Mark Bristow - CEO

Hi, and welcome to the Randgold Resources Q4 Results International Conference Call. My name is Faye and I will be your coordinator for today’s conference. For the duration of the call you will be on listen-only. However, at the end, you will have the opportunity to ask questions. I will now hand you over to your host, Mark Bristow, to begin. Thank you.

Hi. Good afternoon. Thank you. And welcome to everyone in North America, that's longer that I have seen about a great turn out today and also those who have logged in from both South Africa and Europe and the UK. As you know we presented our results to the market as is customary, but this Cape Town as part of the end of our conference. And so intention to not is, we are and as our whole presentation is on our webcast and so I'll tell you - just quickly walk you through the results in a summary form and then let you ask questions as we do in every quarter. I think just as a quick summary, we as you saw we met our 1.2 million ounce promise and reminded the market today that it was the target that we set out those five years ago, for those who remember how I say this 1 million ounce market, the way it comes as a bit of risk everyone seem just stumbled to get over it and so that’s why we did the 1.2. I think it also highlight the importance of mining is a long term business and its hard to change things over on that tool by quarter end and as Randgold is always – run its business and that is – it’s a long-term business, we set long-term assumptions and we stick to our strategy and work very hard not being seduced by the wins of the market. I think as a result say at some point, it’s with a solid we are growing cash and I think that’s a greatest measure at these times, whether you can constantly deliver. And we've shown that we've not only benefited from the deflation in the industry, but our sales at our discipline in managing working capital and generate capturing those cost reductions we are being good at this and certainly quarter four, you look at quarter fourth, quarter three, the first lot of those lower cost profiles are coming through and the pleasing thing as its on the back efficiency throughput and not necessarily and not high grade. Moving to the second slide, as is customary – a summary of our safety, health and environment. Again, I think our big focus this year is been already total injury rates, not just lost time injury rates. We have two of our operations with the lost time injury and which is always a good thing. I think the key here is that the fact that our total injury rate is come down substantially about some 16% on a quarter-by-quarter basis and 50% on a year-by-year basis is something we have to work harder at and we're confident that we'll start rolling through that at a better LTI. Kibali has been recently been recommended for ISO 14001 accreditation which brings all five of our operations to a point that they hold the certification. So what's left now is just to approve the - to get Kibali up at accreditation in the health and safety side of things and we are well on the track to do that. We've been working on it since we started operations, and so all the expectations are this year. The operations continue to care for the welfare of our communities and I am very happy to report that we continue to improve our malaria infection rates by dropping it to some 5% this last year on a year-over -ear basis and also our work on the HIV programs have delivered two very important trends and increasing number of voluntary HIV testing and when you measure that the actual infection rate or the positive test cases have reduced and that’s a significant step forward for our teams and partners in this fight against HIV. Our commitment to host countries out and said you know, and the time when we were cutting exploration capital and so on, we continue to invest as much if not more in our communities and social programs and also in our biodiversity and environmental projects as part of our all state strategy for the impact that we have on environment. And one of the latest and very exciting projects is our support of the conservation program and DRC Garamba National Park, which is well heritage site which is being largely mitigated over the last couple of decades. Moving on to Randgold resource, these are cellular piece a quarter and the year and as I noted in my speech today, we produced a good overall performance boosting production to a new level of record. They will cut in cost significantly all without having to resort to grade, strong cash flows from the operations delivered a much better cash balance for – on the balance sheet and we have every reason that we'll continue to grow this cash and on back of that our board is recommended to our shareholders that they are proving 10% increase in annual dividend. Now again, I'll also highlight that, I think you'll appreciate to achieve these sort of results when all the stars are aligned its easy, but to delivery something in a market that we find ourselves is a great achievement and I certainly mark this last year as one of the big years, if not the best, we've had in the 20 years history of Randgold Resources. And as part of this business, not only being able to deliver these results and really I would also reinforce these results, a product of the work we did in the past. It’s not a – it’s not the product of the last quarter or even the last two quarters. But what we have been focused on the last few quarters is making sure that we optimize our business plan with a slightly sharper focus on working capital and how we manage it and ensuring that we don’t waste a single that we could save, and with that capital and change being particular capital programs, we don’t hit and take and spend the money if we get to returns. But we don’t want to spend the money in the long profile or too early too late, what has spent it at the right time. And taking of working capital, Graham and his team and the logistics team have done a procurement and we just done a great job in the last few years. We've reduced our group stores value by more than $50 million and that’s in