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Here’s the entire text of the Q&A from Randgold Resources’ (ticker: GOLD) Q3 2005 conference call. The prepared remarks are here.

Question-and-Answer Session

Q: Victor Flores, HSBC:

Good morning Mark. I was hoping you could give us a bit of colour around some of these results you are getting out of Morila. You are showing them in the diagram, some drilling towards the south end of the pits. Is that deeper material, or is that just a strike extension that you hadn’t identified previously?

A: Mark Bristow:

Hi, Victor. It’s all well within the extended limits of the pit. If we were to extend the pit limits, we would have some stripping to do but it’s easily accessible. So it’s shallow. We had a big total out “intrusion” where we had done a bit of drilling on the south side of that and we had largely believed that it cut the ore off. With some continued work, and as we exposed that total out in the pit, we saw some rafts of sediments floating in the tonalite and so we’ve extended the drilling south and made these intersections. There are a number of holes, all very good intersections, and we’re very encouraged by this. We’ve got a bit more drilling to do and then we will have another look at the impact it’s going to have on our mine plan. It is out of the pit, but it’s certainly within the pit’s ability to extract it.

Q: Victor Flores:

So is this drilling that you’re doing indicating to you that the mineralisation is potentially open to the south?

A: Mark Bristow:

Yes, technically at this stage, we don’t – as you know we were out there – the board has asked management to get a move on and stick a few more holes in the south. But I think we are pretty comfortable it will add a bit to the business.

Q: Victor Flores:

Do you expect to add further ounces at Samacline as you drill to the west of that.

A: Mark Bristow:

With Samacline it’s certainly going to add ounces. Samacline is deep and at this stage it’s a 3 to 400,000 ounce resource. Our advice to management, and we’ve got support from everyone, is let’s not chase that at the moment. What we really need to chase is the extensions or new projects. So although we are going to continue, as I say in my report, working on the Samacline, the big drive is to get drill rigs into some anomalies. We’ve got a couple of geophysical anomalies, some big arsenic anomalies that we’ve never drilled – that we’re going to go back and drill now. So we’ve all put our heads together – we’ve been working on it for a while – and both we and the Anglo team are on the same page and we’ve got a new guy to lead the team. I think we are going to put some money into this business.

Q: Victor Flores:

To follow-up on that, you also have put a slide in here talking about Mali South which is the area around Morila and targets to the south, the south-east and I guess west of Morila. Is this something that you are doing jointly within the joint venture, or is this additional ground that you’ve picked up for Randgold individually. And what is it that you’re learning or what’s making you think that you need to look in these areas?

A: Mark Bristow:

Well the first thing is our joint venture with AngloGold Ashanti is specific only to the mining lease, so it’s a very small area and that’s just one little square. All the rest is in our own right, and the first thing is if you see the big block around Morila – it’s what we do every time before we start, we try and dominate the position. You’ll see in Tanzania we’ve done it, Senegal, Loulo etc. The second one is this is such a big system, we see signs of gold mineralisation here kilometres away from the Morila deposit. We’ve seen mineralisation stacked up But we’ve still got to find the traps. So around Morila our big focus is keeping that land package and spending money to advance our understanding – which we’re doing all the time. Then, of course, we are able to spread our dollars both in and outside of the joint venture. The country around that, which you see we picked up, is as we develop our knowledge of the Berimium so we go back to some of the old areas and say we want to have a look at that now and pursue a different model. And the other thing, Victor, to be quite frank with you, is that because of the gold price - where it is and with the juniors all over the place, there are a lot of models that normally we would be working on without tying up ground. What we’ve done now is, tie up as much ground as we can so that we don’t get crowded out by the junior stampede.

Q: Victor Flores:

Fair enough. Just one final question, going back to Loulo. This 200,000 tonnes a month capacity – when did you actually achieve that?

A: Mark Bristow:

Well we added it to the design, it was always 180. We indicated that we were upgrading the plant in the second quarter. We are comfortable that we’ve designed it to be able to say to the market – it has a nameplate 200,000 tonnes a month capacity of hard rock. Now on the oxide we should exceed that. We are knocking on the door of 200,000 tonnes a month as we speak. We have got a bit of a way to settle the plant, but we’re reasonably comfortable that once the plant is properly settled that we’ll be able to achieve more than that while we are only processing soft ore. Does that answer your question or did I miss your question.

Q: Victor Flores:

Yeah, well I guess I was fishing for how many tonnes you think you’ll get you know from start up through the end of the year.

