [X]                Accelerated filer   [ ]                Non-accelerated filer   [ ]                

Indicate by check mark which financial statement item the registrant has elected to follow.                     [ ]   Item 17    [X]   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).                                                                                                                                                         [ ]   Yes    [X]   No



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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.

Aureole: A zone of altered country rock around an igneous intrusion.
bcm: Bank cubic meter, a volumetric mining measure, equivalent to a cubic meter.
Birrimian: Geological time era, about 2.1 billion years ago.
Carbonate: A mineral salt typically found in quartz veins and as a product of hydrothermal alteration of sedimentary rock.
Clastic: Rocks built up of fragments of pre-existing rocks which have been produced by the processes of weathering and erosion.
Cut-off grade: The lowest grade of material that can be mined and processed considering all applicable costs, without incurring a loss or gaining a profit.
Development: Activities required to prepare for mining activities and maintain a planned production level.
Dilution: Mixing of ore grade material with non-ore grade/waste material in the mining process.
Discordant: Structurally unconformable.
Disseminated: A term used to describe fine particles of ore or other minerals dispersed through the enclosing rock.
Dyke: A sheet-like body of igneous rock which is discordant to bedding or foliation.
EEP: Exclusive exploration permit.
EP: Exploration permit.
Exploration: Activities associated with ascertaining the existence, location, extent or quality of mineralized material, including economic and technical evaluations of mineralized material.
Fault: A fracture or a zone of fractures within a body of rock.
Feldspar: An alumino-silicate mineral.
Fold: A flexure of planar structures within the rocks.
Foliation: A term used to describe planar arrangements of minerals or mineral bands within rocks.


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Footwall: The underlying side of a fault, orebody or stope.
Fragmentation: The breakage of rock during blasting in which explosive energy fractures the solid mass into pieces; the distribution of rock particle sizes after blasting.
g/t: Gram of gold per metric tonne.
Gabbro: A dark granular igneous rock composed essentially of labradorite and augite.
Gold reserves: The gold contained within proven and probable reserves on the basis of recoverable material (reported as mill delivered tonnes and head grade).
Gold sales: 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.
Grade: The quantity of metal per unit mass of ore expressed as a percentage or, for gold, as grams of gold per tonne of ore.
Greenstone: A field term used to describe any weakly metamorphosed rock.
Greywacke: A dark gray, coarse grained, indurated sedimentary rock consisting essentially of quartz, feldspar, and fragments of other rock types.
Head grade: The grade of the ore as delivered to the metallurgical plant.
Hydrothermal: Pertaining to the action of hot aqueous solutions on rocks.
Igneous: A rock or mineral that solidified from molten or partially molten material.
In situ: In place or within unbroken rock or still in the ground.
Kriging: An interpolation method that minimizes the estimation error in the determination of reserves.
Landsat: Spectral images of the Earth’s surface.
Leaching: Dissolution of gold from the crushed and milled material, including reclaimed slime, for absorption and concentration on to the activated carbon.
Lower proterozoic: Era of geological time between 2.5 billion and 1.8 billion years before the present.


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Measures: Conversion factors from metric units to US units are provided below:

Metric Unit   US Equivalent
1 tonne = 1 t = 1.10231 tons
1 gram = 1 g = 0.03215 ounces
1 gram per tonne = 1 g/t = 0.02917 ounces per ton
1 kilogram per tonne = 1 kg/t = 29.16642 ounces per ton
1 kilometer = 1 km = 0.621371 miles
1 meter = 1 m = 3.28084 feet
1 centimeter = 1 cm = 0.3937 inches
1 millimeter = 1 mm = 0.03937 inches
1 square kilometer = 1 sq km = 0.3861 square miles
Metamorphism: A change in the structure or constitution of a rock due to natural agencies, such as pressure and heat.
Mill delivered tonnes: A quantity, expressed in tonnes, of ore delivered to the metallurgical plant.
Milling/mill: 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.
Mineable: That portion of a mineralized deposit for which extraction is technically and economically feasible.
Mineralization: The presence of a target mineral in a mass of host rock.
Mineralized material: 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.
Moz: Million troy ounces.
Mt: Million metric tonnes.
Open pit: Mining in which the ore is extracted from a pit. The geometry of the pit may vary with the characteristics of the orebody.
Orebody: A continuous, well-defined mass of material containing sufficient minerals of economic value to make extraction economically feasible.
Orogenic: Of or related to mountain building, such as when a belt of the Earth’s crust is compressed by lateral forces to form a chain of mountains.


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Ounce: One troy ounce, which equals 31.1035 grams.
Oxide Ore: Soft, weathered rock that is oxidized.
Payshoot: A defined zone of economically viable mineralization.
Portal: An entrance to a tunnel or mine.
Probable reserves: 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.
Prospect: An area of land with insufficient data available on the mineralization to determine if it is economically recoverable, but warranting further investigation.
Prospecting license or permits: An area for which permission to explore has been granted.
PL: Prospecting License.
PLR: Prospecting License (reconnaissance).
Proven reserves: 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.
Pyrite: A brassy-colored mineral of iron sulphide (compound of iron and sulfur).
Quartz: A mineral compound of silicon and oxygen.
Quartzite: Metamorphic rock with interlocking quartz grains displaying a mosaic texture.
Refining: 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.
Regolith: Weathered products of fresh rock, such as soil, alluvium, colluvium, sands, and hardened oxidized materials.
Rehabilitation: The process of restoring mined land to a condition approximating its original state.


