UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 20-F 

  

¨	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

 

OR

 

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2015

 

OR

 

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

OR

 

¨	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of event requiring this shell company report

For the transition period from                     to

Commission file number: 000-49888 

 

RANDGOLD RESOURCES LIMITED

(Exact name of Registrant as specified in its charter)

 

Not Applicable

(Translation of Registrant’s name into English)

 

JERSEY, CHANNEL ISLANDS

(Jurisdiction of incorporation or organization)

 

3rd Floor Unity Chambers, 28 Halkett Street, St. Helier, Jersey JE2 4WJ, Channel Islands

(Address of principal executive offices)

 

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

 

Title of each class	Name of each exchange on which registered
American Depositary Shares each represented by one Ordinary Share	NASDAQ Global Select Market
Ordinary Shares, par value US $0.05 per Share*

 

*

Not for trading, but only in connection with the listing of American Depositary Shares on the NASDAQ Global Select Market pursuant to the requirements of the Securities and Exchange Commission.

 

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

None

(Title of Class)

 

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

None

(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, 2015, the Registrant had outstanding 93,232,920 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   ¨   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 basis of accounting the registrant has used to prepare the financial statements included in this filing:

 

U.S. GAAP  ¨

International Financial Reporting Standards as issued by the International Accounting Standards Board   x

Other  ¨

 

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.   ¨     Item 17  ¨     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

 

 

TABLE OF CONTENTS

 

Index		Page No.
Item 1. Identity of Directors, Senior Management and Advisers		7
Item 2. Offer Statistics and Expected Timetable		7
Item 3. Key Information		7
Item 4. Information on the Company		26
Item 4A. Unresolved Staff Comments		89
Item 5. Operating and Financial Review and Prospects		90
Item 6. Directors, Senior Management and Employees		102
Item 7. Major Shareholders and Related Party Transactions		119
Item 8. Financial Information		121
Item 9. The Offer and Listing		121
Item 10. Additional Information		122
Item 11. Quantitative and Qualitative Disclosures About Market Risk		141
Item 12. Description of Securities Other Than Equity Securities		143
Item 13. Defaults, Dividend Arrearages and Delinquencies		144
Item 14. Material Modification to the Rights of Security Holders and Use of Proceeds		145
Item 15. Controls and Procedures		145
Item 16. Reserved		148
Item 16A. Audit Committee Financial Expert		148
Item 16B. Code of Ethics		148
Item 16C. Principal Accountant Fees and Services		148
Item 16D. Exemptions from the Listing Standards for Audit Committees		149
Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers		149
Item 16F. Change in Registrant’s Certifying Accountant		149
Item 16G. Corporate Governance		149
Item 17. Financial Statements		150
Item 18. Financial Statements		150
Item 19. Exhibits		150

 

 

GLOSSARY OF MINING TECHNICAL TERMS

 

The following explanations are not intended as technical definitions, but rather are intended to assist the reader in understanding some of the terms as used in this annual report (Annual Report).

 

Albite:	A mineral within the Feldspar Group which is the sodium rich end member of the Albite-Anorthite Series. It is a common type of hydrothermal alteration.
Alteration:	The chemical change in a rock due to hydrothermal and other fluids.
Archaean:	A geological eon before 2.5 Ga.
Arsenopyrite:	An iron arsenic sulfide mineral.
Assay:	A chemical test performed on a sample of ores or minerals to determine the amount of valuable metals contained.
BCM:	A measure of volume representing a cubic meter of in-situ rock.
Birimian:	Geological time era, about 2.1 billion years ago.
Breccia:	A rock in which angular fragments are surrounded by a mass of fine-grained minerals.
Cage:	The conveyance used to transport men and equipment between the surface and the mine levels.
Carbonate:	A mineral salt typically found in quartz veins and as a product of hydrothermal alteration of sedimentary rock.
Cemented Aggregate Fill (CAF):	A backfill method for filling open stopes that uses cement and rock aggregate.
Clastic:	Rocks built up of fragments of pre-existing rocks which have been produced by the processes of weathering and erosion.
Concentrate:	A fine, powdery product of the milling process containing a high percentage of valuable metal.
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.
Cyanidation:	A method of extracting exposed gold or silver grains from crushed or ground ore by dissolving it in a weak cyanide solution.  Carried out in tanks inside a mill or in heaps of ore outside.
Decline:	A sloping underground opening for machine access from level to level or from surface, also called a ramp.
Development:	Underground work carried out for the purpose of opening up a mineral deposit which includes shaft sinking, crosscutting, drifting and raising.
Diamond Drilling (DDH):	A rotary type of rock drilling that cuts a core of rock that is recovered in long cylindrical sections, two cm or more in diameter.

 

  

Dilution (mining):	Rock that is, by necessity, removed along with the ore in the mining process, subsequently lowering the grade of the ore.
Dip:	The angle at which a vein, structure or rock bed is inclined from the horizontal as measured at right angles to the strike.
EEP:	Exclusive EP.
EP:	Exploration permit.
Exploration:	Prospecting, sampling, mapping, diamond drilling and other work involved in searching for ore.
Fault:	A break in the Earth’s crust caused by tectonic forces which have moved the rock on one side with respect to the other.
Feasibility Study:	A comprehensive study of a mineral deposit in which all geological, engineering, legal, operating, economic, social, environmental and other relevant factors are considered in sufficient detail that it could reasonably serve as the basis for a final decision by a financial institution to finance the development of the deposit for mineral production.
Felsic:	A light colored igneous rock composed of quartz, feldspar and muscovite. Also a term used to describe light-colored rocks containing feldspar, feldspathoids and silica.
Feldspar:	An alumino-silicate mineral.
g/t:	Grams of gold per metric tonne.
Gabbro:	A dark, coarse-grained igneous rock.
Gneiss:	A coarse-grained, foliated rock produced by metamorphism.
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.
Granite:	A coarse-grained intrusive igneous rock consisting of quartz, feldspar and mica.
Greenstone belt:	An area underlain by metamorphosed volcanic and sedimentary rocks, usually in a continental shield.
Greywacke:	A dark gray, coarse grained, indurated sedimentary rock consisting essentially of quartz, feldspar, and fragments of other rock types.
Hangingwall:	The rock on the upper side of a vein or ore deposit.
Head grade:	The grade of the ore as delivered to the metallurgical plant.

 

  

Hematite:	An oxide of iron, and one of that metal’s most common ore minerals
Hydrothermal:	Relating to hot fluids circulating in the earth’s crust.
Kibalian:	A geological time era between 2.4 billion to 2.8 billion years before the present.
Lode:	A portion of a mineral deposit in solid rock.
Logging:	The process of recording geological observations of drill core either on paper or on computer disk.
Lower proterozoic:	Era of geological time between 2.5 billion and 1.8 billion years before the present.
Magnetite:	Black, magnetic iron ore, an iron oxide.
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 ton		= 1 g/t		0.02917 ounces per ton
	1 kilogram per ton		= 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

  

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/a revolving drum used for the grinding of ores in preparation for treatment.
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:	A mine that is entirely on surface. Also referred to as open-cut or open-cast mine.

 

  

Ore:	A mixture of ore minerals and gangue from which at least one of the metals can be extracted at a profit.
Orebody:	A natural concentration of valuable material that can be extracted and sold at a profit.
Ounce:	One troy ounce, which equals 31.10348 grams.
Outcrop:	An exposure of rock or mineral deposit that can be seen on surface that is, not covered by soil or water.
Paste Backfill:	A backfill method for filling open stopes that uses cement and tailings material.
Prefeasibility Study:	A comprehensive study of the viability of a mineral project that has advanced to a stage where the mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, has been established, and which, if an effective method of mineral processing has been determined includes a financial analysis based on reasonable assumptions of technical, engineering, operating, economic, social and environmental factors and the evaluation of other relevant factors which are sufficient for a qualified person, acting reasonably, to determine if all or part of the mineral material may be classified as a mineral reserve.
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.
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 yellow iron sulphide mineral, normally of little value. It is sometimes referred to as “fool’s gold”.
Pyrrhotite:	A bronze-colored, magnetic iron sulphide mineral.
Quartz:	A mineral compound of silicon and oxygen.
Quartzite:	Metamorphic rock with interlocking quartz grains displaying a mosaic texture.
Reconnaissance:	A preliminary survey of ground.
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.
Rehabilitation:	The process of restoring mined land to a condition approximating its original state.

 

  

Reserve:	That part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.
RP:	Reconnaissance Permit.
Sampling:	Selecting a fractional but representative sample for analysis.
Satellite deposit:	A smaller subsidiary deposit proximal to a main deposit.
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.
Shaft:	A vertical or inclined excavation in rock for the purpose of providing access to an orebody. Usually equipped with a hoist at the top, which lowers and raises a conveyance for handling ore, workers or materials.
Shear zone:	A zone in which shearing has occurred on a large scale.
Silica:	Silicon dioxide. Quartz is a common example.
Slag:	The vitreous mass separated from the fused metals in the smelting process.
Stockpile:	Broken ore heaped on surface, pending treatment.
Stope:	An excavation in a mine from which ore is, or has been, extracted.
Strike length:	The direction and length of a geological plane.
Stripping:	The process of removing overburden to expose ore.
Sulfide:	A mineral characterized by the linkages of sulfur with a metal or semi-metal, such as pyrite or iron sulfide. Also a zone in which sulfide minerals occur.
Sump:	An excavation where water accumulates before being pumped to surface.
Tailings:	Material rejected from a mill after most of the recoverable valuable minerals have been extracted.
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.
Trend:	The direction, in the horizontal plane, of a linear geological feature, such as an ore zone, or a group of orebodies measured from true north.
Vein:	A fissure, fault or crack in a rock filled by minerals that have travelled upwards from some deep source.

 

  

Volcaniclastic:	Where volcanic derived material has been transported and reworked through mechanical processes.
Volcanisedimentary:	Where volcanic and sedimentary material have been transported and reworked through mechanical processes.
Waste:	Rock mined with an insufficient gold content to justify processing.
Weathered or weathering:	Rock broken down by surface elements of temperature and water.

 

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 “PART I. 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 U.S. Securities and Exchange Commission, or SEC.

 

We are incorporated under the laws of Jersey, Channel Islands with the majority of our operations located in West and Central Africa. Our books of account are maintained in US dollars and our annual and interim financial statements are prepared on a historical cost basis, except as otherwise required under International Financial Reporting Standards as issued by International Accounting Standards Board (IFRS), and in accordance with IFRS. IFRS differs in significant respects from generally accepted accounting principles in the United States, or US GAAP. This Annual Report includes our audited consolidated financial statements prepared in accordance with IFRS. The financial information included in this Annual Report has been prepared in accordance with IFRS and, except where otherwise indicated, is presented in US dollars. For a definition of cash costs and other non-GAAP information, please see “PART I. Item 3. Key Information—A. Selected Financial Data.”

 

Unless the context otherwise requires, “us”, “we”, “our”, “company”, “group” or words of similar import, refer to Randgold Resources Limited and its subsidiaries and affiliated companies.

 

Unless the context otherwise requires, “Morila” refers to Société des Mines de Morila SA, “Loulo” refers to Société des Mines de Loulo SA, “Gounkoto” refers to Société des Mines de Gounkoto SA, “Tongon” refers to Société des Mines de Tongon SA, “Kibali” refers to Kibali Goldmines SA and “Massawa” refers to the Massawa feasibility project.

 

  

Part I

 

Item 1. Identity of Directors, Senior Management and Advisers

 

Not applicable.

 

Item 2. Offer Statistics and Expected Timetable

 

Not applicable.

 

Item 3. Key Information

 

A. SELECTED FINANCIAL DATA

 

The following selected historical consolidated financial data has 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, 2015, 2014 and 2013 and as at December 31, 2015 and December 31, 2014, which appear elsewhere in this Annual Report. The historical consolidated financial data as at December 31, 2013, 2012 and 2011, and for the years ended December 31, 2012 and 2011 have been derived from our audited consolidated financial statements not included in this Annual Report.

 

The financial data have been prepared in accordance with IFRS, unless otherwise noted.

 

		Year Ended December 31, 2015				Year Ended December 31, 2014				Year Ended December 31, 2013				Year Ended December 31, 2012				Year Ended December 31, 2011
$000:
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME DATA:
Amounts in accordance with IFRS unless otherwise stated
Revenues			1,001,420				1,086,756				1,137,690				1,183,127				970,315
Profit from operations1			187,774				281,267				354,699				505,845				429,908
Share of profits of equity accounted joint ventures			77,303				75,942				54, 257				40, 927				44,119
Net profit attributable to owners of the parent			188,677				234,974				278,382				431,801				383,860
Basic earnings per share ($)			2.03				2.54				3.02				4.70				4.20
Diluted earnings per share ($)			2.01				2.51				2.98				4.65				4.16
Weighted average number of shares used in computation of basic earnings per share			93,093,692				92,603,191				92,213,511				91,911,444				91,337,712
Weighted average number of shares used in computation of fully diluted earnings per share			93,093,803				93,513,661				93,346,109				92,824,926				92,276,517
Dividends declared per share2			0.60				0.50				0.50				0.40				0.20
Other data
Total cash costs ($ per ounce sold) 3			679				698				715				735				688

 

  

1	Profit from operations is calculated as profit before income tax under IFRS, excluding net finance income/(costs) and share of profits of equity accounted joint ventures. Profit from operations all arises from continuing operations.
2	Dividend distribution to the company’s shareholders is recognized as a liability in the group’s financial statements in the period in which the dividends are approved by the board of directors and declared to shareholders.
3	Refer to explanation of non-GAAP information provided in the section “—Non-GAAP information” below.

  

Following the introduction and adoption of IFRS 11 Joint arrangements in 2013, the group changed its accounting policy on joint ventures from January 1, 2013 with prior periods 2011 and 2012 restated accordingly (refer to the 2013 Annual Report on Form 20-F). 

 

		At December 31, 2015				At December 31, 2014				At December 31, 2013				At December 31, 2012				At December 31, 2011
$000:
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AMOUNTS:
Amounts in accordance with IFRS
Total assets			3,737,320				3,533,083				3,376,513				3,008,891				2,477,267
Share capital			4,662				4,634				4,612				4,603				4,587
Share premium			1,493,781				1,450,984				1,423,513				1,409,144				1,386,939
Retained earnings			1,708,151				1,575,518				1,386,518				1,154,273				759,209
Other reserves			67,005				67,254				64,398				50,994				40,531
Equity attributable to the owners of the parent			3,273,599				3,098,090				2,879,041				2,619,014				2,191,266

 

Non-GAAP information

 

We have identified certain measures that we believe will assist understanding of the performance of the business. As the measures are not defined under IFRS they may not be directly comparable with other companies’ adjusted measures. The non-GAAP measures are not intended to be a substitute for, or superior to, any IFRS measures of performance but management has included them as these are considered to be important comparables and key measures used within the business for assessing performance.

 

These measures are explained further below:

 

Total cash costs and cash cost per ounce are non-GAAP measures. Total cash costs and total cash cost per ounce are calculated using guidance issued by the Gold Institute. The Gold Institute was a non-profit industry association comprising 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. Total cash costs and cash per ounce also include our share of equity accounted joint ventures’ total cash costs and cash cost per ounce.

 

Total cash cost per ounce is calculated by dividing total cash costs, as determined using the Gold Institute guidance, by gold ounces sold for the periods presented. Total cash costs and total cash cost per ounce are calculated on a consistent basis for the periods presented. Total cash costs and total cash cost per ounce should not be considered by investors as an alternative to operating profit or net profit attributable to shareholders, as an alternative to other IFRS measures. The data does not have a meaning prescribed by IFRS and therefore amounts presented may not be comparable to data presented by gold producers who do not follow the guidance provided by

 

  

the Gold Institute. In particular depreciation and amortization would be included in a measure of total costs of producing gold under IFRS, but are not included in total cash costs under the guidance provided by the Gold Institute. Furthermore, while the Gold Institute has provided a definition for the calculation of total cash costs and total cash cost 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 cost 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.

 

Cash operating costs and cash operating cost per ounce are calculated by deducting royalties from total cash costs. Cash operating cost per ounce is calculated by dividing cash operating costs by gold ounces sold for the periods presented. Total cash operating costs and cash operating cost per ounce include our share of joint ventures’ total operating cash costs and operating cash cost per ounce.

 

Gold sales is a non-GAAP measure. It 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 on hedge contracts which have been rolled forward to match future sales. This adjustment is considered appropriate because no cash is received/paid in respect of these contracts. We currently do not have any hedge positions. Gold sales include our share of our equity accounted joint ventures’ gold sales.

 

Profit from mining activity is calculated by subtracting total cash costs from gold sales for all periods presented. Profit from mining includes our share of our equity accounted joint ventures.

 

Gold on hand represents gold in doré at the mines multiplied by the prevailing spot gold price at the end of the period. Gold on hand includes our share of our equity accounted joint ventures’ gold on hand.

 

The following table reconciles total cash costs and profit from mining activity as non-GAAP measures, to the information provided in the statement of comprehensive income, determined in accordance with IFRS, for each of the periods set out below. 

 

$000:		Year Ended December 31, 2015				Year Ended December 31, 2014				Year Ended December 31, 2013				Year Ended December 31, 2012				Year Ended December 31, 2011
Gold Sales
Gold sales per IFRS			1,001,420				1,086,756				1,137,690				1,183,127				970,315
Gold sales adjustment for joint ventures			393,469				348,117				129,022				134,703				156,771
Gold sales2			1,394,889				1,434,873				1,266,712				1,317,830				1,127,086
Costs
Mine production costs			498,779	3			525,909	3			538,892	3			441,049	3			339,927	3
Depreciation and amortization			150,902				146,762				130,638				117,991				65,562
Other mining and processing costs			60,007				64,762				61,319				75,770				62,758
Cash cost adjustment for joint ventures			195,105				169,260				49,055				50,511				69,532
Depreciation and amortization adjustment for joint ventures			105,677				86,183				19,322				13,750				16,498
Royalties			51,673				56,490				58,415				59,710				44,414
Movement in production inventory and ore stockpiles			17,109				24,665				(49,730	)			(43,716	)			(21,907	)

 

 

$000:		Year Ended December 31, 2015				Year Ended December 31, 2014				Year Ended December 31, 2013				Year Ended December 31, 2012				Year Ended December 31, 2011
Total cost of producing gold			1,079,252				1,024,701				807,911				715,065				576,784
Less: Non-cash costs included in total cost of producing gold: Depreciation and amortization under IFRS			(150,902	)			(146,762	)			(130,638	)			(117,991	)			(65,562	)
Less: Non-cash costs included in total cost of producing gold: Depreciation and amortization for joint ventures			(105,677	)			(86,183	)			(19,322	)			(13,750	)			(16,498	)
Total cash costs using the Gold Institute’s guidance2			822,673				791,756				657,951				583,324				494,724
Ounces sold1			1,210,844				1,134,941				920,248				793,852				718,762
Total cost of producing gold per ounce ($ per ounce)			891				903				878				901				802
Total cash costs per ounce ($ per ounce) 2			679				698				715				735				688

 

1	40% share of Morila, 45% share of Kibali and 100% share of Loulo, Tongon and Gounkoto
2	Refer to explanation of non-GAAP information provided in the section “—Non-GAAP information” above. Randgold consolidates 100% of Loulo, Gounkoto and Tongon, 40% of Morila and 45% of Kibali in the consolidated non-GAAP measures.
3	Comparative figures for 2013, 2012 and 2011 excluded transport and refining costs from mine production costs and disclosed such costs separately.  Given its immateriality, it has been included in mine production costs in 2014 and 2015.  Transport and refining costs total $2.9 million for 2015 (2014:$3.0 million; 2013:$2.7 million; 2012:$2.7 million; 2011: $2.4 million) and are now included in mine production costs.

 

B. CAPITALIZATION AND INDEBTEDNESS

 

Not applicable.

 

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

 

Not applicable.

 

D. RISK FACTORS

 

In addition to the other information included in this Annual Report, you should carefully consider the following factors, which individually or in combination could have a material adverse effect on our business, financial condition and results of operations. There may be additional risks and uncertainties not presently known to us, or that we currently see as immaterial, which may also harm our business. If any of the risks or uncertainties described below or any such additional risks and uncertainties actually occur, our business, results of operations and financial condition could be materially and adversely affected. In this case, the trading price of our ordinary shares and American Depositary Shares, or ADS, could decline and you might lose all or part of your investment.

 

 

Risks Relating to Our Operations

 

The profitability of our operations, and the cash flows generated by our operations, are affected by changes in the market price for gold which in the past has fluctuated widely.

 

Substantially all of our revenue and cash flows have come from the sale of gold. Historically, the market price for gold has fluctuated widely and has been affected by numerous factors, over which we have no control, including:

 

•

the demand for gold for investment purposes including exchange traded funds, industrial uses and for use in jewelry;

 

•

international or regional political and economic trends;

 

•

the strength of the US dollar, the currency in which gold prices generally are quoted, and of other currencies;

 

•

market expectations regarding inflation rates;

 

•

interest rates;

 

•

speculative activities;

 

•

actual or expected purchases and sales of gold bullion holdings by central banks, the International Monetary Fund, or other large gold bullion holders or dealers;

 

•

hedging activities by gold producers; and

 

•

the production and cost levels for gold in major gold-producing nations.

 

The volatility of gold prices is illustrated in the following table, which shows the approximate annual high, low and average of the afternoon London Bullion Market fixing price of gold in US dollars for the past ten years.

 

		Price Per Ounce ($)
Year		High				Low				Average
2006			725				525				604
2007			841				608				695
2008			1,011				712				871
2009			1,213				810				972
2010			1,421				1,058				1,224
2011			1,895				1,319				1,571
2012			1,792				1,540				1,669
2013			1,694				1,192				1,411
2014			1,385				1,142				1,266
2015			1,296				1,049				1,160
2016 (through February 29)			1,251				1,077				1,149

 

The market price of gold has been and continues to be significantly volatile. In 2015, there was a 8% reduction in the average gold 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 re-plan and mine higher grade ore which will have a negative impact on our reserves and life of mine plans. Low gold prices for an extended period could result in us having 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 $679 in the year ended December 31, 2015, $698 in the year ended December 31, 2014 and $715 in the year ended December 31, 2013.

  

  

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. 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 expenditure. 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;

 

•

depletion from past mining;

 

•

mining method and associated dilution and ore loss factors;

 

•

gold price; and

 

•

operating costs.

 

Because our ore reserve estimates are calculated based on current estimates of future production costs and gold prices, they should not be interpreted as assurances of the economic life of our gold deposits or the profitability of our future operations.

 

Reserve estimates may require revisions based on actual production experience. Further, a sustained decline in the market price of gold may render the recovery of ore reserves containing relatively lower grades of gold mineralization uneconomical and ultimately result in a restatement of reserves. The failure of the reserves to meet our recovery expectations may have a material adverse effect on our business, financial condition and results of operations.

 

We are subject to various political and economic uncertainties associated with operating in Mali that could significantly affect our mines in Mali and our results of operations and financial condition.

 

We are subject to risks associated with operating gold mines in Mali. In 2015, gold produced in Mali represented approximately 56% of our consolidated group gold production, including joint ventures. On March 21, 2012, Mali was subject to an attempted coup d’état that resulted in the suspension of the constitution, the partial closing of the borders and the general disruption of business activities in the country. The supply of consumables to our mines in Mali was temporarily interrupted as a result of the political situation. The borders were reopened shortly after these events and an interim government was installed within a month. In January 2013, following military conflicts with terrorist insurgents, the Malian State requested the assistance of the French Government to assist the Malian army to repel the insurgents who had been occupying parts of the north of the country and beginning to move towards the southern part of the country. During 2013, French and other foreign troops occupied the northern part of the country to assist the Malian State in maintaining control of this region and presidential and parliamentary elections took place during the middle of 2013. During 2015, a number of attacks by insurgents took place. Although we have continued to produce and sell gold throughout this period, there can be no assurance that the political or security situation will not disrupt our ability to continue gold production, or our ability to sell and ship our gold from our mines in Mali. Furthermore, there can be no assurance that the political and security situation in Mali will not have a material adverse effect on our operations and financial condition.

 

Our business and results of operations may be adversely affected if the State of Mali and the State of Democratic Republic of Congo (DRC) fail to repay Value Added Tax (TVA), owing to the Loulo, Morila, Gounkoto and Kibali mines.

 

Our mining companies operating in Mali are exonerated by their Establishment Conventions from paying TVA for the three years following first commercial production. After that, TVA is payable and reimbursable. During

 

  

2013, 2014 and 2015 Loulo and Morila has offset TVA reimbursements it was owed against corporate and other taxes payable to the State of Mali under the terms of its legally binding mining conventions. At December 31, 2013, TVA owed by the State of Mali to Loulo stood at $115.6 million. This amount decreased to $91.3 million at December 31, 2014 and to $85.7 million at December 31, 2015. As of December 31, 2013, December 31, 2014 and December 31, 2015, TVA owed by the State of Mali to Morila amounted to $4.4 million (our 40%), $10.5 million (our 40%) and $6.3 million (our 40%), respectively. As of December 31, 2013, December 31, 2014 and December 31, 2015, TVA refunds of $10.7 million, $14.5 million and $17.2 million, respectively, remained owing to Gounkoto by the State of Mali.

 

By December 31, 2013, December 31, 2014 and December 31, 2015, TVA owing to Kibali by the DRC State amounted to $36.4 million (our 45%), $50.5 million (our 45%) and $61.8 million (our 45%), respectively. Kibali has received TVA refunds during the year, but the process has been slower than set out by law, due to additional administrative requirements imposed by the relevant State departments.

 

Our business, cash flow and results of operations will be adversely affected to the extent the TVA amounts owing to the group are not paid.

 

Our business may be adversely affected if we fail to resolve disputed tax claims with the State of Mali.

 

As at December 31, 2015, the group is in receipt of claims for various taxes from the State of Mali totaling $280.0 million, in particular with respect to the Loulo, Gounkoto and Morila mines. The claims have decreased by $33.0 million during the year, substantially representing foreign exchange movements. Having taken professional advice, the group considers the material claims to be without foundation and remote and is strongly defending its position, including following the appropriate legal process for such disputes in Mali. Loulo, Gounkoto and Morila have legally binding mining conventions which guarantee fiscal stability, govern the taxes applicable for the companies and allow for international arbitration in the event that a dispute cannot be resolved in the country. Accordingly, no provision has been made for the material claims. On November 25, 2013, Loulo instigated arbitration proceedings against the State of Mali pursuant to the terms of Loulo’s Establishment Convention at the International Center for Settlement of Investment Disputes in respect of $57.0 million of the tax claims. The arbitration process is ongoing. The outcome of the process is expected to be concluded during 2016. Management continues to engage with the Malian authorities at the highest level to resolve this issue and the other unresolved tax claims. However, it may be necessary to instigate additional arbitration proceedings to resolve these disputes. If for any reason these disputed tax claims become due and payable the results of Morila, Gounkoto and Loulo’s operations and financial position would be adversely affected, as would their ability to pay dividends to their shareholders. Accordingly, our business, cash flows and financial condition will be adversely affected if anticipated dividends are not paid.

 

Changes in mining legislation can have significant effects on our operations.

 

While we have entered into binding mining conventions with the governments of Côte d’Ivoire, Mali and Senegal, in the DRC our Kibali mine operates under the DRC Mining Convention and not under a mining convention. Changes in mining legislation in the countries in which we operate could have significant adverse effects on our results of operations. In addition, changes in mining legislation may discourage future investments in these jurisdictions, which may have an adverse impact on our ability to develop new mines and reduce future growth opportunities. Among the jurisdictions in which we currently have major operations, there are several proposed or recently adopted changes in mining legislation that could materially affect us. The governments in these jurisdictions may require us to renegotiate our mining conventions. If so, there can be no assurance that the outcome of our negotiations will not have a material adverse impact on our financial condition or operational results.

 

Our success may depend on our social and environmental performance.

 

Our ability to operate successfully in communities will likely depend on our ability to develop, operate and close mines in a manner that is consistent with the health, safety and well-being of our employees, the protection of the environment, and the creation of long term economic and social opportunities in the countries in which we operate. Mining companies are required to make a fair contribution and provide benefits to the communities and countries in which they operate, and are subject to extensive environmental, health and safety laws and regulations. As a result of public concern about the real or perceived detrimental effects of economic globalization and global

 

  

climate impacts, businesses generally and large multinational corporations in natural resources industries, in particular, face increasing public scrutiny of their activities. These businesses are under pressure to demonstrate that, as they seek to generate satisfactory returns on investment to shareholders, other stakeholders, including employees, governments, communities surrounding operations and the countries in which they operate, benefit and will continue to benefit from their commercial activities. Such pressures tend to be particularly focused on companies whose activities relate to non-renewable resources and are perceived to have a high impact on their social and physical environment. The potential consequences of these pressures include reputational damage and legal suits.

 

Certain non-governmental organizations oppose globalization and resource development and are often vocal critics of the mining industry and its practices. Adverse publicity by such non-governmental agencies could have an adverse effect on our reputation and financial condition and could have an impact on the communities within which we operate.