A: Mark Bristow:

Let me try and answer that. We’re still hanging onto our 100,000 ounces by the skin of our teeth. We know that the month delay put that under pressure. But if it continues to build up as it has and we can get a good run sort of the last month and a half, we can still achieve that number. You know as we did in the startup we could have poured a bit of gold earlier on, but our business is to get this mine up and running properly. What is encouraging is that we’re ahead of our forecast on Morila, and we’re pretty well in-line in building up of Loulo and so our guidance to the market, collectively, on an attributable basis was 320,000 ounces and we are still in line for that.

Q: Andy O’Conor, Wells Capital:

Gentlemen, congratulations on your quarter. Mark would you have a very preliminary estimate for how an underground operation at Loulo will increase your capital expenditure needs over the next year or two?

A: Mark Bristow:

Andrew it’s very simple, the primary capital which will be scheduled over four years in July money terms is $85 million. And probably as much as a third, depending how quickly we can start it, will be spent next year. The ongoing capital after year four is $8.1 million a year, also in July money terms. Does that answer your question?

Q: Andy O’Conor:

Yeah, thanks so much. And then you’re speaking around this in four year terms but would you have an explicit forecast for Loulo and Morila in the December quarter production in your estimate of cash cost to production.?

A: Mark Bristow:

Andrew, sorry I should have finished that. If looking ahead one of the things is that once we start the declines we estimate it will be about 14 months before we start seeing ore out of our underground. And those final designs will be shared with the market at our next meeting, which is the end of January. What we are looking at is the impact of the optimisation and, the simple way is if you take 200,000 tonnes capacity, the current life-of-mine reserves is about 3.7 grams a tonne – and you know the underground at Loulo is six, that’s the average – the main high payshoot is nearly double that. And you schedule-in the bleeding in of the underground, and what you do is you are constantly impacting the feed grade of the mill and so you grow your ounces of production all the way out to 2010. What we are trying to do now is schedule that so that we can give the market proper guidance of what we expect that to contribute. Cost wise, we’re giving the market a heads up. We’re still looking $250 for the open pit. We should achieve the same or even slightly better on the underground.

Q: Mark Thompson, Anderson & Strudwick:

Morning guys. I have a couple of questions. Do you have any non-recourse loans currently or any hedging. And how many shares of Randgold Resources does Randgold & Exploration still have – if you know that?

A: Mark Bristow:

Mark, good, let me just answer the first one first and that is that we have a debt structure – it’s a project loan in Loulo. It’s specifically for the opencast project of $60 million – our share of that is 80%. But we stand behind the whole lot because governments never dish up any money. We are supporting the funding of the government share for a commercial fee, that is. Hedging, we have got 365,000 ounces hedged over four years – starting January 2006 – and it coincides with the repayment of that debt over four years. Again, it’s at project level specifically, as part of the debt finance we put in. On the Randgold & Exploration shareholding, I can tell you that we in February and again when we filed our 20F, filed a filing with the SEC pointing out that according to our share registers there were 4 million shares that were owned beneficially by Randgold & Exploration which – before our equity issue – equated to 6.7%; it now equates to 10% less than that. And that there were about 2 million shares that we had been unable to, or we are still in the process of discovery, the beneficial ownership – they were held in nominees. We are pursuing that and hopefully we will be able to come back to the market on that. We have confirmed that the last time we checked the beneficial ownership of 4 million shares was still in favour of Randgold & Exploration. We have conducted I think now five audits on our share registers by an independent set of professionals and we have no reason to change our position, and we certainly in our filing of our prospectus and the three prospectuses that we registered in the UK, Canada and SEC, we maintained our position. Does that answer your question Mark?

Q: Mark Thompson:

Yeah, that’s great thanks. On the hedging, if gold went to 550 or 600, would you guys be, how harmed would you be?

A: Mark Bristow:

We wouldn’t be, it’s a small percentage of our overall production. It’s about 15% of our overall production. Over four years it’s 90,000 ounces out of a just on a 400,000 ounces. So, it’s not a big deal. We have on the back of that a gearing in our company in that we have debt and certainly if gold goes up we make a lot more money and we make much bigger returns for our shareholders on an equity basis. The reason we went out and raised equity this time for the underground and other projects is that we felt that it was unwise to continue to take on debt and put in any additional hedges. And so by getting the shareholders to back our growth projects, we keep, all the blue sky open in the future.

Q: Mark Thompson:

So for 2006, what do you estimate the number of ounces?

A: Mark Bristow:

It’s 90,000 ounces out of about 380 forecast and the hedge price is $431 an ounce for that 90,000.

Q: Mark Thompson:

Okay, and what do you estimate total production for 2006 with Morila and Loulo?

A: Mark Bristow:

Attributable at 380, 380,000 attributable. And remember that the attributable ounces hedged is only 80% of 90.