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Reserve: That part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.
Reverse circulation (RC) drilling: A drilling method.
Rotary Air Blast (RAB) drilling: A drilling method.
Sampling: Taking small pieces of rock at intervals along exposed mineralization for assay (to determine the mineral content).
Sedimentary: 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.
Shear zone: An elongated area of structural deformation.
Silica: A naturally occurring dioxide of silicon.
Sinistral: Of, pertaining to, or on the left side.
Stockpile: A store of unprocessed ore.
Stripping: The process of removing overburden to expose ore.
Stripping ratio: Ratio of waste material to ore material in an open pit mine.
Sulphide: A mineral characterized by the linkages of sulfur with a metal or semi-metal, such as pyrite or iron sulphide. Also a zone in which sulfide minerals occur.
Tailings: Finely ground rock from which valuable minerals have been extracted by milling.
Tonalite: A type of igneous rock.
Tonnage: 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.
Tonne: One tonne is equal to 1,000 kilograms (also known as a ‘‘metric’’ ton).
Total cash costs: 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: The arrangement of a group of ore deposits or a geological feature or zone of similar grade occurring in a linear pattern.
Waste: Rock mined with an insufficient gold content to justify processing.
Weathered: Rock broken down by erosion.


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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 Africa. Our books of account are maintained in US dollars and our annual and interim financial statements are prepared on a historical cost basis in accordance with International Financial Reporting Standards, or IFRS. IFRS differs in significant respects from generally accepted accounting principles in the United States, or US GAAP. This Annual Report includes a discussion of the relevant differences between IFRS and US GAAP, and Note 27 to our audited consolidated financial statements included in this Annual Report sets forth a reconciliation from IFRS to US GAAP of net income and shareholders’ equity. We have also included in this Annual Report the audited financial information for the years ended December 31, 2006, 2005 and 2004 of Société des Mines de Morila SA, or Morila SA. 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.


Item 1.    Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2.    Offer Statistics and Expected Timetable

Not applicable.

Item 3.    Key Information


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, 2006, 2005, and 2004 and as at December 31, 2006 and 2005, which appear elsewhere in this Annual Report. The historical consolidated financial data as at December 31, 2004, 2003 and 2002, and for the years ended December 31, 2004 and 2003 have been derived from our audited consolidated financial statements not included in this Annual Report, as adjusted for the accounting changes relating to stripping costs under IFRS and US GAAP and the adoption of SFAS No. 123R ‘‘Share-based Payments’’, or SFAS No. 123R, under US GAAP.

The financial data have been prepared in accordance with IFRS, unless otherwise noted. In Note 27 to our audited consolidated financial statements, we present the principal differences between IFRS and US GAAP and a reconciliation of our net income attributable to equity shareholders and shareholders’ equity to US GAAP.


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  Year Ended
December 31,
Year Ended
December 31,
Year Ended
December 31,
Year Ended
December 31,
Year Ended
December 31,
STATEMENT OF OPERATIONS DATA: (In thousands, except per share and per ounce data)
Amounts in accordance with IFRS          
Revenues $ 258,304 $ 151,502 $ 73,330 $ 109,573 $ 131,440
Profit from operations# 72,414 47,823   7,227   43,474   65,537  
Net profit attributable to equity shareholders 47,564 45,507   13,707   42,578   62,296  
Basic earnings per share ($) 0.70 0.74   0.23   0.74   1.24  
Fully diluted earnings per share ($) 0.69 0.71   0.23   0.74   1.23  
Weighted average number of shares used in computation of basic earnings per share (3) 68,391,792 61,701,782 58,870,632 57,441,360 *  50,295,640 * 
Weighted average number of shares used in computation of fully diluted earnings per share (3) 69,331,035 63,828,996 59,996,257 57,603,364 *  50,817,466 * 
Amounts in accordance with US GAAP (2)        
Revenues 132,353 30,688
Profit/(loss) from operations before joint venture 11,325 (11,858   (9,552   (25,840   (32,788  
Equity income of Morila joint venture 39,551 56,262   18,724   62,633   87,090  
Net income 47,564 42,055   9,172   36,793   54,302  
Basic earnings per share ($) 0.70 0.68   0.16.   0.64   1.08  
Fully diluted earnings per share ($) 0.69 0.66   0.15   0.64   1.07  
Weighted average number of shares used in computation of basic earnings per share (3) 68,391,792 61,701,782 58,870,632 *  57,441,360 *  50,295,640 * 
Weighted average number of shares used in computation of fully diluted earnings per share (3) 69,331,035 63,828,996 59,996,257 *  57,603,364 *  50,817,466 * 
Other data        
Total cash costs ($ per ounce) (1) 296 201   208   111   83  
# Profit from operations is calculated as profit before income tax under IFRS, excluding interest income, interest expense and profit on sale of Syama.
* Reflects adjustments resulting from the sub-division of shares.
Restated due to change in accounting policy relating to stripping costs. Refer to notes 6 and 27 of our audited consolidated financial statements.
Ø Reflects the adoption of SFAS No. 123R using the modified retrospective application. Refer to note 27 of our audited consolidated financial statements .

December 31,
December 31,
December 31,
December 31,
December 31,
Total assets $ 512,164 $ 462,349   $ 253,577   $ 214,736   $ 168,687  
Long-term loans 25,666 49,538 40,718 6,832 19,307
Share capital 3,440 3,404 2,961 2,926 2,766
Share premium 213,653 208,582 102,342 200,244 190,618
Accumulated profit/(loss) 178,400 130,836   85,329   (28,378 )†  (71,307 )† 
Other reserves (59,430 )  (41,000 )  (14,347 )  (7,403 )  (8,293 ) 
Shareholders’ equity 336,063 301,822   176,285   167,389   113,784  
Total assets 486,446 432,610   230,142   183,660   131,588  
Long-term debt 22,329 45,081 35,042 891 3,999
Shareholders’ equity 328,968 294,727   172,369   167,389   113,570  
Restated due to change in accounting policy relating to stripping costs. Refer to notes 6 and 27 of our audited consolidated financial statements.


