EX-3 5 file004.txt PRELIMINARY REPORT Exhibit 3 Randgold & Exploration Company Limited Reg No 1992/005642/06 Sharecode : RNG ISIN: ZAE000008819 NASDAQ trading symbol: RANGY PRELIMINARY REPORT FOR THE YEAR ENDED 31 DECEMBER 2002 RANDGOLD * Profit for year increased substantially * Share price up by 127% year-on-year * Significant increase in value of investment in Randgold Resources * Black Economic Empowerment structure for Minrico CONSOLIDATED INCOME STATEMENT Reviewed Audited year year ended ended 31 Dec 31 Dec R000 2002 2001 ------------------------------------------------------ Revenue Gold sales 404,064 709,440 Cost and expenses ------------------------------------------------------ Cash operating costs (116,095) (390,042) Royalties (27,220) (49,330) ------------------------------------------------------ Total cash costs (143,315) (439,372) ------------------------------------------------------ Profit from mining activities 260,749 270,068 Interest received 2,822 18,924 Interest expense (40,139) (72,343) Depreciation and amortisation (42,009) (66,808) Exploration and corporate expenditure (75,182) (92,532) Loss on sale of investments (1,493) (11,386) Other 27,077 (60,212) ------------------------------------------------------ Profit/(loss) on ordinary activities before taxes, equity income and minority interest 131,825 (14,289) Income and mining taxes - (1,016) ------------------------------------------------------ Profit/(loss) on ordinary activities before equity income and minority interest 131,825 (15,305) Equity income from associates 282,606 - Minority interest (38,594) (54,747) ------------------------------------------------------ Net profit/(loss) for the period 375,837 (70,052) ------------------------------------------------------ Ordinary shares in issue (000s) 43,696 41,702 Earnings/(loss) per share (cents) 873 (168) Headline earnings/(loss) per share (cents) 873 (168) Fully diluted earnings/(loss) per share (cents) 865 (168) ------------------------------------------------------ CONSOLIDATED BALANCE SHEET Reviewed Audited at at 31 Dec 31 Dec R000 2002 2001 -------------------------------------------------------- ASSETS Current assets Cash and equivalents* 21,279 142,535 Receivables 3,859 202,452 Inventories - 116,721 -------------------------------------------------------- Total current assets 25,138 461,708 -------------------------------------------------------- Property, plant, equipment and other long-term assets 14,713 980,190 Investments in associate 495,673 - Investments 148,167 105,482 -------------------------------------------------------- Total assets 683,691 1,547,380 -------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable and accrued liabilities 89,323 385,457 Bank overdraft - 20,463 -------------------------------------------------------- Total current liabilities 89,323 405,920 -------------------------------------------------------- Long-term liabilities Provision for post retirement benefits 53,077 53,077 Long-term loans - 684,621 Provision for rehabilitation - 51,993 Loans from outside shareholders - 259,044 Liabilities on financial instruments - 29,375 -------------------------------------------------------- Total long-term liabilities 53,077 1,078,110 -------------------------------------------------------- Total liabilities 142,400 1,484,030 -------------------------------------------------------- Shareholders' equity Share capital 437 417 Share premium 292,929 271,576 Other reserves 659,671 679,662 Accumulated losses (411,746) (787,583) -------------------------------------------------------- Total shareholders' equity 541,291 164,072 Minority interest - (100,722) -------------------------------------------------------- Total liabilities and equity 683,691 1,547,380 -------------------------------------------------------- * Included in cash and equivalents at 31 December 2001 was R53.6 million relating to a debt service reserve account, held in escrow for partial repayment of the Morila project loan. CONSOLIDATED CASH FLOW STATEMENT Reviewed Audited year year ended ended 31 Dec 31 Dec R000 2002 2001 -------------------------------------------------------- Net cash provided by operations 38,950 319,055 Net cash utilised in investing activities (49,282) (144,302) Net cash utilised in financing activities (90,461) (524,597) -------------------------------------------------------- Net decrease in cash and cash equivalents (100,793) (349,844) Cash and cash equivalents at beginning of period 122,072 471,916 -------------------------------------------------------- Cash and cash equivalents at end of period 21,279 122,072 -------------------------------------------------------- MOVEMENT IN SHAREHOLDERS' EQUITY Reviewed Audited year year ended ended 31 Dec 31 Dec R000 2002 2001 -------------------------------------------------------- Balance at beginning of period 164,072 26,295 Change in accounting policy - 13,599 -------------------------------------------------------- Restated balance at beginning of period 164,072 39,894 Share options exercised 21,373 1,584 Other reserves (19,991) 192,646 Net profit/(loss) for the period 375,837 (70,052) -------------------------------------------------------- Closing balance 541,291 164,072 -------------------------------------------------------- NET ASSET VALUE Net Asset Value for Randgold & Exploration Company Limited (Unaudited) Market Price value per 31 Dec Units share Percent 2002 DESCRIPTION held R held R000 ------------------------------------------------------------ Listed investments Durban Roodepoort Deep, Limited 