spite of the significant growth that our operations have being through in that period. And I think the other thing that’s key is the fact that our managers on our mines have risen to the challenge and certainly both the owned skills as far as our desire to see that all our operations manage their business as a commercially on - and with sound commercial decisions, as well as technically, and also treat our operations as if they were the owned and that’s something that we believe we have invested quite significantly over the last couple of years and we are confident that we will continue to be able to streamline decisions and optimize their efficiency and running our businesses because we do it with top executives on start. The next slide, our numbers really speak for themselves. They really support the point I made on the bullet line and when you look at it quarter-on-quarter or year-on-year it’s evident that the arrow is always – all pointing in the right direction, that’s a good place to be. Moving now to Loulo-Gounkoto, starting with the complex off to a difficult start to the year the complex finished with a flourish as forecast and strong production quarter-on-quarter improvement, cost came down nicely and that’s a clear across our group. Quarter four cost already started seeing all the hard work we've been talking about through the last four quarters coming today and kudos to the team for this performance at Loulo-Gounkoto and certainly achieving it, while continuing with the challenges of what ultimately worked out to be a successful transition to under mining at the underground operations. As with the group, all good quarter numbers, are trending the right way despite the local gold price profit from mining was up quarter-on-quarter and certainly as current run rate the complex is well set to achieve its guidance for 2016, which is at 670,000 ounces. What is significant about our recovering of the plans is that Loulo-Gounkoto as we guided in the last Investor Day back in 2014 that we saw the gap and we wanted to lift its production profile about 600,000 ounces for 10 years, we've achieved that and now we're looking to optimize that 10 year plan. The next graph really shows how our integrated oil management taking into account oil from difference sources, as well as matching the reagent. This week in a proactive way left is products recovery to the past four quarter and suddenly we've been talking about just not give the cited backing information. And then if we move to Loulo's standalone, the major events in Loulo is in operations lot year was taking of the underground mining operations at a move that’s already paying dividends as far as approved efficiencies, less dilution, better grades and of course, no payments of contractor to margins. The Loulo did well in a number of aspects, picking up the plant efficiency, cheers I am just showing you and also its killed and operation brand, capital projects on time and in budget. On the standalone operating numbers, what you see, I've highlight there just pleasing reduction in total cash cost and at the underground operations already has steady - slightly better grades, higher throughput and a good recovery rate and its over well for the coming year. This is where we stand with the underground operations and as you can see the team has done exceptionally well in terms of ore tonnes as well as development meters. And then after fairly tough change over the period, which I referred to earlier, which started and the actual transition was at 1 November by the end of December we're already up to budgeted production rate. And I don’t think too many examples of the transition of this complexity that happened as quickly and efficiently as the Loulo transition. And you know, we also ended all our operations. We continue to invest in our future in Gara. We made good progress as we've taking you through quarter-on-quarter and we are now at a stage where we got some significant resource potential, its delineated and the big challenge now is to have that - to convert that to reserves, which we expect to do this year. What it said [indiscernible] we only publish our reserve resources in March, but every indication is that Loulo will certainly replace it, the reserve this month with resources as a whole, some significant part of that will be reserve conversion and then we will continue to convert through this year. And same goes for Yalea, except Yalea is the year behind Gara. We're still drilling the resources out on the Yalea's south extension where we've hit some significant results with the potential of certainly confirmation of some existence of purple patch material in the deeper its southern extension. And again we - the fact is this to deliver that – the definition of the resource and then continue to convert in 2017. On a standalone basis, I am confident that they had another solid year and it contributed 44% of the complex production without looking to right again and gold production was substantially up quarter-on-quarter and year-on-year and total cash cost were down in the back of higher gold production and reduction in the mining stripping ratio. And what was key is, as we promised we completed the feasibility study on the underground project and good quarter and updated it as promised and we were able to confirm reserve of more than 1 million ounces and certainly this project needs Randgold's investment criteria and it’s a large driver in the run rate and the mine being able to bounce to 600,000 ounce per year run rate for 10 years. I think the study also gave substance to a super fit option. It’s the only mine as we have as a open pit mine without any underground, yet although we've designed it that way. And so if you look at the benefits of deflation that we're experiencing across our industry and we applied the quarter, it’s a high grade open pit project and we do have thousand dollar with all pit assuming current spot processes and we use the $60 oil for our short term planning with $100 oil for our long-term planning. We can put the pit down as shown in this diagram to take a large part of the underground plan and including