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1.    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 Institute’s guidance, include mine production, transport and refinery costs, general and administrative costs, movement in production inventories and ore stockpiles, transfers to and from deferred stripping where relevant, and royalties. Under the company’s revised 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 produced 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 or US GAAP measures or an indicator of our performance. The data does not have a meaning prescribed by IFRS or US GAAP 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, amortization and share-based payments would be included in a measure of total costs of producing gold under IFRS and US GAAP, 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 company’s performance as it provides an indication of a company’s profitability and efficiency, the trends in cash costs as the company’s operations mature, and a benchmark of performance to allow for comparison against other companies. Within this annual report our discussion and analysis is focused on the ‘‘total cash cost’’ measure as defined by the Gold Institute.

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 Institute’s guidance, as a non-GAAP measure, for each of the periods set forth below:

Costs Year Ended
December 31,
Year Ended
December 31,
Year Ended
December 31,
Year Ended
December 31,
Year Ended
December 31,
  (In thousands, except per ounce data)
Mine production costs $ 115,217 $ 66,612 $ 37,468 $ 26,195 $ 22,706
Depreciation and amortization 22,844 11,910 8,738 10,269 8,765
General and administration expenses 13,006 7,438 6,809 6,108 4,128
Transport and refinery costs 711 360 233 408 588
Royalties 16,979 10,273 5,304 7,648 9,185
Movement in production inventory and ore stockpiles (13,373 )  (18,744 )†  (7,425 )†  (5,115 )†  (1,756 )† 
Total cost of producing gold determined in accordance with IFRS 155,384 77,849   51,127   45,513   43,616  
Less: Non-cash costs included in total cost of producing gold:          
Depreciation and amortization (22,844 )  (11,910 )  (8,738 )  (10,269 )  (8,765 ) 
Total cash costs using the Gold Institute’s guidance 132,540 65,939   42,389   35,244   34,851  
Ounces produced* 448,242 328,428 204,194 317,596 421,127
Total production cost per ounce under IFRS 347 237   250   143   104  
Total cash cost per ounce 296 201   208   111   83  
Restated due to change in accounting policy relating to stripping costs. Refer to note 6 of our audited consolidated financial statements.
* 40% share of Morila and 100% share of Loulo.


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2.    Under IFRS, we account for our interest in Morila Limited using the proportionate consolidation method, whereby our proportionate share of Morila Limited’s assets, liabilities, income, expenses and cash flows are incorporated in our consolidated financial statements under the appropriate headings. Under US GAAP, we equity account our interest in Morila Limited. This requires that we recognize our share of Morila Limited’s net profit as a separate line item in the income statement. In the balance sheet, we reflect as an investment our share of Morila Limited’s net assets. While this results in significantly different financial statement presentation between IFRS and US GAAP, it has no impact on our net income or our net asset value, except for any difference between IFRS and US GAAP which relates to Morila.

3.    Effective June 11, 2004, we undertook a split 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 $0.05 ordinary shares for every one $0.10 ordinary share they held. See ‘‘Item 4. Information on the Company — A. History and Development of the Company’’.


Not applicable.


Not applicable.


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 Depository Shares 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.

Substantially all of our revenues 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 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;
  financial market expectations regarding the rate of inflation;
  interest rates;
  speculative activities;
  actual or expected purchases and sales of gold bullion holdings by central banks 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.


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The volatility of gold prices is illustrated in the following table, which shows the 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
1996 415 367 388
1997 367 283 331
1998 313 273 294
1999 326 253 279
2000 313 264 279
2001 293 256 271
2002 349 278 310
2003 416 320 363
2004 454 375 409
2005 537 411 444
2006 725 525 604

In addition, the current demand for, and supply of, gold affects the price of gold, but not necessarily in the same manner as current demand and supply affect the prices of other commodities. Historically, gold has tended to retain its value in relative terms against basic goods in times of inflation and monetary crisis. As a result, central banks, financial institutions, and individuals hold large amounts of gold as a store of value, and production in any given year constitutes a very small portion of the total potential supply of gold. Since the potential supply of gold is large relative to mine production in any given year, normal variations in current production will not necessarily have a significant effect on the supply of gold or its price.

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 $296 in the year ended December 31, 2006, $201 in the year ended December 31, 2005, and $208 in the year ended December 31, 2004. We expect that Morila’s 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. We do not envisage a major increase in Loulo’s cash costs as the life of mine advances, as the higher grades expected from the underground mining should offset increases in 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:

  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.


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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 the operating costs of any mining company. The cost of these consumables is impacted, to a greater or lesser extent, by fluctuations in the price of oil, exchange rates and a shortage of supplies.

Such fluctuations have a significant impact upon the 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. In addition, 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. Accordingly, any appreciation in such other currencies could adversely affect our results of operations.

Our business may be harmed if the Government of Mali fails to repay fuel duties owing to Morila and Loulo.

Up to November 2005, Morila was responsible for paying to diesel suppliers the customs duties which are then paid to the Government of Mali. Our operations at Morila and Loulo can claim reimbursement of these duties from the Government of Mali on presentation of a certificate from Société Générale de Surveillance. During the third quarter 2003, the Government of Mali began to reduce payments to all the mines in Mali due to irregularities involving certain small exploration companies. The Government of Mali has since given full exoneration from fuel duties to the mining industry so that fuel duties are no longer payable. However, significant amounts of previously paid duties remain outstanding. Our share of the amounts owing to Morila was $5.6 million on December 31, 2006 and $4.7 million on March 31, 2007. Amounts owing to Loulo were $4.1 million on December 31, 2006 and $4.1 million on March 31, 2007.

