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Edited Transcript of RRS.L earnings conference call or presentation 3-Nov-16 12:00pm GMT

Q3 2016 Randgold Resources Ltd Earnings Presentation

London Nov 4, 2016 (Thomson StreetEvents) -- Edited Transcript of Randgold Resources Ltd earnings conference call or presentation Thursday, November 3, 2016 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Chris Coleman

Randgold Resources Limited - Chairman

* Mark Bristow

Randgold Resources Limited - CEO

* Graham Shuttleworth

Randgold Resources Limited - CFO

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Conference Call Participants

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* Dan Major

UBS - Analyst

* Anna Mulholland

Deutsche Bank Research - Analyst

* Richard Hatch

RBC Capital Markets - Analyst

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Presentation

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Chris Coleman, Randgold Resources Limited - Chairman [1]

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Good morning. Welcome to Randgold's third quarter results. I've been asked if you could just check that your mobile phones are turned off, please? Just so we don't get any interference. Thank you very much.

Again, welcome. Firstly to say, Randgold Resources has a reputation for working hard to achieve its targets, and I believe it's done so again during this past quarter.

The Company has had more than its share of problems in the first half of the year when, as you know, it's had to contend with an extended mill down time at Tongon and also the task of balancing the feed from Kibali's multiple and varying ore sources. So, dealing effectively with such challenges is really one of the hallmarks of the Randgold team. However, the details were fixed, and the big picture remained intact.

It's worth noting that even in those difficult quarters, the Company still posted a profit. And now, it's bounced back, as promised, with a strong set of results for these three months to the end of September. With all the key

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Edited Transcript of RRS.L earnings conference call or presentation 3-Nov-16 12:00pm GMT

performance indicators pointing in the right direction again, Randgold is confident that it will be able to meet its 2016 targets. It is committed to those targets.

A strong team guided by proven long-term strategy continues to create and deliver value to the Company's stakeholders. Part of that strategy is meaningful communications with the market. This month, Randgold will again be holding Investor Days in London, in New York, and in Toronto, where a large part of the management team will be making presentations and answering questions on all aspects of the Company's business.

We do this, as you probably know, every second year, and I think those who attend those presentations find the insights and the interaction to be very useful in understanding Randgold's prospects. We hope that you'll be able to make those presentations, and we look forward to seeing you there.

So, with that, I'd like to hand you over to Mark, who is going to take you through the quarterly results. Thank you very much.

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Mark Bristow, Randgold Resources Limited - CEO [2]

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Thank you, Chris. And good afternoon, ladies and gentlemen. I'd just point out, just to add to what Chris said, the Investor Days, also in all of the meetings we will have some of our non-executive directors also represented there. So, it's a good time if you have time to come and have a chat not only about the last quarter results but, more importantly, the next 10 years.

As I'm sure many of you are aware, I've been in the mining industry for some time now, and I must say I'm still amazed by the industry's weakness for the latest market fad or fashion. I thought we had got a big reality check when the super cycle ended with a bump a few years ago and that some discipline and deep, deep focus would dawn on our sector.

But what happened? The gold price put on $300, and we are back to our old ways, growing our businesses instead of our profits, growing blind to whatever may lie beyond the next quarter.

I say "we" meaning the industry and not Randgold Resources, mind you, which I might point out has never been a short-term operator. At Randgold, we are always looking to the future and, as the past 20 years have shown, our strategy has a unique ability to create value and deliver profits on a sustainable basis.

This strategy starts with people: our employees, communities, partners, and host governments and how we behave towards them and the environments in which they live and work. It enabled the Group to complete a very busy quarter, this quarter without a single reportable lost time injury for the entire quarter for all our operations; first time in the history of Randgold that we've been able to boast such an achievement. And it's worth pointing out we have 11,000 workers working for us.

It motivates us to keep driving down the incidents of malaria, where again we have shown some significant improvements. And we have just started a mass drug administration in Mali, along with the Mali Health Department, with the intention of actually preventing malaria in all our operations in Mali. It's a test run. We can do it for three months, and Mali has a two-month rainy season. And the objective within the Randgold medical team is to work with the communities and our host country ministries to eradicate malaria around the footprints of our mines.

We've done the same with tropical diseases, some of the more vicious children's diseases. And again, just as we focus on that, we also focus on our footprint, the food security around our mines and all our affected villages. And today, all the villages, bar a few at Kibali, have a food security program, potable water, a school, and access to primary healthcare. And our objective is to make sure that all the villages impacted by our mines have access to those amenities.

And we continue to employ international best practices when it comes to our environmental management and which continues to measure up to the GRR standards. And you see one measurement we continue to measure is our ability to recycle our water.

If you manage for the long term, as we do, you can handle the short-term challenges that inevitably arise in a mining business. And the past quarter's results provide, as Chris pointed out, [a further] demonstration of Randgold's ability to do just that.

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Edited Transcript of RRS.L earnings conference call or presentation 3-Nov-16 12:00pm GMT

Production for the quarter was up and costs down, profits up. So, all the arrows in the right direction. And while we have a lot to do in the fourth quarter, our guidance for 2016 -- and our longer-term plans, more importantly, actually -- remain intact, as I'll show you in the course of this presentation.

And I think if any of you as we go through this quarter can do the simple math and you look at our guidance for the year and our production and performance to date, notwithstanding the good quarter we've had in Quarter Three, it's nice to be able to forecast a nice strong end to the year.

I think the other thing I'd remind you [as always] and some of the more forward-looking statements I'm going to share with you through the presentation is all done at our customary $1,000-an-ounce long-term gold price, and we stick to that. Our reserves will be restated at that price, as well.

These are the numbers. And compared to this time last year, profits are up, as I pointed out, cash costs are down, and production is back in line. And you'll see we've been able to, as with the headlines in the previous slide, deliver some significant growth in cash. And I would remind you, too, that all these financials are despite the fact that we have never impaired anything. So, it's after amortization, depreciation, and, most importantly, tax. So, in every essence, a profitable business.

Turning now to the operations, our Loulo-Gounkoto operation is still on track to beat its production guidance for the year. As I pointed out last time we spoke, we expect Loulo to get close to 30,000 ounces higher than its guidance, and that naturally offsets the restated guidance for Tongon.

