the need to refocus on long term value creation Value creation is driven by exploration success and reserve growth V a l u e
Time exploration discovery production development valuation? market pays a premium Brownfields exploration: further discovery market pays full value Gold price driven by supply and demand?... 0 200 400 600 800 1000 1200 1400 1600 1800 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 Mine Production Net Official Sector Sales Scrap Hedging Supply Implied Disinvestment Gold price World gold supply tonnes Gold price US$/oz Source: BMO 2013 Current Au price Market capitalisation of the mining sector does not signal value creation Source: Scotiabank September 2013 US$ billion 2 250 2 000 1 750 1 500 1 250 1 000 750 500 250 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 $ 190B Precious: $ 20B $ 1.9T Precious: $ 200B $ 2.1T Precious: $ 360B $ 1.1T Precious: $ 190B Diversifieds / Base metals Precious metals Other (Royalty coys, diamonds, uranium, potash, lithium etc) $ 660B Precious: $ 135B A decade long bull market and global gold mine production 0 200 400 600 800 1000 1200 1400 1600 1800 0 500 1000 1500 2000 2500 3000 3500 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Gold Production Gold Price Tonnes produced US$/oz Creating value for all stakeholders through discovery and development is a long term game -500% 0% 500% 1000% 1500% 2000% 2500% 3000% 3500% 4000% 100 300 500 700 900 1,100 1,300 1,500 1,700 1,900 Gold NEM KGC IAG GG GFI EGO AUY AU ABX RRL 2002 2013 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Randgold Resources Share price performance Gold price Gold Price US$/oz Share performance % Despite increase in global exploration budgets new gold production has not been replaced since 2000 0 10 20 30 50 70 80 90 40 60 Moz US$m 3 year average potential production in new discoveries Grassroots + 75% of late stage budgets 0 6000 5000 4000 3000 2000 1000 1997 2011 02 03 04 05 06 07 08 09 10 98 99 00 0 Source: Metal Economics Group 2012 3 year ave production potential from discoveries World gold production) Exploration budgets Industry used the revenue margin to maintain reserves 0 200 400 600 800 1000 1200 1400 1600 1800 Reserve Design Price Gold Price US$/oz Reserve design price vs gold price Source: Scotiabank September 2013 The gold majors reserve assumptions diverged once gold broke US$1000/oz in 2010 400 600 800 1000 1200 1400 1600 2007 2009 2010 2011 2012 Kinross Newcrest Goldcorp Randgold Gold Fields Harmony Newmont Anglogold Barrick Randgold Source: Barclays 2013 US$/oz gold Gold industrygrade is key driver of base cost per ounce 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Reserve Grade Mining Head Grade g/t Reserve Grade vs Mining Head Grade Source: Scotiabank September 2013 Total industry input costs increase circa 150% over 12 years 0.00 0.20 0.40 0.60 0.80 1.00 1.20 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 Diesel 0 1000 2000 3000 4000 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 Cyanide 0 200 400 600 800 1000 1200 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 Steel balls 0 100 200 300 400 500 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 Lime US$ US$ US$ US$ Grade input costs and legislation are main drivers of cost inflation Less than 5% of BMO Research Universe gold production has all-in-costs below spot Cash cost AISC After Tax AISC All-in-cost AIC AT-AISC AISC CASH 3000 2000 1000 0 2500 1500 500 10 20 30 40 50 2013 E costs US$/oz Source: BMO 2013 Cashflow from ops and capital US$B BMO Research universe gold stock free cashflow Source: BMO 2013 0 40 20 -20 0 -40 40 20 -20 0 -40 Free cashflow US$B Cashflow from operations Capex Free cashflow 2002 2005 2003 2006 2007 2008 2009 2010 2011 2012 2013E 2004 SE Asia Russia Central Asia Canada USA Geology is the key driver in finding world class gold deposits Americas - 628 2.2Boz / 0.5g/t Africa - 222 1.4Boz / 1.4g/t Europe / Central Asia - 247 0.9Boz / 0.8g/t Australasia - 268 1.3Boz / 0.6g/t Total global gold resources 1 465 5.8Boz / 0.6g/t Source: Metals Economics Group includes all global assets with >500oz contained Au Central America Australia West Africa Central Africa South Africa South America Alaska Project selectiona key step in determining value creation Does it apply principally to gold? Have we identified and understood the country risks? Does it fit our values? Will we have active management participation Will it enhance our partnering network Does it diversify our geographical exposure?