If we are unable to recover these amounts, then our results of operations and financial position would be adversely affected, as would our ability to pay dividends to our shareholders. Accordingly, our business, cash flows and financial condition will be adversely affected if anticipated dividends are not paid.

Our business may be harmed if the Government of Mali fails to repay Value Added Tax, or TVA, owing to Morila.

Our mining companies operating in Mali are exonerated by their Establishment Conventions from 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 Mali’s audit of the taxpayer’s payments, at which time the Government of Mali recognizes a liability. Unfortunately the Government of Mali did not complete its audit of Morila in 2006.

Morila has concluded a re-imbursement protocol with the Government of Mali for all TVA owing to June 2005 and is in negotiation to conclude a further protocol to bring this up to date. At December 31, 2006, the TVA owed by the Government of Mali to Morila stood at $40.8 million, which amount has increased by $3.7 million to $44.5 million at April 30, 2007.

If Morila is unable to recover these funds, then its results of operations and financial position would be adversely affected, as would its ability to pay dividends to its shareholders. Accordingly, our business, cash flows and financial condition will be adversely affected if anticipated dividends are not paid.


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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 $12.1 million (2005: $12.2 million) included in receivables. Of this latter amount, $7 million is secured by performance bonds and the remainder is secured by various personal guarantees and other assets.

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 is ongoing, and the liquidators are not expected to release a statement of MDM’s assets and liabilities until the investigation has been completed.

We believe that we will be able to recover in full the $12.1 million included in receivables. However, this 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 $12.1 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 $12.1 million included in accounts receivable which cannot in fact be recovered will need to be charged as an expense.

Recovery of any amounts in excess of our claim for recovery of the $12.1 million is dependent on the extent to which our claim is accepted by the liquidators and the amount in the free residue. 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 our use of our derivative instruments to protect us against low gold prices.

We use derivative instruments to protect the selling price of some of our anticipated gold production at Loulo. The intended effect of our derivative transactions is 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. No such protection is in place for our production at Morila.

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 is based upon market assumptions. If these assumptions are not 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 underground mining.

We have determined to develop, construct and operate underground mines at Yalea and Gara. At Yalea, first ore is expected at the end of 2007, with full production scheduled for the beginning of 2009. At Gara, production is expected at the end of 2009. These planned mines represent our entry into the business of underground mining. 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.


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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.

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:

  Seismic events;
  Underground fires;
  Cave-ins or falls of ground;
  Discharges of gases or toxic chemicals;
  Accidents; and
  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.

Actual cash costs of production, production results and economic returns may differ significantly from those anticipated by our feasibility studies for new development projects, including Tongon.

It can take a number of years from initial feasibility studies until development is completed and, during that time, the economic feasibility of production may change. In addition, there are a number of uncertainties inherent in the development and construction of any new mine, including:

  the availability and timing of necessary environmental and governmental permits;
  the timing and cost necessary to construct mining and processing facilities, which can be considerable;
  the availability and cost of skilled labor, power, water and other materials;
  the accessibility of transportation and other infrastructure, particularly in remote locations; and
  the availability of funds to finance construction and development activities.

At our Tongon project in Côte d’Ivoire, we are progressing with a drilling program that will form the basis of a final feasibility study for the development of a mine. The completion of the feasibility study is dependent in large part on the political situation in that country. Accordingly, the success of any mining operation at our Tongon project is subject to the uncertainties stated above, as well as the risks presented by the political situation in that country. We cannot provide any assurance that we will complete a final feasibility study at Tongon, or that the project will ultimately result in a new commercial mining operation.

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.


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The countries of Mali, Senegal, Burkina Faso and Côte d’Ivoire have, since independence, experienced some form of political upheaval with varying forms of changes of government taking place. Côte d’Ivoire has experienced several years of political chaos, including an attempted coup d’etat. The conflict in Côte d’Ivoire resulted in us suspending work in the country pending a peaceful solution. As a result, the progress of the Tongon feasibility study has been delayed.

Goods are supplied to our operations in Mali through Ghana, Burkina Faso 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 Togo or 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 d’Ivoire, Senegal, Burkina Faso, Ghana and Tanzania 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. Except for Tanzania, legislation in these countries currently provides for the relevant government to acquire a free ownership interest, normally of at least 10%, in any mining project. For example, the Malian government holds a 20% interest in Morila SA and Somilo SA, and cannot be diluted below 10%, as a result of this type of legislation. 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.

Under our joint venture agreement with AngloGold Ashanti Limited, or AngloGold Ashanti, we jointly manage Morila Limited, and any disputes with AngloGold Ashanti over the management of Morila Limited could adversely affect our business.

We jointly control Morila Limited with AngloGold Ashanti under a joint venture agreement. Under the joint venture agreement, AngloGold Ashanti is responsible for the day-to-day operations of Morila, subject to the overall management control of the Morila Limited board. Substantially all major management decisions, including approval of a budget for Morila, must be approved by the Morila Limited board. We and AngloGold Ashanti retain equal control over the board, with neither party holding a deciding vote. If a dispute arises between us and AngloGold Ashanti with respect to the management of Morila Limited 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. 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 has financial difficulties, or should there be a dispute in renegotiating a mining contract, or a delay in replacing an existing contractor.

We may be required to seek funding from third parties or enter into joint development arrangements to finance the development of our properties and the timely exploration of our mineral rights, which funding or development arrangements may not be available on acceptable terms, or at all.

In some countries, if we do not conduct any mineral exploration on our mineral holdings or make the required payments in lieu of completing mineral exploration, these mineral holdings will lapse and we will lose all interest that we have in these mineral rights.

We may not pay dividends to shareholders in the near future.

We paid our first dividend to ordinary shareholders in March 2007. 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. 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


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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.