Production for the quarter was down, as expected, despite us focusing on a much better overall annual production, as a result of lower grades from the Gounkoto pushback. And this was -- we were pushing back. We had access to a limited amount of full-grade ore, and we blended that with stockpile through this quarter.

We now have that pushback under control, and we are reaccessing the main ore body and that will lift the grade at Gounkoto back over 5 grams -- sort of 5.5 grams. And with the 5.5 grams coming out of the underground, we'll have a substantial improvement in grade. And that's -- throughput is rarely steady, and that delivers a substantial improvement on gold production.

Looking at Loulo on its own, the Loulo grade was partly offset by better throughput. In other words, we processed more ore from the underground section of the complex, keeping production in line with that of the previous quarter. And total cash costs were steady thanks to improved efficiencies both at Yalea and Gara.

The development projects are all on track and within budget, and we've now completed the refrigeration plants in both underground sections, and they are ready for the next rainy season when we have to manage the underground temperatures.

The underground development, as you see, are slightly behind the Q2's achievements, but that's because of overdelivery in Quarter Two. As we steady the backfill program, with catching up with the backfill of the primary stopes, opening up the secondary stopes for mining. And this development rate will now steady out at these sort of rates.

And at Gara, we continue to open up and expose new reserves for future production.

The numbers again speak for themselves, showing a team which has hit its stride. This is our new Mali underground management team and is certainly keeping pace with our plan.

Meanwhile, at our other operations, brownfields exploration continues to add resources and reserves to the asset base and, really, Loulo-Gounkoto, if you look at this quarter, the big development for us has been the extra ounces that we've now confirmed in the south extension of the Gara deposit, the significant improvement in the grade in the high-grade zone of the Yalea deposit, and the identification of an additional high-grade [chute], shown here on the dotted red circle.

And then, you add to that the super pit plan that I'll talk to just now, and what we've got is a new mine plan which we'll share with you when we get to the Investment Days. But essentially, that plan now banks a 10-year profile of plus-600,000 ounces a year and around $600 total cash costs for 10 years and -- you know this -- at a $1,000 gold price. And really, that matches now the Loulo complex with the Kibali complex, which I'll also come to just now.

And that's a significant improvement, and as much as we are hunting those three new projects, there's no better way to create value than add $2 million-$3 million into an already established mine infrastructure, as we've done in the Loulo-Gounkoto complex.

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Edited Transcript of RRS.L earnings conference call or presentation 3-Nov-16 12:00pm GMT

Moving then to Gounkoto, operationally Gounkoto, as I indicated, had a softer quarter, with production down as a result of tonnes mined being supplemented by the lower-grade stockpile ore.

The mine still delivered good performance, in line with plan, as you see here, and production will get back, as I've indicated, in Quarter Four, with grades rising through the upper-4s into the mid-5 grams a tonne. And there will be less [top-up] from the stockpiles as part of that program.

Still at Gounkoto, as I pointed out, we've made significant progress with the super pit feasibility study, which we're planning to bank this year, and we're currently busy with the final optimization of the mining schedule and the pumping design. This is a very big pit. It goes down 450 meters at pit bottom, and water management is going to be a critical factor because of the size of the pit; during the rainy season, it's natural water catchment; and also because of the close proximity to the Faleme River.

The super pit is scheduled to produce some 2.4 million ounces, and along with the reserves found at Gara and the uptick in the ounces because of the grade improvements in Yalea, it will enable, as I pointed out, Loulo-Gounkoto complex to sustain a long-term production profile of above 600,000 ounces, taking Loulo-Gounkoto into that top-10, world-class category. And I would point out that we've been mining at Loulo for 11 years already, and we've got another 10-plus years banked.

So, while we've been already adding significant value to our portfolio through the brownfields program, it hasn't distracted us from exploring the entire [strike] length of the larger permit area. And as you can see here, a lot of targets. We've just finished the rainy season. So, this period of reflection and refining our targets and reprioritizing is now complete. The geologists are busy moving back into the field, and we've been able to develop a whole lot of new targets.

And for those people who don't understand our business, the engine that drives the Randgold business train is exploration and development. And we run it as a business. And we set out two years ago to reenergize our exploration R&D business, and you'll see today we've actually come out and said -- just like we force the metallurgists and miners and everyone else to set targets that they deliver on, we've told the geologists we need three projects in our pipeline for development in the next five years. We have some color on that already. So, I'll share that as we go through the presentation.

The Loulo complex is part of a bigger footprint and focus for our exploration teams, which we call the Kenieba Inlier, as shown here. And part of that portfolio of projects is the Massawa deposit and project, which also entails the Sofia deposit some 10 kilometers away.

Massawa is actually quite an interesting example of how diligent research and analysis can steadily convert a problematic ore body into a viable prospect. And you may recall that this is a large deposit, high grade, which presented a challenge in the form of its metallurgically complex refractory sulfide ore.

And through patient application, we have gradually overcome this obstacle, and we're comfortable now that we have a workable processing plan for the central zone, the main part of the Massawa ore body, where we can process it through a combination of gravity and ultra-fine grind and normal CIL after that.

And that's indicating about 1.5 million ounces at the moment. We still have the northern zone which is higher grade, but more complex metallurgically. We're still working on that. And that at this stage would require something like pressure oxidation or bioleaching or even just concentrate in selling the concentrate.

Sofia is the one that's really changed the game; an inferred resource, as we stand, at about 1 million ounces now. Still some big holes to fix, but you'll see how we've progressed the old block model of December 2015 to the new block model, which is now giving us a thousand-dollar pit with 660,000 ounces at 3 grams. And again, we've still got significant infill work to do where we believe that will move a lot of those resources into the pit. This deposit is a free-milling ore, and we believe that it has real potential to deliver 1 million-plus ounces.

And so, when you add those together, we're not far off our 3 million ounce mineable gold [fodder] for investment, and the preliminary economic assessments as we stand today using what we've got are coming out in the mid-teens. So, again, not far off our 20% hurdle. And so, really, this project has moved in our pipeline and has got the focus.

Key things left to do is complete the revision of the feasibility by the end of this year. And then, we have to really drill out the central zone in some detail to get away from the risk of the [variagram], because of the complexity of the ore.

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Edited Transcript of RRS.L earnings conference call or presentation 3-Nov-16 12:00pm GMT

And what we're planning to do between now and the end of the year is drill a couple of more phases to get a better handle on that variagram. But the indications are to bank that, it's going to cost around $20 million. But as you know, we're never shy of drilling. One thing we get right most of the time is a grade because we drill it. We don't sort of guess what the grade is going to be. And this is one of those projects which really require that sort of input.