 

In addition, our ability to successfully obtain key permits and approvals to explore for, develop and operate mines and to successfully operate in communities around the world will likely depend on our ability to develop, operate and close mines in a manner that is consistent with the creation of social and economic benefits in the surrounding communities, which may or may not be required by law. Mining operations should be designed to minimize the negative impact on such communities and the environment, for example, by modifying mining plans and operations or by relocating those affected to an agreed location. The cost of these measures could increase capital and operating costs and therefore could have an adverse impact upon our financial conditions and operations. We seek to promote improvements in health and safety, environmental performance and community relations. However, our ability to operate could be adversely impacted by accidents or events detrimental (or perceived to be detrimental) to the health, safety and well-being of our employees, the environment or the communities in which we operate.

 

Any appreciation of the currencies in which we incur costs against the US dollar could adversely affect our results of operations and financial condition.

 

While our revenue is derived from the sale of gold in US dollars, a significant portion of our input costs are incurred in currencies other than the dollar, primarily Euro, Communauté Financière Africaine Franc and South African Rand. Accordingly, any appreciation in such other currencies could adversely affect our results of operations.

 

The profitability of our operations and the cash flows generated by these operations are significantly affected by the fluctuations in the price, cost and supply of fuel and other inputs, and we would be adversely affected by future increases in the prices of fuel and other inputs or a disruption in our supply chain.

 

Fuel, power and consumables, including diesel, steel, chemical reagents, explosives and tires, form a relatively large part of our operating costs. The cost of these consumables is impacted to varying degrees by fluctuations in the price of oil, exchange rates and availability of supplies. Such fluctuations have a significant impact upon our operating costs and capital expenditure estimates and, in the absence of other economic fluctuations, could result in significant changes in the total expenditure estimates for mining projects, new and existing, and could even render certain projects non-viable.

 

Fuel is the primary input utilized in our mining operations, and our results are significantly affected by the price and availability of fuel, which are in turn affected by a number of factors beyond our control. Historically, fuel costs have been subject to wide price fluctuations based on geopolitical factors and supply and demand. Political unrest in certain oil producing countries has in the past led to an increase in the cost of fuel. If there are additional outbreaks of hostilities or other conflicts in oil producing areas or elsewhere, or a reduction in refining capacity (due to weather events, for example), or governmental limits on the production or sale of fuel, or restrictions on the transport of fuel, there could be reductions in the supply of fuel and significant increases in the cost of fuel.

 

During 2015, the average price of our landed fuel was lower than 2014. In the year ended December 31, 2015, the cost of fuel and other power generation costs comprised approximately 18% of our operating costs (2014: 23%; 2013: 20%).

 

  

While we do not currently anticipate a significant reduction in fuel availability, factors beyond our control make it impossible to predict the future availability of fuel. We are not parties to any agreements that protect us against price increases or guarantee the availability of fuel. Extended disruptions to our supply chain would have a material impact on the mines’ ability to operate. Major reductions in the availability of fuel or significant increases in its cost for a significant period of time, would adversely affect our results of operations and profitability.

 

Our underground mines at Loulo and Kibali are subject to all of the risks associated with underground mining.

 

The business of underground mining by its nature involves significant risks and hazards. In particular, our underground mining operations could be subject to:

 

•

rockbursts;

 

•

seismic events;

 

•

underground fires;

 

•

cave-ins or falls of ground;

 

•

discharges of gases or toxic chemicals and other environmental hazards;

 

•

flooding;

 

•

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.

 

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 Tongon, Gounkoto, Kibali and Morila to mine and deliver ore to processing plants and at Kibali to develop the underground mine. As a result of our use of mining contractors, our operations are subject to a number of risks, some of which are outside our control, including:

 

•

Negotiating agreements with contractors on acceptable terms;

 

•

The inability to replace a contractor and its operating equipment in the event that either party terminates the agreement;

 

•

Reduced control over those aspects of operations which are the responsibility of the contractor;

 

•

Failure of a contractor to perform under its agreement;

 

•

Interruption of operations or increased costs in the event that a contractor ceases its business due to insolvency or other unforeseen events;

 

•

Failure of a contractor to comply with applicable legal and regulatory requirements, to the extent it is responsible for such compliance; and

 

•

Problems of a contractor with managing its workforce, labor unrest or other employment issues.

 

  

In addition, we may incur liability to third parties as a result of the actions of our contractors. The occurrence of one or more of these risks could adversely affect our results of operations and financial position.

 

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

 

Feasibility studies and other project evaluation activities necessary to determine the current or future viability of a mining operation are often not economically beneficial. Activities often require substantial expenditure on exploration drilling to determine the extent and grade of mineralized material. It typically takes a number of years from initial feasibility studies of a mining project until development is completed and, during that time, the economic feasibility of production may change. The economic feasibility of development projects is based on many factors, including the accuracy of estimated reserves, metallurgical recoveries, capital and operating costs and future gold prices. The capital expenditure and time required to develop new mines or other projects are considerable, and changes in costs or construction schedules can affect project economics. Thus it is possible that actual costs and economic returns may differ materially from our estimates.

 

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 Massawa (Senegal), a technical and financial study was completed on the open pit enabling us to declare mineral reserves in 2010. In 2012 it was decided to focus on understanding the geological and metallurgical controls of the project. The current plan is to progress the Massawa project review and update the feasibility study in 2016. There can be no assurance that the Massawa project will ultimately result in a new commercial mining operation, or that such new commercial mining operations would be successful.

 

The underground feasibility study on Gounkoto was successfully completed at the end of 2014. Work on the portal in the south of the pit is planned to start in 2018 with access to ore anticipated in 2019. However, there can be no assurance that the Gounkoto underground project will not be subject to the risks and uncertainties listed in this section, all of which could have a material adverse effect on our operating results and financial condition.

 

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 adverse effect on our business and results of operations.

 

The countries of Mali, Senegal, DRC and Côte d’Ivoire have, since independence, experienced some form of political upheaval with varying forms of changes of government taking place.

 

Goods are supplied to our operations in Mali primarily by road through Senegal and Côte d’Ivoire, which at times have been disrupted by geopolitical issues. Any present or future policy changes in the countries in which we

 

  

operate, or through which we are supplied, may in some way have a significant effect on our operations and interests.

 

The mining laws of Mali, Côte d’Ivoire, Senegal and DRC stipulate that, should an economic orebody be discovered on a property subject to an EP, a permit that allows processing operations to be undertaken must be issued to the holder. Legislation in certain countries currently provides for the relevant government to acquire a free ownership interest in any mining project. The requirements of the various governments as to the foreign ownership and control of mining companies may change in a manner which adversely affects us.

 

In addition, unforeseen events, including war, terrorism and other international conflicts could disrupt our operations and disrupt the operations of our suppliers. Such events could make if difficult or impossible for us to conduct our mining operations, including delivering our products and receiving materials from suppliers.

 

We are subject to various political and economic uncertainties associated with operating in the DRC, and the success of the Kibali mine will depend in large part on our ability to overcome significant challenges.

 

We are subject to risks associated with operating the Kibali mine in the DRC. The Kibali mine is located in the north-east region of the DRC and is subject to various levels of political, economic and other risks and uncertainties associated with operating in the DRC. Some of these risks include political and economic instability, high rates of inflation, severely limited infrastructure, lack of law enforcement, labor unrest, and war and civil conflict. In addition, the Kibali mine is subject to the risks inherent in operating in any foreign jurisdiction including changes in government policy, restrictions on foreign exchange, changes in taxation policies, and renegotiation or nullification of existing concessions, licenses, permits and contracts.

 

The DRC is an impoverished country with physical and institutional infrastructure that is in a poor condition. It is in transition from a largely state-controlled economy to one based on free market principles, and from a non-democratic political system with a centralized ethnic power base to one based on more democratic principles. There can be no assurance that these changes will be effected or that the achievement of these objectives will not have material adverse consequences for the Kibali mine.

 

Any changes in mining or investment policies or shifts in political attitude in the DRC may adversely affect operations and/or profitability of the Kibali mine. Operations may be affected in varying degrees by government regulations with respect to, but not limited to, restrictions on production, price controls, export controls, currency remittance, income taxes, foreign investment, maintenance of claims, environmental legislation, land use, land claims of local people, water use and mine safety. These changes may impact the profitability and viability of the Kibali mine.

 

Moreover, the northeast region of the DRC has undergone civil unrest and instability that could have an impact on political, social or economic conditions in the DRC generally. There has been turmoil in the Eastern DRC, to the south of Kibali, following the defeat of the M23 rebel group in late 2013. A sufficient level of stability must be maintained in order for us to continue to operate the Kibali mine. The impact of unrest and instability on political, social or economic conditions in the DRC could result in the impairment of the exploration, development and operations at the Kibali mine.

 

Some of our operations are carried out in geographical areas which lack adequate infrastructure.

 

Mining, processing, development and exploration activities depend, in some part, on adequate infrastructure. Reliable roads, power sources and water supply are important factors which affect our operating costs. A lack of infrastructure or varying weather phenomena, sabotage, terrorism or other interferences in the maintenance or provision of such infrastructure could affect our operations and financial condition.

 

The Kibali mine is located in a remote area of the DRC, which lacks basic infrastructure, including adequate roads and other transport, sources of power, water, housing, food and transport. In order to develop any of the mineral interests, facilities and material necessary to support operations in the remote locations in which they are situated must be established. The remoteness of the mineral interests would affect the potential viability of mining operations, as we would also need to establish substantially greater sources of power, water, physical plant, roads

 

  

and other transport infrastructure than are currently present in the area. Hydropower stations are utilized at Kibali, which necessarily involve maintaining existing stations and building new hydropower stations and also obtaining certain government licenses relating to their operation. The first of three hydropower stations was completed in 2014 and a further additional two hydropower stations are still to be completed.

 

Establishing infrastructure for our development projects requires significant resources, identification of adequate sources of raw materials and supplies, and necessary cooperation from national and regional governments, none of which can be assured.

 

Certain factors may affect our ability to support the carrying value of our property, plant and equipment, and other assets on our consolidated statement of financial position.

 

We review and test the carrying amount of our assets on an annual basis when events or changes in circumstances suggest that the net book value may not be recoverable. If there are indications that impairment may have occurred, we prepare estimates of expected future discounted cash flows for each group of assets. Assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units) for purposes of assessing impairment. Expected future cash flows are inherently uncertain, and could materially change over time. Such cash flows are significantly affected by reserve and production estimates, together with economic factors such as spot and forward gold prices, discount rates, currency exchange rates, estimates of costs to produce reserves and future capital expenditure to extract reserves under the approved life of mine plan.

 

We may incur losses or lose opportunities for gains as a result of any future use of derivative instruments to protect us against low gold prices.

 

We have from time to time used derivative instruments to protect the selling price of some of our anticipated gold production. The intended effect of our derivative transactions was to lock in a fixed sale price for some of our future gold production to provide some protection against a subsequent fall in gold prices. Although we currently do not use derivative instruments to protect us against low gold prices at our operations, we may in the future determine to implement the use of derivatives in connection with a portion of our anticipated gold production.

 

Derivative transactions can result in a reduction in revenue if the instrument price is less than the market price at the time the hedged sales are recognized. Moreover, our decision to enter into a given instrument would be based upon market assumptions. If these assumptions are not ultimately met, significant losses or lost opportunities for significant gains may result. In all, the use of these instruments may result in significant losses which would 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.

 

Under our joint venture agreements with AngloGold Ashanti Limited, or AngloGold Ashanti, we operate the Morila mine and the Kibali mine by means of a joint venture committee, and any disputes with AngloGold Ashanti over the management of the Morila mine or the Kibali mine could adversely affect our business.

 

We jointly control Morila, the owner of the Morila mine, and Kibali, the owner of the Kibali mine, with AngloGold Ashanti under joint venture agreements. We are responsible for the day-to-day operations of Morila and Kibali, subject to the overall management control of Morila and Kibali boards, respectively. Substantially all major management decisions, including approval of a budget for the Morila mine and the Kibali mine, must be approved by the Morila and Kibali boards, respectively. We and AngloGold Ashanti retain equal representation on the boards, with neither party holding a deciding vote. If a dispute arises between us and AngloGold Ashanti with respect to the management of Morila or Kibali, and we are unable to amicably resolve the dispute, we may have to participate in arbitration or other proceedings to resolve the dispute, which could materially and adversely affect our business.

 

Our mines and projects face many risks related to their present or future operations that may impact cash flows and profitability.

 

Our mines and projects are subject to all of the operating hazards and risks normally incident to exploring for, developing and operating mineral properties and mines, such as:

 

  

•

encountering unusual or unexpected formations;

 

•

environmental pollution;

 

•

mechanical breakdowns;

 

•

safety-related stoppages;

 

•

work stoppages or other disruptions in labor force;

 

•

electrical power and fuel supply interruptions;

 

•

unanticipated ground conditions; and

 

•

personal injury and flooding.

 

During 2012, the Tongon mine was plagued by a series of operational challenges, including underperformance in the mining of the open pit as the mine struggled to manage the transition from softer oxide material to fresh rock. In 2015 the mine experienced frequent outages of grid power which disrupted the processing plant. Additionally, during December 2012 there was a fire in the milling circuits which resulted in both mills being offline for one week followed by lower throughput and recoveries. These issues led to gold production at Tongon missing its target by 26%. The plant was restored to full production by the end of January 2013 and the power problems were addressed during 2013. The mine continued to experience problems with recovery in 2013 and 2014 which contributed to Tongon missing its production target by 17% in 2013 and 13% in 2014, as well as issues associated with the crushing circuit, which required certain of the installed crushers to be replaced in 2014.

 

The mine continued to engineer out key process deficiencies and improve operator skills and plant maintenance in 2015, and missed its production target by 7%. Upgrades to the crushing circuits at the mine are forecasted for completion in the first quarter of 2016. In the third quarter of 2015, production was impacted by flooding of the decline after pump failures following a particularly heavy rainy period. This impacted the mine’s ability to deliver the higher grade ore feed that had been planned for the quarter.

 

There can be no assurance that similar operational issues will not happen in the future, or that such events will not adversely affect our results of operations.

 

Mining operations and projects are vulnerable to supply chain disruption and our operations could be adversely affected by shortages of, as well as lead times to deliver fuel, strategic spares, critical consumables, mining equipment or metallurgical plant.

 

Our operations could be adversely affected by both shortages and long lead times to deliver fuel, strategic spares, critical consumables, mining equipment and metallurgical plant. We have limited influence over suppliers and manufacturers of these items. In certain cases there are a limited number of suppliers for fuel, certain strategic spares, critical consumables, mining equipment or metallurgical plant who command superior bargaining power relative to us. We could at times face limited supply or increased lead time in the delivery of such items. There can be no assurance that such limited supply or increased lead time in the delivery of items will not happen in the future, or that such events will not adversely affect our results of operations.

 

Failure to comply with the U.S. Foreign Corrupt Practices Act, Corruption (Jersey) Law and the UK Bribery Act could subject us to penalties and other adverse consequences. We could suffer losses from corrupt or fraudulent business practices.

 

We abide by the provisions of the US Foreign Corrupt Practices Act, Corruption (Jersey) Law and the UK Bribery Act, which generally prohibit companies and their intermediaries from making improper payments to officials for the purpose of obtaining or retaining business. In addition, we are required to maintain records that represent our transactions and have an adequate system of internal accounting controls. The compliance mechanisms and monitoring programs that we have in place may not adequately prevent or detect possible violations under

 

  

applicable anti-bribery and corruption legislation. There can be no assurance that our internal control policies and procedures always will protect us from recklessness, fraudulent behavior, dishonesty or other inappropriate acts committed by our affiliates, employees or agents. As such, our corporate policies and processes may not prevent all potential breaches of law or other governance practices. Failure to comply with such legislation may result in severe criminal or civil sanctions, and we may be subject to other liabilities, including fines, prosecution, potential debarment from public procurement and reputational damage, all of which could have a material adverse effect on our business, consolidated results of operations, and consolidated financial condition. In addition, investigations by governmental authorities could have a material adverse effect on our business, consolidated results of operations, and consolidated financial condition. We are also subject to the risks that our employees, joint venture partners, and agents may fail to comply with other applicable laws.

 

We may be required to seek funding from the global credit and capital markets to develop our properties, and weakness in those markets could adversely affect our ability to obtain financing and capital resources.

 

We require substantial funding to develop our properties, and may be required to seek funding from the credit and capital markets to finance these activities. Our ability to obtain outside financing will depend upon the price of gold and the market’s perception of its future price, and other factors outside of our control. We may not be able to obtain funding on acceptable terms when required, or at all.

 

The credit and capital markets in respect of the commodity sector experienced serious deterioration in 2015, and the conditions in these markets have continued to be difficult since then and may continue to be difficult in the future, which could have an impact on the availability and terms of credit and capital in the near term. The deteriorating financial condition of certain government authorities has significantly increased the potential for sovereign defaults in a number of jurisdictions, including within the European Union. If uncertainties in these markets continue, or these markets deteriorate further, it could have a material adverse effect on our ability to raise capital. Failure to raise capital when needed or on reasonable terms may have a material adverse effect on our business, financial condition and results of operations. A continued or worsened slowdown in the financial markets or other economic conditions, including but not limited to consumer spending, employment rates, inflation, fuel and energy costs, lack of available credit, the state of the financial markets, interest rates and tax rates may affect our growth and profitability.

 

To ensure additional liquidity, in 2013 we entered into a $200.0 million unsecured revolving credit facility with HSBC and a syndicate of three other banks. In 2014 we cancelled the existing credit facility, which was undrawn at that time, and entered into a new $400.0 million unsecured revolving credit facility with HSBC and an extended banking syndicate. If any of the lenders are unable to fulfill their future commitments, our liquidity could be impacted, which could have a material unfavorable impact on our results of operations and financial condition.

 

If we draw down on our credit facility, our indebtedness could adversely impact our business.

 

Under the terms of the credit facility we entered into in 2014 we are obligated to meet certain financial and other covenants. Our ability to meet these covenants and to service our debt (should the credit facility be drawn down) will depend on our future financial performance which will be affected by our operating performance as well as by financial and other factors, some of which are beyond our control.

 

Our operations are located in countries where tax laws and policies may change rapidly and unpredictably and such changes and policies may adversely affect our financial condition and results of operations.

 

Our failure to adapt to changes in tax regimes and regulations in the countries in which we operate may result in fines, financial losses and have a negative impact on our corporate reputation. In addition, if we fail to react to tax notifications from authorities, we could incur financial losses or the seizure of our assets. If we are unable to enforce existing tax legislation or incorrectly applied tax legislation, we may pursue arbitration or other proceedings to resolve the matter, all of which could materially and adversely affect our business.

 

The failure of any bank in which we deposit our funds could reduce the amount of cash we have available for operations.

 

  

Most of our cash deposited with banks is not insured and would be subject to the risk of bank failure. If any of the banking institutions in which we have deposited funds ultimately fails, we may lose our deposits. The loss of our deposits would reduce the amount of cash we have available for operations and additional investments in our business, and would have a material adverse effect on our financial condition.

 

The SEC has adopted rules that may affect mining operations in the DRC.

 

The SEC adopted final rules pursuant to the Dodd Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) regarding disclosure on potential conflict minerals that are necessary to the functionality or production of a product manufactured by a company that files reports with the SEC. Under the final rules, an issuer that mines conflict minerals, such as Randgold, is not deemed to be manufacturing or contracting to manufacture those minerals, unless the issuer also engages in manufacturing, whether directly or indirectly through contract. Though we are not subject to the disclosure requirements of the final rules, we may be called upon by other entities we contract with to provide information to them for their own supply-chain due diligence investigations. This may result in the increased cost of demonstrating compliance in connection with the sale of gold emanating from the DRC and its neighbors. The complexities of the gold supply chain, especially as they relate to ‘scrap’ or recycled gold, and the fragmented and often unregulated supply of artisanal and small-scale mined gold are such that there may be significant uncertainties at each stage in the chain as to the origin of the gold, and as a result of uncertainties in the process, the costs of due diligence and audit, or the reputational risks of defining their product or a constituent part as containing a ‘conflict mineral’ may be too burdensome for the buyers of our gold. Accordingly, they may decide to switch supply sources. This could have a material negative impact on the gold industry, our relationship with the buyers of our gold, and our financial results.

 

Inflation may have a material adverse effect on our operations.

 

Some of our operations are located in countries that have and may continue to experience high rates of inflation during certain periods. It is possible that significantly higher future inflation in countries in which we operate may result in increased future operational costs in local currencies. This could have a material adverse effect upon our operations and financial conditions.

 

Regulations and pending legislation governing issues involving climate change could result in increased operating costs which could have a material adverse effect on our business.

 

A number of governments or governmental bodies have introduced or are contemplating regulatory changes in response to various climate change interest groups and the potential impact of climate change. Legislation and increased regulation regarding climate change could impose significant costs on us, our venture partners and our suppliers, including increased energy, capital equipment, environmental monitoring and reporting and other costs to comply with such regulations. Any adopted future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations. Given the political significance and uncertainty around the impacts of climate change and how it should be dealt with, we cannot predict how legislation and regulation will affect our financial condition, operating performance and ability to compete. Furthermore, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change by us or other companies in our industry could harm our reputation. The potential physical impacts of climate change on our operations are highly uncertain, and would be particular to the geographic circumstances in areas in which we operate. These may include changes in rainfall and storm patterns and intensities, water shortages, changing sea levels and changing temperatures. These impacts may adversely impact the cost, production and financial performance of our operations.

 

We are subject to various political and economic uncertainties associated with operating in Côte d’Ivoire, that could significantly affect the success of the Tongon mine.

 

We have been subject to risks associated with operating the Tongon mine in Côte d’Ivoire. Côte d’Ivoire has in prior years experienced political disruptions, including an attempted coup d’état and civil war. There can be no assurance that similar events may not occur in the future which would have a material adverse effect on our gold

 

  

production and financial results. Our operations and financial conditions could be impacted by future political and economic instabilities.

 

The Ebola virus poses a risk to our operations.

 

In 2014 and 2015, Ebola virus cases were identified in Mali and Senegal along with epidemics in neighboring countries which have now been largely contained. We formed a crisis management team to spearhead a major campaign to safeguard our employees and host communities. If the incidence of the Ebola virus re-emerges and spreads, it could pose risks to us in terms of potentially reduced productivity and increased medical and insurance costs. An Ebola virus outbreak could cause the closing of borders of the countries in which we operate, or neighboring countries, which poses a risk in operation of our supply chain.

 

We may not pay dividends to shareholders in the future.

 

We paid our ninth dividend to ordinary shareholders in 2015. It is our policy to pay dividends if profits and funds are available for that purpose. Whether or not funds are available depends on a variety of factors, including capital expenditure. We cannot guarantee that dividends will be paid in the future.

 

If we are unable to attract and retain key personnel our business may be harmed.

 

Our ability to bring additional mineral properties into production and explore our extensive portfolio of mineral rights will depend, in large part, upon the skills and efforts of a small group of management and technical personnel, including D. Mark Bristow, our Chief Executive Officer. If we are not successful in retaining, developing 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 $100.0 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 effect service of process and enforce legal judgments against us or our affiliates.

 

We are incorporated in Jersey, Channel Islands and a majority of our directors and senior executives are not residents of the United States. Virtually all of our assets and the assets of those persons are located outside the United States. As a result, it may not be possible for you to effect service of process within the United States upon those persons or us. Furthermore, the United States and Jersey currently do not have a treaty providing for the reciprocal recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters. Consequently, it may not be possible for you to enforce a final judgment for payment rendered by any federal or state court in the United States based on civil liability, whether or not predicated solely upon United States Federal securities laws against those persons or us.

 

In order to enforce any judgment rendered by any Federal or state court in the United States in Jersey, proceedings must be initiated by way of common law action before a court of competent jurisdiction in Jersey. The entry of an enforcement order by a court in Jersey is conditional upon the following:

 

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that the court which pronounced the judgment has jurisdiction to entertain the case according to the principles recognized by Jersey law with reference to the jurisdiction of the foreign courts;

 

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that the judgment is final and conclusive – it cannot be altered by the courts which pronounced it;

 

  

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that there is payable pursuant to a judgment a sum of money, not being a sum payable in respect of tax or other charges of a like nature or in respect of a fine or other penalty;

 

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that the judgment has not been prescribed;

 

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that the courts of the foreign country have jurisdiction in the circumstances of the case;

 

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that the judgment was not obtained by fraud; and

 

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that the recognition and enforcement of the judgment is not contrary to public policy in Jersey, including observance of the rules of natural justice which require that documents in the United States proceeding were properly served on the defendant and that the defendant was given the right to be heard and represented by counsel in a free and fair trial before an impartial tribunal.

 

Furthermore, it is doubtful whether you could bring an original action based on United States Federal securities laws in a Jersey court.

 

We are subject to significant corporate regulation as a public company and failure to comply with all applicable regulations could subject us to liability or negatively affect our share price.

 

As a publicly traded company we are subject to a significant body of regulation. While we have developed and instituted a corporate compliance program based on what we believe are the current best practices in corporate governance and continue to update this program in response to newly implemented or changing regulatory requirements, there can be no assurance that we are or will be in compliance with all potentially applicable corporate regulations. For example, there can be no assurance that in the future our management will not find a material weakness in connection with its annual review of our internal control over financial reporting pursuant to Section 404 of the US Sarbanes-Oxley Act of 2002. If we fail to comply with any of these regulations, we could be subject to a range of regulatory actions, fines or other sanctions or litigation. If we must disclose any material weakness in our internal control over financial reporting, our share price could decline.

 

We utilize information technology and communications systems, the failure of which could significantly impact our operations and business.

 

We are dependent upon information technology systems in the conduct of our operations. Our information technology systems are subject to disruption, damage or failure from a variety of sources, including, without limitation, computer viruses, security breaches, cyber-attacks, natural disasters and defects in design. Cybersecurity incidents, in particular, are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected information and the corruption of data. Various measures have been implemented to manage our risks related to information technology systems and network disruptions. However, given the unpredictability of the timing, nature and scope of information technology disruptions, we could potentially be subject to production downtimes, operational delays, the compromising of confidential or otherwise protected information, destruction or corruption of data, security breaches, other manipulation or improper use of our systems and networks or financial losses from remedial actions, any of which could have a material adverse effect on our cash flows, competitive position, financial condition or results of operations.

 

We maintain global information technology and communication networks and applications to support our business activities. Information technology security processes may not prevent future malicious actions, denial-of-service attacks, or fraud, resulting in corruption of operating systems, theft of commercially sensitive data, misappropriation of funds and business and operational disruption. Material system breaches and failures could result in significant interruptions that could in turn affect our operating results and reputation.

 

  

Risks Relating to Our Industry

 

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

 

We must continually seek to replace our ore reserves depleted by production to maintain production levels over the long term. Ore reserves can be replaced by expanding known orebodies or exploring for new deposits. Exploration for gold is highly speculative in nature. Our future growth and profitability will depend, in part, on our ability to identify and acquire additional mineral rights, and on the costs and results of our continued exploration and development programs. Many exploration programs, including some of ours, do not result in the discovery of mineralization and any mineralization discovered may not be of sufficient quantity or quality to be profitably mined. Our mineral exploration rights may not contain commercially exploitable reserves of gold. Uncertainties as to the metallurgical recovery of any gold discovered may not warrant mining on the basis of available technology.

 

If we discover a viable deposit, it usually takes several years from the initial phases of exploration until production is possible. During this time, the economic feasibility of production may change.

 

Moreover, we will use the evaluation work of professional geologists, geophysicists, and engineers for estimates in determining whether to commence or continue mining. These estimates generally rely on scientific and economic assumptions, which in some instances may not be correct, and could result in the expenditure of substantial amounts of money on a deposit before it can be determined whether or not the deposit contains economically recoverable mineralization. As a result of these uncertainties, we may not successfully acquire additional mineral rights, or identify new proven and probable reserves in sufficient quantities to justify commercial operations in any of our properties.

 

If management determines that capitalized costs associated with any of our gold interests are not likely to be recovered, we would recognize an impairment provision against the amounts capitalized for that interest. All of these factors may result in losses in relation to amounts spent which are found not to be recoverable.

 

Title to our mineral properties may be challenged which may prevent or severely curtail our use of the affected properties.

 

Title to our properties may be challenged or impugned, and title insurance is generally not available. Each sovereign state is the sole authority able to grant mineral property rights, and our ability to ensure that we have obtained secure title to individual mineral properties or mining concessions may be severely constrained. Our mineral properties may be subject to prior unregistered agreements, transfers or claims, and title may be affected by, among other things, undetected defects. In addition, we may be unable to operate our properties as permitted or to enforce our rights with respect to our properties.

 

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

 

We compete with other mining companies in connection with the search for and acquisition of properties producing or possessing the potential to produce gold. Existing or future competition in the mining industry could materially and adversely affect our prospects for mineral exploration and success in the future.

 

In addition, we compete with other mining companies to attract and retain key executives, skilled labor, contractors and other employees. We also compete with other mining companies for specialized equipment, components and supplies necessary for exploration and development, as well as for rights to mine properties. If we are unable to continue to attract and retain skilled and experienced employees, obtain the services of skilled personnel and contractors or specialized equipment or supplies, or acquire additional rights to mine properties, our competitive position or results of operations could be adversely impacted.

 

  

Artisanal mining can disrupt our business and expose us to liability.