Q: Mark Thompson:

But how many ounces do you think Loulo will do next year in production?

A: Mark Bristow:

Next year it should be between 200 and 250. And Morila will do about 500. We’ve got 40% of Morila and 80% of Loulo.

Q: Mark Thompson:

So you should do about 400,000 ounces?

A: Mark Bristow:

That’s right, 380.

Q: Mark Thompson:

And then with Loulo underground that would be what a couple of years?

A: Mark Bristow:

Well you take four years to see the impact and that should grow. It will be incremental on the current forecast, and we are going to give the market a firmer view than what you can do a back of the cigarette box calculation, but we will give them a view once we’ve finished the optimisation.

Q: Mark Thompson:

And do you have any opinion on the gold price?

A: Mark Bristow:

Well we think that there is a more likely chance of it going up than going down, and you know anything above 400 is good for us. Seriously we think there’s technical support and that there is no new gold supplier foreseeable. There is a sentiment change in the market, generally the stars are aligned in favour of gold at the moment.

Q: Heather Douglas, BMO Nesbitt Burns:

Hi everyone. Mark during your opening comments you mentioned that Morila were a pet subject and you could still do more. I was wondering if you could give us a little more colour on that and can you also maybe touch on some of the cost pressures that are unavoidable to what’s happening; well we know diesel is going up, and what’s happening with reagent costs and overall costs?

A: Mark Bristow:

Yes, you know the diesel cost is like a pet bag to put all excuses for costs in the industry. And you know in realty it’s a dollar on the barrel of oil, as the dollar per ounce – certainly for us, around that. So you can only use diesel for so much of your increase in costs. Morila has done very well, it’s been a very high grade mine and invariably in mines like that you build a habit of being comfortable with your revenue. And we have been driving the management there to appreciate that the grades are coming off and you’ve got to be a lot more focused on the costs. And it is, if you benchmark Morila it still can improve on its cost profile. And I must tell you over the last quarter we’ve seen signs of management getting on top of that. You know when you get the operation working smoothly every day, when you start getting management focused on its day to day business you start benefiting from that focus. I would like to see and I believe Morila and I think the management itself – we’ve got a couple of cost saving strategies now. We will enlarge them as they go, but for the first time for a while we’ve started seeing benefits of that. I’ll give you an example. Do you remember when AngloGold came out at the beginning of the year, their guidance was a little more than $200 an ounce on Morila. We gave a guidance that we believed we should be focusing to try and keep Morila at under 200. The management team has done well to do that. It’s still within a stone’s throw of achieving that for the year. The year to date we are just over 180, so it can be achieved. The cost pressures, we’ve seen them, supply chain costs particularly – shipping; some of the Eurasian costs, I think a lot of the Eurasian costs, people have locked in because they’ve changed currencies or they’ve gone to the dollar currency – dollar purchase price – at the point where the dollar is weak. We manage it all the time. I think we can manage it, but the gold industry suffers from dollar inflation because it’s a dollar business and most of the mines are located in emerging markets where the dollar predominates. I don’t know if I am answering your question, but all I can tell you is that we give everyone in our management team a headache about costs because it’s the one thing we can control as managers. We can’t control the gold price.

Q: Heather Douglas:

Can you give specific examples for this cost saving strategy, of some things you’d like to do?

A: Mark Bristow:

I’ll give you some exact examples. In Morila for instance, the whole mining cost – we have now got to a stage where we have people buying into benchmarking. You know the efficiencies of load and haul, appreciation that if you worry about the energy – where you put it and how you break the ore you can improve your throughput. And you don’t always have to make sure that you grind everything in the plant, that if your fragmentation is well controlled in the pit you can get that sorted out. Staffing efficiencies – people, always a big cost. And if people work hard and consistently deliver you immediately improve your efficiency which is effectively your cost per unit. Those are the things that have really taken shape as the challenge has been that we’ve had to try and fix that in Morila. In Loulo, the idea is that we want to try and create that habit up front Heather, and that’s our big challenge as managers. If you create a good habit about cost control then it’s easier to keep into the future.

Q: Heather Douglas:

Thank you. I also have a quick follow up to your question. You mentioned that your outlook for Loulo is $250 an ounce for the open pit but for the first couple of quarters how would the oxide material, will it be higher or lower than that number?

A: Mark Bristow:

It’s going to be lower, materially lower.

CONCLUSION

Ladies and gentlemen thank you for the time, we’ve gone way over our normal slot. Is there anyone who wants to ask questions and not happy to ask them in a public forum you’ve got our contact numbers. You are welcome to give us a call.

Related:

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Source: Full Transcript of Randgold Resources’ 3Q05 Conference Call - Q&A (GOLD)

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