The growing feasibility of the Massawa-Sofia operation has subsequently confirmed the prospectivity in our mind of Senegal and, in particular, has heightened our interest in the Mako Belt. And again this last season we've been able to develop a new regional prospectivity map, as shown here, which integrates all our data over some 15 years of work now and points to a number of new targets which we'll be picking up on during the next field season.

Moving back to Mali and to Morila, which is the mine in which Randgold was built, this grand old lady is now heading into the sunset but still has a few years left in her. During the past quarter, Morila transitioned to full tailings retreatment operation, with the processed tailings being deposited back in the pit as part of its rehabilitation program.

We didn't complete the permitting process for the proposed Domba satellite pit as planned. So, it's been taken out of the 2016 mining plan, and that's really the pressure that has been put on our guidance. It's not -- the main foundation of our business, the real commercial drivers, are on track, and we've taken out about 40,000 ounces out of our 2016 plan, which has moved our guidance to the bottom end. But I would just point out that those 40,000 ounces are not really -- they don't move the dial on the commercial numbers in our business plan. And it's all about paying for the closure of Morila.

In addition to the Domba satellite, which is a three-month pit which will add about $6 million or $7 million, maybe $10 million, to the balance sheet -- the closure fund, effectively -- we've recently announced the signing of an option with Biriam Gold, a junior company with some two deposits in Ntiola and Viper, about 25 kilometers from Morila.

It's about 60,000 ounces potential at this stage indicated, and we're planning to drill that out on a feasibility basis. And the indications from the work that has been done is that that should be a viable prospect for Morila and add another contribution to its balance sheet and its closure plans. And so, we expect to have the first sort of feel of that project early in the new year. We will be mobilizing the drilling program already this year.

The results are in line with plan. You'll see the costs are slightly higher this quarter; the reason being that as we transitioned, it's taken us a little bit of time to get everything up and to the right throughput level from mining the tailings down. And as it settles down, we've also changed the flow sheet and we're putting it through the mill, scrubbing that tailings. And we're seeing significantly better recoveries than the sort of 55% recoveries that we were forecasting initially. And we believe that it will add to the profitability of this reclamation project.

Over then to Cote d'Ivoire, where Tongon has come back strongly after a particularly difficult first half of the year when it suffered a long and multiple more breakdown challenge, while still getting to grips with its newly commissioned plant upgrade and extension program.

With very substantial improvements in production, profit, and cash costs, the mine is very much back on plan. The results really show all arrows heading in the right direction, reflecting a praiseworthy all-around performance, which is expected to improve further in the fourth quarter when the full benefits of its circuit upgrade are expected to tested.

It's worth noting, by the way, that Tongon remained profitable even in its most challenging quarters.

During Quarter Three, Tongon also made real progress in developing a more cooperative approach towards its power management with the Ivorian power utility, and the grid-to-generated-power ratio improved during the quarter, as you can see here. And this has a significant impact, as you would expect, on our costs.

The drop in cost is really a result of the refund of the overcharge in the power costs that led to the standoff in Quarter Two when the utility cut our power off for a little while. Anyway, we got it all back, as you can see.

And then, we continued to -- we're on track with our upgrading of our standby power station. We're adding another six generators. The first one is up and commissioned already. And that will give us a capacity of 24 megawatts and ensure that when there are blackouts we'll be able to run the full operation on the standby power station.

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Edited Transcript of RRS.L earnings conference call or presentation 3-Nov-16 12:00pm GMT

As I've often said, Cote d'Ivoire is our preferred destination for greenfields exploration. It's very prospective, yet still relatively underexplored. And with the best mining code in Africa and a well developed infrastructure, it's a good place to build mines.

And also, within our portfolio, we have derisked completely Ivory Coast, because Tongon has paid back its capital. It's generating strong cash flow. So, we have no real exposure to the Ivory Coast. And so, our limits in reinvesting in the Ivory Coast are very high. And of course, projects become viable in Ivory Coast long before they become viable in Burkina and Mali and Senegal, even, because of its infrastructure.

At Tongon, as again with our other operations, an exploration team is actively looking at ways to extend the life of the Tongon mine, and we're currently drilling below the pit. And in fact, the latest round of deeper drilling in the northern zone has highlighted a [facet] change in the mineralization, which we're still trying to get our head around.

But we've got some -- suddenly a large amount of visible gold, some very nuggety grades, and it's intriguing exactly what's driving that. And that's one of the things we're going to be looking at over the next couple of quarters.

And then, we've also looked at the -- there's every indication that the wider ore body that we're intersecting below the western end of the northern pit, we'll be able to take that pit down, the thousand- dollar pit, a little deeper. So, all boding well for some additional reserves in time.

And then, of course, we continue to look at satellite projects. And again, in line with our real focus on delivery, we've got to the stage after the last field season where we've put some numbers to these targets. And the focus this quarter will be to convert those inferred resources into a mineable reserve. And we'll update you as we go along.

Our Boundiali permit, as I talked to last time, is host to multiple targets, as you can see here, and notably we now have an inferred resource defined at Fonondara of 500,000 ounces and 250,000 ounces at Kassere and still a lot of new targets being generated. And the big focus is to pull those targets up in the next season to make sure that we can correctly prioritize the follow-up phase, which we call advanced drilling, and focused in on the right targets.

This is a greenstone belt that continues up into Mali. It hosts the [Ciarma] mine and its satellite deposits. And Ciarma is still, despite all the challenges, it's still one of the largest and best grade deposits ever found in west Africa.

So, we're certainly on the right trend that's delivered world-class reserves in the past.

We talked a little about, and I touched on in the introduction, our three new projects in five years. And one of them potentially is the Massawa-Sofia project. And that project has every indication to be able to replace Tongon in our portfolio. It's potentially a 3 million ounce, 200,000 to 250,000 ounces a year; something that really fits and that carries some bread and butter stuff.

And likewise, the Mankono permit is starting to show a similar sort of potential, with about 1 million ounces of inferred resource scoped out on the Gbongogo deposit. It's low grade but very low strip ratio and excellent metallurgy. It's in the granite, very low mill work index. So, we expect if we can bulk it up a little bit more, it certainly is a good ore body to mine.