 

Artisanal miners are active on, or adjacent to, many of our properties. Artisanal mining is associated with a number of negative impacts, including environmental degradation, human rights abuse and funding of conflict. We do not purchase any gold from artisanal miners. There is a misconception that artisanally-mined gold is channeled through large-scale mining operators and such misconceptions have a negative impact on the reputation of the mining industry. The activities of illegal miners could cause damage to our properties, including pollution, underground fires, or personal injury or death. We could potentially be held responsible. Illegal mining and theft could result in lost gold reserves, mine stoppages, and have a material adverse effect on our operations and financial condition.

 

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.

 

Our operations are highly unionized, and strikes are legal in the countries in which we operate. Therefore, our operations are at risk of having work interrupted for indefinite periods due to industrial action, such as strikes by employee collectives. Should long disruptions take place on our operations, the results from our operations and their financial condition could be materially and adversely affected.

 

AIDS and tropical disease outbreaks pose risks to us in terms of productivity and costs.

 

The incidence of AIDS in the DRC, Mali, Côte d’Ivoire and Senegal, which has been forecast to increase over the next decade, poses risks to us in terms of potentially reduced productivity and increased medical and insurance costs. The exact extent to which our workforce is infected is not known at present. The prevalence of AIDS in the countries in which we operate and among our workforce could become significant. Significant increases in the incidence of AIDS infection and AIDS-related diseases among members of our workforce in the future could adversely impact our operations and financial condition.

 

Malaria and other tropical diseases pose significant health risks at all of our operations in West Africa and Central Africa where such diseases may assume epidemic proportions. Malaria is a major cause of death and also gives rise to absenteeism in employees and contractors. Consequently, if uncontrolled, the disease could adversely impact our operations and financial condition.

 

  

Item 4. Information on the Company

 

A. HISTORY AND DEVELOPMENT OF THE COMPANY

 

Randgold Resources Limited was incorporated under the laws of Jersey, Channel Islands in August 1995, to engage in the exploration and development of gold deposits in Sub-Saharan Africa. Our principal executive offices are located at 3rd Floor Unity Chambers, 28 Halkett Street, St. Helier, Jersey, JE2 4WJ Channel Islands and our telephone number is (011 44) 1534,735-333. Our agent in the United States is CT Corporation System, 111 Eighth Avenue, New York, New York 10011.

 

We discovered the Morila deposit during December 1996 and we subsequently financed, built and commissioned the Morila mine.

 

During July 2000, we concluded the sale of 50% of our interest in Morila Limited (and also a shareholder loan made by us to Morila Limited) to AngloGold Ashanti for $132.0 million in cash.

 

We have an 80% controlling interest in Loulo through a series of transactions culminating in April 2001. In February 2004, we announced that we would develop a new mine at Loulo in western Mali. The Loulo mine commenced operations in October 2005 and mines the Gara (formerly Loulo 0) and Yalea deposits. In addition, the board agreed to proceed with the development of the underground mine and, after the award of the development contract, work commenced with the construction of the boxcut at the Yalea mine in August 2006. We accessed first ore at Yalea in April 2008 with full production beginning in 2010. We commenced development of Loulo’s second underground mine, Gara, and started mining in 2011. We discovered the Yalea deposit in 1997.

 

We have an 80% controlling interest in Gounkoto, which owns the Gounkoto mine. The Gounkoto mine commenced mining in January 2011 and processes its ore by way of a toll treatment agreement with the Loulo mine, in June 2011.

 

We have an 89% controlling interest in Tongon, which owns the Tongon mine. The Tongon mine commenced mining in April 2010 and first gold was produced in 2010.

 

In April 2004, Resolute Mining Limited, or Resolute, acquired the Syama mine from us. The agreement entered into in June 2004 between the parties provides for the payment of a production royalty by Resolute to us relating to Syama’s production equal to $10/oz on the first million ounces produced by Syama and $5/oz on the next 3Moz produced by Syama. This royalty payment is capped at $25.0 million. We received our first royalties in 2009. During 2015, quarterly royalty payments were received from Resolute throughout the year.

 

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 October 15, 2009, we completed the acquisition of 50% of Moto Goldmines Limited (Moto Goldmines), in a joint venture with AngloGold Ashanti, which resulted in joint control of a 70% interest in the Kibali mine in the DRC. On December 22, 2009 we completed a further acquisition of a 20% interest, on behalf of the joint venture, from Société des Mines d’Or de Kilo-Moto SA (SOKIMO), the parastatal mining company of the DRC, resulting in an effective interest in the Kibali mine of 45%. The Kibali mine commenced mining in 2012 and first gold was produced in 2013.

 

During November 2009, we completed the sale of our Kiaka gold project to Volta Resources Inc., for CAD$4.0 million in cash and 20 million Volta Resources Inc. shares. During 2010, we sold 15.5 million Volta Resources Inc. shares for a net profit of $19.3 million. We had received CAD$4.0 million in full by the end of 2011.

 

  

Effective December 19, 2013, Volta Resources Inc. and B2 Gold Corp completed a Canadian law combination which resulted in Volta Resources Inc. becoming a wholly-owned subsidiary of B2 Gold Corp. As a result of this combination we received 898,003 shares in B2 Gold Corp in exchange for our Volta Resources Inc. shares.

 

We conduct our mining operations through:

 

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a 50% joint venture interest in Morila Limited (which in turn owns an 80% interest in the Morila mine);

 

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an 80% interest in Loulo;

 

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an 80% interest in Gounkoto;

 

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an 89% interest in Tongon; and

 

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a 50% joint venture interest in Kibali (Jersey) Limited (which in turn indirectly owns a 90% interest in the Kibali mine).

 

We also have an 83.25% interest in the Massawa feasibility project.

 

Principal Capital Expenditure

 

Capital expenditure incurred for the year ended December 31, 2015 totaled $216.0 million compared to $179.3 million for the year ended December 31, 2014, and $303.1 million for the year ended December 31, 2013. Significant capital expenditure is forecasted to be incurred across the group during 2016 to support the planned continued growth in production, especially at Kibali, of approximately $80 million (45% of the project), and the ongoing development of the underground mines at Loulo, where total capital at the Loulo-Gounkoto complex is forecast at $141 million. Capital at Tongon, including completion of the crusher expansion, is estimated at $10 million, and $1 million will be spent at Morila (40% of the project), with Massawa capital expenditure estimated at $6 million. Consequently, total group capital expenditure for 2016 is expected to be approximately $240 million (including attributable share of joint ventures). The capital expenditure is projected to be financed out of internal funds.

 

B. BUSINESS OVERVIEW

 

Overview

 

We engage in gold mining, exploration and related activities. Our activities are focused on West and Central Africa, some of the most promising areas for gold discovery in the world. In Mali, we have an 80% controlling interest in the Loulo mine through Loulo. The Loulo mine is currently mining from two underground mines. We also have an 80% controlling interest in the Gounkoto mine through Gounkoto. We own 50% of Morila Limited, which in turn owns 80% of Morila, the owner of the Morila mine in Mali. In addition, we own an effective 89% controlling interest in the Tongon mine located in the neighboring country of Côte d’Ivoire, which was commissioned in November 2010. We also own an effective 83.25% controlling interest in the Massawa project in Senegal where we completed a technical and financial study in December 2009. In 2009, we acquired an effective 45% interest in the Kibali mine, which is located in the DRC. Since that time we have updated the feasibility study and constructed the mine such that we commissioned the first mill stream in 2013 and commissioned the second mill stream in 2014. We also have exploration permits and licenses covering substantial areas in Côte d’Ivoire, DRC, Mali, and Senegal. At December 31, 2015, we declared proven and probable reserves of 15Moz attributable to our percentage ownership interests in Loulo, Morila, Tongon, Gounkoto, Massawa and Kibali.

 

Our strategy is to create value for all our stakeholders by finding, developing and operating profitable gold mines. We seek to discover significant gold deposits, either from our own phased exploration programs or the acquisition of early stage to mature exploration programs. We actively manage both our portfolio of exploration and

 

  

development properties and our risk exposure to any particular geographical area. We also routinely review opportunities to acquire development projects and existing mining operations and companies.

 

Loulo

 

In February 2004, we announced that we would develop a new mine at Loulo in western Mali. In 2005, we commenced open pit mining operations at the Gara and Yalea pits. In 2010, an application was made to split the Loulo and Gounkoto permits. In 2011 mining ceased in the Gara open pit. In 2015, its tenth year of production, the Loulo mine produced 350,604 oz of gold at a total cash cost of $739/oz. We currently anticipate that mining at Loulo will continue through 2028.

 

We commenced development of the Yalea underground mine in August 2006, where first ore was accessed in April 2008. We commenced development of Loulo’s second underground mine, Gara, in 2010 with first ore being intersected during the second quarter of 2011 and stoping began in November 2011. From June 2011, ore from Gounkoto was processed through the Loulo processing plant following the conclusion of a toll-treatment agreement between the two mines. The commencement of the toll-treatment of ore from Gounkoto resulted in a reduction of ore processing with respect to the Loulo mine. Mining of the Yalea South pushback pit was completed in 2013. The Yalea and Gara underground mines are now in full production and paste backfill plants at both mines have been commissioned and are operational.

 

The focus of exploration at Loulo is to continue to explore and discover additional orebodies within the Loulo permit.

 

Gounkoto

 

The Gounkoto mine is located approximately 25km south of Loulo’s plant. Following the completion of the feasibility study in 2010, construction of the mine commenced in late 2010.

 

In January 2011, mining commenced at Gounkoto. In June 2011, the Loulo plant started to treat Gounkoto ore. 2012 represented the first full year of production for Gounkoto. During 2015 a total of 1.97Mt of Gounkoto ore at a grade of 4.9g/t was fed to the Loulo plant and 279,563oz were produced at a total cash cost of $594/oz. We currently anticipate that mining at Gounkoto will continue through 2025.

 

The underground feasibility study on Gounkoto was successfully completed at the end of 2014 and updated in 2015. A trade-off study between a large open pit option and the current underground project is expected to be completed by the end of the year.

 

The focus of exploration at Gounkoto is to continue to explore and discover additional orebodies within the Gounkoto permit.

 

Morila

 

In 1996, we discovered the Morila deposit, which we financed and developed and was our major gold producing asset through 2009. Morila’s total production for 2015 was 122,374oz at a cash cost of $674/oz. Consistent with the mine plan, Morila ceased open pit mining in April 2009 and is currently processing mineralized waste and preparing to process TSF material. During 2010 a study of the reprocessing of the Morila Tailings Storage Facility (TSF) was completed and in 2011 a feasibility study on the viability of treating the TSF material, marginal ore and mineralized waste stockpiles was completed and approved by the board in January 2012. During 2012, a feasibility study on the viability of the Pit 4S pushback was completed, and approved by the board in January 2013. Closure of the operation was originally scheduled for 2013, but, together with the Pit 4S pushback, which was completed in 2015, and the tailings treatment projects, processing of the marginal ore and mineralized waste should extend its life to 2019.

 

  

Tongon

 

The Tongon mine is located within the Nielle exploitation permit in the north of Côte d’Ivoire, approximately 55km south of the border with Mali.

 

We commenced construction of the Tongon mine at the end of 2008, and commissioned the first stream in the fourth quarter of 2010, with first gold production being recorded. We completed and commissioned the second stream including secondary and tertiary crushing circuit and the sulfide circuit of the processing plant in 2011. Tongon has two main pits, South Zone (SZ) and the smaller North Zone (NZ). In 2015, we produced 242,948oz at a total cash cost of $836/oz. The Tongon mine has a remaining mine life of 7 years (to 2021) but has the potential to extend this with nearby discoveries and satellite pits.

 

The focus of exploration at Tongon is to evaluate near-mine targets with a 15km radius and Greenfield programs beyond the near-mine 15km radius.

 

Kibali

 

Our interest in the Kibali mine was acquired in 2009 following the acquisition of Moto Goldmines, in conjunction with AngloGold Ashanti, and the further acquisition of a 20% interest from Sokimo on behalf of the joint venture. The Kibali mine is located approximately 560km northeast of the city of Kisangani and 180km west of the Ugandan border town of Arua in the northeast of the DRC. We are managing the development and operation of the Kibali mine.

 

First gold production at the Kibali mine was recorded in the third quarter of 2013. In 2015, we produced 642,720oz at a total cash cost of $604/oz.

 

The Kibali mine is being developed in two phases. Phase 1, which includes the KCD open pit operation and processing plant, the mine infrastructure and the first of three hydropower stations was completed in December 2014. Phase 2 comprises the underground mine development and two additional hydropower stations. A key achievement in 2014 was the commissioning of the sulphide circuit and subsequent ramp up to design production level by the end of 2014. In 2015, the mine commenced processing underground ore from the decline development, while continuing to progress the construction of the vertical shaft which is expected to be completed in 2017. The mine is expected to operate through to 2031.

 

The focus of exploration at Kibali is to evaluate extension to the known deposits, especially KCD where mineralization has been confirmed.

 

Exploration

 

We are exploring in four African countries (Mali, Senegal, Côte d’Ivoire and the DRC) with a portfolio of 141 targets on 12,307km of ground holding, of these 99 are satellite targets located near existing operations while 42 are potential stand-alone operations. We target profitable gold deposits that have the potential to host mineable gold reserves. Our business strategy of organic growth through exploration has been validated by our discovery and development track record, including the Morila mine, Loulo mine, Gounkoto mine, Tongon mine and the Kibali mine and the Massawa discovery.

 

In 2015, the exploration focus was sustained on the priority areas: the MTZ in Senegal, the Senegal-Mali Shear in Mali, the Boundiali and Senefou belts in Côte d’Ivoire and the KZ Structure in NE DRC. The group’s portfolio of mineral rights was expanded through the acquisition of new permits as well as additional joint ventures.

 

OWNERSHIP OF MINES AND SUBSIDIARIES

 

The Morila mine is owned by Morila, which in turn is owned 80% by Morila Limited and 20% by the State of Mali. Morila Limited is jointly owned by us and AngloGold Ashanti and the mine is controlled by a 50:50 joint venture management committee. Responsibility for the day-to-day operations rests with us.

 

The Loulo mine is owned by a Malian Company, Loulo, which is owned 80% by us and 20% by the State of Mali.

 

  

The Gounkoto mine is owned by a Malian company, Gounkoto, which is owned 80% by us and 20% by the State of Mali.

 

The Tongon mine is owned by an Ivorian company, Tongon, in which we have an 89% interest, the State of Côte d’Ivoire 10% and 1% is held by a local Ivorian company.

 

The Kibali mine is controlled by a 50:50 joint venture, between ourselves and AngloGold Ashanti, which holds an effective 90% interest in Kibali. The remaining 10% of the shares are held by SOKIMO, the parastatal mining company of DRC. We thus have an effective 45% interest in the Kibali mine.

 

We hold an effective 83.25% interest in the Massawa project. The government of Senegal retains a 10% carried interest in the project, with the balance held by our Senegalese joint venture partner.

 

GEOLOGY

 

West Africa is one of the more geologically prospective regions for gold deposits in the world. Lower Proterozoic rocks are known to contain significant gold occurrences and exist in West Africa in abundance. The Birimian greenstone belts, part of the Lower Proterozoic, which are younger than the Archaean greenstones of Canada, Australia and South Africa, contain similar types of ore deposits and are located in Ghana, Côte 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 Birimian Formation, a series of Lower Proterozoic volcanic and sedimentary rocks. The West African Birimian sequences host a number of world class gold deposits and producing gold mines.

 

The Central African gold belts have a long history of gold production, particularly during the colonial era but due to regional instability they have seen little modern exploration. The Kibalian greenstone belts of northeastern DRC are comprised of Archaean Kibalian (Upper and Lower) volcanisedimentary rocks and ironstone-chert horizons metamorphosed to greenschist facies. They are cut by regional-scale north, east, northeast and northwest trending faults and are bounded to the north by the Middle Achaean West Nile granite-gneiss complex and cut to the south by the Upper Congo granitic complex. Our Kibali mine is located within the Moto greenstone.

 

Our strategy was initiated before the current entry of our competitors into West Africa and we believe that this enabled us to secure promising exploration permits in the countries of Côte d’Ivoire, Mali, Burkina Faso, and Senegal at relatively low entry costs.

 

ORE RESERVES

 

Only those reserves which qualify as proven and probable reserves for purposes of the SEC’s Industry Guide Number 7 are presented. Pit optimization is carried out at a gold price of $1,000/oz. Underground reserves are also based on a gold price of $1,000/oz.

 

The Morila, Loulo, and Tongon open pit ore reserves were calculated by Mr. Shaun Gillespie, an officer of the company and competent person. The Kibali open pit ore reserves were calculated by Mr. Nicholas Coomson, an officer of the company and competent person, while the underground ore reserves were calculated by Mr. Tim Peters, an external consultant and competent person. The Loulo underground ore reserves were calculated by Mr. Andrew Fox, an external consultant and competent person. The Gounkoto open pit ore reserves were calculated by Mr. Philemon Frimpong, an officer of the company, under the supervision of Mr. Shaun Gillespie, an officer of the company and competent person. The Gounkoto underground ore reserves were calculated by Mr. Tim Peters, an external consultant and competent person. Total reserves as of December 31, 2015 amounted to 194Mt at an average grade of 3.6g/t, for 23Moz of gold of which 15Moz are attributable to us.

 

In calculating proven and probable reserves, current industry standard estimation methods are used. The geological estimates were calculated using classical geostatistical techniques, following geological modeling of the

 

  

borehole information. The sampling and assaying is done to internationally acceptable standards and routine quality control procedures are in place.

 

All reserves are based on technical and financial studies. Factors such as grade distribution of the orebody, planned production rates, forecast working costs, dilution and mining recovery factors, geotechnical parameters and metallurgical factors as well as current forecast gold price are all used to determine a cut-off grade from which a life of mine plan is developed in order to optimize the profitability of the operation.

 

The following table summarizes the declared reserves at our mines as of December 31, 2015:

 

		Proven Reserves												Probable Reserves												Total Reserves
		Tonnes				Grade				Gold				Tonnes				Grade				Gold				Tonnes				Grade				Gold
Operation/Project2		(Mt)				(g/t)				(Moz)				(Mt)				(g/t)				(Moz)				(Mt)				(g/t)				(Moz)
Morila1			-				-				-				15				0.6				0.3				15				0.6				0.3
Loulo1			8.6				4.5				1.2				23				4.7				3.4				32				4.6				4.7
Tongon1			8.2				2.3				0.6				18				2.4				1.4				26				2.4				2.0
Gounkoto1			4.1				3.1				0.4				16				5.2				2.7				20				4.8				3.1
Massawa1			-				-				-				21				3.1				2.0				21				3.1				2.0
Kibali1			4.0				1.8				0.2				76				4.3				10				80				4.1				11
Total			25				3.1				2.5				170				3.7				20				194				3.6				23

  

1

Our attributable share of Morila is 40%, Loulo 80%, Gounkoto 80%, Tongon 89%, Massawa 83.25% and Kibali

45%. The figures stated above represent the 100% values.

2

The reporting of ore reserves is in accordance with SEC Industry Guide 7. Open pit reserves are calculated at a weighted average cut off of 1.05g/t and within an $1,000/oz open pit designs. Underground reserves are reported at a weighted average cutoff of 2.51g/t, calculated at $1,000/oz gold price. Dilution and ore loss are incorporated into the calculation of reserves. Addition of individual line items may not sum to sub totals because numbers are reported to the second significant digit.

 

At Loulo, Gounkoto, Kibali and Massawa open pit reserves, a 10% mining dilution at zero grade and an ore loss of 3% has been incorporated into the estimates of reserves and are reported as mill delivered tonnes and head grades. At the Tongon project a dilution of 13% at zero grade and 2% ore loss, with selected portions of the pushback containing very narrow ore body, of 18% at zero grade and an ore loss of 12%, has been modelled for the Southern Zone and 10% dilution and 2% oreloss for the Northern Zone. Kibali underground dilution varies between 1% and 6.7% depending on stope design and ore loss of 3%. For Morila a 5% dilution has been applied to the TSF mining with 0% ore loss. Metallurgical recovery factors have not been applied to the reserve figures since these are the estimates of the material to be delivered to the mill. Operating costs, metallurgical recovery, royalties, dilution and ore loss factors are used to determine the cut-off grade at which to report ore reserves. The weighted average metallurgical recovery factors used are 57% for the Morila mine, 93.5% for the Loulo open pit material and 91.9% for Loulo underground material, 86% for the Tongon mine, 92% for the Gounkoto underground material, 89% for the Massawa open pit material and 88.2% for the Kibali mine. 

 

MINING OPERATIONS

 

Loulo-Gounkoto Mine Complex

 

The Loulo and Gounkoto mines, known as the Loulo-Gounkoto complex, are located in the west of Mali, bordering Senegal, adjacent to the Falémé River. The complex lies within the Kedougou-Kéniéba inlier of Birimian rocks which hosts a number of major gold deposits in Mali, including Gara, Yalea and Gounkoto, Sadiola, Segala and Tabakoto as well as Sabodala across the border in Senegal. The Loulo mine officially opened in November 2005 with the approval for an underground feasibility study in the same year and underground mine development started in 2006. Gounkoto was discovered in 2009. Open pit mining commenced in January 2011 and first ore was delivered to Loulo plant, under a toll treating agreement in June 2011.

 

The complex is owned 80% by us and 20% by the State of Mali. In 2010, an application was made to split the Loulo and Gounkoto permits, and a separate company was created for Gounkoto in December 2010 with the same

 

  

corporate structure and shareholding as Loulo. A new mining convention, which dictates the fiscal and regulatory environment applicable to the mine, was negotiated with the State of Mali and signed in March 2012. The convention included an initial two year corporate tax holiday starting from the date of first production, and a further tax holiday, up to a maximum of five years in total, in the event of further investment such as an underground mine. It also includes royalties of 6% of revenues and a 10% priority dividend payment for the State of Mali.

 

In 2015, gold sales totaled $724.2 million for the year. Total royalties paid to the state amounted to $47.9 million and cash operating costs totaled $376.8 million, resulting in profit from mining activities of $298.4 million.

 

Gold production at the Loulo-Gounkoto complex was 630,167oz, 1% down on the prior year. The small decrease in production was due to a 4% decrease in head grade milled to 4.8g/t, offset by a 3% increase in tonnes processed, while the recoveries were in line with the prior year at 90.1%. Total cash costs per ounce were in line with the prior year at $675/oz and well contained, notwithstanding the lower production and head grade milled, aided by a lower fuel price and favorable euro/dollar exchange rate.

 

Gold sales of $724.2 million were 9% lower than the previous year due to the 9% drop in the average gold price received. Profit from mining activity (before interest, tax and depreciation) decreased by 20% to $298.4 million due to the lower sales.

 

Tonnes processed at 4,543kt for the year were 3% above 2014 despite a mill motor failure in the first quarter, a mill motor replacement in the third quarter and the integration of the paste plant with the processing plant. Further modifications including the launders installation at the CIL in 2016 is expected to boost throughput to 4,600kt for the year.

 

Production results for the 12 months ended December 31		2015				2014
MINING
Tones mined (000)			31,360				27,025
Ore tonnes mined (000)			4,513				4,539
MILLING
Tonnes processed (000)			4,543				4,396
Head grade milled (g/t)			4.8				5.0
Recovery (%)			90.1				90.2
Ounces produced			630,167				639,219
Ounces sold			630,627				631,124
Average price received ($/oz)			1,148				1,267
Cash operating costs1 ($/oz)			606				597
Total cash costs1 ($/oz)			675				672
Gold on hand at period end2 ($000)			8,133				9,708
Profit from mining activity1 ($000)			298,396				375,293
Gold sales1 ($000)			724,167				799,718

 

 

1

Refer to explanation of non-GAAP information provided in the section “—Non-GAAP information” above.

2

Gold on hand represents gold in doré at the mines multiplied by the prevailing spot gold price at the end of the period.

 

  

LOULO

 

Operations

 

Gold production at Loulo decreased by 8% to 350,604oz due to a 5% decrease in tonnes processed (2,570kt) and a 4% drop in head grade milled (4.7g/t). Notwithstanding the drop in production, total cash costs were contained at $739/oz, a 4% increase on the prior year. The grade was negatively impacted by a slower build-up in underground mining which delayed access to higher grade areas, in part due to the impact of the flooding in the third quarter as well as the transition to owner mining. There was a marked improvement in the latter half of the fourth quarter.

 

Gold sales of $406.6 million were lower than the previous year due to the 9% drop in the average gold price received. Profit from mining activity (before interest, tax and depreciation) decreased to $145.9 million for the year.

 

Capital expenditure for the year of $181.7 million included the development of Yalea and Gara underground mines as well as the acquisition of a new underground mining fleet as part of the transition from contract mining to owner mining. Expenditure also covered the replacement of ten aging Cat 3512B generators, as well the addition of a carbon regeneration kiln and upgrades to the gravity and elution circuits to increase the gold stripping capacity.

 

Work continues on the underground refrigeration plants, upgrading of the medium voltage distribution system as well as a new elution column and electrowinning section to expand the gold stripping capacity in the process plant.

 

Two additional medium speed generators are due to be installed in 2016 to provide the additional power requirements for the two new refrigeration plants at Yalea and Gara.

 

Mining and Production

 

During 2015, 16,642 development meters were completed and 2,460kt of ore at 5.57g/t was hoisted to surface. The improved backfill performance during 2015 had a positive impact on the availability of stopes, mining sequence and delivery of ore at both Yalea and Gara.

 

Loulo successfully transitioned from contract mining to owner mining in the last quarter of 2015. The transition included the implementation of remote control mining technologies at both Yalea and Gara. The automated loading guidance system is expected to reduce loader damage and increase productivity.

 

As part of its commitment to provide a productive, safe and healthy working environment, Loulo started the construction of two refrigeration and air-cooling plants for both underground mines. Given the hot and at times humid climate in Mali, and with the increasing depth of the mining levels, the refrigeration plants are designed to cool the ambient air to a wet bulb temperature of approximately 28°C at the working face.

 

Production results for the 12 months ended December 31		2015				2014
MINING
Tones mined (000)			2,598				2,819
Ore tonnes mined (000)			2,520				2,699
MILLING
Tonnes processed (000)			2,570				2,711
Head grade milled (g/t)			4.7				4.9
Recovery (%)			90.1				90.1
Ounces produced			350,604				382,263
Ounces sold			352,927				376,490
Average price received ($/oz)			1,152				1,264
Cash operating costs1 ($/oz)			670				637
Total cash costs1 ($/oz)			739				713
Gold on hand at period end2 ($000)			3,678				6,922
Profit from mining activity1 ($000)			145,875				207,496
Gold sales1 ($000)			406,643				475,861

 

  

Randgold owns 80% of Loulo and the State of Mali 20%. Randgold has funded the whole investment in Loulo by way of shareholder loans and therefore controls 100% of the cash flows from Loulo until the shareholder loans are repaid.

Randgold consolidates 100% of Loulo and shows the non-controlling interest separately.

1

Refer to explanation of non-GAAP information provided in the section “—Non-GAAP information” above.

2

Gold on hand represents gold in doré at the mines multiplied by the prevailing spot gold price at the end of the period.

 

Ore Reserves

 

Total ore reserves were marginally down year on year, as depletion of ore reserves was partially replenished from infill grade control drilling of the principal deposits.

 

				Tonnes (Mt)								Grade (g/t)								Gold (Moz)								Attributable Gold2 (Moz)
at December 31		Category		2015				2014				2015				2014				2015				2014				2015				2014
ORE RESERVES1
■ Stockpiles		Proved			1.9				2.2				1.7				1.8				0.1				0.1				0.08				0.1
■ Open pits
■ Underground		Probable			5.3				4.2				3.4				2.5				0.6				0.3				0.5				0.3
		Proved			6.7				-				5.3				-				1.1				-				0.9				-
TOTAL ORE RESERVES		Probable			18				27				5.0				5.1				2.9				4.4				2.3				3.5
		Proved and probable			32				33				4.6				4.6				4.7				4.9				3.7				3.9

 

1

Open pit ore reserves are reported at a gold price of $1,000/oz and an average cut-off of 1.1g/t and include dilution and ore loss factors. Open pit ore reserves were calculated by Mr. Shaun Gillespie, an officer of the company and competent person. Underground ore reserves are reported at a gold price of $1,000/oz and a cut-off of 2.6g/t for Yalea underground and 2.2g/t for Gara underground and includes dilution and ore loss factors. Underground ore reserves were calculated by Mr. Andrew Fox, an external consultant and competent person.

 

2

Attributable gold (Moz) refers to the quantity attributable to Randgold based on its 80% interest in Loulo.

 

Processing, Plant and Engineering

 

Processing

 

A total of 4,543kt at 4.8g/t, which includes 1,973kt from Gounkoto, was treated and milled at the Loulo plant during the year, compared to 4,396kt at 5.0g/t in 2014. Further modifications in 2016, including the launders installation at the CIL, are expected to expand the throughput capability to 4.6Mtpa.

 

Overall gold recovery of 90.1% was in line with the prior year, while plant utilization of 92.3% increased from 91.7% in 2014. Gold recovery of plus 91.0% is being targeted for 2016 on the back of the upgrades to the gravity, elution and regeneration circuits, along with other improvement initiatives, including an upgrade to the Aachen reactors to increase oxygen availability in the CIL.

 

Loulo contributed 57% (23% Gara underground; 28% Yalea underground; 4% Yalea OC; 1% Gara OC) and Gounkoto 43% of the ore to the plant, almost in line with the 60:40 plan to balance the mines’ respective reserves.