a higher grade crown pillar, which effectively produces more reserve ounces than the current pits and the underground plans that I've shared with you in the previous slide. And then we still have some underground oil. So its not only scoping study as we've got quite a bit of work to do, because it’s a deep pit tenant and we have some technical risk because we need to get out in and around that and the impact of it being developed so close to the Falémé river. So if we finish the scoping and showing that some are out here and the plan is to have completed the full feasibility study through this year and we will be in a decision to make that cold weather we go underground or we develop the super pit and the pushed me underground out to 20-20 feet. It gives much better optimal profile in production and it has about half of the capital cost as the underground four more ounces indications has real potential to be the right one to do. On the exploration, it continues around the Loulo, Gara deposits and also Gounkoto that we are in also our Greenfield's team, two large governments are working on some interesting targets, notably southwest of the extensions – southwest extensions to on the Yalea's - northwest extensions on the Gounkoto structure. And this is as discussed, we share with you the five year plan to all our operations and this is Loulo plant five year plan, like all the other plans we've shown you same profile and that’s because we pretty don’t change things much from year-to-year. Slightly lower production in 2016 and '17 in order to achieve our more optimal profile and that is that we are producing more, slightly low gold grade and not building stuff piles because that gives us the best cash flow. Loulo, I mean, Gounkoto underground has been included for the first time, the schedule now and that all in capital and everything is not included in that model. Also in Mali, Morila had another solid year and moved from low grade order to Morila's way and its now gearing on to proceeds the tightening thing. We obviously decamping the tightening yet there, taking out the lower grade part of the tightening that we deposited with by processing these low grade ores. And at the same time we are – we have this small project called Adumbi, which has the potential to add a significant amount of money to the balance sheet and effectively bank disclosure at 80 plus and we've been busy just working with the communities to get all the permitting and approval before we do that. We are in time constraints and so the possibility now the five year plan we are showing includes Adumbi, that there is possibility we might have to delay because we're not going to post the issue and put out social license at risk. These are the numbers, working at Adumbi, this shows you where we've come from and able to deliver profits at quite safe enough the brand and below and then the next slide is the three year plan which shows that we are still profitable even in processing the tailings down going out to 2018, yes, is that a little smidges in training the on time, but really the business starts strategy in there. We are also making progress on our legacy project to ensure that, we utilize the throughput that we've developed for the benefit of the communities in the form of sustainable agri businesses that we've been building and we are now going to try and grow that out with Malian partners. Moving to Cote d'Ivoire, Tongon had another tough year, but it was heartening to see that its team continue to deliver a steady performance, improvement and while production was a little bit lower guidance it was still much better that of 2014. Throughput recovery about half and they were peaking reduction in total cash cost as you see over the next slide and with the plant commissioning of the quarterly installation this coming we really do deliver on the all the capital projects and get hung on to that point where it is capable of processing its design tonnage. As you can see our numbers show a steady improvement in throughput and recovery which is expected to continue when the full benefits of the capital program flow through. On good times, we had some challenges in integrating with the power utility of Cote d'Ivoire, and you can see we have over the last quarter got back to designed plan and that has an immediate impact on us. And the same with recovery, we've worked really hard at the recovery and you'll see that we've steadily driven our usages down to improve the recovery over the past six quarters and we expect to continue doing that, we still got about 2% we believe we can still deliver on. There is more complexity at the moment as we purchased transition and the operation is running well and meeting its criteria, if you consider it was as going through and if it was processing only sulphide ore, but you know, transition oils adds a bit of a challenge in the right, but our comment still remains 86%. Moving to the exploration, as I have noted before because as our current go through addresses for exploration and with the risk of the industry cutting back we've been able to expand our footprint there as is elsewhere all our areas are focused and we just completed the airborne geophysical survey Boundiali. And you can see the difference between the recent survey on our last – in the old data on the left. And we already believe that this is going to allow us to really jump on very significant differences in the structures that controlled the projects we have in our portfolio and we expect to be able to use this to prioritize the nation under on this date. Moving to the next slide, this is the most significant prospect in our portfolio at present. It’s a big system, alteration system 350 meters, but over 100 meters grading between 1.5 and 2 grams and we're about to drill the first borehole and these big systems and the question is, is it going to be a big block of 1 gram [ph] to two grams or this is top of some thing that looks a lot more exciting. And there is a lot of similarity to exactly how this looks and where we are returning as to those early stages when we drilled out Morila and were not sure exactly whether they