And then, as a result of the work last quarter, as you see here, we've come up with a real stunker of a soil anomaly extending over about just under three kilometers, and we've grades of up to 6 grams in the soil and a very tight focus, 400 meters wide. And so, that's going to be our focus. It's seven kilometers southeast of Gbongogo and certainly keeps that Mankono permit in our focus as far as potential to deliver something significant.

And as I said to you last quarter, you're going to see this sort of flow of information out of Randgold for consecutive quarters now, because we've really established that base and the preliminary base work is done. And now, we're going to continue to be generating and evaluating targets, going forward.

Back to the operations and over to Kibali which, as forecast, has recovered well after underperforming, as Tongon did, in the first two quarters of the year. Production is up, and costs are down. The underground project is on track.

The Ambarau hydropower plant will deliver its first power this quarter. It's really important for us to have it all bedded down by the time the rains come back in early next year, but we're going into the dry period at

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Edited Transcript of RRS.L earnings conference call or presentation 3-Nov-16 12:00pm GMT

the moment. So, it's a good time to commission a hydropower station.

And then, we're now on track with the start-up of the Azambi third power station construction. And we've also initiated the ultra-fine grind capacity expansion project, which will address the key issues arising out of the feed trial, 100% sulfide feed trial, of Quarter One. So, that's all on track now.

With its plant operation stabilized and back above the nameplate design, that's quite important. If you look at the throughput, we were right up there as far as throughput goes on a quarterly basis. And Kibali achieved that throughput and significant improvement in recovery, as you see. And production up as a consequence 23% quarter on quarter. And if you look back to the last quarter, the third quarter of 2015, you'll see we're getting back to that steady-state position.

And so, the key challenge remains feed delivery and, particularly, managing the feed grade. And this tries to give you a feel of that complex feed grade. As we reported last quarter, Kombokolo is a new target. We brought it forward. It's a high-grade open pit, small open pit, but it really does -- it's the one that's going to help us on the feed grade this quarter. And you can see how the grade sticks up as Kombokolo contribution grows substantially. That's the yellow, or the second-to-right, bar in the Quarter Four feed

mix.

And really, that's our -- we're not planning to mill more. We're not planning to do anything else differently from Quarter Three, except add a chunk of higher-grade Kombokolo feed to pick the grade up and get us right up there into the sort of 190s, as far as gold production goes.

So, we're expecting both Kibali and Loulo-Gounkoto to deliver that sort of gold production this quarter, which is really the backing for a big finish to 2016.

Underground mining at Kibali continues, and both the development of the decline part of the mine along with the offshaft development to connect the two parts of the underground infrastructure is on schedule for completion in the third quarter of 2017. And really, that leads to the ramp-up in underground feed. You'll see it's constantly ramping up now. And once we get into 2018, about 80% of the gold produced at Kibali will come from the underground mine.

And just coming back to the hydropower stations, everyone talks about hydropower. In DRC, we're the only ones that have really done anything about it. And this is the engine that drives the profitability of Kibali, getting the power down to as close to $0.10 as possible per kilowatt hour over the year.

And you'll see the big Ambarau power station on the top, and we're now running the water through the stop gates, as you can see there, while we finish the wall on the right. And once we've done that, we'll open up the river. And we're not going to close those stop gates until we've completed finished with the wall and the (inaudible). And once we've done that, we'll let the water over the (inaudible). Because once you close that gate, you can't open it until the water drops. So, we'll wait until the water has dropped, manage that, get everything working, and then close it properly as the rains come, and put the water through the generators.

On the Azambi project, as you can see it's started, in the bottom picture. It's a [run of river] hydropower station, not a big wall. Very similar to the Anzaro II power station, our first one we built. And I think the really special thing about Azambi is that we've just closed the tenders, started the operation, and all the engineering, construction, every bit of the project is going to be done by Congolese contractors.

Over the last six years, we slowly moved those skills by partnering our local contractors with the big multinational engineering firms, and they certainly have the competence now to build this station. And of course, we'll run it with a very strong owners team, our own engineering capital projects team supervising, but all Congolese.

So, that's about $48 million that will go back into the Congolese economy and most of it in that region, in our province, which is significant.

And this is the result of our power strategy, and you'll see the low rainfall months -- January and February -- come with a slightly higher cost, but we've really brought those costs down substantially. And the next big step is, once we get Ambarau up and running, we are able to increase the relative ratio of hydro energy to diesel as we ramp up the demand from the underground. And by 2018 when we commission Azambi, we're down to the sort of four or five engines we have to keep as spinning reserve are a relatively small percentage of the overall power generated. And that's where we come down close to $0.10, on average, for the year.

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Edited Transcript of RRS.L earnings conference call or presentation 3-Nov-16 12:00pm GMT

At Kibali, too, we are working to replace the ounces being depleted by mining, and we have a three- pronged approach at Kibali: adding flexibility to the immediate short-term mine plan through the delineation of small but higher-grade, near-mine deposits; two, converting resources and reserves through infill drilling and testing extensions to add to and bank the detail of the mine plan; and then, the third leg, hunting that a little further afield on the permit for plus-1 million ounce deposits. And those permits are very large permits. Still got lots of work to be done on the greenfields aspects of that permit.

Kibali is also base for our long-term strategy for the northeastern DRC. A very prospective region. And the current stage of prospecting and projects is shown here on this slide. We've just completed sampling for a major regional geochronology and isotope research program, as we try to work out which of these greenstone belts are more prospective than others, and we definitely see that. And our generative team [is ready to] let's try and unpick these and get it all smarter in selecting the place that we need to go to.

And with the start of the relatively dry season, field work has begun on the Moku project again and which, as you can see here, is in very close proximity to Kibali. And we've already identified multiple mineralized trends and have already some advanced targets defined which we are following up on. And we're just about finished with the full regional -- that's the mapping and the soil and stream sediment sampling -- to put the whole permit's prospectivity into perspective.

And the Ngayu survey, this is a very big footprint of a joint venture, largely with [Lundcor], in which we're owning in a controlling position, and we've just -- we're about 66%-70% through with a 10,000-kilometer multiple aspect of airborne electromagnetic survey covering the whole ground holding. And the survey is expected to complete by mid-November, and then the field season we'll do our initial ground truthing again through the traditional "drier" period -- nothing is ever dry in DRC, but you do have a definite drier period in December, January, and February.