 

  

Engineering and power supply

 

In the metallurgical plant the availability of the mills and crusher was 94.8% (2014: 93.2%) and 87.9% (2014: 88.9%) respectively.

 

Despite improvement in the mills’ runtime, availability was negatively impacted by the premature failure of the primary mill gearbox float bearing, power interruptions in the first quarter of 2015 and Mill 2 motor lube system failures. The crushing plant will be reconfigured in the second quarter of 2016 to add an additional tertiary crusher (currently three tertiary units are in operation) allowing a finer gap setting to deliver a finer crush product which will raise the milling throughput.

 

The power plant produced a total of 331.6GWh of electricity (2014: 287.7GWh), a 15% increase on the prior year. This reflects the additional underground demand, including increased usage of the paste backfill plants and primary ventilation upgrades.

 

The mine is currently busy with a power stability upgrade to the medium voltage switching system scheduled for completion by the end of 2016 and designed to enhance the efficiency and reticulation of its power. This will be followed by an advanced power management system upgrade during the first quarter of 2017. Ten medium speed generators, which are more efficient than high speed units, can now run on cheaper heavy fuel oil (HFO) which, together with the lower diesel price during the year, contributed to a significant improvement in power costs of $0.151/kWh against $0.246/kWh in 2014. This trend is expected to continue in 2016 given the favorable oil price and the addition of two HFO medium speed generators.

 

Exploration

 

Greenfields activity has refocused the exploration effort with an updated, project-wide geological interpretation utilizing all mapping, drilling, geochemical and geophysical datasets. This work has delivered 56 new areas of interest which have been ranked and prioritized. Several targets have been advanced with new geological models, including Baboto North, Yalea Ridge South, and the near surface mineralization potential at Gara South. Going forward, priority targets along regional scale structures such as the Far West structure and Yalea structure will be investigated further in 2016. A detailed summary of the exploration work completed during the year can be found in the section entitled “—Exploration Review.”

 

Health and Safety

 

Five lost time injury (LTI) cases were recorded during the year, representing a lost time injury frequency rate (LTIFR) of 0.87 per million hours worked compared to 0.62 in the previous year. However, the annual total injury frequency rate (TIFR) decreased from 10.76 per million hours worked in 2014 to 7.28, in 2015. A new safety management software system (Myosh) was installed during the year to assist in the management of the mines safety improvement projects. The mine retained its OHSAS 18001 certification.

 

1,274 malaria cases were treated during the year, an incidence rate of 44% which is a 32% increase on 2014. The mine is focusing on a program to reduce the incidence rate in 2016.

 

Overall, 2,358 Voluntary Counselling and Testing (VCT) cases were seen during the year with an HIV positivity rate of 1.8%. The rise in the number of VCT cases, compared to the previous year, is attributable to increased awareness of the disease following the activities of the local NGO, Soutoura. The organization partnered with the mine to focus on sensitizing employees and the community to the prevention of HIV/AIDS.

 

Following the declaration of the end of Ebola in West Africa on December 29, 2015, the temperature screening at mine sites has been discontinued, while the hand washing initiative and the infection control protocols have been maintained as best practice. Mali Ebola Private Sector Mobilization Group (EPSMG) has reviewed its agenda to include occupational health, HIV/AIDS and malaria management and meetings have been rescheduled to take place on a monthly basis.

 

  

Environment

 

The mine retained its environmental management system (EMS) certification for ISO 14001 following the surveillance audit during the year, while management reviews and inspections were also undertaken.

 

A water balance review was undertaken to assess water reticulation and to explore additional ways to save water as well as recycling opportunities. The TSF water recycling rate decreased to 70% against 78% in 2014. Actions were taken to consume more recycled water and by year end had started showing positive results with above 80% recycled.

 

During the year the sludge treatment plant at Gara was commissioned and, within one month of commissioning, the total suspended solids level in the discharge dropped from above 300-400mg/l to 16mg/l vs 30mg/l as per the legal requirement.

 

An action plan has been put in place to protect and enhance biodiversity onsite (BAP) of which 90% has been implemented. Fauna and flora awareness has increased and protected fauna species identified. During the year a fishing event was organized in the mine cofferdam with the local community; a total of 27kg of fish was harvested. In 2016, the mine plans to evaluate the opportunity to again assist with the Mali elephant project.

 

Further details are provided in the section entitled “—Social Responsibility and Environmental Sustainability.”

 

Human Resources and Industrial Relations

 

The operational labor complement at Loulo comprises 2,896 employees (including personnel employed by contractors and temporary laborers) in line with the prior year, of which 94% are Malians. The mine has seen an increase in employees following its transition to underground owner mining and a corresponding decrease in contractors. Notwithstanding this transition, the total number of expatriates at the mine has reduced by a further 7% due to the continuation of the localization program designed to promote employment of host country nationals.

 

Industrial relations were generally stable through most of the year, although a 72 hour strike was undertaken by Union Nationale des travailleurs du Mali (UNTM) affiliated employees in the third quarter of the year. The strike action did not affect production.

 

Loulo Manpower

		2015												2014
at December 31		Expats				Nationals				Total				Expats				Nationals				Total
Employees			153				1,775				1,928				68				877				945
Contractors			31				937				968				133				1,783				1,916
TOTAL			184				2,712				2,896				201				2,660				2,861

 

Community

 

We continue to engage actively with the community through monthly community development committee meetings and ad hoc meetings. The annual sustainability report of the company was presented to the local, regional and national authorities and the community at the beginning of this year. The CEO had constructive meetings with the chiefs of the different villages. It was decided to assist the community in constructing a hotel close to the Senegal-Mali border to provide additional economic activity in the region and to devise a bursary program for the local students. The mine, together with the community committee and the local authorities, is working to implement these projects this year.

 

GOUNKOTO

 

Mining at Gounkoto started in January 2011, although first ore was fed to the Loulo plant in June 2011 and 2012 represented the first full year of production from the mine. Total material mined during 2015 was 28.8Mt compared to 24.2Mt in 2014.

 

  

Operations

 

Gounkoto produced 279,563oz of gold, 9% more than in the previous year. Tonnes processed increased to 1,973kt while the head grade milled reduced by 8% to 4.9g/t. With the recovery in line with the prior year at 90.1%, and due to good cost control assisted by a lower fuel price, total cash costs decreased to $594/oz.

 

Gold sales of $317.5 million were lower than the previous year due to the 10% drop in the average gold price received, resulting in profit from mining activities (before interest, tax and depreciation) of $152.5 million. Capital expenditure totaled $2.7 million, most of which was related to the underground feasibility study and exploration.

 

During the year, Gounkoto paid a total of $51.9 million in dividends to its shareholders.

 

Mining and Production

 

A total of 28.8Mt was mined, including 2.0Mt of ore at an average grade of 4.9g/t, compared to 24.2Mt including 1.8Mt of ore at 4.4g/t in 2014. The increase in grade reflects the current improved grade profile in the pit.

 

A total of 1,973kt of ore was fed from Gounkoto to the Loulo plant at an average head grade of 4.9g/t compared to 1,686kt of ore at 5.3g/t in 2014.

 

The strip ratio was 13.4 in 2015 compared to 12.2 in 2014, slightly higher than the LoM strip ratio of 10.2, although in line with the plan which anticipated higher strip ratios in 2015 and again in 2016.

 

The Gounkoto main pit is scheduled to be mined until 2024, based on a revised mine plan that focuses on sustainable production over a ten year period and reducing lock-up of working capital within low grade stockpiles, thus maximizing cash flow. The Gounkoto pit will interface with mining from the Faraba satellite pit from 2022 through to 2024.

 

12 months ended December 31		2015				2014
MINING
Tones mined (000)			28,762				24,206
Ore tonnes mined (000)			1,992				1,841
MILLING
Tonnes processed (000)			1,973				1,686
Head grade milled (g/t)			4.9				5.3
Recovery (%)			90.1				90.2
Ounces produced			279,563				256,957
Ounces sold			277,700				254,634
Average price received ($/oz)			1,143				1,272
Cash operating costs1 ($/oz)			526				537
Total cash costs1 ($/oz)			594				613
Gold on hand at period end2 ($000)			4,455				2,786
Profit from mining activity1 ($000)			152,521				167,797
Gold sales1 ($000)			317,524				323,857

 

Randgold owns 80% of Gounkoto and the State of Mali 20%. Randgold consolidates 100% of Gounkoto and shows the non-controlling interest separately.

1

Refer to explanation of non-GAAP information provided in the section “—Non-GAAP information” above.

2

Gold on hand represents gold in doré at the mine multiplied by the prevailing spot gold price at the end of the period.

 

  

Ore Reserves

 

Drilling and updated modelling of the open pit reserves have resulted in the replenishment of reserves depleted during the year, while the update of the Gounkoto underground feasibility study has increased the underground reserve to 4.7Mt at 7.20g/t for 1.1 million probable ore reserve ounces. Total ore reserves for Gounkoto remain above 3Moz.

 

				Tonnes (Mt)								Grade (g/t)								Gold (Moz)								Attributable Gold2 (Moz)
at December 31		Category		2015				2014				2015				2014				2015				2014				2015				2014
ORE RESERVES1
■ Stockpiles		Proved			1.9				1.7				1.9				1.9				0.1				0.1				0.09				0.08
■ Open Pits		Proved			2.2				2.7				4.2				4.9				0.3				0.4				0.2				0.3
		Probable			12				13				4.4				4.0				1.6				1.7				1.3				1.4
■ Underground		Probable			4.7				4.7				7.2				6.0				1.1				0.9				0.9				0.7
TOTAL ORE RESERVES		Proved and probable			20				22				4.8				4.4				3.1				3.2				2.5				2.5

 

1

Open pit ore reserves are reported at a gold price of $1,000/oz and 1.3g/t cut-off and include dilution and ore loss factors. Open pit ore reserves were calculated by Mr. Shaun Gillespie, an officer of the company and competent person. Underground ore reserves are reported at a gold price of $1,000/oz and a cut-off of 3.0g/t and include dilution and ore loss factors. Underground ore reserves were calculated by Mr. Tim Peters, an external consultant and a competent person.

2

Attributable gold (Moz) refers to the quantity attributable to Randgold based on its 80% interest in Gounkoto.

 

Gounkoto Underground Project

 

The underground feasibility has been updated on the back of a revised resource model which incorporates the drill results from 2015. Work on the portal in the south of the pit is planned to start in 2018 with access to ore anticipated in 2019. A ramp-up to steady state production is scheduled by 2020, as mining in the south of the pit comes to an end. The proposed mining method comprises longhole open stoping with backfill to support a 60 to 70ktpm operation over an eight year period.

 

An economic assessment on the financial viability of the Gounkoto project underground reserve has been carried out based on the parameters summarized below:

 

·

A flat gold price of $1,000/oz;

 

·

Total ore mined of 4.7Mt containing 1.07Moz of gold at an average grade of 7.2g/t;

 

·

Mining costs average $81/ore tonne delivered to the Gounkoto RoM pad;

 

·

Crushing and haulage costs average $5.90/t ore;

 

·

Mill throughput of an average of 585kt per year to be treated at the Loulo plant over eight years;

 

·

Plant processing costs at an average of $20.60/ore tonne milled;

 

·

G&A cost at $9.27/ore tonne processed over Life of Mine (LoM), including outside engineering costs; and

 

·

LoM capital of $156 million.

 

A financial model using a $1,000/oz gold price together with a 30% tax rate and a 6% royalty, produced a nine year project with a total after tax cash flow of $210 million and an internal rate of return of 35%.

 

The Gounkoto underground mine schedule is integrated into that of the Loulo-Gounkoto complex operational schedule which forecasts more than 600,000oz per year until 2025 on current reserves. This excludes further

 

  

opportunities currently being explored to expand the resources at the three principal orebodies of Yalea, Gara and Gounkoto.

 

Underground Mine versus Superpit Trade-Off

 

Given the decrease in mining and processing costs as a result of lower fuel prices and mining contractor efficiency, a superpit option is being considered to optimize the mining of the remaining Gounkoto orebody at the end of the current pit. A full trade-off between the large open pit option and the current underground project is expected to be completed by the end of the year.

 

The larger pit design will be beneficial in extending the life of the open pit to 2023 which brings total cash flow forward and adds operational flexibility. It will also allow for the crown pillar in the underground design to be mined out and still provide an opportunity to mine the remaining underground reserves, accessed from the deeper pit.

 

Exploration

 

Newly identified geological controls to high grade mineralization at P64W have delivered gains to the overall Gounkoto mineral resource which partially offset depletion. At Mz1, underground feasibility drilling showed limited potential for extending the underground target to this portion of the orebody. The potential of the larger open pit potential will be tested in 2016.

 

As at Loulo, an updated project-wide geological interpretation utilizing all datasets has generated 28 new areas of interest, which have been ranked and prioritized. An increased understanding of cover thickness across the permit has been combined with gradient array IP geophysics to identify several blind targets. During the year work at Minan, Toronto south, and Gounkoto NW confirmed the limited ability for these targets to pass our strategic filters, and they were removed from the resource triangle. In 2016, priority targets along the regional scale Gounkoto and Faraba structures will be investigated further. A detailed summary of the exploration work completed during the year can be found in the section entitled “—Exploration Review.”

 

Health and Safety

 

2015 marked the third consecutive year that the Gounkoto mine has been LTI free, an excellent achievement with the mine recording over 6.6 million LTI free hours. The mine retained its OHSAS 18001 certification.

 

During the year, a compliance audit was conducted on the safety management system to further enhance the performance of the mine:

 

·

512 malaria cases were treated during the year representing an incidence of 48%, a 6% decrease from 2014.

 

·

650 VCTs were conducted during the year with a HIV positivity rate of 0.46%. The increase in the number of VCT cases compared to the previous year was attributable to the activities of the local NGO, Soutoura, which partnered with the mine to focus on sensitizing employees and the community on the prevention of HIV/AIDS.

 

Best practices of infection control and prevention inherited from the Ebola crisis management were introduced into the health service.

 

Environment

 

The mine retained its environmental management system certification to ISO 14001 following the surveillance audit at the beginning of the year and will undergo a recertification audit early in 2016. A management

 

  

review forum and environmental inspections were undertaken to ensure continued improvement. No major environmental incidents occurred during the year.

 

The mine water balance was reviewed by an independent consultant to identify gaps to improve the mine water efficiency. The main focus is to reduce the inflow of water from the Faleme River into the pit by establishing an effective dewatering network.

 

A total of 1,387 trees from 356 plants species are growing in the tree nursery. The opportunity to once again assist in the Mali elephant project is being evaluated.

 

The environmental permit for the future underground mine was granted by the Ministry of Environment.

 

Human Resources and Industrial Relations

 

Mine employees decreased to 132, excluding contractors, after a rightsizing exercise was undertaken. The total operational complement is now 1,040, including personnel employed by contractors, of which 97% are Malian. Industrial relations were generally stable through most of the year, although a 72 hour strike was undertaken by UNTM affiliated employees in the third quarter of the year. The strike action did not affect the production.

 

A total of 34 employees received formal training during the year in line with the company’s employee development program.

 

Gounkoto Manpower

		2015												2014
at December 31		Expats				Nationals				Total				Expats				Nationals				Total
Employees			4				128				132				7				144				151
Contractors			29				879				908				28				834				862
TOTAL			33				1,007				1,040				35				978				1,013

 

Community

 

The company’s annual sustainability report was presented to the relevant authorities as well as the community, and it continued to engage with the community through monthly development committee meetings. During the year the CEO met with village chiefs to discuss and decide on a number of development projects, including a bursary program for local students. The mine is working on the implementation of these projects in cooperation with the community committee and the local authorities.

 

MORILA

 

The Morila mine is situated 280km south-east of Bamako, the capital of Mali. The Morila mine is owned by a Malian company, Morila, which in turn is owned 80% by Morila Limited and 20% by the State of Mali. Morila Limited is jointly owned by ourselves and AngloGold Ashanti Limited and the mine is controlled by a 50:50 joint venture management committee. Responsibility for the day-to-day operations rests with us. Under its stewardship the mine was successfully converted from open pit mining to a stockpile treatment operation during 2009.

 

Closure of operations at Morila was originally scheduled for 2013 but, together with the Pit 4S pushback, completed in 2015, the Domba satellite deposit and the re-tailings treatment projects, processing of the marginal ore and mineralized waste should extend its life to 2019.

 

Operations

 

Morila produced 122,374oz for the year, an 11% improvement on the previous year’s production (2014: 110,272oz). The higher grade pit 4S ore was processed in the first half of the year and complemented by additional mineralized waste material from waste dumps deposited earlier in the life of the mine when the highest grades from the pit were being mined. The gold production increase resulted from a 17% rise in the head grade milled, partially

 

  

offset by slightly lower throughput. Total cash costs were significantly lower at $674/oz, a 41% decrease on the prior year, on the back of the increased production and lower mining costs.

 

Gold sales, at $143.0 million (100% basis), were 3% higher than the previous year due to the increased production, notwithstanding the 7% drop in the average gold price received. Profit from mining activity (before interest, tax and depreciation) increased to $60.5 million for the year.

 

Capital expenditure for the year of $11.0 million mainly related to the preparation for the treatment of the TSF. During the year, Morila paid a total of $25.7 million in dividends to its shareholders.

 

Mining and Production

 

Mining and processing of pit 4S was successfully completed at the end of March 2015 as planned. Waste was dumped in both pit 4N and pit 5 to reduce the hauling cost. Total tonnes mined in 2015 was 3.4Mt including 939kt of ore at 2.85g/t.

 

Morila is planning to mine ore from the Domba pit during 2016, subject to agreement with the community and government on relocation of a part of the village. Timeous approval by the Malian authorities should result in first ore from the Domba pit being delivered in the second quarter of 2016, after which the mine is planning to switch to tailings retreatment.

 

12 months ended December 31		2015				2014
MINING
Tonnes mined (000)			3,425				18,405
Ore tonnes mined (000)			939				1,035
MILLING
Tonnes processed (000)			3,063				3,242
Head grade milled (g/t)			1.4				1.2
Recovery (%)			91.1				89.8
Ounces produced			122,374				110,272
Ounces sold			122,374				110,272
Average price received ($/oz)			1,168				1,258
Cash operating costs1 ($/oz)			645				1,109
Total cash costs1 ($/oz)			674				1,143
Profit from mining activity1 ($000)			60,487				12,631
ATTRIBUTABLE (40% PROPORTIONATELY CONSOLIDATED)
Gold sales1 ($000)			57,197				55,489
Ounces produced			48,950				44,109
Ounces sold			48,950				44,109
Gold on hand at period end2 ($000)			-				-
Profit from mining activity1 ($000)			24,195				5,052

  

Randgold owns 40% of Morila with the State of Mali and joint venture partner owning 20% and 40% respectively. The group equity accounts for its 40% joint venture holding in Morila.

1

Refer to explanation of non-GAAP information provided in the section “—Non-GAAP information” above.

2

Gold on hand represents gold in doré at the mines multiplied by the prevailing spot gold price at the end of the period.

 

  

Ore Reserves

 

Only the higher grade portion of the TSF is reported as ore reserves and forms the bulk of the feed for the current LoM plan.

 

				Tonnes (Mt)								Grade(g/t)								Gold (Moz)								Attributable Gold2 (Moz)
at December 31, 2015		Category		2015				2014				2015				2014				2015				2014				2015				2014
ORE RESERVES1
■ Stockpiles		Proved			-				0.02				-				4.0				-				0.003				-				0.001
■ Open pit		Probable			-				0.6				-				3.0				-				0.06				-				0.02
■ TSF		Probable			15				12				0.6				0.5				0.3				0.2				0.1				0.08
TOTAL ORE reserves		Proved and probable			15				13				0.6				0.7				0.3				0.3				0.1				0.1

 

1

TSF ore reserves are reported at a $1,000/oz cut-off grade of 0.49g/t. Ore reserves were calculated by Mr. Shaun Gillespie, an officer of the company and competent person.

2

Attributable gold (MOZ refers to the quantity attributed to Randgold based in its 40% interest in Morila.

 

TSF Project

 

The TSF retreatment model and reclamation schedule were updated during the year and integrated into the LoM. The TSF mining project is being managed by Fraser Alexander Tailings, a specialized TSF retreatment operator.

 

The 2016 LoM plan includes:

 

·

36.9Mt of low grade material stripped and pumped directly into the pit from 2016 through to 2020; and

 

·

15.5Mt of higher grade material processed through the plant, with the tailings also being deposited in the pit from 2016 through to 2019.

 

The TSF decapping activity commenced in April 2015 with a total of 3.5Mt of waste discharged directly into the pit during the year.

 

Domba Project

 

The Domba project consists of a satellite deposit located 6km to the northwest of the main Morila open pit. The mineralization is very different to that of the Morila orebody, consisting of multiple subparallel lodes along a north south corridor. The lodes vary in width from 1m to 15m and have been delineated in the saprolite to an average depth of 50m. The mineralization intersected in the fresh rock is narrow, erratic and typically lower grade.

 

Grade control drilling was completed over the majority of the proposed pit to confirm the mineral content and a feasibility study was completed. This identified 454kt of ore at 3.1g/t, within a $1,000/oz pit design, to be mined.

 

A Malian contractor has been identified to complete the mining and haulage activities over a four month period. The mining sequence requires that the southern portion of the pit be mined first, followed by the north. This allows for the waste from the north to be backfilled into the southern portion of the pit, reducing the surface impact of the mine. The waste is planned to be used to construct a safety berm between the pit and the village and to be shaped to ensure access to the pit as a surface water source for the community, post mining. Metallurgical recoveries, based on test work, are good at 91%.

 

  

A full environmental and social impact assessment (ESIA) was completed, addressing key community concerns through public consultations, including the Resettlement Action Plan which specifically caters and compensates for the 26 households, three public infrastructures and 26 fields that will be affected by mining activities. Community development projects targeting farming, water supply, street lighting, the school, the clinic and mosque have been agreed with the community. Final agreement with the community and the government for the project to proceed is awaited.

 

Exploration

 

Generative work around the Morila deposit continued during the year with a relogging program focusing on the key structural and alteration features associated with the Morila mineralization. However, this work did not lead to the generation of any new targets due to the lack of any visible controls on the features.

 

At Samacline, a review of the deep zone of mineralization located to the immediate west of Morila identified open, high grade mineralization within a wide, low grade envelope of up to 80m in width. The untested area down dip to the west of Samacline is large enough to hold a Morila-type deposit and is now the target of a diamond drill hole being planned to test the model that samacline could be the eastern edge of a large deposit.

 

Health and Safety

 

No LTIs were recorded during the year and the associated LTIFR of zero compared favorably to 1.11 in the previous year. The TIFR also decreased from 4.81 in 2014 to 4.21 per million hours worked in 2015.

 

A review of the health and safety management system was completed during the year and the scope of the safety policy has been extended to capture the new TSF reclamation activities and ensure the risk assessment of the TSF project is applied to mitigate any safety risks in this new activity.

 

The malaria incidence rate for the year was 22.5%, a 14% decrease from the previous year.

 

The mine maintained its OHSAS 18001 certification.

 

Environment

 

The mine remains compliant under ISO 14001 and recertification is scheduled for the first quarter of 2016. No major environmental incidents occurred during the year.

 

The mine closure plan was updated in November 2015 to meet the requirements of the government and the communities and to prevent or minimize any adverse long term environmental and social impacts while creating a self-sustaining natural ecosystem. High risk infrastructure, such as the processing plant and the tailings dam with piping, will be removed and the footprint rehabilitated. Waste rock dumps will be profiled to fit in with the natural landscape and revegetated, and other infrastructure will be left and used to develop an agro industrial center for the benefit of the communities, former workers and the country (more information is included in the agribusiness section).

 

Environmental monitoring will continue for five years after the mine closes to ensure compliance with the closure targets.

 

Further details are provided in the section entitled “—Social Responsibility and Environmental Sustainability.”

 

Human Resources and Industrial Relations

 

Total manpower recorded at the end of the year was 781 (including 422 persons employed by contractors) of which 99% are Malian. During the year the industrial relations climate was stable and the mine continued with its

 

  

downsizing exercise, in line with the cessation of mining activities. Several training and employee capacity building activities took place.

 

Morila Manpower
		2015												2014
at December 31		Expats				Nationals				Total				Expats				Nationals				Total
Employees			2				357				359				7				295				302
Contractors			4				418				422				11				967				978
TOTAL			6				775				781				18				1,262				1,280

 

Community

 

During the year, community relations remained good and regular meetings were held with the local development committee (LDC). In conjunction with the LDC, a number of infrastructure development projects were undertaken for the benefit of the community, including:

 

·

Solar pumping system for market gardens;

 

·

Manufacturing and installation of biohazard incinerators at Sanso and Domba medical centers;

 

·

Domba Youth Cultural Centre upgrade with solar power and a borehole;

 

·

Additional boreholes at Fingola; and

 

·

Upgrade of the bridge between the Morila and Sokela villages.

 

The microfinance project (CAMIDE) has now funded 79 projects with 82% of the amounts advanced having been repaid.

 

Agribusiness

 

In line with the closure plan and strategy, the mine is continuing to establish a viable and sustainable agricenter, with the feasibility study having been completed during the year together with the Ministry of Mines.

 

Assumptions and salient points:

 

·

Available surface land offered by the center is 30ha in 2017 and 2018, increasing to 50 ha in 2019 and 2020 and then to 100ha in 2021.

 

The model has been submitted to potential operators for review and to propose an operational plan.

 

This project aims to:

 

·

Provide an alternative income source to former mineworkers and the surrounding communities;

 

·

Contribute towards ensuring food security in the community and the country;

 

·

Promote local economic development; and

 

·

Improve the community’s economic welfare.

 

TONGON

 

The Tongon mine is located within the Nielle exploration permit in the north of Côte d’lvoire, 55km south of the border with Mali. The Tongon mine is owned by an Ivorian company, Tongon, of which Randgold has an 89% interest, the government of Côte d’lvoire 10% and 1% is held by a local company. Tongon is an open pit mining operation and employs the four standard mining practices of drill, blast, load and haul.

 

  

Operations

 

The mine produced 242,948oz of gold in 2015, a 7% increase year on year as a result of a 6% improvement in recovery and a 1% improvement in mill throughput. The underperforming Vibrocone crushers were replaced with upgraded CH660 Hydrocone crushers in the fourth quarter of 2014 and their optimization continued into the first quarter of 2015. An additional new 4th stage CH440 Hydrocone circuit was designed, fabricated and procured in 2015 for complete installation and commissioning in the first quarter of 2016.

 

By the first quarter of 2015, the mine had completed the installation of the flotation circuit upgrade, designed to increase recovery into the upper 80s percentile. After commissioning, the mine continued to improve gold recovery by engineering out key processing deficiencies and optimizing the rougher flotation circuit, ultrafine grinding VXP2500 mills and treatment of the flotation concentrates in the CIL circuit. Gold recovery improved to 84% by year end. Improvement of the operator skills is key to performance as the mine increases the localization of its workforce.

 

The electricity grid supply issues, which had challenged the mine in 2014, resurfaced in the second and third quarters of 2015 necessitating the use of a larger proportion of diesel generated power at a higher cost. The supply issues were resolved at the end of the third quarter, resulting in a ‘grid-to-generated’ power ratio at the targeted 97:3 in the fourth quarter of 2015.

 

Gold sales amounted to $277.3 million at a total cash cost of $836/oz, resulting in a profit from mining activity (before interest, tax and depreciation) of $75.4 million. Capital expenditure for the year totaled $16.2 million, related primarily to the flotation circuit upgrade and the new 4th stage crushing circuit.

 

Mining and Production

 

Mining continued in the SZ pit mainly in the pushback of the eastern and southern walls supplying fresh sulphide ore to the plant. Waste mining in the NZ pit was started and ramped up in the first quarter and the second quarter exposing the ore blocks for the third quarter and the fourth quarter ore mining. As in 2015, mining activities in 2016 will focus evenly on both NZ and SZ pits, mining both ore and waste.

 

The LoM schedule is summarized as follows:

 

·

Mining in the SZ pit started in 2010 and will continue to 2019;

·

Mining in the NZ pit, started in 2011, ramped up in the second quarter of 2015, continued during the wet season and ramped up further in the fourth quarter of 2015. NZ pit ore mining continues in 2016 to 2020; and

·

SZ and NZ satellite pits have been included in the mine plan and the SZ oxide pit will be mined from 2020 and NZ east pit from 2020.

 

Total material mined in 2015 at 28.8Mt was 10% above the prior year. Total ore mined at 3,563kt was in line with the previous year despite the added challenge of mining in the SZ pit cut-back areas, consisting of multiple thin orebody sections, found predominantly in this pit. Ore dilution control in the SZ pit is of paramount importance.

 

The strip ratio for the year at 7.1 was 13% above the prior year, in line with the LoM plan. SZ pit mining activities centered on cut-back hard rock mining (ore and waste) with an oxide/saprolite pushback which started in the first quarter of 2015 in the northern side of the SZ pit. Mining production started improving from the first quarter of 2015, reduced in the second quarter as per plan and picking up once more in the third quarter and fourth quarter.

 

Groundwater and surface water management received continued attention and was well controlled during the year. The SZ pit 260RL stage, installed in the fourth quarter of 2014, continued to serve as the main pumping station.