3,500,000 32.80 2.0% 114,800 Western Areas Limited 179,891 44.00 0.2% 7,915 JCI Gold Limited 36,916,300 0.57 2.1% 21,042 JCI Debentures 2,565,600 1.04 1.3% 2,668 Kelgran Limited 2,321,115 0.75 2.7% 1,741 Randgold Resources Limited 13,312,480 125.53 48.2% 1,671,166 ------------------------------------------------------------ 1,819,332 Other assets 78,745 Liabilities (142,400) ------------------------------------------------------------ Net assets 1,755,677 ------------------------------------------------------------ Shares in issue (000) 43,696 NAV per share (cents) 4,018 ------------------------------------------------------------ COMMENTS Randgold & Exploration has through its substantial holding in Randgold Resources Limited and other gold mining ventures continued to deliver value for its investors over the past year. Following the undertaking to address negative structural issues within the Group, the listing of Randgold Resources on Nasdaq in July 2002 has proven to be highly successful. The increased share liquidity, as well as Randgold Resources' threefold increase in profits year on year, have resulted in its share price more than doubling. This impacted positively on Randgold & Exploration's net asset value, which has doubled from 2,036 cents to 4 018 cents over the year. Its share price increased by 127% year-on-year. The company has also concluded an agreement in terms of which Marothodi Resources Limited, a black empowerment company, will obtain a 26% interest in Minrico Limited, Randgold & Exploration's mineral rights management subsidiary. It is envisaged that Minrico will apply for selected Randgold & Exploration mineral rights under the recently promulgated Minerals and Petroleum Resources Development Act. Both Randgold & Exploration and Marothodi have committed themselves to developing Minrico into a profitable exploration, development and mining company using the extremely successful formula applied to the development of Randgold Resources. Minrico will restrict its activities to the Rand Monetary Region. On the exploration front the joint ventures with Rio Tinto and SouthernEra for diamonds and that with Pan Palladium for platinum group metals are ongoing. Pan Palladium has recently completed a high resolution aeromagnetic survey over the Aurora Project area, the results of which are encouraging. During the fourth quarter a joint venture agreement was entered into with Eurasia Mining plc to explore for platinum group metals on Doornbosch 294 KT in the Eastern Bushveld. At present an environmental management programme is being prepared and it is anticipated that diamond drilling will commence within weeks of the prospecting permit being issued. The terms and conditions of the ABSA loan held by Randgold & Exploration were renegotiated in September 2002. A further R10 million plus outstanding interest of the original R70 million loan have been repaid, leaving an outstanding amount of R30 million, at more favourable rates. The loan, which previously was in place until 31 March 2003, has been extended for a further six months to September 2003. A minimum of R10 million will become compulsorily repayable on 28 March 2003. FINANCIAL REVIEW The results for the year ended 31 December 2002 have been prepared in terms of South African Statements of Generally Accepted Accounting Practice, and in accordance with the Group's accounting policies which are consistent with that of the previous year. These results have been reviewed by our auditors, PricewaterhouseCoopers Inc., and a copy of their report is available for inspection at the Company's registered office. At the time of its listing on Nasdaq in July 2002, Randgold Resources issued 5 million new shares to new shareholders. This resulted in Randgold & Exploration's portion of the total Randgold Resources shareholding reducing from 59% to 48%. From July 2002 Randgold Resources is therefore not consolidated as a subsidiary, but accounted for by the equity method as an associate company. Subsequent to this date profits from Randgold Resources are shown as a single line item in the consolidated income statement. The consolidated results improved substantially from a net loss of R70.1 million for the year ended 31 December 2001 to a net profit of R375.8 million for the year ended 31 December 2002. Earnings per share for the year were R8.73 compared to a loss of R1.68 per share for the year ending 31 December 2001. The increase in profitability is primarily the result of exceptionally high grades mined during the September and December quarters at the Morila Mine in Mali, in which Randgold Resources holds a 40% interest. Profits were further enhanced by the elimination of operating losses from the Syama mine, placed on care and maintenance one year ago, as well as a reduction in financing cost due to substantially lower debt levels in the group. Morila produced 1,052,816 ounces of gold for the year (year to 31 December 2001 : 631,650 ounces), at a total cash cost of US$74 per ounce (year to 31 December 2001 : US$103 per ounce). This achievement ranks Morila, on an annual production basis, among the largest as well as the highest margin producers worldwide. Randgold Resources is currently reviewing a number of proposals received from companies seeking to acquire its shareholding in the Syama mine. The Syama mine is continuing to incur costs related to care and maintenance, as well as rehabilitation work. A segmental analysis of the net profit for the year is set out in a table below. Shareholders are also referred to the announcement published today by