At the start of this presentation, I noted Randgold's recognition of our host communities as important stakeholders in our business and our commitment to making a real difference for the better in their lives. And we have a range of initiatives. Some of them listed here are designed not only to benefit these communities for the life of our operations, but to provide a post-mining legacy in the form of sustainable agribusinesses and economically useful skills. And we'll continue to do that. Our view is that it's important to assign some of the value of the ore bodies that we mine to ensuring that the economic and social environment after mining is different and positively impacted.

We also, of course, are a major source of benefits for our host governments, and I thought given the news recently I'd illustrate this point by taking Mali as an example. In the 20 years we've been operating there, we have invested around $2.7 billion in capital in that country, by far the largest investor.

The net revenues flowing from these investments have amounted to about the same. And of this, two- thirds have gone to the Malian Treasury, and the remaining third we invested back in the country. It came to us. We've reinvested it.

We are one of the Mali's largest taxpayers and private sector employers, and every year we account, depending on the gold price, for between 6% and 10% -- this is Randgold operating mines -- of the total GDP of the country.

I guess even --. And so, that's why we were a little surprised last month when the Malian Ministry of Finance and, more particularly, the tax administration escalated one of our long-running tax disputes by closing our offices and bank accounts in the country. I guess even the most successful partnerships are tested from time to time, and I've no doubt we will get to an amicable settlement, and I would just point out that closing our offices doesn't do much in Mali, because we operate our mines from mine sites. It was more a token of frustration and enforcement from the authorities.

We have lifted all that, and we are engaged with the Ministry of Finance and, in particular, the tax authorities. And I have no doubt -- in fact, there is no other way than to get a solution. This is something that is a normal course of business. What was a difference was some over-enthusiastic person made it a public announcement. And so, I just want to leave you with that information. And it certainly doesn't in any way reflect the relationship we have with the government and the state of Mali, which has never been questioned.

To finish off with, I thought I'd just reflect on a few things. And one of them is, as you know, I attended the Denver gold conference again this year. And when I went there, I was a little apprehensive about the industry and, particularly, Randgold's sort of fit in how we go forward. And certainly after the conference, I came away more convinced than ever of the superiority of Randgold's strategy and even more confident of our ability to outperform the market, whichever time frame or metric you try and apply to it.

2/1/2017

Edited Transcript of RRS.L earnings conference call or presentation 3-Nov-16 12:00pm GMT

As I noted in my opening introduction, the industry has been lulled back into a false sense of security by this year's unexpected fill-up in the gold price. But I'm absolutely convinced that once that glitter fades, the hard facts remain, and these are that since the turn of the century the industry has not replaced what it has mined. Instead, it has been living on its resources, converting them into reserves at ever-lower grades.

Because of the industry's indifference to exploration, gold production is destined to continue to decline, by as much as a third in 10 years according to some analysts. With production decreasing, the pressure to deliver growth will likely drive companies back to those M&A deals. And just as it did in the start of the super cycle, we'll see another dose of value destruction. It's worth noting that Global Mining Research pointed out recently that $100 billion of gold industry M&A transactions just since 2010 have delivered a zero value accretion to our industry.

The most visible effects of this value destruction, or erosion, have been the losses, write-downs, and departures of management teams and leadership, which has really put our industry under a lot of pressure to be able to manage its future.

Randgold, on the other hand, is projecting, as I pointed out, a solid bankable production profile from its existing operations over the next 10 years, with its aggressive exploration program likely to bolster that, perhaps, with more world-class deposits.

We have no debt, and by the end of this year we are likely to have around our targeted $500 million of cash in the bank. And that's why we believe that in the gold sector Randgold has a unique capacity to continue creating value and delivering profits, not just this year but well into the foreseeable future.

And on that note, I'm happy to hand over to you and take questions.

Just for introduction, we've got a swath of our team here. We've got John Steele, from capital projects, sitting in the back. You know Graham, our CFO. Lois, our communications executive. Our Chairman, Chris. Martin, our legal counsel. Lisa, who runs our London office. [Ruhl], who's our IT buff. So, quite a few people here to back me up on those difficult questions, Tyler. Is he here?

So, over to you guys.

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Questions and Answers

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Unidentified Participant [1]

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The question I have is on the tax claim you have in Mali. What is the path forward from here? What are the next milestones we should look for? And is there a reason why you decided not to take any provision, although you have made a cash upfront payment?

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Mark Bristow, Randgold Resources Limited - CEO [2]

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No, we haven't made a payment; we've made an advance. Very different.

We don't need to make a provision because these are rolling assessments. So, when I point out it's normal course of business, it's not a flippant statement.

And people have tried to link it with the arbitration. The arbitration is the final right we have to settle disputes under our investment convention. So, normally, we get past things without having to go there. But we will go there again if we have to.

So, every three years the tax department goes back and looks at the tax you've paid and does an assessment, and it comes up with a number, usually largely inflated. And then, some companies trade it and get down. They start at 100, offer 10, fix it somewhere between there.

Randgold's policy is we're principled about our tax. We don't horse trade our tax payments. We work on a principle. So, we stand firm when we think it's not legal.

2/1/2017

Edited Transcript of RRS.L earnings conference call or presentation 3-Nov-16 12:00pm GMT

So, we've had that assessment. It was stood by for a while, while we dealt with the arbitration, because some of the big arguments are related to the points of arbitration. Subsequent to that arbitration, as you know, the government paid us back the money they had taken out of our bank account the last time, and we settled a small VAT payment on foreign services, which is an argument on their side. But over all, all that was settled.

At the same time, the review started again, and we went through with the tax people. And by the time we got to the second round, we were aware of some of the aspects of the tax that had been assessed. Had based a sound logic to it, and we paid that tax.

But there was a bunch of taxes that were, in our mind, not aligned with any tax provision, tax law, or anything else in our agreements. And so, we declined the payment thereof. And so, we got into a dispute, of which there's a procedure to resolve them.

And before that procedure was complete, there was a more enthusiastic approach to try to force the money out of us, as you saw in the press. We've got past that phase in the dispute resolution, I guess, and the minister and I have had some discussions and we've certainly agreed, as you've seen in the announcements, a commitment to finding a global settlement.

Because of the arbitration, we've got two files outstanding: 2011-12-13 and 2014-15. But everything we've agreed with the tax authorities, we've paid up all the way.