 

  

The rainy season preparation for 2016 is already in place, with the required deep sumps developed in 2015 below 200RL in the northern and southern parts of the SZ pit. In the NZ pit, eight borehole pumps are permanently pumping on the perimeter of the pit together with a deep sump below 290RL, which will be established in the first quarter of 2016 for the pit dewatering system.

 

Dewatering remains an integral part of the mining strategy in Tongon as the pit lies in the catchment area of the old river system and is downstream of the water storage dam. Mining schedules and plans are developed with a view to ensuring two low spots (sumps) in the pit at any time ahead in the mining cycle, to allow mining to take place in dry ground while the water is pumped away from the sumps.

 

Production results for the 12 months ended December 31		2015				2014
MINING
Tonnes mined (000)			28,826				26,126
Ore tonnes mined (000)			3,563				3,566
MILLING
Tonnes processed (000)			4,018				3,984
Head grade milled (g/t)			2.3				2.3
Recovery (%)			82.6				78.0
Ounces produced			242,948				227,103
Ounces sold			241,478				227,103
Average price received ($/oz)			1,148				1,264
Cash operating costs1 ($/oz)			801				834
Total cash costs1 ($/oz)			836				872
Gold on hand at period end2 ($000)			1,576				-
Profit from mining activity1 ($000)			75,444				88,963
Gold sales1 ($000)			277,253				287,026

 

Randgold owns 89% of Tongon with the State of Côte d’Ivoire and outside shareholders owning 10% and 1% respectively. Randgold funded all the investments in Tongon by way of shareholder loans and therefore controlled 100% of the cash flows from Tongon until the shareholder loans were repaid at the end of the third quarter of 2015.

Randgold consolidates 100% of Tongon and shows the non-controlling interest separately.

1

Refer to explanation of non-GAAP information provided in the section “—Non-GAAP information” above.

2

Gold on hand represents gold in doré at the mine multiplied by the prevailing spot gold price at the end of the period.

 

Ore Reserves

 

Both Tongon Southern Zone (SZ) and Northern Zone (NZ) resource models and open pit designs have been updated during the year, using a significant quantity of new data from grade control, advanced grade control and resource drilling.

 

Depletion of ore reserves was partially replenished in the year, principally from grade control gains within the SZ, while ore reserve reductions were identified in the NZ from mining depletion and model changes. Total ore reserves were thus slightly down year on year. Drilling continues on both the NZ and SZ to test the orebodies below the current pits for possible extensions.

 

  

				Tonnes (Mt)								Grade (g/t)								Gold (Moz)								Attributable gold2 (Moz)
at December 31		Category		2015				2014				2015				2014				2015				2014				2015				2014
ORE RESERVES1
■  Stockpiles		Proved			2.4				3.0				1.3				1.3				0.1				0.1				0.1				0.1
■  Open pits		Proved			5.8				4.2				2.7				2.8				0.5				0.4				0.4				0.3
		Probable			18				23				2.4				2.4				1.4				1.7				1.3				1.5
TOTAL ORE RESERVES		Proved and probable			26				30				2.4				2.3				2.0				2.2				1.8				2.0

 

1

Open pit ore reserves ore reported at a gold price of $1,000/oz and 0.84g/t cut-off and include dilution and ore loss factors. Open pit ore reserves were calculated by Mr. Shaun Gillespie, an officer of the company and competent person.

2

Attributable gold (Moz) refers to the quantity attributed to Randgold based in its 89% interest in Tongon SA.

 

Processing, Plant and Engineering

 

Processing

 

Year on year throughput increased by 1% with 4,018kt of fresh sulphide ore treated in 2015.

 

In 2014 the tertiary Hydrocone crushers were replaced with new Vibrocone crushers with a view to crush finer and increase throughput via the ball mills. Although the Vibrocone crushers delivered an improvement in crusher throughput and fineness of crushed product, this improvement could not be sustained due to repeated mechanical failures.

 

Consequently, it was agreed with the supplier to replace the Vibrocone crushers with upgraded CH660 Hydrocone crushers within a new circuit configuration which was completed in the fourth quarter of 2014 with optimization continuing in the first quarter of 2015. Concurrently, an additional new 4th stage CH440 Hydrocone circuit was designed as the final means to crush finer and increase the mill throughput. Fabrication and procurement of the circuit and peripheral services took place in 2015 and the first phase of the installation was completed at the end of the year.

 

The mine is currently commissioning the second phase of the crushing circuit upgrade with completion scheduled for the end of the first quarter of 2016, and is expecting to ramp up mill tonnage throughput to 4.5mtpa in 2016.

 

Year on year, gold recovery improved by 6% to 82.6% and by December 2015 had improved to 84%, mainly as a result of improving and sustaining both the flash and rougher flotation concentrate mass pull, the ultrafine grind of the concentrates and its treatment, making it more amenable to leaching in the CIL circuit. Gold production increased 7% year on year to 242,948oz due to higher gold recovery and mill throughput. Further recovery gains are anticipated through optimizing the flotation and ultrafine grind circuits to recover all the arsenopyrite associated gold, with the overall recovery target being the original feasibility specification of +86%.

 

Engineering and power supply

 

Overall mill availability for 2015 was 90.3%, a decrease of 2% compared to 2014, following the production hours lost to replace the total length of the tailings pipeline in the third quarter after five years in operation. Mill runtime improved significantly in the fourth quarter due to less downtime stemming from the TSF pipeline constraints, mechanical failures in the milling circuit and improved power management.

 

Tongon experienced a major lack of national grid power supply from CIE in the second quarter and the third quarter when CIE experienced a lack of gas supply to the platform and low water levels. Lower and no grid availability was absorbed by increased usage of diesel generated power. Grid-to-generated power ratio decreased to a 65:35 ratio in the second quarter and the third quarter and thereafter increased to the targeted 97:3 ratio in the

 

 

fourth quarter. Consequently, the cost of power increased significantly as a result of increased usage of generated power, at $0.12/kWh for 2015 ($0.10/kWh for 2014).

 

Improved cooperation between the CIE national supply authority and Tongon mine has resulted in more effective utilization and smooth synchronization during extended power outage periods as well as improved power stability. The completion of the 225kV ring line passing from Leboa to Ferkessedougou is a high priority for 2016. The replacement of the Leboa transformer and power line was completed by the end of 2015 as scheduled.

 

Power demand consumption from the grid increased from 18.7MW to an average 21.6MW for 2015. Total mine consumption increased in line with the raised operational availability and utilization, and an increase in the number of process units demanding power as new projects were commissioned during the year.

 

Exploration

 

At Tongon the team has continued to pursue the dual strategy of working to replace depletion at the mine with further drilling in and around the Tongon pit while also exploring for a new deposit on the Nielle permit. The work at Tongon has identified a number of high grade structures in the footwall of the deposit which will be further tested in 2016. Infill drilling on existing satellite resources around the pit was also carried out which confirmed their potential to supplement the Tongon ore feed. Further afield, exploration continued on the Nielle permit, focusing on targets along the arsenic-in-soil geochemistry trend which maps the main fluid pathway along the Senefou belt.

 

Health and Safety

 

A total of four LTIs were recorded during the year including one fatal incident, resulting in a LTIFR of 0.82 per million hours worked compared to LTIFR of zero for 2014. The fatal accident was fully investigated and corrective and preventive actions were implemented. The total injury frequency rate per million hours worked, continued to decrease from 11.6 in 2014 to 7.0 in 2015.

 

Attention to safety remains a priority and management, along with the entire Tongon team, continues to conduct risk assessments prior to the commencement of each task.

 

The continued implementation and maintenance of malaria control programs resulted in a reduction of the malaria incidence rate from 50.7% in 2014 to 42.2% in 2015.

 

The mine continued with its Ebola awareness and preparedness campaign together with Randgold’s other West African operations as part of an industrywide private initiative in partnership with state and regional health authorities until the World Health Organization declared Guinea free of Ebola on December 29, 2015. The end of Ebola transmission in Guinea, the last affected country, marked the end of the recent Ebola outbreak transmission in West Africa.

 

The mine maintained its OHSAS 18001 accreditation.

 

Environment

 

Tongon mine has been ISO 14001 recertified for another three years after successfully completing an audit in October 2015. No Class 1 environmental incidents occurred in the year.

 

A total of 6km of the worn tailings pipeline was replaced with new 450mm TSF pipeline sections in line with the recommendations of Centre Ivorien Antipollution (CIAPOL) on the preventive and corrective measures implemented to close off the Class 1 incident that occurred in December last year.

 

Tongon mine reviewed its mine closure plan with assistance from international specialist consultants Digby Wells Environmental. Changes made include the reduction of rates due to inflation adjustment, allocation of infrastructure to the mine agribusiness project after closure, an increase in the final angle of waste dump slopes, and

 

  

the change in the RoM pad rehabilitation techniques to exclude topsoil. The mine’s focus in 2016 will be to rehabilitate concurrently with mining operations.

 

Human Resources and Industrial Relations

 

Tongon’s recruitment and localization strategy is designed to minimize the influx of outsiders into the area and any disruption to community life, while attempting to maximize the benefits of the mine development for the communities surrounding the mine. The principle of employing locally first and spreading recruitment between local villages followed by regionally and then nationally and finally internationally, is fundamentally applied in the mine’s recruitment and localization strategy. This is evident in the percentage of Ivorians employed by the mine which has increased to more than 97%. To date, 79% of the operational labor is from local villages. Overall, the operational labor complement for Tongon comprises 1,767 personnel, including people employed by contractors.

 

Open and continuous engagement between Tongon’s workforce, the union and management ensured that a constructive work environment was maintained. Towards the end of the year, management and the union concluded a review of the Mine Level Agreement (MLA) and, as part of this review, have agreed to adjust the salaries of the workers in the lower categories over a period of three years.

 

As part of Tongon’s succession planning, training workshops were held for 833 workers. These consisted mainly of engineering employees identified for promotion to higher levels of responsibility, and in some cases to replace expatriates. 

 

Tongon Manpower
		2015												2014
at December 31		Expats				Nationals				Total				Expats				Nationals				Total
Employees			17				573				590				23				426				449
Contractors			30				1,147				1,177				46				1,208				1,254
TOTAL			47				1,720				1,767				69				1,634				1,703

 

Community

 

The mine maintained a constructive working relationship with the surrounding communities during the year.

 

Two health centers and six classrooms were constructed in the surrounding community together with a low capacity dam at Kofiple village and recreational soccer facilities at Tongon village. Kationron village streets were also opened. As part of improving the quality of education in the community, a number of initiatives have been implemented, one of which is rewarding the best performing pupils. This has resulted in our community schools performing better than the national average.

 

KIBALI

 

The Kibali mine is a gold development property which covers an area of 1,836km² on the Moto Goldfields in the north east of the DRC. It is located some 560km north east of the city of Kisangani and 150km west of the Ugandan border town of Arua. Kibali is a joint venture between Randgold (45%), AngloGold Ashanti (45%) and a Congolese parastatal, SOKIMO (10%).

 

The mine is being operated by Randgold. The mine comprises an integrated open pit and underground operation. It is planned that the mine will ultimately be supplied by four hydropower stations supported by a thermal power station for low rainfall periods and back-up.

 

Operations

 

The Kibali Mine is being developed in two phases. Phase 1, which includes the KCD open pit operation and the construction of the processing plant, the mine infrastructure (including a 36 unit high speed thermal power station) and the first of three hydropower stations, was completed in December 2014. Phase 2 comprises the underground mine development,

 

  

including the vertical shaft which is scheduled for commissioning in 2017, and the construction of two additional hydropower stations which are planned for commissioning in 2016 and 2018, along with further satellite pits. The mine is expected to produce an average of 600koz of gold per annum over the first 12 years of its life, which currently extends to 2031.

 

Open pit mining started in July 2012 and commissioning of the oxide circuit began in the third quarter of 2013. Kibali poured its first gold in September 2013, ahead of plan, and started commercial production in the fourth quarter of 2013. Commissioning of the sulphide circuit started at the end of the first quarter of 2014 and production has steadily ramped up since then, with the mine now processing around 600,000t/month.

 

In 2015, Kibali produced 642,720oz of gold at a total cash cost of $604/oz. Gold sales amounted to $742.3 million (100% basis) resulting in a profit from mining activity (before interest, tax and depreciation) of $358.2 million.

 

The capital estimate for the project (phase 1 and 2) remains in line with previous estimates at $1.83 billion excluding mining preproduction expenses. In 2015, capital expenditure totaled $251.2 million, which related principally to the Ambarau hydropower station, underground decline and shaft development, CTSF Phase 2, backfill plant and other surface infrastructure.

 

During the year, Kibali repaid a portion of its shareholder loans made available by the Kibali Joint Venture (KJV, the effective owner of the 90% interest in Kibali) to fund the development of the mine which allowed the KJV to pay $70 million in dividends to its shareholders (Randgold and AngloGold Ashanti).

 

Mining and Production

 

Open pit mining

 

A total volume of 12.4 million BCMs was mined from the open pits, exceeding the plan, and ore tonnes mined of 6.1Mt were in line with plan.

 

Mining of the first open pit satellite deposit, Mofu, was completed during the year and has started at the second, Mengu Hill. The KCD main pit and the push back 2 north were mined out during the year, with the push back 2 south scheduled for completion in the first quarter of 2016. Push back 3 (Durba hill) is planned for the end of open pit mine life in 2025. Bush clearing and dewatering has started in preparation for mining of the Pakaka pit which is scheduled to begin in the first quarter of 2016.

 

Underground mining

 

During 2015, 804kt of ore was mined from underground of which stoping contributed 72% with the remaining coming from development ore. As forecast, production increased through the year, culminating in 296kt in the fourth quarter.

 

Stoping is expected to continue to ramp up during 2016, with underground production scheduled to produce 1.3Mt of ore for the year.

 

Production results for the 12 months ended December 31		2015				2014
MINING
Tonnes mined (000)			31,170				30,470
Ore tonnes mined (000)			6,862				5,632
MILLING
Tonnes processed (000)			6,833				5,568
Head grade milled (g/t)			3.5				3.7
Recovery (%)			83.8				79.3
Ounces produced			642,720				526,627

 

  

Production results for the 12 months ended December 31		2015				2014
Ounces sold			643,976				516,902
Average price received ($/oz)			1,160				1,258
Cash operating costs1 ($/oz)			557				528
Total cash costs1 ($/oz)			604				573
Profit from mining activity1 ($000)			358,184				354,220
ATTRIBUTABLE (45%)
Gold sales1 ($000)			336,272				292,627
Ounces produced			289,224				236,982
Ounces sold			289,789				232,606
Gold on hand at period end2 ($000)			4,006				5,248
Profit from mining activity1 ($000)			161,183				159,399

 

Randgold owns 45% of Kibali with the DRC State and joint venture partner owning 10% and 45% respectively. The group equity accounts for its 45% joint venture holding in Kibali.

1

Refer to explanation of non-GAAP information provided in the section “—Non-GAAP information” above.

2

Gold on hand represents gold in doré at the mine multiplied by the prevailing spot gold price at the end of the period.

 

Ore Reserves

 

Depletion of ore reserves was partially offset by small gains at Gorumbwa, Pakaka and the KCD underground. Drilling continues to focus on grade control drilling of the deposits in the immediate mine plan of KCD underground, Pakaka and Mengu Hill.

 

				Tonnes (Mt)								Grade (g/t)								Gold (Moz)								Attributable gold2 (Moz)
at December 31		Category		2015				2014				2015				2014				2015				2014				2015				2014
ORE RESERVES1
■  Stockpiles		Proved			3.8				3.8				1.7				1.4				0.2				0.2				0.1				0.08
■  Open pits		Proved			0.2				1.6				3.7				2.6				0.03				0.1				0.01				0.06
		Probable			30				33				2.2				2.4				2.2				2.5				1.0				1.1
■  Underground		Probable			45				44				5.6				5.7				8.2				8.2				3.7				3.7
TOTAL ORE RESERVES		Proved and probable			80				83				4.1				4.1				11				11				4.8				4.9

1

Open pit ore reserves are reported at a gold price of $1,000/oz and an average cut-off of 0.88g/t and include dilution and ore loss factors. Open pit ore reserves were calculated by Mr. Nicholas Coomson, an officer of the company and a competent person. Underground ore reserves are reported at a gold price of $1,000/oz and a cut-off of 2.5g/t and include dilution and ore loss factors. Underground ore reserves were calculated by Mr. Tim Peters, an external consultant and a competent person.

2

Attributable gold (Moz) refers to the quantity attributable to Randgold based on its 45% interest in the Kibali gold mine.

 

Processing, Plant and Engineering

 

Processing

 

The processing plant continued to make steady progress, with 6,833kt treated during 2015, 23% up on the prior year. The feed comprised both oxide and sulphide material at an average grade of 3.5g/t. The average recovery

 

  

for the year was 83.8%, an improvement from the 79.3% average in 2014. Optimization of the processing facility is expected to increase this to around 85% in 2016.

 

Plant enhancements during the year included the construction and commissioning of an additional kiln, providing greater carbon regeneration capacity and facilitating improved carbon management, as well as a de-sliming cyclone circuit, which will relieve the pressure on ultra-fine grind throughput and allow for an increase in sulphide concentrate handling. The second phase of the lined tailings facility (CTSF) was also completed, providing additional storage capacity for CIL tailings.

 

Engineering and power supply

 

With a continued focus on planned maintenance, plant availability again increased throughout the year, reaching 94% in December.

 

At the end of 2014, the Nzoro hydropower station was supplying 16.8MW of power with a 55/45% split between hydropower and thermal power. Further optimization of the hydropower and synchronization of power produced from Nzoro II with the diesel power plant via a power management system (PMS), resulted in Nzoro II running at its full 22MW capacity and a 70/30% split between hydropower and thermal power by the fourth quarter. This is the maximum hydropower proportion anticipated with the current capacity but with the completion of Ambarau expected in the second quarter of 2016 and Azambi in mid-2018, the hydropower share of the blend should continue to increase.

 

The commissioning of Nzoro II reduced the cost of power from $0.46/kWh to $0.21/kWh. With the increase in the contribution of hydropower in 2015, assisted by lower diesel prices, power cost dropped to $0.12/kWh by December, with an average cost for the year of $0.15kWh.

 

Construction and Underground Mine Development

 

The backfill plant was completed and commissioned during the year in line with plan and is operating above design capacity (190m3/h). Six stopes have been backfilled and the first secondary stope blasted without any delay in the schedule.

 

Construction of Ambarau, the second 11MW hydropower station was negatively impacted when the earth coffer dam wall failed during high river flows in November 2015. This resulted in the power house flooding as well as damage to the carpi membrane on the wall. The additional repair and rehabilitation work has delayed the completion and commissioning of the station, with first power now expected in the second quarter of 2016. As the previously planned commissioning was scheduled for the start of the dry season, the potential power available until March/April would have been significantly lower and thus the impact of the delay on the hydro/thermal blend is not significant and, as mentioned above, has been offset to an extent by the lower fuel price.

 

Decline Development

 

The mining team consistently achieved decline and underground development targets during 2015 and at a better advance rate than planned in the feasibility. An average of 300m/month per jumbo was reached in development with the decline contractor continuing at the 900m/month reached towards the end of the previous year.

 

To date, a total of 22.7km has been developed including 10.6km in 2015.

 

Vertical Shaft System

 

Led by Randgold’s team, the main contractor completed the shaft sinking in the second quarter of the year, ahead of schedule, reaching the shaft bottom of 751m in July 2015. Lateral development for the production and crusher levels also progressed ahead of target. Equipping of the shaft and headgear change-over also progressed

 

  

ahead of the program, with the planned re-opening of the shaft to continue off-shaft development scheduled for the first quarter of 2016.

 

Exploration

 

Exploration focused on confirming controls on mineralization to update geological models and defining potential exploration upside. Phased drilling to validate models and test upside is planned for 2016. Extensive data compilation and relogging programs at KCD and satellite deposits formed the base for superpit conceptual models and optimization studies which are expected to be concluded early 2016.

 

Activities on seven priority targets developed from the analysis of mineralization and distribution of existing work along the KZ trend elevated the prospectivity of two targets.

 

Trench results at Tete Bakangwe identified three NE plunging mineralized lenses in BIF and metaconglomerate with down dip potential to provide mine schedule flexibility in a low gold price environment through high grade oxide resources. Results include 13m at 15.06g/t.

 

At Sessenge, SW trenches highlighted four higher grade NE plunging mineralized lenses in BIF and metaconglomerate with down dip potential to open up down plunge and add additional resources. Results include 28m at 3.18g/t (9008 lode) and 40.5m at 3.76g/t (9003 lode).

 

A detailed summary of the exploration work completed during 2015 can be found in the section entitled “—Exploration Review.”

 

Health and Safety

 

Kibali had 5 LTIs during the year, as in 2014. However, due to the lower workforce numbers as the capital teams demobilized, the LTIFR deteriorated slightly from 0.51 in 2014 to 0.56 in 2015. The TIFR decreased from 10.60 in 2014 to 6.11 per million hours worked in 2015. There were no fatalities at Kibali during the year.

 

A concerted effort was made during the year to address the high levels of malaria, with a commendable 46% reduction in the malaria incidence rate.

 

576 VCTs cases were conducted during the year, with a HIV positivity rate of 7.29% compared to 11.26 % the previous year.

 

Environment

 

Environmental awareness and control improved at Kibali during the year as the mine settled into stable operations, resulting in no major environmental incidents being recorded. An increased focus on water management improved processing water recycling and the water quality guidelines were not exceeded at any time during the year.

 

The biodiversity action plan was enhanced in 2015 with extensive surveys of the aquatic habitats to identify biodiversity hotspots and develop an appropriate management measure for these sites. Camera trapping has also been implemented to monitor movement of the larger animal species occurring within the fence. Kibali again contributed over $250,000 to the African Parks Network as part of the continued biodiversity offset strategy and agreement to help combat poaching in the Garamba National Park. This included the funding for collaring of the threatened Kordofan sub-species of giraffe found in the park as well as financial support for pilots to enable aerial counts and patrols.

 

Kibali was recommended for ISO 14001 certification during the year under review.

 

Further details are provided in the section entitled “—Social Responsibility and Environmental Sustainability.”

 

  

Human Resources and Industrial Relations

 

Although the majority of construction laborers were demobilized during 2014, there was further downsizing of the workforce in 2015 with the number of employees, including contractors, totaling 4,161 by year end. The employee ratios are in line with Randgold’s policy of recruitment prioritization, sourcing primarily from local villages, then regional, followed by national and lastly looking for candidates outside the country. 87% of Kibali employees are Congolese nationals and the intention is to continue localizing the work force during 2016.

 

Key appointments to the underground mining team were made during 2015 in line with the increase in underground production.

 

Constructive labor relations were maintained directly with employees and with the union, without any industrial action taking place during the year. Agreement was reached on the excellence bonus and employee mine closure fund during the year.

 

Kibali Manpower
		2015												2014
at December 31		Expats				Nationals				Total				Expats				Nationals				Total
Employees			96				609				705				95				606				701
Contractors			448				3,008				3,456				651				3,392				4,043
TOTAL			544				3,617				4,161				746				3,998				4,744

 

Community

 

In 2015, there was an improvement in the mine and community relationship on the back of more structured, inclusive and informed engagements. The year ended with all grievances resolved except for a few related to field compensation following the change in the plan to mine a satellite pit. These have subsequently been estimated and agreed with the community.

 

EXPLORATION REVIEW

 

The team continued its drive to replace mining depletion and find deposits which pass Randgold’s strategic filters: an IRR of 20% and the potential for 3 million minable ounces at a long term gold price of $1,000/oz. Work during the year discovered a number of interesting targets and more than replaced the 1.4Moz depleted by mining.

 

The focus was sustained on the priority areas: the MTZ in Senegal, the Senegal-Mali Shear in Mali, the Boundiali and Senefou belts in Côte d’Ivoire and the KZ Structure in NE DRC, a portfolio which contains 141 targets. During 2015 Randgold also developed new business functions to ensure an equal balance between greenfields and brownfields work. By the end of the year three joint venture agreements had been concluded in the DRC, giving Randgold control over the Ngayu Archean greenstone belt and increasing its groundholding in the country to over 6,500km², and its permit portfolio in Africa to 13,912km² with a further 4,299km² under application. Joint venture agreements on properties in western Mali have also been signed and a number of other negotiations were in progress at year end.

 

SENEGAL

 

Massawa

 

At Massawa, the feasibility study was progressed, producing strong intersections from the Sofia target, located 10km to the west of the main Northern Zone and Central Zone (CZ) deposits.

 

Several large diameter, close spaced drilling programs were completed to further improve the mineralization model and provide further samples for the large amount of testwork required by the prefeasibility study. Both shallow and deep RC and diamond drilling programs were completed in the more complex CZ, leading to a significant modification of the geological model which includes an early, broad, low grade phase of refractory,

 

  

arsenic-rich mineralization, overprinted by a later, narrow and complex set of structures containing visible gold, quartz, antimony and arsenic. Testwork on these high grade structures towards the end of the year confirmed a high percentage of gravity recoverable (up to 68%) and leachable gold which will improve the economics of the CZ ore, previously thought to be largely refractory.

 

The Massawa deposit does not currently pass the company’s investment filters due to the high cost associated with processing refractory ore, and the feasibility study is focused on reducing tonnes and increasing grade and recovery to pass the 20% IRR hurdle. Reserves at Massawa are currently 20.73Mt at 2.1g/t for 2.2Moz. The study is due to be completed in 2016.

  

With respect to the 4km long Sophia orebody, a 200m long section contained shallow, higher grade drill intersections and was targeted by drilling in 2015 to confirm whether the higher grades within this zone were related to supergene enrichment at the redox boundary.

 

During the second half of the year, six deeper RC holes over 600m of strike length confirmed the zone of high grade mineralization, returning an average weighted (true width) intersection of 30m at 5.18g/t at 100m vertical depth for the main zone sulphide ore and confirming a hypogene source for the high grade mineralization. The holes also confirmed the existing hangingwall and footwall lodes. The main orezone is located immediately beneath a mylonitic structure, and is hosted in strongly sheared gabbro and felsic intrusive units with silica flooding and carbonate-sericite alteration. These results further highlight the potential for Sofia to provide over 1 Moz of high grade, non-refractory, ore to the Massawa project. The high grade mineralization is believed to plunge to the north and further drilling programs are being planned to test this open potential in 2016.

 

The target is located on the Sofia-Sabodala structure which hosts a number of the Sabodala orebodies along strike to the north and marks the western limit of the volcanic domain in the Mako belt. Historical work on a number of targets around Sofia has returned strongly anomalous results from near surface which form a portfolio of priority targets for follow-up work in 2016.

 

Bambadji joint venture

 

Work on the Bambadji permit in Senegal was placed on hold in 2015 as Randgold renegotiated the terms under the joint venture with Iamgold Corporation and the government. Work is expected to restart in 2016.

 

MALI

 

Loulo

 

Brownfields

  

At Gara, the 2015 brownfields program was highly successful, confirming the extension of the Gara system to the south, with an average true width of 7.68m which remains open down-plunge to the south.

 

At Yalea, the southern extension to the Purple Patch was tested by a number of deep drill holes with some very interesting results. YADH19 returned a high grade intercept at the edge of the block model (11.3m at 12.1g/t from 711.9m) where a footwall structure is interpreted to intersect the main shear, producing a plunging rod of high grade, Purple Patch type mineralization. 300m down-plunge from this intersection, YDH277 returned two zones of high grade mineralization: Zone 1 – 13.40m at 6.50g/t, including 6.60m at 11.06g/t; and Zone 2 – 11.86m at 4.43g/t, including 3.66m at 7.50g/t. Silica-carbonate alteration and breccia textures suggest this hole pierced the plunge extension of the target tested by YaDH19 and highlights the considerable potential at Yalea to locate further zones of high grade, Purple Patch type ore. To date, scout exploration drilling occurred in the south of Yalea, in the form of four drill holes.Work is focused on locating zones of +6g/t material with sufficient size to support the capital expenditure on a separate shaft for a new, high grade supply of ore to the plant.

 

  

 

Greenfields

 

A number of existing satellites were reviewed (P125-Loulo 3 Gap, Baboto North and South, Loulo 2 South, Loulo 3 and Loulo 1). Exploration work focused on the advancement of the Yalea Ridge South and Gara South targets which are not currently in resource.

 

Further generative work was completed across the Loulo permit with the aim of better understanding and targeting the large structures which have acted as strain and fluid conduits across the permit. Further structural mapping and interpretation was completed and highlighted five principal structures which run N-S to NE-SW across the permit and form the basis of target generation and prioritization work with priority targets located along two of these structures, Far West, around Iron hill and the Yalea structure.

 

Gounkoto

 

Brownfields

 

At Gounkoto, five drill holes were completed beneath the $1,000/oz pit shell, testing narrow, high grade plunging lodes in MZ1 which form at the intersection of differently oriented footwall and hangingwall structures. All holes intersected the target structure as modelled, but results were weak, showing that the three higher grade shoots targeted have limited down-plunge continuity at depth. The weak results returned from this program downgraded the MZ1 underground target.

 

In MZ3 in the north of the deposit, drillhole GKDH432 returned 10.8m at 1.02g/t down-plunge to the north of the Jog Zone underground project confirming it to be open. Northerly plunging mineralized shoots are controlled by the intersection between a brecciated structure in HW quartzite with silica-albite-sericite alteration, and a FW shear consisting of albite with overprinting chlorite and hematite alteration. Further work on this target is pending an evaluation of a new superpit concept at Gounkoto which would extract a large part of the high grade underground resource.