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:

  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;
  the judgment is final and conclusive — it cannot be altered by the courts which pronounced it;
  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;
  the judgment has not been prescribed;
  the courts of the foreign country have jurisdiction in the circumstances of the case;
  the judgment was not obtained by fraud; and
  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, including the US Sarbanes-Oxley Act of 2002. While we have developed and instituted a corporate compliance


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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 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. We also cannot provide assurance that our independent auditors will not issue qualified attestation reports on our management’s assessment on the operating effectiveness of our internal controls over financial reporting. 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.

Risks Relating to Our Industry

The exploration of mineral properties is highly speculative in nature, involves substantial expenditures, and is frequently unproductive.

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:

  encountering unusual or unexpected formations;
  environmental pollution;
  personal injury and flooding; and
  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.


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Our ability to obtain desirable mineral exploration projects in the future may be adversely affected by competition from other exploration companies.

In conducting our exploration activities, 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 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.

All Malian national employees are members of the Union Nationale des Travailleurs du Mali, or UNTM. Due to the number of employees that belong to UNTM, we are at risk of having Morila and Loulo’s mining and exploration operations stopped for indefinite periods due to strikes and other labor disputes. Should any labor disruptions occur, our results of operations and 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, which has been forecasted 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 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.


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Item 4.    Information on 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 La Motte Chambers, La Motte Street, St. Helier, Jersey, JE1 1BJ, 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 S.A., or Somilo, through a series of transactions culminating in April 2001. The new 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 conduct our mining operations through:

  a 50% joint venture interest in Morila Limited (which in turn owns an 80% interest in the Morila mine); and
  a controlling interest in Somilo, the Yalea and Loulo 0 deposits and further exploration within the greater lease area situated within the Loulo permit.

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.

In April 2003, we entered into a heads of agreement with Resolute Mining Limited, or Resolute. Under this agreement we gave Resolute a 12 month option to acquire our entire interest in our wholly-owned subsidiary, Randgold Resources (Somisy) Limited, or RRL Somisy, for $6 million, plus a quarterly royalty payment based on the gold price, and the assumption of certain liabilities. RRL Somisy owned 80% of Somisy which owned the Syama mine.

As of June 13, 2003, Randgold & Exploration owned approximately 43% of our outstanding share capital. Since that time, a number of transactions have taken place resulting in all of our shares which were held by Randgold & Exploration being sold. Currently Randgold & Exploration has no interest in us.

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. This boxcut has been completed and the first blast into hard rock took place on December 22, 2006. First ore is expected towards the end of this year and full production is scheduled for 2009. Development at Loulo’s second underground mine, Gara, is due to start at the beginning of 2009 with first ore being delivered to the plant by the end of that year.

In April 2004, Resolute exercised its option to acquire the Syama mine. 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 makes provision for the payment of a royalty by Resolute. At a gold price of more than $350 per ounce, we would receive a royalty on Syama’s production of $10 per ounce on the first million of ounces attributable to Resolute and $5 per ounce on the next three million of attributable ounces


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entered. This royalty payment is capped at $25 million. In April 2007, Resolute officially reopened the mine and announced that it would commence a recommissioning. We did not receive any royalties in respect of the years ended December 31, 2006, 2005 or 2004.

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. The proceeds from the offering are being used for the development of the underground project at Yalea, then will be used for the Tongon feasibility study and the underground project at Gara, together with such other organic and corporate opportunities, including possible acquisitions, as might arise.

Recent Developments

Following the decision to proceed with the development of the Loulo underground mines, at Yalea and Gara, the first hard rock blast at Yalea took place in December 2006. The first ore is expected to be accessed in late 2007 and full production is scheduled for 2009. Development of Gara, Loulo’s second underground mine, is due to start in 2009. Most of the heavy vehicle fleet equipment has been delivered to site and a maintenance agreement entered into with the local Caterpillar dealership.

During 2006, as a result of peace initiatives in Côte d’Ivoire, we undertook a small drilling program in Côte d’Ivoire. The successful results have allowed us to plan and now commence a 30,000 meter feasibility drilling program designed to allow completion of a final feasibility study and for a production decision within two years.

Developments during 2006 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, 2006 totaled $61.5 million compared to $73.2 million for the year ended December 31, 2005 (excluding the Loulo power plant acquired under a finance lease) and $68.5 million for the year ended December 31, 2004. As of December 31, 2006, our capital commitments amounted to $10.5 million, principally for the Loulo underground project. The capital expenditures will be financed out of internal funds. The capital cost for both Loulo underground mines is expected to amount to $106 million for the first four years of each mine.



We engage in gold mining, exploration and related activities. Our activities are focused on West and East Africa some of the most promising areas for gold discovery in the world. In Mali, we own 50% of Morila Limited, which in turn owns 80% of Morila SA, the owner of the Morila mine. In October 2005 the first gold was poured at our new Loulo mine, in which we have an 80% controlling interest through Somilo, and work has commenced on the development of two underground mines, Yalea and Gara. In addition, we have a feasibility stage project in the neighboring country of Côte


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d’Ivoire, as well as exploration permits covering additional areas in Mali, Côte d’Ivoire, Burkina Faso, Ghana and Senegal and exploration licenses in Tanzania. As of March 31, 2007, we had declared proven and probable reserves of approximately 6.29 million ounces attributable to our percentage ownership interest in our assets.

Our strategy is to achieve superior returns on equity through the discovery, management and exploitation of resource opportunities, focusing on gold. We seek to discover bulk tonnage 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.

The focus of Morila SA’s exploration activities is on extending the existing orebody and discovering new deposits which can be processed using the Morila plant.

Outside of Morila SA, we hold exploration permits covering 3,000 square kilometers in the Morila region, where we are engaged in early stage exploration work.