were – this group is going to deliver some thing. So watch this space. Likewise, in total, north we've got a big target 13 kilometers drive, 200 meters wide, grading in the soil sort of about round a half a gram, that’s a big system. We've confirm that that in the rock with the stages, the critical thing is the question we've got answers, Canada system deliver an low body that meets our investment criteria and that’s still part a way to go through the early stage project. On the five year plan, the term loan and big focus on the exploration and term loan is around some of the satellite and also the extensions in the ore bodies that we've been drilling and because its paid on its capital, its got six years there for it last, part of that is all around 300,000 ounces production, as you can see we with the commissioning of the crusher we expect to bring the cost out again in 2016 and then it’s a pretty steady cost, timeline is very low, total cash cost and small sustaining capital. So it’s a big cash generator for Randgold Resources. Moving on to Kibali, another good year for Kibali, 40,000 ounces better than guidance, largely because of the strategy of building flexibility by try to beg this little, small ounce but higher grade ore bodies are at Mofu which we did last year and Mofu actually was the one that already added ounces that we exceeded the guidance part. Its never tired playing and standing in the DRC so, I don't want to take away the credit to the whole team in DRC and the work they have done to be able to deliver this sort of operation world class and anyone's terms and literally if you consider we report call in September 2013 to be up at these levels is an amazing achievement and well done to the team there. Good set of numbers, and what is particularly pleasing is how well we expected drop a grade, which we got is being manage by big increase in tonnage as we can, but is not when a plan comes together. On the underground development, it certainly continues to live up to expectations and win some with the lessons we've learned at Yalea and Gara proving invaluable. There is been a big step up last quarter as we pointed to you that is a big challenge. The team kept up to the challenge to deliver the big step up in production. As you see in the slide we've got you know, price pack [ph] is working very well and on top of that hydropower strategy is slowly rolling out and the next slide shows that significant drop in power cost, which is core to the return drivers in Kibali and of course it goes without saying that that’s being helped also by the lower fuel price. On the exploration, oil exploration strategy as I referred to earlier is reserve replacement and hung on with a strong Greenfield’s exploration trust in Côte d’Ivoire, while at Loulo-Gounkoto the emphasis on converting it significant resource industry and expanding its green soils fairly at Kibali, the fact is its still in hard flexibility of the mine plan by adding to the near mine reserves which the exploration is doing successfully. At the same time, we are building a fragment around very prospective high grade zone and the next slide is really assuming cash deposit in some of the signatures or footprints of the - where the underground ore bodies deal out on surface and we're looking at defining those targets now and seeing if we can actually expand the pit model and even with some of our pits could correlate into a larger pit. And that we referred to as the super pit plan and that’s what you see in this slide and its all about you know, trying to manage, continuing and we've got better way to define these deposits and see if we can reduce the strip ratios, so that all fit and correlates to the $1000 pit. And we've got drilling program plan for the - to continue that take that opportunity this year. Skipping outside the joint venture with Angola, certainly I am encouraged by our successes in Kibali, we looked to - as we've talked about for the last couple of quarters to expand our footprint in the DRC and recently we announced new joint venture agreements which concluded by securing or expanding our footprint in North Eastern DRC to six and half thousand square kilometers. New joint ventures I am sure picked them up already, Loncor Resources, which is there in Ngayu belt or Project Kilo Goldmines , which is the Somituri permits and Devon Resources also located in Ngayu deposits as shown here. Kibali's five plan early as presented in the slide, again, is similar to the one that you've see before and the one before that, the only difference here is that is a big step up in production in 2018 as we bring the underground up. We now have brought the underground completion into 2017 which allows us and gives us more confident that we will be able to deliver the full business plan as per strategic guide in 2018 which does the improvement in our forecast. The mine is targeting 16,000 ounces for 2016 and it will be 16, 620 and then 730 flat for the next five year plan. It does – it has a business plan or plus 600,000 ounces and under $600 an ounce for 12 years. So that would leave our grading to – the pipes on which we build out business, every year we had to get on reinforces our business and we do that all, what as you see in this slide, a declining capital requirement and that’s the way you really push the internal real rate of returns any business as you get to that harvesting period. And we got many as to do that from Kibali and the up ticks of new opportunities are quite visible and in Kibali we've very excite about still be in the next decade. And turning on Massawa, we continue to work on that. We've made some good progress on Massawa and some of the work we're doing with the Metallurgy and then particularly looking at defining the different proceeds to process the complex ore and we recently got some encouraging flotation results back, fairly results which really why we're getting 50% recovery on gravity revenue and between sort of 55 and 70 on the tiles on the CIL prices, which really augurs well for and suggest that we could achieve 70% to 80% recovery just on that basis with the fresh oxidation which makes