 

Exploration work around Gounkoto confirmed the P64 orebody to be a NE striking dilation zone between two reactivating north-south structures. Further studies were carried out with the aim of updating the geological model on which a revised resource estimate will be based. This work constrained new mineralization wireframes to sandstone with subordinate limestone and silica-albite breccia host rocks that are variably altered with tourmaline, magnetite and chlorite.

  

Greenfields

 

At Toronto South, one diamond hole was drilled to test the structural model of higher grade at depth within the central portion of a sinistral jog, in a zone of maximum dilation that was not tested by previous drilling. TSDH001 intersected two weakly anomalous zones, a wide hangingwall zone with 41.5m at 0.16g/t from 526.35m and a second zone of 8.3m at 0.42g/t from 574.3m. Consequently the target was removed from the resource triangle.

 

Investigation of the strike extents of the Gounkoto domain boundary (a key structure controlling mineralization in the Gounkoto orebody) continued in the north of the project area at Gounkoto North as well as in the south at Faraba West and South West. Initial results confirmed the prospectivity of the NNW extension of this structure with strongly silica-albite- tourmaline altered heterolithic breccia that returned strong results (8.8g/t and 22.8g/t) from the banks of the Falémé River to the north of P64. Follow-up trenching returned an intercept of 3.7m at 1.44g/t (31.7m), including 1.2m at 3.94g/t (GNWTR02) from the same breccia with silica-carbonate veinlets, which was then confirmed in trenching 100m to the south in trench GNWTR04 (6.8m at 0.64g/t, including 1.7m at

 

  

1.29g/t). This structure will be further tested in 2016. At Faraba West and South West pitting and trenching programs confirmed the extension of the domain boundary but failed to intersect significant mineralization and work is ongoing along this target.

 

Minan is a blind target that was identified from project wide integrated mapping and target generation work. Trenching on the target in the second quarter intersected a discrete 3m wide ferruginous mineralized shear which graded up to 5.5g/t beneath transported alluvial material. RC drilling on the target confirmed the presence of disseminated sulphides in bedrock which are weak but within a system which appears to be dilating to the south. However, only sub-anomalous grades were returned (12m at 1.12g/t from 40m (GSWRC11), 28m at 0.82g/t from 152m, including 2m at 4.61g/t (GSWRC03) and 4m at 1.59g/t from 248m (GSWRC13). The low grades are interpreted to be due to the absence of early silica-albite and tourmaline alteration that prepares the host rocks for subsequent mineralization during brittle-ductile deformation. Encouragingly, the work on the target confirms the efficacy of the target generation system described above, which has also highlighted a number of other targets across the Gounkoto system and further afield, beneath transported material at Bena and Bakolobi.

 

Regional

 

Randgold controls a portfolio of 627km² along the Senegal Malian Shear (SMS) structure in western Mali. The SMS is a key regional control on gold mineralization and is proximal to the Sadiola (AGA/ IAG), Loulo (RRS) and Fekola (B2G) ore systems.

 

Bakolobi (Taurus joint venture)

 

At Bakolobi, between Gounkoto and Fekola, a first phase of trenching across key targets on the permit was completed. Nine trenches in total were excavated over zones of bedrock mineralization, identified through the initial reconnaissance RC drill program. Results from these trenches included: BKTR006 – 20.13m at 1.59g/t; BKTR004 – 23.70m at 0.61g/t; BKTR009 – 24.60m at 0.23g/t; and BKTR005 – 14.96m at 3.83g/t including 6.25m at 7.71g/t and 11.45m at 1.94g/t (88.60m) including 3.50m at 5.39g/t. The trenching confirmed that the mineralized structures dip uniformly to the west and that the highest grades are associated with the intersections of NW and NNE-NS striking structures.

 

Follow-up pitting confirmed the southern extension, beneath transported alluvial material, of the Koliguinda target with anomalous pits returning values up to 0.4g/t over a 50m wide structural corridor. The Koliguinda target is interesting as it features a left hand flexure which would be dilatational in a largely sinistral system such as the SMS and is the target which has, to date, returned the strongest results from trenching (shown above). It is also in an area which is intersected by a major NW structure interpreted to be a transverse fault in the original belt architecture. It also happens to be the area where transported gravels are thickest.

 

The other targets in the permit are still thought to be prospective with widths at surface averaging approximately 20m with grades of between 1g/t and 2g/t. Follow-up work on the permit was carried out including the completion of a new interpretation over the ground following a review of all existing data. Pitting is now in progress over targets which are not covered by the thick alluvial material, a problem across much of the permit. A drilling program which aims to test key parts of the two main mineralized trends is being prepared for 2016.

 

Legend joint venture

 

On the Legend Gold JV to the south of Sadiola, work continues along the SMS which strikes over 18km within the permit area. Both trenching and pitting have been ongoing through the year on targets close to the Kofi formation boundary, in the area of influence of the SMS, and have focused on the anomalous contacts of carbonate and siliciclatic rocks which provide a key chemical and rheological contrast in this district. This work has tested a number of targets, but many of them have been removed from the resource triangle during the year as they have shown no potential beyond the weakly anomalous results.

 

  

At Woyanda, groove results returned 5.60m at 0.30g/t, 8m at 0.37g/t, and 4m at 0.39g/t (95.40m). However, no significant results were returned from five lines of exploration pits testing the strike extensions of the target, which was consequently downgraded.

 

The Sourokoto East target, located at the lithological contact between volcano-sedimentary units (pyroclastic, brecciated tourmaline greywacke) in the east and volcanics (mostly andesites) to the west, returned an encouraging pit result in early work of 2.99g/t, 1.8km along strike from a zone of in-situ saprolite mineralization grading up to 0.89g/t. Follow-up pitting confirmed the continuity over 600m strike length of in-situ gold anomalism within a 30m wide alteration zone with values of 0.16g/t to 11.3g/t in sheared greywackes with silica-carbonate-hematite alteration. A trench over the alteration zone (SRTE001) returned 8.85m at 0.28g/t and confirmed that the higher grades are related to millimetric oxidized quartz veinlets within the greywacke, an observation which downgrades the potential of the target.

 

Trenching is currently in progress on the Sebesounkoto South target, where previous work defined silica-carbonate-tourmaline and chlorite alteration within a gossanous structure over 1km strike, and lithosample values up to 1.6g/t.

 

Bena

 

The Bena project is located to the immediate south of the Gounkoto permit. At Boulandissou, a 3km strike length target was previously generated which incorporated a number of historical mineralized intersections and samples and this target was the sole focus of work on the project at the beginning of the year. Historical results from the target include 26m at 3.53g/t from trench BNT02 in the north and 13m at 1.57g/t from RC drill BORC02 in the south. A phase 1 program of three trenches and one groove was carried out over the target with the trench over RC hole BORC02 returning 12.87m at 2.04g/t, confirming the west-dipping nature of the mineralized structure. Groove BGVO10 returned 12.6m at 1.84g/t to the immediate east of the main target structure but the other excavations along the target returned no significant intersections restricting the known mineralization to limited strike extents. Because of this, and due to uncertainties over the geological interpretation for the permit, an updated interpretation was carried out in parallel with the Bakolobi and Gounkoto work, (both permits lie along strike from Bena) and a new portfolio of targets was generated. Field work on these targets is in progress. The Bena permit is less affected by the difficult transported regolith in the Bakolobi permit and therefore more conventional surface exploration work can be done.

 

Morila

 

Work on the near mine conceptual targets at Morila continued through the first half of the year with the team relogging holes across the SE of the permit where coincident features associated with the Morila deposit such as flat foliation, high temperature leucosome/quartz plagioclase veins, tonalite intrusives, MG rich biotite and arsenopyrite mineralization were identified. The distribution of these features was mapped but the team was unable to generate any targets for drill testing due to the lack of any visible control.

 

Following the completion of the Domba grade control drilling program, the exploration team undertook a relog of the Samacline deposit which is located at 300m depth to the immediate west of Morila.

 

The updated interpretation for the target has identified open, high grade mineralization within a wide, low grade envelope of up to 80m in width. The untested area down dip to the west of Samacline is large enough to hold a Morila-type deposit and is the target of a diamond hole being planned to test the model that Samacline could be the eastern edge of a large deposit.  

 

CÔTE D’IVOIRE

 

Randgold holds, in its own name or through joint ventures, 5,589km² of ground in Côte d’Ivoire (11 permits) which includes four permits which have passed the inter-ministerial commission in 2015. Additionally, nine applications (3,592km²) through joint ventures are pending.

 

  

Nielle

 

At Tongon, a full relog of the deposit’s core and the modelling of the skarn system enabled the team to project and identify a number of targets at the base of the $1,000/oz pit shell where infill drilling had the potential to increase the grade, or the number of mineralized structures in the model. The reduced strip ratio as a result of positive results would enable the pit to access deeper ore. To test the updated model, a program of 10 diamond holes was undertaken at Tongon with five holes in the southern pit; two in the oxide pit and three beneath the Northern Zone pit. Results from the Northern Zone failed to extend the existing block model with intersections from three holes being either narrower or lower grade than predicted. In the Southern Zone the holes intersected several zones of mineralization outside the existing block model but failed to intersect mineralization in a wide area of internal waste, which is limiting pit depth in current optimizations.

 

Towards the end of the year infill drilling programs were carried out on two nearby satellite deposits. Tongon has the ability to make money from low grade satellites and current resources in the two targets (Sekala and Seydou) have the potential to supplement the orefeed, extend Life of Mine and protect the resource in a low gold price environment. At the time of writing, most results from these programs were still pending.

 

In greenfields exploration, the Yvette West target was prioritized within the 20km Bladonon corridor target in the SW of the Nielle permit and mapping and sampling during the year identified silicified volcaniclastics/tuffs, sheared and locally folded argillites and carbonaceous shales with lithosamples returning significant values up to 9.63g/t from silicified tuffs. Work will continue on this mineralized trend in 2016.

 

Mankono

 

On the Mankono permit to the SW of Fapoha, where the Senefou belt and the Boundiali belt structures intersect, the team discovered two styles of mineralization on the Gbongogo target. Trenching throughout the year confirmed 400m strike of wide, low grade ore which may be amenable to bulk mining. Trench results this year include: GBTR003 – 103m at 1.30g/t; GBTR007 – 73m at 1.80g/t; GBTR014 – 102.70m at 1.90g/t including 73.60m at 2.36g/t, 14.20m at 3.25g/t and 6.60m at 3.84g/t; and GBTR017 – 62m at 1.59g/t including 36.50m at 2.38g/t and 17.75m at 3.41 g/t. The mineralization is hosted in a quartz tourmaline stockwork in a silica-sericite altered coarse grained sediment. The presence of strong silicification and sericite with associated boxworks after sulphides are indications of the higher grade mineralization. The mineralized system is interpreted to be related in some way to the core of a fold hinge which lunges to the NE and its potential is to be tested by drilling in 2016. Lower grades were intersected in GBTR015: 59m at 0.46g/t and 28.50m at 0.33g/t and in trench GBTR016: 10.60m at 0.32g/t. A strong soil anomaly extends from these trenches over a strike of 2.6km and work is ongoing to define the continuation of the vein system.

 

Located 800m to the NE of the Gbongogo fold hinge target, the second style of mineralization is controlled by discrete dextral NS shears with moderate silicification and strong magnetite and coarse grained pyrite, located on the eastern limb of the regional fold. The best intersection to date is 23m at 1.25g/t including 7m at 3.05g/t with weaker intersections along strike, including 10.10m at 0.36g/t.

 

Boundiali

 

At Fonondara South, the target was progressed from a soil anomaly to a drill program as a result of strong results from trenching and pitting along the target. The mineralized shear zone, which dips steeply to the east, locates on the eastern margin of a massive andesite where it is in contact with interbedded tuffs and argillites.

 

Trenching and pitting exposed a wide zone of alteration (up to 57m) including 13m at 1.56g/t and 6m at 2.10g/t (open to the west) from FSTR011 in the south and 14m at 1.00g/t and 23m at 1.28g/t from FSTR012 in the center of the target. Follow-up work of a 2014 trench (FSTR008) which intersected 16m at 2.5g/t (including 11m at 3.49g/t) in the north of the target revealed that a flat structure appears to have placed barren material on top of a significant, steeply dipping mineralized zone which is up to 30m wide and which returned consistent high grade mineralization up to 16g/t. Further pitting 60m south of FSTR008 confirmed the flat structure and the high grade mineralization beneath it. Intersections from contiguous pits at 5m spacing across the target zone beneath the flat

 

  

structure returned: FP442 – 6m at 5.36g/t (open at depth); FP423 – 7m at 4.68g/t (open at depth); FP424 – 7m at 7.24g/t (open at depth); FP425 – 7m at 3g/t (open at depth); FP428 – 4m at 4.51g/t (open at depth); and FP434 – 6.70m at 8.71 g/t (open at depth).

 

This surface work at Fonondara South defined a system which averaged 16m at 2.96g/t at surface over 1.5km strike at the margin of the Boundiali volcanic belt. To test this structure at depth, six diamond drill holes were drilled at 300m spacing along the full strike of the target and all intersected mineralization approximately 100m beneath the trenches. Best results were received from hole FSDH003 which returned 16.53m at 3.83g/t from 148.14m, including 7.40m at 5.88g/t in the main zone, and 8.83m at 28.62g/t from 188.07m including 4.10m at 61.05g/t from the first of two footwall structures. Other holes intersected more moderate grades up to 1.5g/t over similar widths within a large low grade carbonate/sericite alteration system which contains a phase of late quartz veining and extensive visible gold in a sequence of volcaniclastic rocks and carbonaceous shales. Pyrite, pyrrhotite and arsenopyrite are present in all mineralized zones.

 

Initial metallurgical test work shows the sulphides at Fonondara to be moderately refractory. However, flotation has been shown to improve the recoveries in the problematic shale ore to 81% from 40% through direct cyanidation. Direct cyanidation recovers 85% of the gold in the volcanic ore and 98% of the gold in quartz ore.

 

Nine kilometers along strike to the north of Fonondara, three additional diamond holes (750m) were drilled at the 3.5km long Sani target to test the wide alteration system intersected in previous trenching which returned best results of 12m at 3.90g/t, 6m at 6.27g/t and 10m at 4.12g/t. This drilling confirmed a wide and consistent low grade system with best results received from SNDH003: 54.41m at 1.21g/t (from 132.84m) including 9.45m at 3.28g/t within a +200m wide anomalous zone. Mineralization is linked to coarse grained pyrite and chalcopyrite and initial metallurgical tests conducted on the fresh material returned an average recovery of 87%. The problematic shale ore seen at Fonondara is not present at Sani.

 

At Fonondara North, pit results graded up to 5.96g/t from in-situ sheared saprolite, while fieldwork carried out during the year at Yama, (to the north of Fonondara) identified a 750m long mineralized structure through trenching and pitting with sheared and altered samples returning 15.40m at 0.81g/t including 4m at 2.32g/t, with values up to 7.11g/t in a trench and up to 11.80g/t in pits. This structure is part of a corridor that could extend over 4km.

 

A number of +10km soil anomalies with confirmed bedrock mineralization at Yama, Sani, Fonondara and Kassere, all along strike and all located along the Boundiali belt margin, highlight the significance of the structure as a large scale mineralized system with the potential to host world class deposits. Given these positive results and the scale and prospectivity of the Boundiali belt margin, a VTEM (helicopter EM, Mag and radiometric) survey over the Boundiali, Nafoun and Mankono permits was completed at the end of the year to improve the understanding of the regional setting of the Boundiali-Bagoe Belt, generate new targets and facilitate the reprioritization of existing targets. An earlier IP survey completed during the wet season over the 20km Fonondara-Sani corridor showed that there is significant potential to change the existing interpretation of the key structures and identify new targets with additional remote data.

 

At year end, the survey was nearing completion and is clearly confirming the extension of regional structures, including the southern extension of the Syama and subsidiary structures, through the permit and highlighting new areas of interest along the Fonondara structure.

 

Fapoha

 

At Fapoha, work progressed on the two main target areas, in the north of the permit and in the south, with both featuring multi kilometer long gold-in-soil anomalies at the sediment-volcanic lithological contact. At Ouboulo in the south, trenching over the 12km target returned best results of 27m at 1.20g/t including 6m at 2.36g/t and 5m at 2.87g/t from a brittle vein system in volcaniclastics in contact with massive andesites and a quartz-diorite intrusion. Structures are generally a thin fracture network associated with narrow shear bands developed at the margin of the quartz-diorite and the target was downgraded.

 

  

At Fapoha North, a 13km +50ppb soil anomaly in a right hand flexure of the target structure was further investigated at the end of the year by pitting. The pits returned consistently anomalous grade, with values up to 8g/t in saprolite over the full width and strike of the target, which is up to 170m wide. Three trenches were excavated at year end at a spacing between 1.2km and 1.4km, all sited over existing anomalous pits. Results from two of these trenches were received at the time of writing. Trench YOTR001 returned a wide mineralized zone of 108m at 0.40g/t, including 5m at 1.03g/t and 5.50m at 1.11g/t, whereas FTR002 yielded a low grade anomalous zone of 88m wide (open to the east) including 5m at 0.87g/t; 29.50m at 0.38g/t and 20m at 0.64g/t. Zones of mineralization in both trenches are hosted in a brecciated tuff in contact with a quartz diorite intrusion. Despite the low grades from initial trenches, the target is showing geological continuity between trenches and is confirmed as a wide, low grade mineralized system. Trenching will continue in 2016 to properly test the corridor along strike to the north and to potentially identify zones of dilation and higher grade mineralization in the structure.

 

DEMOCRATIC REPUBLIC OF CONGO

 

Kibali

 

The Kibali project is located over a world-class gold belt in the Archean of northeast DRC where Randgold holds ground over 35km strike of the KZ structure, a regional mineralized trend which hosts the giant 17Moz KCD deposit with a banked LoM of over 10 years.

 

Brownfields

 

Megi

 

Scoping resource estimation work at Megi within a $1,500/oz pit shell produced 5.63Mt at 1.72g/t. The fourth quarter scoping model shows an 18% reduction in tonnes, a 5% increase in grade and 14% drop in ounces respectively when compared to the first quarter estimate of 6.8Mt at 1.64g/t. The changes are attributed to a more robust revised geological model, which indicates that mineralization remains open down-plunge to the NE, providing exploration upside. A commercial review comparing mining costs and benefits at Megi against other satellite deposits will drive the timing of infill conversion drilling.

 

The brownfields team completed the rebuilding of lithological, alteration and mineralization wireframes to enable the evaluation of a potential superpit option at Pakaka, Pamao and Bakangwe Aval for the Pakaka pit, while Kombokolo, Sessenge, Gorumbwa and Durba Hill were remodeled and combined for the KCD pit. Optimizations are in progress and results will guide further infill drilling around both pits.

 

Durba Hill

 

At Durba Hill, trenching returned anomalous intersections of 14m at 1.99g/t and 10.80m at 1.26g/t (both DBTR0004) and 10m at 3.03g/t (DBTR0003) all hosted in brecciated chert and siliciclastic BIF in the hangingwall of the dolerite above the KCD pit. Two holes were drilled on top of Durba Hill (between KCD and Gorumbwa) to test beneath the trench. Results returned (DHDD0001) 23.46m at 2.98g/t from 105.54m (including 5.16m at 8.30g/t from 105.54m) associated with silica carbonate alteration with pyrite, and is interpreted as being a plunging rod of mineralization. A second deeper hole intersected a broad 40m zone of weak alteration with thin intervals of strong silica carbonate alteration containing 15m at 0.15g/t from 113.7m (including 1m at 1.1g/t from 123m). It is interpreted that the follow-up hole clipped the edge of the mineralized rod which remains open down-plunge. Further drilling is planned for 2016.

 

Greenfields

 

KZ Structure

 

Understanding of the deformational history of the Kibali area, and more specifically the mineralized KZ structure, was advanced. The team focused on the key criteria used to identify targets along the structure and re-ranked them after ground truthing and field validation of information, based on the potential to host a new multi-million ounce standalone deposit or an economic satellite. The analysis and ranking exercise generated a

 

  

portfolio of 28 targets. A ranking of the portfolio identified Kanga Sud (1), Ikamva-Kalimva (2), Sessenge SW (3), Oere-Libala (4), Tete Bakangwe (5), Megi (6) and Mengu Hill W (7) as the areas with highest potential of delivering a new multi-million ounce orebody.

 

In the KCD area work progressed on mapping the continuity of the folded F1 structure which marks the contact between clastic siliceous rocks with carbonaceous/ferruginous units in the KCD pit. The ore lodes of the KCD deposit occur close to this faulted contact around the hinges of a recumbent F2 fold which has been over printed by a second fold event, both of which have NE plunging hinges, thought to control the distinctive rod-like nature of the mineralized lodes at Kibali. These recumbent folds may be a more regional feature and are likely to be blind and a number of conceptual targets exist where fold hinges are interpreted to locate.

 

Tete Bakangwe

 

At Tete-Bakangwe, which is an old artisanal pit 4km from the plant, trenching returned significant results including 11.3m (true) at 2.04g/t, 37.35m (true) at 4.1 g/t and 24.68m (true) at 1.59 g/t containing at least four higher grade mineralized lenses in BIF and metaconglomerate which plunge to the NE, with potential to provide mine schedule flexibility through high grade oxide resources. The lenses are associated with folded ironstone units cut by NE trending structures, creating a 150m wide corridor of deformation and low grade mineralization where strong rotation of the regional foliation from the NW trend to the SW creates dilation. Down-plunge opportunities exist as does the potential for repeated mineralized lenses to the southwest towards the historic Agbarabo open pit.

 

An estimation based on old drill holes and new trench results gives an oxide potential of 30koz at 4.5g/t in a conceptual $1,500/oz pit shell which will be drill tested in 2016.

 

Sessengue SW

 

The Sessengue SW target is located 350m south of the Sessengue pit where folded ironstones with lithosamples to 10.7g/t are located. Historical drill results from the target area include 22m at 1.95g/t and 8m at 1.9g/t. In 2015 results received from trenches excavated across targets returned intersections of 22m at 4.01g/t including 12m at 6.36g/t (STR0002) and 12m at 1.5g/t, 28m at 3.18g/t and 40.5m at 3.76g/t on ironstone units in the targets area.

 

These trench intersections, combined with results from an auger program and a ground magnetics survey across the target, helped define four areas with the potential to host at least four higher grade mineralized lenses in banded ironstone and metaconglomerate which plunge to the NE. The target area has not been adequately tested by deep drilling, and upside opportunities clearly exist for subsurface continuation of the lenses which may lead to the discovery of new 9000 lode style mineralized systems.

 

Ikamva Kalimva

 

Ikamva is considered to be one of the more prospective parts of the KZ structure with structural similarities to KCD. Eight trenches were excavated during the year to investigate the extent of mineralization and geological controls in the priority Zone 1 target area. Trenches mostly returned thin intervals of mineralization associated with ironstones, with one trench (IVTR0003) returning significant mineralization of 9.1 m at 3.24g/t from 72.9m and 11m at 3.87g/t from 88m, 18m at 1.51g/t from 122m and 16m at 1.18g/t from 142m. Drilling beneath this trench failed to confirm the continuity of mineralization but did highlight the potential at Ikamva, where there are several small Belgian pits. Further work planned on the target includes field mapping to upgrade the interpretation and to identify key controls on high grade mineralization.

 

Prospect scale mapping and sampling at Kalimva, an old Belgian mine, confirmed the NNE trending shear corridor hosting rod/augen shaped mineralized alteration zones plunging at 30 degrees to the NNE. The down-plunge extension of mineralization in the old pits was tested by previous diamond drilling programs with mixed results but structural and lithological observations in 2015 suggest a vertical system, rather than the east dipping model tested previously, indicating exploration upside to be tested in 2016.

 

  

Regional

 

In the past year, two joint venture agreements were concluded in the DRC: Loncor and Devon Resources, which both hold permits over the Ngayu Archean greenstone belt, some 200km to the southwest of the Kibali project. The belt hosts a multitude of exploration opportunities and despite limited historical exploration work hosts resources of nearly 3Moz. The agreements give Randgold exclusive exploration rights over the majority of the Ngayu belt where it already holds 752km² under the KGL Isiro joint venture. The new agreements cover a total land area of 2,200km². Randgold has negotiated the right to earn up to 65% of each of the three projects through the completion of prefeasibility studies.

 

The newly signed joint venture agreements bring Randgold’s total groundholding in northeast DRC to 6,000km² (including Kibali) and is a significant expansion to its footprint in an area it believes to be one of the most prospective on the continent. This work paves the way for regional sampling programs across the area in 2016 designed to collect detailed geochemical and geochronological data which will be used to define the most prospective belts and structures on this part of the craton.

 

MINERAL RIGHTS AND ORE RESERVES

 

Table of mineral rights at December 31, 2015:

 

COUNTRY		TYPE1		AREA				EQUITY
				(km²)				(%)
MALI
Loulo		EP			263			80.0
Gounkoto		EP			100			80.0
Morila		EP			200			40.0
Bena West		EEP			22			90.0
Bakolobi2		EEP			120			Earn in minimum 51	%
Djelimangara2		EEP			55			Earn in minimum 51	%
Djelimangara West2		EEP			48			Earn in minimum 51	%
Sebesounkoto2		EEP			29			Earn in minimum 51	%
Sebesounkoto Sud2		EEP			28			Earn in minimum 51	%
Djidian		EEP			325			90.0
Kobokoto Est2		EEP			100			65.0
Koussikoto2		EEP			37			65.0
CÔTE D’IVOIRE
Nielle		EP			751			89.0
Boundiali		EEP			1,320			81.0
Mankono		EEP			704			81.0
Tiorotieri2		EEP			86			89.0
Kouassi Datekro N		EEP			350			89.0
Kouassi Datekro C		EEP			396			89.0
Fapoha North2		EEP			387			81.0
Fapoha South2		EEP			398			81.0
Tengrela South		EEP			400			81.0
SENEGAL
Kanoumba		EEP			506			90.0
Miko		EEP			61			90.0
Dalema		EEP			301			90.0
Tomboronkoto		EEP			225			90.0
Bambadji2		EEP			236			Earn in minimum 51	%
DEMOCRATIC REPUBLIC OF CONGO
Moto Belt2
11447		EP			227			45.0
11467		EP			249			45.0

 

  

COUNTRY		TYPE1		AREA				EQUITY
				(km²)				(%)
11468		EP			46			45.0
11469		EP			92			45.0
11470		EP			31			45.0
11471		EP			113			45.0
11472		EP			85			45.0
5052		EP			302			45.0
5073		EP			399			45.0
5088		EP			292			45.0
Ngayu Belt2
1796		EEP			97			Earn in minimum 65	%
1793		EEP			196			Earn in minimum 65	%
1794		EEP			198			Earn in minimum 65	%
1797		EEP			157			Earn in minimum 65	%
1798		EEP			185			Earn in minimum 65	%
1800		EEP			168			Earn in minimum 65	%
1801		EEP			167			Earn in minimum 65	%
1802		EEP			163			Earn in minimum 65	%
1803		EEP			147			Earn in minimum 65	%
1804		EEP			124			Earn in minimum 65	%
1805		EEP			175			Earn in minimum 65	%
1806		EEP			86			Earn in minimum 65	%
1807		EEP			119			Earn in minimum 65	%
2226		EEP			137			Earn in minimum 51	%
2227		EEP			137			Earn in minimum 51	%
2229		EEP			126			Earn in minimum 51	%
2230		EEP			155			Earn in minimum 51	%
2231		EEP			197			Earn in minimum 51	%
12976		EEP			71			Earn in minimum 65	%
12984		EEP			20			Earn in minimum 65	%
12988		EEP			70			Earn in minimum 65	%
12982		EEP			7			Earn in minimum 65	%
12975		EEP			6			Earn in minimum 65	%
12986		EEP			111			Earn in minimum 65	%
12990		EEP			11			Earn in minimum 65	%
Isiro Belt
2285		EEP			197			Earn in minimum 51	%
2286		EEP			185			Earn in minimum 51	%
2287		EEP			183			Earn in minimum 51	%
2288		EEP			173			Earn in minimum 51	%
2289		EEP			195			Earn in minimum 51	%
2290		EEP			189			Earn in minimum 51	%
2291		EEP			191			Earn in minimum 51	%
TOTAL AREA					12,307

 

¹ EP Exploration Permit

EEP Exclusive exploration permit

² Subject to a joint venture agreement.