And we're back engaged now. We started meetings this week, and we'll definitely find a solution. And if we don't, we'll end up in arbitration, which no one really wants to go to. It's a long, tedious, expensive process.

And the one thing that I would point out, we don't do this lightly, because if we are proved to be incorrect in our assessments and we get a ruling against us, we pay the penalties. So, we're very mindful of ensuring that we pay the tax that is not -- that in our mind is fair and proper.

And we've been doing this for 20 years. All the time we've been in these debates, for 20 years. So, this is just an aberration, really, and certainly it doesn't impact on our business.

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Dan Major, UBS - Analyst [3]

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It's Dan Major, from UBS. A couple of questions. Firstly, some operational question. Big lift in throughput at Kibali this quarter. Is that the sort of rate we should be expecting in the fourth quarter and going into

2017?

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Mark Bristow, Randgold Resources Limited - CEO [4]

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We're going to be a lot better in the fourth quarter, again.

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Dan Major, UBS - Analyst [5]

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In terms of throughput, this is?

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Mark Bristow, Randgold Resources Limited - CEO [6]

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No, throughput, we're at throughput max. We're actually above the nameplate. So, the big change there was we changed the engineer out in the middle of the mess, in the beginning of the year, and we moved one of our long-time resident engineers from Tongon, actually, (inaudible). And he's made a big difference

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Edited Transcript of RRS.L earnings conference call or presentation 3-Nov-16 12:00pm GMT

in investing and getting our planned maintenance better managed. And we had a 94% availability in the plant this quarter, which is what really led that throughput.

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Dan Major, UBS - Analyst [7]

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Okay. And then, the second question, on I guess the comments in your release on the dividend and on your cash position, if I look at the consensus available, it doesn't suggest the market expects a huge amount of dividend growth into next year. Do you think this is a part of your investment case the market is overlooking?

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Mark Bristow, Randgold Resources Limited - CEO [8]

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Well, it you guys that are non-believers. You've been non-believers for the last -- I don't know how many -- two years. Get with the program. Because we've proved you wrong all the time. We didn't stop our dividends. We didn't go back. We continued. Because we plan at $1,000. Believe us.

And if you want to read the dividend policy -- I think Graham and I have seen it so many times --- just pick up the annual report for this year, and it will tell you very clearly what our policy was.

And that is, we're going to return money that's not usable on an arrears basis year on and year out. We said we have a progressive dividend until we've got $500 million in the bank. After that, once we look at our business, in arrears, look at our capital requirements, et cetera, that excess cash after provisions, in a good proper fashion, we'll pay out. But we're not linking our dividends to gold price or any other stuff.

We're a normal company. We've got long-term shareholders that own our stock, and they don't trade for the dividends. They're there. And so, if you're a long-term shareholder, you'll get a dividend once a year.

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Dan Major, UBS - Analyst [9]

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Thanks. And last question, could you give us an update on the elections in the DRC? The timing you're expecting and the process?

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Mark Bristow, Randgold Resources Limited - CEO [10]

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Well, relative to the United States, it looks quite clear, (laughter) just to put it into perspective.

Everyone is talking. There's a general agreement that you can't just go and unilaterally change the current president or government without a plan, because there's no [electorate role] and and there's no ability to in a proper and considered manner allow the people to talk to the new leadership.

At the same time, there's a realization within the African Union and the European community that have really pushed this dialogue that you can't leave the status quo either.

So, we hope that in due course the last of the oppositions will join that dialogue. But the consensus is that the opposition parties will appoint the prime minister and a substantial part of the cabinet in the transition. The presidential majority -- remember, it's a coalition; it's not one party -- will be the other half of government with the president through the transition.

The dates have been set for the election. The funds are currently being raised or committed to get this election going, because this country is a very, very large country and very expensive to hold an election.

And I think there are a few more points to debate amongst the players, but what I can tell you is that normally in a situation like this you go to the capital, the political capital, and everyone is clutched out. We

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Edited Transcript of RRS.L earnings conference call or presentation 3-Nov-16 12:00pm GMT

were there in our normal courtly visit and every and every single minister is working hard, to continue to manage the economy and the mining industry and other challenges that we are all facing with a drop in the copper price and the pressure on the Congolese franc, and so on.

And on our side, in the [Haut-Uele] province, we are encouraged by the fact that we for the first time this quarter saw part of our tax payments come back to the province to bolster their budget which is part of the mining code, which is proper. And so, that gives our administration provincial government capacity to continue to work with us on managing the immediate environment in Kibali and the greater infrastructure and services within that region. So, that's a very positive sign.

And again, Randgold, as the managers of Kibali, our social license, our investment into the community, ensure that economy, and we've got a very vibrant economy around Kibali, very innovative business people. We're still very much in a construction phase. So, we're feeding that economic engine.

And our focus is to work with the local businessmen, politicians, and what the Congolese call civil society on ensuring that we don't have idle hands and people are busy during this time of political ebbs and flows, because I guess that's really what it is at this stage.

And I think we've seen -- we saw that very regrettable demonstration turn bad, the first one, in Kinshasa, which has always been a place where you get this real confrontation in every political standoff. But what was encouraging is the second demonstration was very peaceful, and both sides people respected (inaudible). And very clearly, the Congolese people are not -- they are completely nationalist in that they want to see the country work things out and they don't want to go back to where they came from.

And we see this as a normal growing pain and the democratic evolution of a country, just like we're seeing roll out in South Africa. And I think that whole South African crisis is critical that it gets resolved, because it's a very -- and I've no doubt it will, as South Africa has always been able to work through some of these more challenging situations. And it's a good example for the rest of Africa about ensuring that there's a process and that the people carry the power rather than the politicians.

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Dan Major, UBS - Analyst [11]

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Thanks. You said the dates have been set for election. Do you know when --?

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Mark Bristow, Randgold Resources Limited - CEO [12]

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It's 2018, early. I think it's March. Can anyone add to that? But the dates are thereabouts.

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Dan Major, UBS - Analyst [13]

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Okay. Great. Thanks a lot.

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Anna Mulholland, Deutsche Bank Research - Analyst [14]

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Anna Mulholland, Deutsche Bank. The three new projects in five years, you have added Massawa-Sofia as a potential to that; Mankono, maybe. What else do you have currently? Obviously, you've given us all your options. What do you think is nudging up in that list to make the final three? And would you put M&A into that, as well?