Does it have a reserve potential greater than 3 million ounces of gold? Does it have the potential to be + 250 000 oz per year producer
Can we move it up the value curve? Does it have the potential to be in the lowest total unit cost quartile? Can it produce an IRR in excess of 20%? Does it have a payback of less than 5 years? Is it accretionary to our share value?
Feasibility studies and due diligence another critical step towards value creation Feasibilities draw on in house skills in geology, mining, metallurgy, HR and logistics, while pulling in experts in mine design, costing, environment, plant and infrastructure design Orebody drives the mine and plant design Orebody quality determines capital capacity Geological and geotechnical models determine the mining method Upfront trade off studies required for principal concepts: Open pit vs Underground Decline vs Shaft UG mining methods Metallurgical domains are geologically driven Geometallurgy drives metallurgical testwork Representativity of samples critical Plant designed for bulk ore type Feasibility must pass key filters of GOLD, CRITICAL MASS and VALUE to advance to next stage Shaft Open pit Declines Orebody Discovery to development a key variable to consider 0 5 10 15 20 Kibali Gounkoto Tongon Yalea Gara Morila Mean Gold pricea critical assumption in modelling returns US $/oz 0 200 400 600 800 1000 1200 1400 1600 1800 1 9 6 3 1 9 6 5 1 9 6 7 1 9 6 9 1 9 7 1 1 9 7 3 1 9 7 5 1 9 7 7 1 9 7 9 1 9 8 1 1 9 8 3 1 9 8 5 1 9 8 7 1 9 8 9 1 9 9 1 1 9 9 3 1 9 9 5 1 9 9 7 1 9 9 9 2 0 0 1 2 0 0 3 2 0 0 5 2 0 0 7 2 0 0 9 2 0 1 1 2 0 1 3 3 year average US$ 1 538 10 year average US$ 1 039 15 year average US$ 799 5 year average US$ 1 421 Capital cost estimates a critical value driver 0 1 2 3 4 5 6 7 8 Initial capital estimate Final updated capex Source: Scotiabank US$ B Size does count...What is world class? Assume a project with the following characteristics Total cash cost : US$ 900 / oz Upfront capital : US$ 500 million Ongoing capital : 3% of total cash cost Annual production in base case : 200 000 ounces Base case Gold Price of US$ 1 600 / oz Three scenarios considered for this project 1 million ounce deposit 3 million ounce deposit 10 million ounces deposit The impact of negative changes in the gold price on returns are less severe in the case of larger deposits -60% -40% -20% 0% 20% 40% 60% 1000 1200 1400 1600 1800 2000 Project Gold Price Sensitivity - IRR P1 : 1M oz P2 : 3M oz P3 : 10M oz IRR Gold price US$ / oz Impact of feasibility input costs on IRR with different reserve basis -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% 0% 5% 10% 15% 20% P1 : 1M oz P2 : 3M oz P3 : 10M oz -5% 0% 5% 10% 15% 20% 25% 30% 0% 5% 10% 15% 20% P1 : 1M oz P2 : 3M oz P3 : 10M oz IRR Increase in cost Project Grade / Recovery Sensitivity - IRR Operating Cost Variance Sensitivity - IRR IRR Negative grade / recovery movement Value per share is the key driver of TSR. reserve oz and grade/share 0 0.05 0.1 0.15 0.2 0 5 10 15 20 25 30 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Reserves Moz Resources Moz Reserve oz/share Oz/share Million ounces Grade g/t 4 3 2 1 0 Grade Grade Reserve oz/share Building a link between capital, governments and laboura partnership philosophy! Mining Companies and Investors Employees and communities Governments NGOs and Regulators Provide enabling platform for business Provide or incentivise development of infrastructure Mining code conducive to fiscal and legal stability, and good governance
Responsibility of mining companies: Responsibility of Governments: Attract first world finance Guard against exploitation of equity markets at expense of host country Deal honestly and transparently with governments Create jobs Transfer skills Support local suppliers Have meaningful social responsibility programmes Disclaimer Competent persons: COMPETENT PERSONS: Yalea and Gara mineral resources from Loulo were calculated by Mr Abdoulaye Ngom, an officer of the company, under the supervision of Mr Jonathan Kleynhans, an officer of the company and competent person. Loulo 3 and Baboto mineral resources from Loulo were calculated by Mr Ivan Doku, an independent consultant, and reviewed by Mr Jonathan Kleynhans, an officer of the company and competent person. Faraba mineral resources from Gounkoto were calculated by Mr Jonathan Kleynhans, an officer of the company and competent person. Tongon mineral resources were calculated by Mr Mamadou Ly and Mr Babacar Diouf, both officers of the company, under the supervision of Mr Jonathan Kleynhans, an officer of the company and competent person. Morila mineral resources were calculated by Mr Adama Kone, an officer of the company, under the supervision of Mr Jonathan Kleynhans, an officer of the company and competent person. Kibali mineral resources were calculated by Mr Ernest Doh, an officer of the company and competent person. Morila open pit resources