 

 

Annual ore reserve declaration at December 31, 2015

 

At																												Attributable
Mine		Category		Tonnes (Mt)								Grade (g/t)								Gold (Moz)								Gold (Moz)
				2015				2014				2015				2014				2015				2014				2015				2014
ORE RESERVES
Kibali																													45	%			45	%
		Proved			4.0				5.4				1.8				1.8				0.2				0.3				0.1				0.1
		Probable			76				78				4.3				4.3				10				11				4.7				4.8
Sub total		Proved and Probable			80				83				4.1				4.1				11				11				4.8				4.9
Loulo																													80	%			80	%
		Proved			8.6				2.2				4.5				1.8				1.2				0.1				1.0				0.1
		Probable			23				31				4.7				4.8				3.4				4.7				2.7				3.8
Sub total		Proved and Probable			32				33				4.6				4.6				4.7				4.9				3.7				3.9
Gounkoto																													80	%			80	%
		Proved			4.1				4.4				3.1				3.8				0.4				0.5				0.3				0.4
		Probable			16				18				5.2				4.6				2.7				2.6				2.2				2.1
Sub total		Proved and Probable			20				22				4.8				4.4				3.1				3.2				2.5				2.5
Morila																													40	%			40	%
		Proved			-				0.02				-				4.0				-				0.003				-				0.001
		Probable			15				13				0.6				0.7				0.3				0.3				0.1				0.1
Sub total		Proved and Probable			15				13				0.6				0.7				0.3				0.3				0.1				0.1
Tongon																													89	%			89	%
		Proved			8.2				7.1				2.3				2.2				0.6				0.5				0.5				0.4
		Probable			18				23				2.4				2.4				1.4				1.7				1.3				1.5
Sub total		Proved and Probable			26				30				2.4				2.3				2.0				2.2				1.8				2.0
Massawa																													83	%			83	%
		Proved
		Probable			21				21				3.1				3.1				2.0				2.0				1.7				1.7
Sub total		Proved and Probable			21				21				3.1				3.1				2.0				2.0				1.7				1.7
TOTAL RESERVES		Proved and probable			194				201				3.6				3.6				23				24				15				15

 

The reporting of ore reserves is also in accordance with SEC industry Guide and JORC 2012 Code and as such are reported to the second significant digit.

Reserve pit optimizations are carried out at a gold price of $1,000/oz for all pits.

Underground ore reserves are also based on a gold price of $1,000/oz. Dilution and ore loss are incorporated into the calculation of reserves.

 

  

Mineral Rights and Permits

 

The following map shows the position of our current permits in West Africa:

 

 

The following map shows the position of our current permits in Central Africa:

 

 

  

Although we believe that our exploration permits will be renewed when they expire, based on the current applicable laws in the respective countries in which we have obtained permits, there can be no assurance that those permits will be renewed on the same or similar terms, or at all. In addition, although the mining laws of Mali, Côte d’Ivoire, Senegal and DRC provide a right to mine should an economic orebody be discovered on a property held under an exploration permit, there can be no assurance that the relevant government will issue a permit that would allow us to mine. All mineral rights within the countries in which we are currently prospecting are state-owned. Our interests effectively grant us the right to develop and participate in any mine development on the permit areas.

 

SOCIAL RESPONSIBILITY AND ENVIRONMENTAL SUSTAINABILITY

 

Sustainability Governance

 

We have implemented policies and procedures to ensure we engage effectively with our stakeholders and for identifying and reporting on sustainability risks and opportunities.

 

Management of sustainability

 

We have a wide range of policies, processes and people in place to ensure we identify and manage the risks and opportunities that sustainability factors present to our business, and to ensure we engage effectively and transparently with all our stakeholders.

 

Our sustainability governance starts at the top and it is our board who holds ultimate responsibility for our performance in this area. Key to this is the environmental and social oversight committee, which meets quarterly and is chaired by our CEO. Sustainability considerations play a key part in all our decisions, for example in 2015 our verdict not to proceed with a potential investment opportunity was made, in part, because we did not feel the project met our sustainability criteria.

 

We also have three high level executives who drive our work on community relations, health and safety, environmental management and sustainability reporting. Two of these are West African nationals, in keeping with our ambition to have host country nationals involved at the highest levels of management in our company. To avoid a hierarchical structure these executives report directly to our chief operating officers (who sit above the mine general managers). This helps provide an important layer of independent sustainability oversight. It also helps to integrate sustainability into the DNA of our company, ensuring that it is not reliant on one person or one department.

 

While responsibility sits at the top, our management of environmental and social issues also flows from the ground upwards. Hence our extensive stakeholder engagement program (see “—Stakeholder engagement” below) and the participation of our CEO in regular mass meetings with employees, and open forums with community chiefs and other local representatives. Such meetings are a lively, vigorous and important part of our governance of sustainability.

 

Where appropriate, we also include achievement of sustainability targets as a component of bonus based remuneration packages. For example, part of both our CEO’s and CFO’s annual bonus payments are dependent on the group achieving a Lost Time Injury Frequency Rate of below 1.0. From 2016, the maximum bonus is only payable if the LTIFR is zero. Similarly, part of the CEO’s and CFO’s bonuses are linked to achieving the target of zero class 1 environmental incidents.

 

Corporate governance

 

Our Code of Conduct helps ensure our values are applied throughout the company and defines the standards of behavior expected of all directors, employees and contractors. It sets out our standard on a range of issues including bribery, whistle blowing, record-keeping, fraud, interactions with governments and sustainable development. Contravention of this code would lead to disciplinary action and the potential termination of employment. The importance of complying with our Code of Conduct is explained to all new employees as a central part of their induction training.

 

  

Where appropriate, we include achievement of sustainability targets as a component of bonus-based remuneration packages. We also build succession planning in every executive management position, including our CEO, to ensure that our sustainability work is built into the DNA of our company.

 

As part of our tendering procedure we also encourage all contractors and service providers to implement our human rights, environmental and social standards, anticorruption and anti-bribery policies in their organizations. As detailed throughout this sustainability report, Randgold has a comprehensive set of policies and practices in place to deal with all our sustainability challenges. We rely on our people to effectively implement these policies, which have evolved through years of experience and are crafted to comply with host country legislation. This means that we tend not to officially adopt or endorse specific international charters or sustainability initiatives, even though we often agree with them and work to support them.

 

Examples of international standards or initiatives that fall into this description include the IFC Performance Standards, World Bank Operational Guidelines, OECD Convention on Combating Bribery and the Voluntary Principles on Security and Human Rights.

 

Anti-corruption measures

 

The group’s Code of Conduct requires all our personnel, and the personnel of our contractors, suppliers and partners not to engage in any form of bribery or corruption. Randgold undertakes due diligence on the parties it does business with. Our personnel are also trained in anti-bribery and corruption measures to ensure the group’s Code of Conduct is fully adhered to.

 

The group operates a whistle blowing policy where all our personnel and the personnel of our suppliers, contractors and partners are encouraged to report any breach or suspected breach of the group’s anti-corruption and antibribery policies to the group’s compliance officer. Our anti-bribery and anti-corruption policies and practices are regularly audited to assess the adequacy of and compliance with our Code of Conduct.

 

We believe in full transparency in our dealings with governments and we fully encourage our host governments’ efforts to establish procedures to ensure revenue transparency in accordance with international standards.

 

Stakeholder engagement

 

Our stakeholder engagement program is an integral part of our governance of sustainability and vital to ensuring our business creates value for all stakeholders. We classify our stakeholders into eight groups, and believe that keeping open an ongoing two way dialogue with each of these diverse constituencies is critical to the success of our business.

 

We engage with our stakeholders in a variety of ways, including our annual Materiality Assessment (see “—Materiality assessment” below) and through both formal and informal meetings and mechanisms, including correspondence, roadshows, open forums and local consultations. For example, at Kibali we present the quarterly results to our local stakeholders and in 2016 we are looking to expand this practice across all our operational mines. We also present our annual report and sustainability report to our host communities each year.

 

Our aim is to be receptive and flexible to the feedback we receive through our stakeholder engagement program. For example at Kibali in the DRC in 2015, based on input from government authorities, village chiefs, community representatives, local businessmen, civil society and the local Roman catholic church, we drafted and signed a formal Memorandum of Understanding (MOU) with the local community. This acts as a social contract of peace and is the first time we have done this with a local community.

 

Materiality assessment

 

An important element of both our stakeholder engagement and risk management approach is a strategic prioritization of sustainability issues which we undertake each year.

 

  

This is undertaken in line with guidance set by the Global Reporting Initiative’s (GRI) G4 Standard for sustainability reporting. The Materiality Assessment sees us survey both internal and external stakeholders to ask what they perceive our most critical sustainability risks to be.

 

This year’s Materiality Assessment identified 19 priority sustainability issues for 2016, of which seven were categorized as highest priority.

 

Issues in the top ranking cut across a range of themes including environmental, human capital, social and governance factors. Safety, cyanide management, water pollution and community engagement were all identified as highest priority issues in both 2015’s and 2014’s Materiality Assessment – and this report discusses in depth how Randgold has approached each of these challenges. This year’s Materiality Assessment also produced an additional three top priority issues: closure planning, revenue transparency and community development and investment. In this report we discuss our strategy, policy, performance and plans in all these areas.

 

The results also introduced three new issues within the medium priority category compared to 2014. These are: occupational health, attracting and retaining staff and security forces. Five issues dropped below the medium priority line compared to last year: artisanal mining, community grievance mechanism, corporate governance, indigenous populations and waste management, although we will continue to monitor, manage and report on all of these.

 

One of the most useful outcomes of the Materiality Assessment exercise is that it helps the Randgold team to identify where gaps in perception exist between internal and external stakeholders, thus helping ensure we understand all our stakeholders’ needs and maximize the benefits we bring to them.

 

This year’s assessment showed a reasonably high level of convergence on the issues that both internal and external stakeholders view as highest priority. For example safety, occupational health, skills transfer and training and water pollution all featured in the top third of priorities for both groups.

 

Economic development

 

Strategy and policy

 

We recognize our responsibilities and seek to create shared economic value for all stakeholders. As well as paying all relevant taxes, we include the governments of our host countries as part owners on all our mines (the states of Mali, Côte d’Ivoire and the DRC all have stakes of at least 10% in our respective mines) so we also contribute to national treasuries through dividends and royalties. We are fully transparent about all payments and sign long term agreements within mining code obligations that include commitments to leave behind a thriving legacy after a mine’s closure.

 

Our performance

 

Our contributions to host countries in 2015 have been significant. This year’s payments bring Randgold’s total contributions to host countries via taxes, royalties and dividends to over $2.5 billion.

 

Most of our host country economies are heavily dependent on natural resources and we also work with these governments to support them in their efforts to diversify their economies, for example by facilitating foreign investment. In 2015, this has included our investments in agribusiness and support for small and medium sized enterprises through our preferential procurement system and business mentoring.

 

As well as being fully transparent about our revenues and economic footprint, we strive to encourage high standards of corporate governance and transparency in our countries of operation, with the aim of helping them attract other world-class companies to invest there. We are pleased that as of July 2014 all our countries hosting operational mines – Mali, Côte d’Ivoire and DRC – have been compliant with the Extractive Industries Transparency Initiative (EITI).

 

  

Further to this, we were encouraged to see all our host countries improved their ranking in the 2015 World Bank Ease of Doing Business survey. This sends a powerful message to international investors that the business environment in our host countries continues to improve and welcomes world-class businesses.

 

Investing in infrastructure

 

One of our most critical contributions to the economic development of our host countries is our investment in vital infrastructure which both makes our mines viable and lays the foundations for future growth in the regions in which we operate. We have invested approximately $700 million in host country infrastructure during the last five years, from bridges to broadband, new roads networks to new power networks.

 

Examples of vital infrastructure include a $40 million project during the construction of our Tongon mine to introduce overhead power lines to connect the Tongon region to the national electricity grid, a venture which both helped us reduce our reliance on expensive thermal energy and diesel generators and succeeded in lighting up an isolated region of Côte d’Ivoire. In the DRC, we are investing in the construction of three hydropower stations which will power up to 90% of our Kibali mine and leave a community legacy that outlasts the mine. 2015 also saw us complete the construction of a new customs house on the Senegalese-Malian border, one of the vital routes to our Loulo-Gounkoto complex.

 

Community development

 

Strategy and policies

 

All our mines need the support and goodwill of the communities in which they are based to be able to operate successfully. We aim to build strong and transparent relationships and view each community as a partner who can provide us with talented employees, a secure environment and local knowledge and who can use us to build better local health and education facilities and more prosperous local economies.

 

Our guiding policy in this area is to empower each community through the creation of community development committees (CDCs). Each CDC consists of a representative mix of local leaders, women and youth delegates and others and is empowered to decide how best to spend an annual community investment budget within the five broad sustainable development categories of education, primary health, food security, potable water and local economic development.

 

Similarly, where we invest in a new facility such as a school, health clinic or fresh water well we also work closely with the CDCs or local authorities to ensure that it can be maintained after the mine has closed.

 

Our performance

 

The amount invested through community development committees increased by over $3.6 million in 2015, a rise of 136% on the previous year. This has led to a range of vital investments in health, education, local economic development, food security and drinking water projects across all our host communities.

 

Some highlights for each mine’s surrounding communities in 2015 include:

 

·

Tongon (Côte d’Ivoire) – Included over $100,000 on health projects, over $60,000 spent to construct new classrooms and $30,000 on new computer facilities in schools. The Tongon community was honored by the visit of the President of Côte d’Ivoire and the Minister of Agriculture in 2015 who observed progress at the agribusiness development projects.

·

Gounkoto (Mali) – Included a $1.4 million investment to develop an agribusiness college, around $50,000 to build a new school in Batankoto village, $14,000 for a tractor for community use and improvements to roads and local water supply.

·

Loulo (Mali) – Examples of projects include over 18 water boreholes drilled or rehabilitated, $50,000 to construct three classrooms in Dabara, over $23,000 on medical supplies for the

 

  

community and a major infrastructure investment to improve the customs offices at the nearby Senegalese border.

·

Kibali (DRC) – Included major constructions such as a new livestock training center and community complex housing sporting facilities. Over $30,000 for a maternity center and ultrasound room in Watsa Hospital, 19 drinking water projects, major repairs and renovations to several schools and an investment of over $500,000 to establish long term microfinance facilities. The focus is also shifting at Kibali to viable business projects, with a total of $1 million spent on local economic development initiatives.

·

Morila (Mali) – An increase of over $1 million in investment in this community helped cover the growth of agribusiness projects and additional community electrification initiatives such as the installation of a solar powered water pumping system at a women’s market garden and electrification of the new youth center. Investments also included over $30,000 on new borehole construction, improvements to waste management at local hospitals and contributions to community radio and local soccer facilities.

 

Protecting human rights

 

Strategy and policies

 

Randgold is committed to upholding fundamental human rights with everything we do, and wherever we operate. We have never been subject to any allegations of serious human rights abuses or breaches of humanitarian law throughout our 20 years of operation.

 

We have a detailed Human Rights Policy and Conflict Free Gold Policy, both available on our website, that cover all aspects of our business including, but not limited to, areas of employment, resettlement, engagement of private security forces and our work with suppliers. These policies are a part of induction for all relevant staff and ensure that our mines do not provide benefits to any armed groups who have committed or been credibly accused of human rights abuses.

 

We also recognize that we do not operate in a bubble, but as part of an economic value chain where we can have influence. Therefore we also try to proactively encourage respect for human rights by including human rights clauses within all our supplier contracts – putting a legal duty on contractors both large and small to comply with our zero tolerance policy in areas such as bribery or child labor. We monitor compliance with these clauses, alongside all our terms and conditions, as part of our annual inspections of suppliers.

 

Safety

 

Strategy and policies

 

Safety is a top priority for Randgold and we are determined to create an injury and fatality free working environment. It is vital that our employees can come to work every day knowing they will be in a safe environment, and contributing to the wellbeing of their colleagues.

 

We have robust safety systems in place at all mines and use the internationally recognized OHSAS 18001 safety standard to guide and inform our practices. For example, we use a hierarchy of control to help manage our safety risks. We first seek to eliminate known hazards; where hazards cannot be eliminated we look to technology and mechanization of processes to reduce exposure to risk and finally where exposure to risk cannot be removed we ensure we manage those risks with careful administration and monitoring, including the compulsory use of personal protective equipment. Our policies also include assessments of specific safety risks for each part of the mine, holding daily toolbox safety briefings in each department and having detailed procedures and training modules in place for areas such as chemical hazards.

 

Each site has an emergency response team, including a mine rescue team where we have underground operations. All our underground operations have a number of refuge chambers where workers can seek shelter in the

 

  

event of rock fall or cave in. This includes 15 such refuge chambers at our Loulo mine which we believe is the largest number for any mine in West Africa.

 

The core of our approach to safety is to ensure each individual takes responsibility for the safety of themselves and those around them. To create this safety culture we include safety training as a critical part of induction for every employee and contractor, we hold regular audits to check employees’ understanding of safety behaviors, and all staff are encouraged to think proactively about safety risks. For example we encourage a right to refuse i.e., to challenge supervisors if they feel that appropriate equipment or other safety measures are not in place before doing a job.

 

If an incident occurs, the safety, health and environment (SHE) department on each mine analyses the incident and works to ensure appropriate remedial actions are taken. They also ensure that illiterate employees are fully briefed on the meanings of written procedures and signs in their native language, an important consideration in some of the underdeveloped areas in which we operate.

 

We also have a zero tolerance policy towards drug or alcohol abuse and unsafe behavior on site.

 

Our performance

 

Unfortunately we suffered one fatality in 2015. The incident occurred at our Tongon mine in January where a foreman in the contract mining team was the victim of a tractor crash in the pit. An in-depth investigation into the incident has been conducted and remedial actions were implemented to prevent such an accident occurring again have included a prohibition of the use of tractors in the pit, defensive driving sessions for all operators on how to respond in extreme situations, and reminder sessions on the importance of conducting thorough mechanical checks on relevant equipment.

 

After achieving a record decline in our group’s Lost Time Injury Frequency Rate (LTIFR) in 2014, to 0.47 per million hours worked, we saw the rate rise to 0.59 per million hours worked in 2015 – the first increase in LTIFR since 2010. Although this is a disappointing increase, the LTIFR rate still remains low – and is more than 50% below the average rate from the last five years. The rise can be partially attributed to an increase in the number of Lost Time Injuries at our Tongon mine in particular (from zero to four), some of which were related to contractors at the facility. We are determined to bring the rate down again in 2016 and measures to improve safety will include looking at additional training and the introduction of new disciplinary measures which increase the accountability of employees and contractors for unsafe behavior.

 

To further improve safety we also began piloting the safety software, MyOSH, at our Loulo operation in 2015. MyOSH allows us to record all safety information for each employee. This means we are notified when pre-safety checks are not carried out or when refresher training is required, thus providing a useful additional tool to our management. We plan to expand the trial of MyOSH to Gounkoto in early 2016, and across all our sites if the trial is successful.

 

Group lost time injury frequency rate

 

We are pleased to report that both our Morila and Gounkoto mines recorded zero lost time injuries during 2015, the second year in a row Gounkoto has achieved this milestone. Another significant achievement was a 25% drop in the Total Injury Frequency Rate (LTIFR) across the group in 2015, thanks largely to a 34% decrease in medical treatment injuries (MTIs).

 

We were also encouraged by a rise in near misses in 2015. These are incidents where no personal injury or property damage was sustained and reporting them triggers remedial actions that can prevent future accidents. Perhaps counter-intuitively, we see a rise in near misses as part of a positive trend towards encouraging a culture of incident awareness and increased reporting of incidents.

 

  

Group Safety Performance
		2015				2014				2013
Total labor1			11,348				12,341				15,373
Person hours			25,518,122				27,583,588				35,246,260
LTIs2			15				13				20
LTIFR3			0.59				0.47				0.57
Fatalities			1				1				1
TIFR4			6.90				9.26				8.37
Near misses			211				189				128

 

1

Including persons employed by our contractors calculated as an average over the year.

2

Defined as injuries that occur in the execution of duties which prevent our workers from performing those duties for at least one day.

3

Number of LTIs per million person hours worked.

4

Number of LTIs plus medical treatment injuries (MTIs) per million man-hours worked.

 

Individual Mine Level Safety Performance
		Loulo								Gounkoto								Morila								Tongon								Kibali
		2015				2014				2015				2014				2015				2014				2015				2014				2015				2014
Person hours			5,769,169				6,410,729				2,117,943				2,152,358				2,138,655				2,697,840				4,849,840				4,628,717				10,642,515				11,693,944
LTIS			5				4				0				0				0				3				4				0				6				6
LTIFRs			0.87				0.62				0				0				0				1.11				0.82				0				0.56				0.51
Fatalities			0				0				0				0				0				0				1				0				0				1
Near misses1			52				29				45				36				4				6				41				34				69				85

 

1

Restated as value reported previously was the number of property damages.

 

Discovering and developing local talent

 

Strategy and policies

 

A central tenet of our employment strategy is to attract the best candidates from our host countries and communities providing them with world-class training and genuine opportunity to progress. It is a strategy that enables us to benefit from an efficient and effective workforce, at a relatively low cost base compared to other peers, while also playing an important role in building strong community relations and a secure environment for our mines.

 

It also provides us with a loyal workforce and we take pride in our staff retention rates.

 

Our policy to prioritize host country nationals means that for every role we seek to place someone with the right level of skills from first the local region, then the host country, then sub-Saharan Africa and beyond. We have a target to maintain the number of nationals in our workforce above 80% and we place a high priority and considerable resources into nurturing talent and skills for long term development.

 

During recruitment we use a variety of tools such as psychometric and other tests to assess the skills and competencies of all candidates and to match the best ones with the right roles. We then use a combination of both formal and informal training to progress careers and employee excellence. Informal training includes skills shadowing, mentoring and on the job training which most employees engage in to a large extent. We also have several formal training partnership arrangements in place with the universities of Pretoria, Cape Town and Abidjan.

 

We also run a stagiaire industry placement program giving students from host country colleges opportunities to work on our mine sites for up to 12 months. This helps us to both identify and recruit some of the most talented individuals from our countries of operation and provides essential work experience to graduates.

 

  

Our performance

 

We had a total workforce of 10,905 in 2015, of which 92% of operational staff were host country nationals. We continue to have high retention rates. For example, at mines such as Loulo and Morila that have been in operation for over a decade, over 85% of employees have been with us longer than 10 years.

 

One of our key targets is the development and progression of host country nationals into management positions and as of 2015 the entire management teams at Morila, Loulo and Gounkoto consisted completely of Malian nationals. A total of 17 senior management roles were transferred from expatriates to host country nationals this year.

 

Owner mining

 

As part of our commitment to investing in host country nationals we also introduced a shift to owner mining at Loulo’s underground mines in 2015. While underground mining activities have always been under management control, owner mining means that rather than relying on outsourced labor and contract staff (who are usually expats) to fulfil the underground mining function, work is now completed by our own employees. This process has required the short term hire of over 90 international experts (down from 131 before owner mining) on rolling contracts but ultimately will lead to a more highly skilled local workforce and then a subsequent reduction in the number of expatriates on underground operations.

 

Beyond the benefits of increased employment opportunities and knowledge transfer for our local communities, owner mining also makes good sense for us as a business. It allows us to eliminate any duplication of functions on site and to reduce our reliance on more expensive expatriate labor. We anticipate the cost reductions of the shift to owner mining to be about 10 to 15% on relevant costs.

 

Training the future

 

We spent more than $1.3 million on formal training for 302 employees in 2015 with rising stars gaining certification in areas such as rock mechanics, arc welding, pump installation and maintenance, waste management and the finance for non-financial managers program run by University of Cape Town’s Graduate School of Business. We continue to build good relations with universities in our host countries and established a partnership with the Ferke Technical Institute at the University of Abidjan in Côte d’Ivoire in 2015.

 

More than 600 stagiaires have attended practical training sessions across all our operations in the last two years with a total of 80 being recruited after graduation, either with the operation itself or by our subcontractor companies.

 

On the executive development side, a number of senior group executives as well as senior operational managers are scheduled to attend management development programs and executive development programs at UCT, Stellenbosch University as well as the Harvard School of Business.

 

This year also saw the introduction of a $1 million state of the art underground vehicle training simulators at Loulo.

 

Gender diversity

 

We are an equal opportunity employer, with transparent non-discrimination policies in place. However one of the challenges we face in this area is that within our countries of operation gender norms, cultural traditions and legislative barriers can all work against attracting women to work in the extractives sector.

 

In 2015, a total of 5.5% of our total workforce were women – with the highest numbers of women employed at our Kibali and Tongon mines. To help ensure local women also benefit from our presence in the community, we also support activities targeted at supporting and developing employment opportunities for local women. In 2015 these included the creation of women’s market gardens around all our mines and the provision of training to women

 

  

on the use of grain mills as well as soap and jam making. This has provided many local women with a steady source of income. We hope that over the medium term some of the community initiatives we support that help empower women in the community may help meet this challenge.

 

Inducing stable industrial relations

 

Strategy and policies

 

We see our employees as key partners in our business, and this is the foundation of our industrial relations approach.

 

All employees are free to join unions and all our host countries have the right of freedom of association enshrined in law. We recognize all groups that legitimately speak for our workers and meet with union representatives at each mine site on a monthly basis. Union representatives also attend monthly management cost reviews, quarterly board meetings, participate in regular dialogues with each mine’s general manager and sit in on strategic planning sessions.

 

Further to this our senior management have an open door policy for staff, who are encouraged to make contact by email with any concerns they have. Our CEO Mark Bristow also holds mass meetings twice a year at each mine. All staff are invited to attend these public forums and they provide an important opportunity for staff to raise issues or ask any questions they feel important directly with the CEO.

 

Each mine has a Mine Level Agreement (MLA) agreed between the unions and management which sets out mutually agreed rules for each mine on detailed items such as salary increments or the parameters of acceptable behavior in a strike situation. MLAs are reviewed every three years.

 

Our performance

 

For the most part industrial relations across all our sites have been calm and productive in 2015. In total there were three days of work lost to strike action over the course of the year, all coming from a strike at the Loulo- Gounkoto complex in June 2015. The biggest factor behind this strike was a combination of misinformation about the financial position of the mine – which led to some calls for unreasonable salary increases – and competition between two unions to help shore up membership.

 

Key to our resolution of this strike action, and an important foundation for avoiding a repetition, was the introduction of an extensive communication campaign at all mines to give specific and honest information about the revenue and profitability of the mine to all employees (rather than allowing such information to be disintermediated by union representatives). The agreement signed with the unions as part of the resolution also saw us introduce three new salary premiums to those employees with exposure to dirt, dust and danger.

 

Managing health risks

 

Strategy and policies

 

In order to perform to the best of their abilities our workforce needs to be healthy and well, and more than this they need to be free from worry about the health and wellbeing of their families and communities. This provides a compelling business case for us to invest in much needed local healthcare facilities and initiatives when it comes to both occupational and community health.

 

Our health policy is to provide free basic healthcare to employees, their immediate family and community members within a 10km radius of each mine. In order to achieve this we build a number of health clinics on each mine and in surrounding communities – with the aim being to pass control and responsibility for the community clinics over to local authorities once they are established.

 

Our clinics work to prevent and treat both occupational health hazards, such as dust inhalation and noise exposure, and priority community health issues. The latter are defined by the independent baseline study that we

 

  

commission at the feasibility stage of our projects and include standalone programs to combat malaria and HIV/AIDS. In the last year we have also worked in partnership with local authorities and international organizations to combat the threat of Ebola in our host regions.

 

In order to ensure a continual quality improvement of our health care delivery, our senior medical officers, under the supervision of our chief medical officer, reviewed the health service provision of our operations. This looked at aspects such as strategic planning, infection control, patient care and emergency preparedness.

 

Our performance

 

During 2015 our clinics conducted over 80,000 medical consultations for employees and individuals in our host communities. About 31 % of these were received by local community members or employees’ family members, reinforcing the value of our health investments to our host communities as well as to our workforce. The bulk of consultations were for malaria, diarrhea linked diseases and respiratory conditions.

 

Total medical consultations in 2015
Total number of medical consultations			80,758
Employees			69%
Employee dependents			18%
Local community			13%

 

Occupational Health

 

Gold mining has a number of inherent occupational health risks. Processes at the plants and in the pits and underground are noisy and there can be exposure to dust and hazardous chemicals. These exposures can build-up over time into significant health risks for our employees and therefore need to be constantly and carefully monitored and managed.

 

We take a number of steps to prevent these risks, including regular site risk assessments and prework and periodic medical checks for employees. The annual medical checks monitor employees for any signs of afflictions such as hearing loss, respiratory issues, heavy metals in the blood, silicosis and tuberculosis. Staff who are regularly exposed to chemicals and other hazards also receive biological and radiation testing. Our assessments of safe exposure levels are based on internationally recognized monitoring standards, including the American conference of Governmental Industrial Hygienists (ACGIH), while our health and safety management systems are set up to comply with OHSAS 18001 requirements.

 

As detailed in the earlier safety section of this report we use a detailed hierarchy of control to minimize exposure to hazards across the workplace. This also includes regular training and checks to ensure that the materials and equipment to deal with traumatic, toxic and cardiovascular emergencies are in place and functioning well. All employees must pass minimum standards of fitness in order for their job to be performed safely and a zero tolerance approach is taken to those who fail to use their personal protective equipment (PPE).

 

Wherever possible we also look to use advances in equipment and technology to help reduce or eliminate occupational health risks.

 

Environmental management

 

The ore we extract, the water and energy we use, and the climate we operate in, are all dependent on a thriving natural environment. Being careful environmental stewards is therefore a crucial building block of our business. On top of this, by maximizing energy efficiency and recycling water and waste we help keep our costs down.

 

  

The importance of strong environmental management was reflected in our 2015 Materiality Assessment with issues of cyanide management and water pollution ranked as highest priority issues, and air pollution and environmental incidents also ranking high in importance among both internal and external stakeholders.