Randgold Resources for a more detailed review of results. SEGMENTAL ANALYSIS OF THE NET PROFIT/(LOSS) Corporate, Corporate, explor- explor- ation ation and and Group's other: other: 40% share non-South South Syama of Morila African African mine* mine oper- oper- R000 (Mali) (Mali) ations ations Total -------------------------------------------------------------------------- YEAR ENDED 31 DECEMBER 2002 a. On an equity accounted basis -------------------------------------------------------------------------- Gold sales - 404,064 - - 404,064 Total cash cost - (143,315) - (143,315) -------------------------------------------------------------------------- Cash profit/(loss) - 260,749 - - 260,749 Interest - (12,422) (10,355) (17,362) (40,139) Depreciation - (33,280) (8,667) (61) (42,009) Loss on sale of investment - - - (1,493) (1,493) Exploration and corporate expenditure - (2,095) (61,026) (12,061) (75,182) Other (27,436) (11,648) 1,775 67,207 29,899 -------------------------------------------------------------------------- Profit/ (loss) before tax, equity income and minority interest (27,436) 201,304 (78,273) 36,230 131,825 Equity income from associate (13,421) 341,938 (45,911) - 282,606 Tax and minority interest 11,323 (83,048) 33,131 - (38,594) -------------------------------------------------------------------------- Net profit/ loss) (29,534) 460,194 (91,053) 36,230 375,837 -------------------------------------------------------------------------- b. On a fully consolidated basis ** -------------------------------------------------------------------------- Gold sales - 1,369,476 - - 1,369,476 Total cash cost - (326,475) - - (326,475) -------------------------------------------------------------------------- Cash profit/ (loss) - 1,043,001 - - 1,043,001 Interest - (24,706) (14,345) (17,362) (56,413) Depreciation - (74,687) (17,342) (61) (92,090) Loss on sale of investment - - - (1,493) (1,493) Exploration and corporate expenditure - (5,928) (165,064) (12,061) (183,053) Other (59,628) (8,581) 8,408 67,207 7,406 -------------------------------------------------------------------------- Profit/(loss) before tax, and minority interest (59,628) 929,099 (188,343) 36,230 717,358 Tax and minority interest 30,094 (468,905) 97,290 - (341,521) -------------------------------------------------------------------------- Net profit/ (loss) (29,534) 460,194 (91,053) 36,230 375,837 -------------------------------------------------------------------------- **If Randgold Resources would have been consolidated for the whole year. YEAR ENDED 31 DECEMBER 2001 -------------------------------------------------------------------------- Gold sales 140,979 568,461 - - 709,440 Total cash cost (221,359) (218,013) - - (439,372) ------------------------------------------------------------------------ Cash profit/ (loss) (80,380) 350,448 - - 270,068 Interest (8,571) (19,343) (6,635) (37,794) (72,343) Depreciation - (62,783) (2,598) (1,427) (66,808) Loss on sale of investment - - - (11,386) (11,386) Exploration and corporate expenditure - 601 (82,700) (10,433) (92,532) Other 34,522 (3,799) 27,330 (99,341) (41,288) -------------------------------------------------------------------------- Profit/(loss) before tax and minority interest (54,429) 265,124 (64,603) (160,381) (14,289) Tax and minority interest 20,207 (103,375) 27,405 - (55,763) -------------------------------------------------------------------------- Net profit/ (loss) (34,222) 161,749 (37,198) (160,381) (70,052) -------------------------------------------------------------------------- * Discontinued operation PROSPECTS Randgold & Exploration will continue its active support of Randgold Resources as an independent, international, return-driven resource company with a gold focus. It is also committed to the development of Minrico into a sustainable New South African resource company in the same way as it successfully sponsored the emergence of successful companies such as Harmony and Durban Roodepoort Deep. Options to broaden the empowerment initiative to the Randgold & Exploration level will be explored as part of the ongoing group restructuring initiatives. R A R Kebble Johannesburg Chairman Registered office : 5 Press Avenue, Selby, 2025, Johannesburg, PO Box 82291, Southdale, 2135, Republic of South Africa, Telephone +27(11) 309-6000, Telefax: +27(11) 837-2396, e-mail : haddond@randgold.co.za Share transfer secretaries : Computershare Services Limited, 70 Marshall Street, Johannesburg, 2001, P.O Box 62391, Marshalltown, 2107, Republic of South Africa, Telephone : 27(11) 370-7700, Telefax +27(11) 836-0792 Depository bank : American Depository Receipts, The Bank of New York, Shareholder Relations Department, 101 Barclay Street, New York, NY 10286, Telephone: 1 (800) 524-4458 Investor and media relations : For further information contact Kathy du Plessis on Telephone +27(11) 728-4701, Telefax +27(11) 728-2547, e-mail : randgold@dpapr.com Website : www.randgold.co.za ------------------ DISCLAIMER: Certain of the statements in this document are forward-looking in nature and are based on certain assumptions which involve risks and uncertainty because they relate to events and depend on circumstances that will occur in the future. Randgold & Exploration undertakes no obligation to update any forward-looking statements. Mining and exploration by its very nature, is a risky business and one in which the producers have little influence over the price of their product. Consequently investors should be mindful of the inherent risks associated with all mineral development projects.