The Loulo mine, in its first full year of production, produced 241,575 ounces of gold. Work on the underground development at the Yalea mine commenced and the first hard rock was blasted in December 2006. It is expected that the first ore will be accessed towards the end of the year and full production is scheduled for 2009. It is anticipated that Loulo’s second underground mine, Gara, will start in the beginning of 2009 and first ore will be delivered to the plant at the end of that year.

The focus of exploration at Loulo is to continue to explore and discover additional mineralized material from the 372 square kilometer permit and to date success has lead to the identification of two additional targets, Faraba and Boboto, which are subject to further exploration.

We also own a feasibility-stage project at Tongon, located in Côte d’Ivoire. We have not yet committed to constructing a mine at Tongon. However, we have commenced a 30,000 meter drilling program which has been designed to allow completion of a final feasibility study and for a production decision within two years.

Ownership of Mines and Subsidiaries

The Morila mine is owned by a Malian company, Morila SA. The mine is controlled by a 50/50 joint venture management committee with day-to-day operations being the responsibility of a Malian subsidiary of AngloGold Ashanti.

Under a joint venture agreement between us, we are each entitled to appoint four directors to the board of directors of Morila Limited, which owns 80% of Morila SA. AngloGold Ashanti is entitled to appoint one of its four directors as chairman, which position does not possess an additional vote. A quorum of the board for any meeting may only be achieved if at least two directors appointed by each of us are present. We have further agreed that all major decisions involving Morila Limited must be decided upon at the board level on a consensus basis, though under an operating agreement we have agreed to delegate responsibility for and authority regarding the day-to-day operation of Morila to a subsidiary of AngloGold Ashanti. Under the joint venture agreement, if either party wishes to sell its interest in Morila Limited, the other has a right of first refusal regarding that interest.

From the start of production in October 2000 through December 2006, Morila has produced approximately 4.3 million ounces of gold at a total cash cost of $142 per ounce.

The Loulo mine is owned by a Malian company, Somilo, which in turn is owned 80% by Randgold Resources (Somilo) Limited, our wholly-owned subsidiary, and 20% by the State of Mali. Randgold Resources is the operator of the Loulo mine. In 2006, Loulo’s production was 241,575 ounces at a total cash cost of $328 per ounce.


We target profitable gold deposits that have the potential to host mineable gold reserves of two million ounces or more.


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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 occur in West Africa in abundance. The Birrimian 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 d’Ivoire, 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 Birrimian Formation, a series of Lower Proterozoic volcanic and sedimentary rocks. The West African Birrimian sequences host a number of world class gold deposits and producing gold mines.

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 d’Ivoire, Mali, Burkina Faso, and Senegal at relatively low entry costs.


Only those reserves which qualify as proven and probable reserves for purposes of the Securities and Exchange Commission’s industry guide number 7 are presented in this Annual Report. The reserves are calculated at an average gold price of $475 per ounce (2005: $425 per ounce) over the life of the mine or project.

Morila reserves have been estimated by our joint venture partner, AngloGold Ashanti. The Loulo mine and Project reserves were estimated by us in conjunction with our independent mining engineers.

Total reserves as of December 31, 2006, amounted to 75.85 million tonnes at an average grade of 3.66 g/t, giving 8.93 million ounces of gold of which 6.29 million ounces are attributable to us. In calculating proven and probable reserves, current industry standard estimation methods are used. The reserves 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 level studies. Factors such as grade distribution of the orebody, planned production rates, forecast working costs 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.

The following table summarizes our declared reserves as of December 31, 2006:

  Proven Reserves Probable Reserves Total Reserves
Morila mine 15.36 2.50 1.23 11.35 2.47 0.90 26.71 2.49 2.13
Loulo Project * 11.21 3.47 1.26 37.93 4.54 5.54 49.14 4.30 6.80
* Includes Loulo underground.

A 10% mining dilution at zero grade and a gold loss of 5% have been incorporated into the estimates of reserves and are reported as mill delivered tonnes and head grades. Metallurgical recovery factors have not been applied to the reserve figures. The approximate metallurgical recovery factors would be 91.5% for the Morila mine and 89.6% for the Loulo mine.

Mining Operations — Loulo

The Loulo Mine Project is situated in western Mali adjacent to the Falémé River — which forms the frontier with Senegal. It is located 350 kilometers west of Bamako and 220 kilometers south of Kayes. Loulo falls within the Birrimian sequence of the Kenieba inlier. This succession of volcano-sedimentary and clastic rocks contains several major regional shear structures hosting gold deposits such as Sadiola, Gara (formerly known as Loulo 0) and Yalea as well as numerous other satellite targets. Loulo is situated 96 kilometers from Sadiola.


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Following the 2003 updated feasibility study on the Loulo open pit project (which comprises the Gara and Yalea deposits) and the rise in the gold price, our board and that of Somilo approved the development of the Loulo open pit project. Construction commenced in February 2004. The mine produced its first gold in October 2005 and made its first gold sale on November 8, 2005, which marked the commencement of the five year tax holiday and three year duty free period granted to the mine under the Loulo establishment convention.

The President of Mali, Amadou Toumani Touré, officially opened the Loulo open pit mine on November 12, 2005 at an event attended by, among others, Malian government ministers, ministers from other West African countries, several thousand local villagers and their leadership, and our board.

Loulo Mine

The Gara orebody was first discovered on the lease by the Syndicat Or (a joint venture between the Bureau de Recherches Géologiques et Minières and Direction Nationale de la Géologie et des Mines) in 1981. In June 1992, BHP Minerals Mali Inc acquired the shares of Bureau de Recherches Géologiques et Minières (in Syndicat Or), and entered the Somilo joint venture together with the Malian government. BHP Minerals Mali Inc was subsequently acquired by us, in October 1996.