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Mark Bristow, Randgold Resources Limited - CEO [15]

2/1/2017

Edited Transcript of RRS.L earnings conference call or presentation 3-Nov-16 12:00pm GMT

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Sure, M&A has to be part of that option.

So, the immediate focus -- and this comes out of what we said to [Jal] and the team -- you've got two years to get your act together. We need to rebuild our foundation, our platform, our pipeline. And now, it's time to deliver.

And if you go back in Randgold's history, we've always been like that. We've always said we're going to do this by this date. John is going to build this mine by this date with this money, and Charles is going to produce 600,000 ounces, and so on. That's the game that we play.

And so, equally, the exploration is a business and we want the delivery. We spend $50 million a year on it.

So, immediate focus is Tongon's replacement. Of course, immediate focus is extending all our mine lives, because that's the best way to make money. At the same time, we need to look to Tongon's replacement, and we've got two potential targets that might well do that. And those might end up with two of the three or just one. Because it never works out as you expect in exploration or mining.

And the logic behind those three is, given our massive growth in the Cote d'Ivoire and we are expanding in Senegal, which we announced today, and our continued unpicking of the big structure that hosts Yalea and Gara and Gounkoto, we think that there's a more than even chance that there's another deposit out there. And Ivory Coast is certainly number one in that bet.

And then, the third one, again we're hunting those opportunities in the northeast DRC, and we've got a very strong footprint in what we have, based on proper R&D, identified as highly prospective destinations. And there's no reason why our geologists shouldn't deliver something out of that portfolio.

And that's really the logic, and it's a really --. So, we replaced Tongon, where there's no other gold company like us. We go past 10 years, 1.2 million to 1.5 million ounces, and it's all at $1,000 gold price. It's a great business.

Add another two projects, even if they're 200,000-ounce producers, and it's internally funded with the returns that we use as a (inaudible). You can't get better than that, and we've never aspired to be a multimillion-ounce producer. We want to be around the 1.5 million-2 million ounces is a good number.

So, that's our business. And sure, M&A, we're always looking at it, but world-class targets or prospects in Africa are very scarce. You name one, other than the ones we've got. (laughter)

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Anna Mulholland, Deutsche Bank Research - Analyst [16]

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It should look outside of Africa.

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Mark Bristow, Randgold Resources Limited - CEO [17]

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We'll go there, but that would be more a corporate thing. We wouldn't go single project. Wouldn't go fishing on a single river somewhere in other parts of the world. We just don't have the culture and depth to be able to manage something like that.

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Anna Mulholland, Deutsche Bank Research - Analyst [18]

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Thank you. And could I ask Graham a quick question? In your press statement in the booklet, you're talking about CapEx maybe being a little bit higher than original guidance for this year. Could you just give me the rough number, please?

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2/1/2017

Edited Transcript of RRS.L earnings conference call or presentation 3-Nov-16 12:00pm GMT

Graham Shuttleworth, Randgold Resources Limited - CFO [19]

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As we alluded to, basically the difference between the original guidance and what we're guiding to now is really the capitalized strip at Gounkoto, which was about $15 million. So, that's really the nub of the increase.

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Richard Hatch, RBC Capital Markets - Analyst [20]

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Richard Hatch, RBC. Two questions. Firstly, on Morila. Domba, does that go into 2017 mine plan? And what are the challenges there? Can you just talk about what issues you're seeing there?

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Mark Bristow, Randgold Resources Limited - CEO [21]

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It's easy. Not yet, because it's not permitted. It's all done, but this deposit -- it's a small pit. We'll mine it out in three months. It's right next to a village called Domba. And we are wanting the village to sign off on the plan. There's a very big benefit for the village: infrastructure. We've done a deal with them.

But some of the traditional, what we call VIPs --. There's a tradition in west Africa where villagers that become successful -- ministers and bankers and so on -- they sort of keep a tie with their village, and they're like elders. And so, they've wanted us to relocate the whole village. So, first of all, culturally you can't do that. It's very difficult. This is a longstanding village with lots of history.

And secondly, it would not be viable. We'll relocate part of the village that's within the blast perimeter -- the perimeter. There's no blasting. It's a free dig pit.

But we are not going to force this. It doesn't change the dials in Randgold. It certainly helps change the dials in the closure plan, and we'll manage it through with the communities and the government. And if we can't it, we're definitely not going to burn our social license by forcing, leaning on the village to get this done.

And the Biriam option is very much a good replacement for that, anyway. It will beef us our financial resources to ensure closure and leave a chunk for the life after mining. And we'll continue to work with that.

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Richard Hatch, RBC Capital Markets - Analyst [22]

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What was the timing of the Biriam option?

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Mark Bristow, Randgold Resources Limited - CEO [23]

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So, we should have the feasibility drilled out by, I reckon, March next year, February/March next year. And we'll have that decision then.

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Richard Hatch, RBC Capital Markets - Analyst [24]

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Okay.

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2/1/2017

Edited Transcript of RRS.L earnings conference call or presentation 3-Nov-16 12:00pm GMT

Mark Bristow, Randgold Resources Limited - CEO [25]

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And again, we haven't put it in the plan. We've got to --. The plan is about 60,000 to 70,000 ounces for 2017 and 2018, just based on the tailings.

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Richard Hatch, RBC Capital Markets - Analyst [26]

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Okay. Thanks. And then, finally, on Tongon, Q4, where do you see the uplift quarter on quarter? Is it grades?

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Mark Bristow, Randgold Resources Limited - CEO [27]

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It's throughput.

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Richard Hatch, RBC Capital Markets - Analyst [28]

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I throughput?

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Mark Bristow, Randgold Resources Limited - CEO [29]

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Tongon is another sort of 8,000 to 10,000 ounces up, and then we're sort of steady at just over 4 million tonnes a year, 2.6 grams, 84%-85% recovery, on average.

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Richard Hatch, RBC Capital Markets - Analyst [30]

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Thank you.

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Mark Bristow, Randgold Resources Limited - CEO [31]

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Justin?

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Unidentified Participant [32]

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Mark, you couldn't just talk about the satellite pits at Kibali and what the next couple of years of satellite mining might be?