were calculated by Miss Paula Oligive, an independent consultant, under the supervision of Mr Jonathan Kleynhans, an officer of the company and competent person. Gounkoto mineral resources were calculated by Mr Fredrick de Bruin, an independent consultant, under the supervision of Mr Jonathan Kleynhans, an officer of the company and competent person. Mr Johan Kleynhans and Mr Rodney Quick are members of SACNASP and both have sufficient experience in the style of mineralisation and types of deposits under consideration and the activity which they are undertaking as competent person as defined in the 2004 addition in the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves. The Loulo, Tongon, Morila and Gounkoto open pit mineral reserves were calculated by Mr Shaun Gillespie, an independent consultant and competent person and member of SAIMM. Kibali open pit mineral reserves were generated by Mr Nicholas Coomson, an officer of the company and competent person and member of AusIMM. Loulo underground reserves were calculated by Mr Mamou Toure, an officer of the company, and reviewed by Mr Mark Odell, an independent consultant and competent person and practising professional engineer. Massawa mineral reserves remain unchanged from last year and were calculated by Mr Onno ten Brinke, an independent consultant and competent person and member of AusIMM, and reviewed by Mr Rodney Quick, an officer of the company and competent person. The Kibali underground mineral reserves were calculated by Mr Tim Peters of Piran Mining and reviewed by Mr Dan Donald of Mine RP, both independent consultants and competent person and members of AusIMM. All competent person have sufficient experience in the style of mineralisation and types of deposits under consideration and the activity which they are undertaking as competent person as defined in the 2004 addition in the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves.Cautionary note to US investors: The United States Securities and Exchange Commission (the SEC) permits mining companies, in their filings with the SEC, to disclose only proven and probable ore reserves. Randgold uses certain terms in this report such as resources that the SEC does not recognise and strictly prohibits the company from including in its filings with the SEC. Investors are cautioned not to assume that all or any parts of the companys resources will ever be converted into reserves which qualify as proven and probable reserves for the purposes of the SECs Industry Guide number 7.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: Except for the historical information contained herein, the matters discussed in this presentationare forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933 and Section 21E of the US Securities Exchange Act of 1934, and applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to the future price of gold, the estimation of mineral reserves and resources, the realisation of mineral reserve estimates, the timing and amount of estimated future production, costs of production, reserve determination and reserve conversion rates. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as will, plans, expects or does not expect, is expected, budget, scheduled, estimates, forecasts, intends, anticipates or does not anticipate, or believes, or variations of such words and phrases or state that certain actions, events or results may, could, would, might or will be taken, occur or be achieved. Assumptions upon which such forward-looking statements are based are in turn based on factors and events that are not within the control of Randgold Resources Limited (Randgold) and there is no assurance they will prove to be correct. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Randgold to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to mining operations, including political risks and instability and risks related to international operations, actual results of current exploration activities, conclusions of economic evaluations, changes in project parameters as plans continue to be refined, as well as those factors discussed in Randgolds filings with the US Securities and Exchange Commission (the SEC). Although Randgold has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Randgold does not undertake to update any forward-looking statements herein, except in accordance with applicable securities laws. CAUTIONARY NOTE TO US INVESTORS: The SEC permits companies, in their filings with the SEC, to disclose only proven and probable ore reserves. We use certain terms in this release, such as resources, that the SEC does not recognise and strictly prohibits us from including in our filings with the SEC. Investors are cautioned not to assume that all or any parts of our resources will ever be converted into reserves which qualify as proven and probable reserves for the purposes of the SECs Industry Guide number 7.