the whole project different, particularly on capital and in just general operating cost. At the same time we continue to work on Sophia target, you will in the slide, we have another 5 to 605 meter strike for -at higher rate part of the ore body. We closed just a line of all, so we don’t have a third dimension here, we've got part a bit of work to do, but it should in the initial results, continue to be encouraging given the - as we define this in two quarters ago. Just and finishing off, I just want to remind everyone that you know, our social license with DRC Randgold and an integral part of our business and as we have done in exploration we believe that its something you should invest more in the troughs than late and our sustainable strategy has three pillars sharing values, strong partnerships and sustainable mine legacies for communities. And we believe that we've made an enormous progress in getting by and not only from our own management teams but also the communities and most importantly the governments and regular authorities of the countries in which we operate. Some of the agricultural legacy projects we've got are not small and we just recently commissioned an agriculture college in between Loulo-Gounkoto and we're far advanced group. We've completed the feasibility study into the palm oil and the DRC we just waiting for an investment framework signed off from the government. And likewise we've embarked on a big joint venture with the Department of Agriculture and completing a feasibility study for the legacy program around Tongon and as you know Ivory Coast is a big agricultural economy and have enough access, a lot more skills than we have in other countries. I think, and once in this space, we're going to be continuing to do this work and again this is something that you should be investing in and that’s why we – our focus is on profitable operations so can afford these things, no matter what part of the software we're in. Tying that all together, this is the five year consolidated forecast for the group, which again presents a profile very similar to the one I shared with you last year. There is been a slight change in the profile and that it’s smoother, it goes for 10 years now. And with very low capital as you see, just in this five year view. And the big focus being on breakeven cash flow and to this 2016 we are looking at breakeven numbers on a group basis off to capital of under $800 an ounce. Our guidance for 2016 is $1.25 to $1.3 million ounces at a cost of between 590 and 650, that’s a total cash cost and capital profile mostly unchanged, despite the fact that we did EBITDA original guidance for 2015 where we finished at 325 million, that’s again 400 million guidance and part of that is the production was 25 million, as we rolled into 2016. The other is just improved efficiencies and re-cutting programs and benefit as the markets offered us with the deflation in cost generally and the strength of – that surprise audience. A big study and that is also being in Kibali with bringing forward the old shaft system. This year regarding $240 million and we expect to get down to about $115 next year, so and you can see how quickly with that comes, the cash cost, several cash cost are coming down as you can see in this graph and also the net cash breakeven of the organization drops as well because of the lowering overall capital cost. And as is customary and I'll finish off with a share price comparison, I think its quite significant that last year we beat – we outperformed the golden index again, as we have done for 13 years out of the past 15 years. It does get more difficult every year, particularly with our peers redefining the base in which they work with all the impairments and write-downs that we see in the industry and also the significant reduction relative to us of share prices. We are mindful of that, but that doesn’t deter us from retaining our focus on continued delivery against our plan. And also as I pointed out in the beginning is what we do today that will govern here and we perform in five years term. And really I don’t want to leave you with the point that you know, organic growth is our core engine. It’s been good for our company, as you can see we are fully focused on it. We have after reinventing our expiration initiative a year ago we are starting to see results now and we've got some exciting drilling plans ahead of us. The DRC footprint is now going to take a bit of time before we get to a Ivory Coast businesses, it’s probably a year behind Ivory Coast. And we continue to look for projects that are capable of delivering sort of value that Loulo and Tongon and Morila have done for us and also Kibali where we doubled the reserves after its acquisition. And certainly is the next big project that we land, the good thing we will be able to finance it internally and that’s where you really create value for our shareholders. So thank you for attention. We're happy to take questions and said, we've got a big team, representatives from all our management team here on Cape Town, and Graham is holding the fort in London. So over to you guys for questions.

A - Mark Bristow: Well, are you sure.

[Operator Instructions]

Well, thank you ladies and gentlemen, I really appreciate you making your time. As I said you know, we're appreciative a lot of the large number of people that phoned in today. +We're glad that we managed to address all you potential questions in the results. But again if you want to ask questions, and you think of any, Graham and I and the team are available, you got to ask our numbers and give us a call or drop a note to Kathy and she will always set up a conference call with the team. Again, thank very much and we'll speak to you next time. We will see you, I think, the next one is BMO Conference down in Florida, and those of you who are not traveling to BMO, we will be traveling to New York for two days, we will try and catch you there, and then on to Toronto for the PDAC, and otherwise, we're back again on the Merrill Lynch conference. Okay. Thank you and good evening or good day.

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