Randgold Resources said Monday that it boosted production and trimmed costs in the fourth quarter ended December 31, 2008 to end the year with an adjusted net profit of $57.4 million, up 26% on 2007. After a non-cash provision of $10.3 million against investments in auction rate securities - first reported in the previous quarter - net profit was up 3% at $47 million. A dividend of 13cents per share - up 8% on 2007 - was approved for the year.

The company said that the fact that it has a strong balance sheet with more than $250 million cash in hand means that even in these troubled times it is capable of funding current growth plans.

Chief executive Mark Bristow said the company had done well to come within 2% of its production target in a very challenging year, during which it had to contend with spiralling input costs while at the same time developing the new Yalea underground mine, managing the impact of delays at Yalea on the Loulo production profile, rightsizing Morila, initiating another new mine at Tongon and advancing its latest discovery at Massawa.

Attributable gold production for the fourth quarter was up 6% on the previous quarter at 107 321 ounces, bringing the total for the year to 428,426 ounces (2007: 444,573 ounces).

Group total cash costs for the quarter were $459 per ounce, down 11% on the previous quarter, partly as a result of a drop in the price of diesel which is a major component of the company's cost structure.

Total cash costs for the year were in line with our revised guidance at $467 per ounce ($421 cash operating cost) against 2007's US$356 per ounce ($315 cash operating cost), reflecting the pressure of consumable and other price increases during the year.

At Loulo, increased throughput partially offset the impact of lower head grades caused by a slower than planned ramp up in the Yalea underground development, which limited access to higher grade ore. The mine also posted a decrease in operating costs quarter on quarter. Production for the year was 258 095 ounces compared to the previous year's 264 647 ounces. Although the underground project experienced a number of challenges through 2008, with the support of the equipment suppliers and service providers they have been addressed and it is expected to reach the planned 120,000 tonnes per month by year end, the company said.

The Morila joint venture, which is managed by Randgold Resources, grew production by 25% to 117 066 ounces in the last quarter on the back of an increase in the ore grade and improvements in throughput and recoveries. Operating costs reduced by 14% quarter on quarter and gold production for the year was 425 828 ounces. Preparation for the conversion of the mine to a stockpile treatment operation later this year made steady progress and Morila continued to be an important cash generator for the group with 2008 dividends totalling $91 million.

At Tongon in the C�te d'Ivoire, work has started on the third new mine to be developed by the company. Construction of accommodation and other infrastructure is underway, long lead-time equipment has been ordered and negotiations with short-listed mining contractors are ongoing. The government has issued an environmental permit, clearing the way for the mining licence to be granted. The mine remains on track for commissioning in the last quarter of 2010.

Further diamond drilling at Massawa in Senegal has confirmed that it is a significant discovery. The mineralised system has been drill proved over seven kilometres and the mineralisation is open in all directions. "Recent drilling results have delineated an 850 metre high grade northern zone and this along with encouraging metallurgical results gives Massawa the potential to be one of the better new gold projects around," says Bristow.

Massawa is now the subject of a scoping study on which a decision to proceed to the feasibility stage will be based. Exploration also continues around Loulo and Tongon. On the generative front, a team has been assigned to develop a Central African geological and structural framework from Tanzania in the east to Cameroon in the west.

Bristow also said the company's strategy of building growth by investing in the future had served it well again during the past year and had positioned it strongly for 2009.

"We're on track to ramp up production at Loulo to the planned levels. While Morila needs a lot of management at this stage of its life, it's set to remain a good cash generator for several more years. Tongon is beginning to take shape as our next mine and Massawa leads a portfolio of attractive prospects. The reduction in the oil price and other consumables, if sustained, should have a positive effect on our cost profile," he said.

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