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Mark Bristow, Randgold Resources Limited - CEO [33]

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2/1/2017

Edited Transcript of RRS.L earnings conference call or presentation 3-Nov-16 12:00pm GMT

So, the immediate focus is if we could get another 20,000 ounces at sort of 4 grams, we'll change the game on flexibility. And we've got one of those pits -- it's the Rhino pit -- sitting --. So, you can see Kombokolo is right close to the plant. It's sitting right there.

And then, you've got Rhino is sitting there. It's a small little deposit, very high grade, which we're drilling out at the moment. It's limited by the edge of what we call the exclusion road, which is the fence line of the mine footprint. And it limits our last zone, because it's hard rock. But easy metallurgy.

And there are a couple more that we've identified [here]. So, these are the sort of flexible little targets.

The next big target is the Gorumbwa open pit, which we're now busy with the relocation plan to relocate people. It's a big project, and it's a key part of the next -- we'll start feeding that end of next year.

And then, the other big area that we're focusing in on is this Sessenge project, and what we're seeing here is you'll see KCD is here. We're seeing a potential, what we call the, 3,000 load coming down offset on the main underground. And we've gone some spectacular intersections between the underground section and the bottom of the pit. And we've been struggling to get holes into that. We've got a few, and then we've had some big hits, sort of 20-30 meters -- 16, 17, 25 grams. But very conceptual at this stage.

We see that as a significant potential for a new mine section, where if we could prove that up we would develop it separately in a decline access.

And then, we've got -- I haven't got the slide here -- then we've got the full extended ore body starting with Pakaka, which is at the end of this trend up here. And then, you've got the whole -- there's a big thrust that has ore bodies sitting in them all the way out to [Mengu Hill].

And then, we've got another big structure, and we've got a drilling target at the moment called [Akimvo], which we're currently drilling, which is quite an interesting target. Again, could vary from 10,000-20,000 ounces to 400,000 ounces depending on what we find. It's sitting under a big iron sheet cap.

So, we've got lots to keep us busy with. The key thing at the moment is balancing -- you see what happens when you overfeed these complex ore bodies into this plant, because this plant is designed to be majority underground ore. And the underground ore, remember, once we've commissioned in the middle of next year, all that ore goes through crushers underground. So, it arrives crushed.

At the moment we're feeding this mill with blocks. So, we're putting a lot of pressure on the front end [communition] part of the mine. And we're reluctant to overcapitalize that, because ultimately you've got 8 million ounces that are going to come out crushed from underground.

John is busy with -- as part of our ultra-fine grind expansion, he's also putting in a roll crusher into the oxides line so that we can feed free-milling ore through the oxide circuit, which is hard. So, we are building some capacity in the crushing circuit in the front end of the plant.

But that's really -- there's still. The ore bodies when you go -- we're drilling 1,000-meter holes now, and what we've done just recently is built a better model. We've really got control of the ore body positions by mapping the iron stones, which are easily visible. So, you can drill for the iron stone, pick it up, and then you know where the ore body is. Because these ore bodies are 20-30 meters wide, but they're high grade and they plunge down like cigars.

So, once you get to 800 meters, you're drilling a 1,500-meter hole to hit a very small target. So, that's been our big challenge. As we develop the deeper end of the mine, of course we get access, too. So, we've got no reserves below the bottom of the shaft yet.

There's a lot to -- we could add a lot more ounces, but we wouldn't mine them for 10 years, right now. Our big focus is just managing the flexibility of the ramp-up in the underground.

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Unidentified Participant [34]

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And you couldn't just talk about the super pit, what the CapEx might be for that?

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Mark Bristow, Randgold Resources Limited - CEO [35]

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Edited Transcript of RRS.L earnings conference call or presentation 3-Nov-16 12:00pm GMT

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The pushback CapEx, $100 million. Was the total CapEx about $150 million?

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Unidentified Company Representative [36]

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(inaudible)

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Mark Bristow, Randgold Resources Limited - CEO [37]

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So, we've got a fleet and pushback, and we will firm up on those numbers as we go into the Investor Days. We're running around trying to finish that detail now for the Investor Day.

But basically the same as the open pit underground, as far as overall capital goes. But a lot lower risk, because that Gounkoto ore body is complex and mining it underground comes with some significant risk. We've learned from the open pit we've got.

With that super pit, you get access to the whole body,. We mine more of the ore body. So, we still end up with about 300,000-400,000 ounces of very high grade underground accessible ore at the bottom of the super pit, as well.

So, over all, it's a better project than the underground option -- the smaller pit in the underground option.

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Unidentified Participant [38]

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Just if I may? On Massawa, I just wondered if you could give us an idea on if any permits or permissions are required if you were to look to construct that? And if you get to feasibility, by Q4, which sounds like the plan, how soon could we see that asset going to a development decision?

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Mark Bristow, Randgold Resources Limited - CEO [39]

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About probably two years from there. Because we would update the pre-feasibility by year-end, and then we've got to drill out the Massawa, and we don't want to do that until we finish this phased drilling.

So, in the central zone we've drilled three blocks of highly -- very close-spaced drilling. And now, what we're going to do is drill close-spaced lines every 100 meters, or so, and see the variation up into the northern zone. What we're looking at is, is the changeover from manageable metallurgy to refractory ore gradational? Or, is there a clear break?

And we need to get that sorted out. Once you've got that sorted out, we'll be able to --. And we're still waiting for a whole lot of test work. John, I believe?

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Unidentified Company Representative [40]

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Yes.

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Mark Bristow, Randgold Resources Limited - CEO [41]

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2/1/2017

Edited Transcript of RRS.L earnings conference call or presentation 3-Nov-16 12:00pm GMT

So, we've got test work coming, and once we've finished all that test work, we'll --. Basically, the model is we're getting very good gravities -- a lot of free gold in this -- and then reducing the volume that you process and then treating the tails. Doing some ultra-fine grind. So, floatation, the ore floats really well. Ultra-fine grind. And CIL.

And so, I think we've got the process clear, and that process allows the mining of that ore body to be more practical because we can clean it up in the process.

And so, we'll mine the high-grade zone; the sort of envelope of low-grade zone just dilutes it less. So, that's how we'll mine it so we don't have a big problem with dilution.

And Sofia, we've still got lots of work to do there. We've got the whole northern extension. We think we've probably mistargeted that continuation. As it turns around, it changes strike. And we've picked up something, but it's not as good as the main Sofia ore body and we're re-looking at our modeling of that [geology].