 

We have clear policies in place to monitor and minimize all our negative environmental impacts at every stage of the mining lifecycle. We conduct environmental and social impact assessments (ESIAs) during the feasibility stage of all our projects, and once a mine is operational we put in place an environmental management system (EMS) to manage all identified risks in accordance with both national regulations and international standards such as the IFC Performance Standards on Environmental and Social Sustainability. We use the global best practice standard ISO 14001 to help set the criteria for each EMS and as of 2015 all our operations are now certified to the ISO 14001 standard with Kibali granted certification for the first time. We also conduct independent external audits to ensure our compliance.

 

We are committed to transparent reporting of our environmental impact and as well as offering details publicly in this report we provide environmental data to the Carbon Disclosure Project (CDP) each year. The climate change score awarded to Randgold by CDP for our disclosure of environmental data rose by 40% from 64/100 in 2014, to 90/100 in 2015. 

 

We report on five key areas of environmental management performance: environmental incidents, energy and climate change, water and air quality, waste management and biodiversity.

 

Environmental incidents

 

One of our key performance indicators in this area is the number of environmental incidents at each site. We record three types of environmental incidents and in 2015 had zero Class 1 incidents (i.e., major incidents resulting in significant injury, damage or death); 11 Class 2 (i.e., medium) incidents and 85 Class 3 incidents.

 

The lack of major incidents and 45% reduction in Class 2 incidents is encouraging and reflects a renewed focus on daily environmental management in 2015. An example of a Class 2 incident in 2015 included the overflow of a detoxification pond at Loulo’s tailings dam after very high rainfall. The incident was quickly rectified and water quality tests taken downstream immediately after the incident to check there had been no contamination. Our only Class 1 environmental incident during the last five years occurred in December 2014 at our Tongon mine in Côte d’Ivoire. The incident involved a burst tailings pipeline, and significant focus in early 2015 was placed on ensuring this incident was comprehensively dealt with. Remedial activities in 2015 have included the implementation of an action plan in conjunction with the Ivorian government’s anti-pollution body, CIAPOL. A full sign off from CIAPOL to show that all damage has been rectified is anticipated in the first quarter of 2016.

 

Class 3 incidents refer to minor events such as a small leak in a pipe within site boundaries. High numbers of Class 3 incident reports are not necessarily a bad thing as they indicate increased employee awareness of environmental impact and we use them as an early warning reporting system which, when appropriately and promptly attended to, can help to prevent more serious incidents from occurring.

 

No significant environmental fines or non-monetary sanctions were imposed on any of our operations during 2015.

 

Energy and emissions

 

Our gold mines rely on a secure and plentiful supply of energy in order to manage everyday operations, creating a significant cost to our business. Thus, our policy to continuously improve energy efficiency and increase access to clean energy sources helps us create tangible business value. By reducing our greenhouse gas emissions these efforts also help future proof our mines as the world transitions towards a low-carbon economy.

 

  

Since 2010 we have been implementing a five year energy strategy which has included elements such as:

 

·

Improving the amount of hydropower in our energy mix with the creation of three hydropower plants at Kibali, collectively capable of producing 90% of the energy needed by the mine and its surrounding communities.

·

Connecting our Tongon mine to the Ivorian national grid (which is largely hydroelectric and natural gas powered), reducing the mine’s reliance on thermally-generated energy to about 10%.

·

Introducing lower revving generators, better spinning reserve management and other specific power efficiency measures at Loulo in Mali.

·

Running energy saving awareness initiatives on all sites such as our switching off switches campaign.

·

Exploring other renewable energy sources and energy efficiency measures. For example, working with the Malian government and IFC to examine the feasibility of a solar project to help connect the Loulo-Gounkoto complex and surrounding areas to the Malian national grid.

 

In 2015, many of these investments came to fruition with the Nzoro II hydropower plant in DRC reaching full capacity and the national grid connection at Tongon significantly improved with 75% of energy in the third quarter coming from this source. In total 33% of all energy used across our five mines in 2015 came from clean energy sources, an increase from 30% in 2014.

 

Water and air quality

 

Whether for industrial use, drinking or irrigation, water management is essential to our business and to our host communities. We recognize that water management is not just a technical debate around levels of abstraction and quantitative data – it is an issue that our key stakeholders feel passionate about.

 

We operate both in areas where water can be scarce (such as Mali and Côte d’Ivoire) and where high rainfall can create flooding risks (DRC). Most of our mines are also located next to large rivers and the amount of water we take from freshwater sources such as these is governed by permit restrictions set by the relevant governing authority.

 

One of the most important elements of our water management policy is to maximize the amount of process water we recycle. This helps to reduce energy use from pumping, ensures security of supply in drought prone areas and mitigates the potential of environmental incidents. Thus we have an ambitious group target to recycle 85% of process water.

 

In 2015, over 61% of process water was recycled. This is ultimately a disappointing rate as it both misses our corporate target and shows a decline from the reported rate of 75% recycled in 2014. It is worth noting however, that one of the factors behind this relatively low figure was a decision to adjust how we calculated water recycling at Tongon in 2015. This calculation had previously included both the storm water dam and the return water but for consistency and standardization across the group and to ensure the reported water recycling rate is accurate, we removed flows from the storm water dam from the calculation this year.

 

Water abstraction also rose in 2015, with a notable increase of over 7,500 cubic meters in the amount of fresh water we abstracted from sources such as local rivers. A major factor behind this was the start of TSF processing at Morila which involves blasting the tailing with water at high pressure. This was also a factor in our water efficiency.

 

Water quality

 

We closely monitor water quality to ensure local water sources and biodiversity are not damaged by our processes and, in line with international best practice, test regularly for contaminants such as iron, cyanide, manganese and sulphates both in boreholes and downstream of the mine. We have a target of zero non-compliances each year against national or IFC standards and achieved this target in 2015.

 

To help manage water quality in 2015 we also engaged in ecological practices such as the planting of fast growing trees, like the Eucalyptus, at seepage areas around the tailings dam and have plans for the creation of wetland systems to remove sediments and pollutants such as nitrates from the water.

 

  

Air quality

 

Just as we take care to guard against water pollution, we also regularly monitor air quality to ensure levels of dust particles do not cause undue irritation and damage to humans and livestock. This is particularly important in the dry seasons in Mali and Côte d’Ivoire.

 

As stipulated by IFC guidelines we have monitoring stations to measure airborne dust both on site and in local communities with the aim of ensuring levels of airborne particulates remain below 500mg/m²/day. Dust suppression activities which we undertake include regular road wetting (with priority given to heavily used roads and those in the community), speed awareness programs, use of dust suppressants such as molasses and planting vegetation on exposed dirt and rock.

 

Waste management

 

The gold mining process produces a significant amount of waste. This consists of both hazardous waste, where it is paramount that we leave nothing to chance, and general (non-hazardous) waste where we take proactive steps to ensure safe and environmentally responsible disposal. We have site-specific waste management plans that track the clearance of all substances aligned with national regulation and best practices laid out in IFC Performance Standards.

 

Hazardous waste

 

Our hazardous waste includes toxic substances such as cyanide, acids, used oil and chemicals. One of the most important parts of our waste management is the handling of cyanide, an issue that has proved one of our highest priority issues in the last two Materiality Assessments.

 

We introduced a new internal cyanide code in 2013 to ensure we are aligned with international best practice with regard to its production, transportation, storage and use. Actions to implement this policy include regular tests on any water facilities accessible by birds or wildlife (such as tailings storage facilities or solution ponds) to ensure levels of cyanide are below the levels recommended by the IFC and International Cyanide Management Institute (ICMI), annual cyanide audits at each site and increased training and supervision for those transporting cyanide and burning cyanide related waste.

 

Cyanide code audits were carried out at all our mines in 2015 and all met the compliance levels recommended by ICMI, with the exception of Kibali which dipped slightly below these levels in the third quarter of 2015. Steps have been taken to correct this non-compliance and in 2016 we will conduct an independent review of our cyanide processes to see if there are any gaps that need to be closed.

 

There was one environmental incident related to cyanide in 2015. This occurred at Loulo when a very heavy rainfall (above 70mm) occurred during the servicing of an intensive cyanide leaching unit. The rainfall caused an overflow of the pollution control dam which contained spill from the unit. The contaminated water was however contained within the site and the incident was classified as a Class 2 (medium) incident.

 

We pay just as close attention to other types of hazardous waste such as battery waste, chemical and solvent waste, fluorescent lighting and hydrocarbons. For example, we hire reputable service providers and trained local businesses to dispose of used oil from our sites.

 

No waste deemed hazardous under the Basel Convention is transported, exported, imported, treated or shipped internationally by Randgold.

 

Non-hazardous waste

 

We produced more than 64Mt of waste rock in 2015, our most significant waste product by volume. This waste rock and overburden is stored in rock dumps and we shape and measure the slopes of these dumps to ensure they are safe and in line with international best practice. We also use topsoil indigenous grasses and trees to cover

 

  

some dumps helping with erosion control and dust levels. At the end of mine life these dumps will be recontoured and vegetated.

 

Other non-hazardous wastes include scrap metal and organic waste and our levels of general waste also increased in 2015 to over 11,000t. We dispose of each material appropriately and also see waste management as an opportunity to partner with local communities to develop self-sustaining, profit generating waste management companies. In both DRC and Mali we have also encouraged the creation of local NGOs to recycle and sell scrap metal generated by the mine.

 

Waste generated
Tonnes		2015				2014				2013
Tailings			18,497,138				17,174,516				12,749,069
Waste rock			64,382,913				86,209,131				79,546,766
Hazardous			7,294				6,313	1			8,090
General2			11,379				5,065				5,763

 

1

Restated from last year.

2

Both organic and inorganic.

 

Tailings storage facilities

 

The management of tailings storage facilities (TSFs) has been an issue that commanded media attention in 2015 and we have clear policies and management procedures in place to ensure best practices are implemented for proper construction, operation, maintenance, monitoring and eventual closure of our TSFs.

 

All our tailing dams are water-retained dams with engineered structures not dry walls, and we minimize volumes to avoid the build-up of pressure on these walls. Our TSFs are also subject to regular checks and reinforcements at all sites and an independent auditor, Epoch Resources, checks the management of these facilities every quarter.

 

Biodiversity management

 

Our mines sit within functioning ecosystems that provide us with clean air, fresh water, fertile soil and other natural services vital to our business. So protecting these ecosystems has to be a key part of our job.

 

We take a dynamic approach to land and biodiversity management through the entire life of a Randgold mine. Biodiversity elements are compiled and integrated into the environmental impact assessments that are required at all of our operations prior to their construction. We then use satellite imagery to monitor changes in vegetation cover over each year of operation and have a policy of constant rehabilitation of flora and fauna while a mine is operational.

 

Each mine has a biodiversity action plan (BAP) which monitors the implementation of rehabilitation plans so that on closure as much of the original ecosystem is restored as possible. Our BAPs set out details such as which plant and animal species are native to each part of a site, and implementation of plans is evaluated each quarter and reported to the environmental and social committee. We also discuss these with local communities.

 

In 2015 we rehabilitated approximately 20 hectares of land including the planting of over 12,200 trees from local species and the introduction of a pair of gazelles within a protected part of the Morila mine. We also rehabilitated part of the tailings dam wall at Loulo with indigenous plants, donated seedlings to Kenieba Forest in Mali and oversaw the creation of a more detailed database of the wildlife and their terrestrial habitats across each site using studies of animal droppings.

 

At our Kibali mine in the DRC we recognize that parts of the land cannot be rehabilitated to the optimal level, and therefore have created a biodiversity offset scheme, based on guidance from the International Union for Conservation of Nature (IUCN). This project sees us support vital conservation work at the nearby Garamba National Park that in turn enables our Kibali mine to achieve a net biodiversity gain. We believe this project is not

 

  

only important from a biodiversity point of view – but also in terms of regional development, as it is helping the National Park develop its potential for tourism, in turn diversifying the regional economy and improving security.

 

None of Randgold’s mines is located within the boundaries of any natural World Heritage Sites nor do our mines affect the habitats of any endangered species.

 

Total land rehabilitated and disturbed

 

		2015				2014				2013
Total hectares rehabilitated			20				16				6
Total hectares disturbed			53				682				1,063

 

MARKETING

 

We derive the majority of our income from the sale of gold produced by Morila, Loulo, Gounkoto, Tongon and Kibali in the form of doré, which we sell under agreement to a refinery. Under these agreements, we receive the ruling gold price on the day after dispatch, less refining and freight costs, for the gold content of the doré gold. We have only one customer with whom we have an agreement to sell all of our gold production. The “customer” is chosen periodically on a tender basis from a selected pool of accredited refineries and international banks to ensure competitive refining and freight costs. Gold mines do not compete to sell their product given that the price is not controlled by the producers.

 

PROPERTY

 

Our active mining areas comprise of the Morila mining permit of 200km², the Loulo mining permit of 263km², the Gounkoto mining permit of 100km ², the Tongon mine located within the 751km ² Nielle exploitation permit and the Kibali mine located within the 10 mining permits which make up the Kibali mine and cover 1,836km². Our exploration permits are described under the subheading “–Mineral Rights and Permits” in this report.

 

We also lease offices in Abidjan, Côte d’Ivoire; Bamako, Mali; Dakar, Senegal; Entebbe, Uganda; St. Helier, Jersey; Johannesburg, South Africa; Kinshasa, DRC; and London, United Kingdom.

 

LEGAL PROCEEDINGS

 

The group is in receipt of claims for various taxes from the State of Mali totaling $280.0 million at December 31, 2015 (December 31, 2014: $313.0 million; December 31, 2013: $123.1 million), in respect of its Malian operations. Having taken professional advice, the group considers the material claims to be without foundation and is strongly defending its position, including following the appropriate legal process for disputes within Mali. Accordingly, no provision has been made for the material claims and the likelihood of a material outflow of economic benefits in respect of such claims is considered remote under IFRS.

 

Other than as disclosed above we are not party to any material legal or arbitration proceedings, nor is any of our property the subject of pending material legal proceedings.

 

HEALTH AND SAFETY REGULATIONS

 

Mali

 

The primary laws, regulations and standards governing Safety and Health in our Malian operations are as follows:

 

•

Law 1992-020 Code du travail (the Labor Code);

 

•

Ordonnance No. 99-032 le code minier, Ordonnance 200-013 le code minier modifications 2000 (the Mining Code);

 

  

•

Decree No. 91-278 / PM-RM Approving the Establishment Agreement Covering Research and Mining in the Republic of Mali (the Decree);

 

•

LOI N°62-68 AN-RM du 9 août 1962 Code de prévoyance sociale (INPS-Institut National de Prévoyance Sociale);

 

•

Convention Collective (National Collective Agreement for the Mining Industry).

 

Labor Code

 

The Labor Code provides generally for the following:

 

•

General provision for protection, prevention and hygiene;

 

•

Dangerous goods handling;

 

•

Employer responsibility regarding safety and health (implementation of safety system);

 

•

Labor inspector duty (control of employer safety system);

 

•

Injury notification to Labor Inspector within 48 hours;

 

•

Requirement to ensure medical service on site;

 

•

Medical leave (up to 12 months) and medical separation compensation; and

 

•

Establishment of a Joint Management and employees health and safety committee.

 

Mining Code

 

The Mining Code provides generally for an Occupational Health and Safety Committee (Joint management and employee safety committee), Personal Protective Equipment or PPE, safety guide, emergency procedure, means of education and sensitization, employees obligation regarding occupational health.

 

The Decree

 

The Decree provides generally for the following:

 

•

Must carry out research or mining work to ensure the safety and health of the public;

 

•

Must inform the local administrative authorities and the Director in the event of a fatal accident or serious injury or any natural phenomenon which may have an adverse effect on the safety of the area, the safety and hygiene of the personnel or conservation of the mine, neighboring mines or public roads; and

 

•

In the case of imminent danger or an accident, the local administrative authorities and the Director may requisition the necessary material and personnel to alleviate the danger, at the expense of the mining company.

 

LOI N°62-68 AN-RM du 9 août 1962 Code de prévoyance sociale (INPS - Institut National de Prévoyance Sociale)

 

The Code de la Sécurité Sociale provides generally for the following:

 

•

Requirement to have medical service on work site for occupational health and primary health care purposes;

 

  

•

Requirement for pre-employment medical check;

 

•

Requirement for periodical medical check of employees;

 

•

Requirement for general hygiene (ablutions, change house, potable water, workplace);

 

•

Protection against injury, environmental pollutants, occupational disease);

 

•

Ergonomic conditions;

 

•

Notification of occupational disease to the employer by the occupational health practitioner;

 

•

Requirement for first aid training for one employee per section of work or shift;

 

•

Requirement for compensation in case of debilitating injury, occupational disease;

 

•

Requirement for notifying injury and or occupational disease to INPS/Labor inspection; and

 

•

Redeployment of employee following injury and/or occupational disease.

 

Morila, Loulo and Gounkoto have a Committee of hygiene, safety, and working condition made up of elected labor and specialist management representatives, as outlined in the respective labor code. This committee designates, from its members, a consultative technical sub-committee charged with the elaboration and application of a concerted policy of improvement of health and security safety conditions at work. Its composition, attributions and operational modalities are determined by legal provisions and regulations.

 

The chairman of this committee (the general manager of the mine or his deputy) coordinates quarterly committee meetings, sets the agendas with his secretariat, monitors resolutions and signs off on committee determinations.

 

The committee’s secretariat ensures under the supervision of the chairman that:

 

•

follow-up activities such as action resulting from the regular surveys and inspections are carried out; and

 

•

health and safety manuals and updates are distributed, posters are posted on notice boards and safety committee minutes and reports are distributed.

 

Each mine’s medical officer sits on the Committee of hygiene, safety, and working condition and advises on the following:

 

•

working conditions improvements;

 

•

general hygiene on the operation;

 

•

ergonomics;

 

•

protection of workers safety in the workplace; and

 

•

medical checks and eye and ear testing.

 

The Committee of hygiene, safety, and working condition forms, from within its membership, two consultative commissions, the Commission of Inquiry and the Educational Commission. The Commission of Inquiry:

 

•

investigates accidents and makes recommendations to avoid repetitions;

 

  

•

ensures plant, machinery and equipment have adequate protection to avoid injury; and

 

•

updates and revises safety and health manuals.

 

The Educational Commission:

 

•

provides information and training on safe practices and potential risks;

 

•

provides first aid training;

 

•

administers and promotes the safety suggestion scheme; and

 

•

explains, where necessary, the contents of the safety and health manual.

 

All employees are covered by the state’s social security scheme and our medical reimbursement scheme, that reimburses a large portion of expenses related to medical treatment and medicines. Dental and optical expenses are also covered to 50%.

 

No post-employment medical aid liability exists for the group.

 

Côte d’Ivoire

 

The primary laws, regulations and standards governing Safety and Health in our Côte d’Ivoire operations are:

 

•

Mining Code (95-553) of July 15, 1995;

 

•

Loi no 95-15 du 12 janvier 1995 portant Code du travail.(Labour code); and

 

•

Loi n° 99-477 du 2 août 1999 portant modification du Code de prévoyance sociale (Social security law).

 

The Mining Code provides generally for the following:

 

•

Any individual or legal entity carrying out works for prospecting or mining mineral substances is required to undertake such works in a way that the safety of the people and goods is assured;

 

•

Must adopt and comply with internal regulations concerning safety and specific hygiene measures, subject to approval by the Mining Authority;

 

•

Any accident in a mine or quarry or in their dependencies and any identified cause of accident must be reported to the Mining Authority as soon as possible; and

 

•

In case of impending danger or accident in a mine, mining engineers and other authorized agents of the Mining Authority must take all necessary measures, at the expense of the individual or legal entity, to stop the danger and prevent it from occurring again.

 

The Code de la Sécurité Sociale provides generally for the following:

 

•

Requirement to have medical service on work site for occupational health and primary health care purposes;

 

•

Requirement for pre-employment medical check;

 

•

Requirement for periodical medical check of employees;

 

  

•

Requirement for general hygiene (ablutions, change house, potable water, workplace);

 

•

Protection against injury, environmental pollutants, occupational disease);

 

•

Ergonomic conditions;

 

•

Notification of occupational disease to the employer by the occupational health practitioner;

 

•

Requirement for first aid training for one employee per section of work or shift;

 

•

Requirement for compensation in case of debilitating injury, occupational disease;

 

•

Requirement for notifying injury and or occupational disease to INPS/Labor inspection; and

 

•

Redeployment of employee following injury and/or occupational disease.

 

Labor Code

 

The Labor Code provides generally for the following:

 

•

General provision for protection, prevention and hygiene;

 

•

Dangerous goods handling;

 

•

Employer responsibility regarding safety and health (implementation of safety system);

 

•

Labor inspector duty (control of employer safety system);

 

•

Injury notification to Labor Inspector within 48 hours;

 

•

Requirement to ensure medical service on site;

 

•

Medical leave (up to 12 months) and medical separation compensation; and

 

•

Establishment of a Joint Management and employees health and safety committee.

 

DRC

 

The Mining Code, Law No. 007/2002 signed into law on July 11, 2002, and its ancillary Mining Regulation (Decree 038/2003 of March 26, 2003), adopted in 2003, is the primary statute forming the legal basis for mining activities in the DRC.

 

•

Loi no-015/2002 du 16 Octobre 2002 portant Code du travail (Labor code)

 

•

Decret-loi du 29 Juin 1961 organique de la sécurité sociale

 

Articles relating to social and environmental impact studies are listed below:

 

Key Environmental Legislation in the DRC by aspect General environment

 

•

Arrêté Ministériel No. 043 of December 8, 2006 and No. 08 of April 3, 2007

 

•

Ordinance No. 07/018 of May 16, 2007

 

  

Soils and land use

 

•

Article 28 (Topography, Geology and Land Use) from Chapter II of Schedule IX, Mining Regulations, Decree No. 038/2003 of March 26, 2003

 

•

Article 75 (Dead Ground Management) of Chapter V of Schedule IX, Mining Regulations, Decree No. 038 / 2003 of March 26, 2003

 

Water

 

•

Decree of May 6, 1952 on water

 

•

Ordinance 52-443 of December 21, 1952

 

•

Regulation on lake and watercourse contamination and pollution of July 1, 1914

 

•

Article 30 to 33 from Chapter II of Schedule IX, Mining Regulations, Decree No. 038 / 2003 of March 26, 2003

 

•

Articles 53 to 74 of Schedule IX of the Mining Regulations, Decree No. 038 / 2003 of March 26, 2003

 

Climate and air quality

 

•

Article 29 (Climate and Air Quality) of Schedule IX of the Mining Regulations, Decree No. 038 / 2003 of March 26, 2003

 

•

Articles 49 to 52 of Schedule IX of the Mining Regulations, Decree No. 038 / 2003 of March 26, 2003

 

Biodiversity and protected areas

 

•

Forest Code (Law 011,2002 of 28 May 2002)

 

•

Regulation No. 69-041 of 22 August 1969

 

•

Regulation No. 79-244 of 16 October 1997 (Amended 1995 and 1996)

 

•

Law No. 75-023 of July 22, 1975 and Regulation No. 78-190 of May 5, 1978

 

•

Articles 34 to 37 (Biological Environment) of Schedule IX of the Mining Regulations, Decree No. 038 / 2003 of March 26, 2003

 

•

Schedule XII of the Mining Regulations, Decree no. 038 / 2003 of March 26, 2003

 

Noise and vibrations

 

•

Schedule XIII of the Mining Regulations, Articles 1 to 6

 

•

Articles 46 to 48 from Chapter II of Schedule IX, Mining Regulations, Decree No. 038/2003 of March 26, 2003

 

Cultural heritage

 

•

Ordinance 70-089 of 11 March 1970

 

•

Ordinance 71-016 of 15 March 1971

 

•

Article 46 of the Constitution of the DRC of February 18, 2006

 

  

•

Articles 205 and 206 of the Mining Code and Regulations

 

Resettlement

 

•

Code Foncier Immobilier et Régime des Sûretés, April 5, 2006

 

Artisanal mining

 

•

Articles 223, 224, 232, 233, 416, 417 and 575 of the Mining Regulations, Decree No. 038/2003 of March 26, 2004

 

Mining code

 

Mining articles which were taken into account for the Kibali mining project include the following:

 

•

Article 15 of the DRC Mining Code confers the responsibility on the Department in charge of Protection of the Environment, within the Ministry of Mines, in conjunction with other government departments, of environmental protection including the technical evaluation of the EIS and EMP of the project and the Mitigation and Rehabilitation Plan (MRP). The Mining Code is supported by the mining regulations.

 

•

Article 42 requires that, and provides the framework within which, the EIS and EMP for a new mining right is evaluated.

 

•

Article 50 defines the scope of a mineral exploration license. The undertaking of exploitation activities on an exploration permit is prohibited. The holder of an exploration license, however, has the exclusive right to apply for the conversion to an exploitation license during the validity period of the exploration license.

 

•

Article 69 requires that an applicant for an exploitation permit submits an EIS and EMP for the project and approval of said documents are required for granting of the exploitation license in terms of article 71.

 

•

Article 277 regulates works required between adjacent mines, and should such works be required, the title owners cannot object to them and payment of costs will be pro-rata.

 

•

Article 279 stipulates the restrictions on the occupation of land and requires consent before any area within 180m from temporary or permanently occupied buildings, 45m from ploughed land and 90m from land used for breeding cattle or with a reservoir; dam or private water reserve is occupied.

 

•

Compensation for use of the land is regulated by articles 280 and 281.

 

•

Article 283 determines the authorized activities within the exploitation right and adjacent areas.

 

•

Article 294 allows for the confiscation of the provision for rehabilitation by the court should the owner fail to adhere to the provisions of the EMPP at completion of the exploitation works.

 

Safety Performance

 

We suffered one fatality in 2015. The incident occurred at our Tongon mine in January where a foreman in the contract mining team was the victim of a tractor crash in the pit. An in-depth investigation into the incident has been conducted and remedial actions implemented to prevent such an accident occurring again have included a prohibition of the use of tractors in the pit, defensive driving sessions for all operators on to how to respond in extreme situations, and reminder sessions on the importance of conducting thorough mechanical checks on relevant equipment.

 

  

After achieving a record decline in our group’s Lost Time Injury Frequency Rate (LTIFR) in 2014, to 0.47 per million hours worked, we saw the rate rise to 0.59 per million hours worked in 2015 – the first increase in LTIFR since 2010. Although this is a disappointing increase, the LTIFR rate still remains low – and is more than 50% below the average rate from the last five years. The rise can be partially attributed to an increase in the number of Lost Time Injuries at our Tongon mine in particular (from zero to four), some of which were related to contractors at the facility. We are determined to bring the rate down again in 2016 and measures to improve safety will include looking at additional training and the introduction of new disciplinary measures which increase the accountability of employees and contractors for unsafe behavior. To further improve safety we also began piloting the safety software, MyOSH, at our Loulo operation in 2015. MyOSH allows us to record all safety information for each employee. This means we are notified when pre-safety checks are not carried out or when refresher training is required, thus providing a useful additional tool to our management. We plan to expand the trial of MyOSH to Gounkoto in early 2016, and across all our sites if the trial is successful.

 

See “—Social Responsibility and Environmental Sustainability.”

 

C. ORGANIZATIONAL STRUCTURE

 

The following table identifies our subsidiaries and joint ventures and our percentage ownership in each subsidiary or joint venture:

 

Countries of Incorporation/ Name of Company		% effective ownership
Jersey
Randgold Resources Limited			-
Mining Investments (Jersey) Limited			100
Randgold Resources (Burkina) Limited			100
Randgold Resources (Côte d’Ivoire) Limited			100
Randgold Resources (DRC) Limited			100
Randgold Resources (Ghana) Limited			100
Randgold Resources (Gounkoto) Limited			100
Randgold Resources (Kibali) Limited			100
Randgold Resources (Mali) Limited			100
Randgold Resources (Secretaries) Limited			100
Randgold Resources (Senegal) Limited			100
Randgold Resources (Somilo) Limited			100
Randgold Resources T1 Limited			100
Randgold Resources T2 Limited			100
Isiro (Jersey) Limited			51
RAL 1 Limited			50.1
RAL 2 Limited			50.1
Morila Limited			50
Moto (Jersey) 1 Limited			50
Moto (Jersey) 2 Limited			50
Kibali (Jersey) Limited			50
Kibali 2 (Jersey) Limited			50
Kibali Services Limited			50
KAS 1 Limited			25
Australia
Border Energy (Pty) Ltd			50
Border Resources NL			50
Moto Goldmines Australia (Pty) Limited			50
Westmount Resources NL			50
Burkina Faso
Randgold Resources Burkina Faso SARL			100

 

 

 

Countries of Incorporation/ Name of Company		% effective ownership
Canada
0858065 BC Limited			50
Moto Goldmines Limited			50
Côte d’Ivoire
Randgold Resources (Côte d’Ivoire) SARL			100
Société des Mines de Tongon SA			89
Democratic Republic of Congo
Bilanga Palm Oil SARL			100
Milona Entreprises SARL			100
Randgold Resources Congo SARL			100
KGL Isiro SARL			51
Kibali Goldmines SA			45
Mali
Randgold Resources Mali SARL			100
Société des Mines de Gounkoto SA			80
Société des Mines de Loulo SA			80
Kankou Moussa SARL			75
Société des Mines de Morila SA			40
South Africa
Seven Bridges Trading 14 (PTY) Limited			100
Tanzania
Randgold Resources Tanzania (T) Limited			100
The Netherlands