At that time, the total project gold mineralized material was estimated by BHP Minerals Mali Inc to be 1.25 million ounces. We then undertook detailed exploration which resulted in the discovery of the Yalea deposit. Following the acceptance of a bankable feasibility study in 1999, by the board of directors of Somilo, we exercised our option to increase our participation in the project to 51%. However, the project was put on hold with the subsequent drop in the gold price to nearly $250 per ounce. In 2001, we also acquired the 29% La Source share in Somilo, raising our stake to 80%, with the government of Mali holding the remaining 20%.

As a result of a gold price recovery in 2003 and the completion of a successful exploration drilling campaign (which added significant confidence to our knowledge of the orebodies and highlighted the potential of significantly more reserve ounces at depth with respect to both Yalea and Gara), a revised feasibility study was conducted and demonstrated that the project met our investment return guidelines. Our board then approved the investment in Somilo, which facilitated the development of the Loulo mine.

On December 30, 2005, notice of default was given to the main construction contractor and our capital projects team took over completing the hard rock crushing and related phase II circuits, which had fallen behind schedule. Despite delays caused by the late commissioning of the hard rock crushing circuit, throughput in 2006 was maintained at levels above the design specification. This resulted in production of 241,575 ounces for the year, only marginally below expectations, mainly as a result of not being in a position to feed as much of the originally planned higher grade hard ore.

Loulo production has reached steady state and consequently the focus in 2007 will be on process optimization and improving cost control given the cost pressures impacting the industry, particularly with respect to grinding media, reagents and diesel for power generation.

Despite loading equipment difficulties, the mining contractor moved a total of 18.4 million tonnes at a strip ratio of 6.2:1 waste to ore. As part of an exercise to curtail the effect of rising contractor costs, all rise and fall formulae will be reviewed to take into account inflationary amounts and not contractor inefficiencies.

The Loulo mine has proved to be our second successful mine development. The focus is now on ensuring that the operation becomes one of Africa’s more efficient gold mines and the underground development is carried out cost effectively and on time.


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The following statistics detail the operating and production results from operations for the years ended December 31, 2006 and 2005:

    12 months ended
December 31,
Summary of Results 2006 2005
  Tonnes mined (million tonnes) 18.36 12.10
  Ore tonnes mined (million tonnes) 2.55 1.21
  Total ore milled (million tonnes) 2.60 0.53
  Tonnage rate (tonnes per hour) 337 304
  Mill availability/utilization (%) 87.90 47.30
  Head grade – reconciled (g/t) 3.15 4.46
  Overall gold recovery (%) 93.94 94.30
  Gravity (%) 5.79 6.08
  Cyanidation (%) 88.15 89.78
  Gold produced and shipped (oz) 241,575 67,984
Total mine    
  Total cash costs ($/oz)* 328 165
* Refer to ‘‘Item 3. Key Information — A. Selected Financial Data’’ for a definition of total cash cost per ounce.

Mine Facilities

Loulo mine consists of two main open pits (Yalea and Gara) as well as other smaller satellite pits. The mine is currently developing the first of its underground sections at Yalea. The second underground mine will follow in two years’ time at Gara.

The plant is designed to process an average of 320 tonnes per hour, 2.5 million tonnes per annum using the following circuits: (1) crushing — a three-stage crushing circuit for the hard rock sulfide ores and a single stage roll toothed crusher for the soft weathered oxide ores, (2) milling — the milling circuit comprises two parallel single stage ball mills in closed circuit with a dedicated cluster of hydro-cyclones, (3) gravity — two XD 48 Knelson centrifugal primary concentrators followed by a shaking table for re-dressing of primary concentrates, (4) Carbon in Leach, or CIL, recovery process, (5) Zadra elution process and gold recovery.

Mineralized Material

Despite the mining depletion, total mineralized material increased by 1.42 million ounces to 11.35 million ounces at December 31, 2006.

During the year, a total of 2.5 million tonnes at 3.35g/t was mined from four pits: Yalea, Gara, P125 and P129. The softer oxide ore was initially fed to the plant, with hard ore being stockpiled while the hard rock crusher was completed. On commissioning the hard rock crusher the plant was fed with ex-pit and stockpile material.

At December 31, 2006, total material on stockpile (all of which is included in reserves) was 673,579 tonnes at 2.44g/t. Of this, 25,461 tonnes at 3.95g/t was on the plant cone, 45,431 tonnes at 3.59g/t on the Run of Mine, or ROM, pad and 602,687 tonnes at 2.29g/t on re-handle stockpiles behind the ROM pad.

Grade control versus plant check-out reconciliations were acceptable for most of the year, leading up to the hard rock crusher commissioning, when reconciliation was poor as a result of ore being fed from unplanned sources. Once the feed was stabilized during the last quarter of the year, reconciliations were back within 3% on tonnage and 2% on grade. Infill Reverse Circulation, or RC, drilling over P129 and Gara West has allowed us to improve our confidence in the mineralized material and transfer them into the reserve category with pit designs.


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Drilling concentrated on Gara Deeps during 2006, with definition drilling also continuing at Yalea. Incorporation of the Gara holes has allowed the extension of the mineralized material to 600 meters below surface. Infill drilling has allowed for the conversion of mineralized material to reserves with the completion of the latest underground mine design. Drilling at Faraba has allowed for additional mineralized material to be added, while total mineralized material has increased by 15% inclusive of mining depletion for the year. This takes the total mineralized material number over the 11 million ounce mark at December 31, 2006. Greenfields exploration continued on the remainder of the permit with drilling at the P64 target and Gara South showing promising results.

The Securities and Exchange Commission permits companies, in their filings with the Securities and Exchange Commission, to disclose only proven and probable ore reserves. We use certain terms in this section, such as ‘‘mineralized materials’’. Investors are cautioned not to assume that all or any parts of our mineralized materials will ever be converted into reserves which qualify as ‘proven and probable reserves’ for the purposes of the Securities and Exchange Commission’s Industry Guide number 7.

Ore Reserves

After mining depletion of 262,604 ounces, the overall reserve increased substantially from 5.6 million ounces at December 31, 2005 to 6.8 million ounces at December 31, 2006. Most of the increase has taken place at Gara, but a small increase also occurred at Yalea.

The Loulo mine is a dynamic environment and consequently the planning department continually updates the mine plans. Due to the number of deposits and targets, mine plans are developed individually for parts of the operation as new information becomes available. When significant changes have been made to any part of the project, the life of mine plan is updated.

2006 was the first year of continuous operations and the resulting costs, mining rates and plant throughput realized have been used in updating the mine plans and have had a consequent effect on those plans. Pit optimization was carried out at a gold price of $475 per ounce with actual 2006 costs for mining, processing, general and administration applied.


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Ore Reserves Tonnes
• Stockpiles Proven 0.67 0.66 2.44 2.94 0.05 0.06  
• Gara (was Loulo 0)
6.12 7.29 3.19 3.29 0.63 0.77  
Probable 0.74 0.24 3.11 3.00 0.07 0.02  
Sub-total 6.87 7.53 3.18 3.28 0.70 0.79  
• Yalea – shallow pit
3.29 4.72 3.80 3.56 0.40 0.54  
Probable 0.01 0.04 2.49 2.87 0.001 0.004  
Sub-total 3.30 4.76 3.80 3.55 0.40 0.54  
• Yalea – deep pit
1.08 1.07 4.79 4.79 0.17 0.17  
Probable 0.68 0.68 5.71 5.72 0.13 0.12  
Sub-total 1.77 1.75 5.15 5.15 0.29 0.29  
• P125
0.05 4.69 0.01  
Probable 0.001 0.51 3.59 3.53 0.0001 0.06  
Sub-total 0.05 0.51 4.66 3.53 0.01 0.06  
• P129
0.15 0.24 2.70 2.67 0.01 0.02  
• Gara West Probable 0.56 2.10 0.04  
• Total surface sources 13.37 15.46 3.51 3.56 1.52 1.77  
• Gara (was Loulo 0)
UG Probable
13.14 5.14 3.91 4.00 1.65 0.66  
• Yalea UG
22.64 17.98 4.99 5.46 3.63 3.15  
• Total UG sources 35.78 23.12 4.59 5.13 5.28 3.82  
• TOTAL PROVEN 11.21 13.75 3.47 3.48 1.26 1.54 1.01
• TOTAL PROBABLE 37.93 24.82 4.54 5.07 5.54 4.05 4.43
• TOTAL MINE 49.14 38.57 4.30 4.51 6.80 5.59 5.44

2006 reserves reported are economic at a gold price of $475 per ounce (2005: $425 per ounce).
Dilution of 10% and ore loss of 5% are incorporated into the calculation of reserves.
Cut-off grade of 1.4g/t.
Stockpiled ore included.

The underground operation at Yalea, which had its inaugural blast on October 17, 2006, has seen significant reworking of the mine plans. The increased confidence in understanding the underground cost profile has had an effect on optimizing the open pit to underground interface leading to more ore being planned to be mined from underground. The deeper pit reserves in the south of Yalea attract a stripping ratio of approximately 13:1 indicating that it might be more efficient to exploit this ore from underground. These have consequently been separated from those shallower reserves pending completion of an underground mine design and plan, at which stage they might report to the underground reserve.

The 2006 mining operation at Yalea led to the depletion of 1.08 million tonnes at a grade of 3.15g/t for 105,808 ounces.

The open pit design at Gara has also been updated based on the latest mineralized material model and updated costs. An update to the open pit/underground interface is currently underway. The higher operating costs have been offset by the higher gold price indicating a similar size pit to that previously reported. During the year, 1.28 million tonnes at a grade of 3.47g/t for 139,043 ounces were mined from the Gara pit.


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During the year mining also took place in the two smaller pits, P125 and P129, where a combined total of 17,753 ounces was mined.

Underground reserves were increased during the year as a result of an increase in the mineralized material model due to extra drilling. This translated into an increase in underground reserves at Gara of approximately 720,000 ounces which was reported at the end of the fourth quarter of 2006. Subsequent to that a further refinement in the underground mine design has led to the reserve being increased to 13.14 million tonnes at a grade of 3.91g/t for 1.65 million ounces (2005: 5.14 million tonnes at a grade of 4.00g/t for 0.66 million ounces). While this has almost tripled the Gara reserve, early indications from drilling to the south of the current reserves is that additional high grade mineralization is present in this area. This could lead to a re-planning and scheduling of the Gara underground where mining is due to commence in 2009.


Mining operations at Loulo are carried out under contract by a third party contractor which operates a fleet of two Liebherr 994B excavators and 14 Caterpillar 777D dump trucks, assisted by a variety of ancillary equipment. Apart from mining the main Gara and Yalea pits, this year also saw the mining of two satellite pits, P129 and P125. That third party contractor also provides the drill and blast services with bulk explosive products and accessories being supplied by another third party contractor.

The average production volume for the mining fleet during 2006 was 700,000 bcm per month, which was ramped up to 800 kbcm per month towards the end of the year.

Mining Results 2006 2005
Ore tonnes mined (million tonnes) 2.55 1.21
Ore grade (g/t) 3.35 4.50
Waste mined (million tonnes) 15.82 10.89
Stripping ratio 6.2:1 10:1