B Q4 2017 Earnings Call

Operator: Ladies and gentlemen, welcome to Randgold's Fourth Quarter Conference Call. Today’s speaker will be Mr. Mark Bristow, Randgold’s CEO. Sir, please go ahead.

Mark Bristow: Good afternoon, ladies and gentlemen. We are broadcasting from sunny - the dry sunny so good morning to those in North America and good afternoon to the callers that are in from the U.K. and Europe. We're a full house, so let's get on with it. We had, as is tradition, we proceeded a full presentation to a packed audience at lunchtime and the idea of this call is to run you through the results and then give you an opportunity to ask questions. The full transcript or webcast of our presentations at lunchtime our -- is on website for those who want to go and get the full presentation. So, without any further ado, we ran through, as I normally do, a touch on the market and industry and the fact that we've got lots of challenges facing the gold industry today, not the least, of which is our ability to replace the gold that we're mining at the similar quality and fend off the deterioration in our reserves and, particularly in the grade. And at the same time -- and that impinges on this trend for governments to demand more and for us as an industry, to not be afford it because we’re just not able to present the sort businesses that we have done in the past. Of course, we, at Randgold feel that we stand apart from this dilemma and that we're a committed, profitable business, reinforced by this last 2017’s performance. Probably our best performance in the 23 years we've been operating and certainly the -- another record, the seventh in a row in production and the best cost profile that we’ve been able to deliver in the last six years. And the key building blocks of that delivery is not only the focus on profitability and our investment future all of our -- the people and us performing at a world-class level despite the fact that we operate in Africa. All our operations retained the 18,001 certifications in Kibali on its way to achieving the updated standards, soon to be followed by our other operations. And likewise, we aspire to the highest standards of environmental management and in the next presentation, you can see our performance on efficiencies, whether it’s water or energy use, we continue to show improvement. And again, Kibali was a leader in our operation, just because it's new and so it was awarded the new ISO 14400:1 2013 accreditation which is the new environmental accreditation that comes with lot more modern criteria when it comes to environmental management and its linkage to the new thinking about climate change and global pollution. And again, other operations following Kibali and seeking accreditation and they are all scheduled for this quarter. Salient features, I'll summarize in these slides. Really as I pointed out in the introduction of seventh consecutive year of we've increased production during the record and total cash cost per ounce at 620 at 6 year low. And this really led by a superb performance from Loulo and Gounkoto. But there was a balance delivery across the group with somewhat beating the guidance the first time in its history. And this is despite the disruptions that were caused by unrest in the Northern part of the country at the beginning of the year. And the highlight for the year with the commission of the Kibali underground operations in quarter 4. And while it was slightly below, it was slightly below its production guidance. The completion it takes the capital project to the Loulo mine was as I said last time we spoke, the most significant and was our focus for the year. And our new business started at Massawa feasibility project bonds towards the development decision which we're scheduling later this year. The numbers really speak for themselves, and what they supported the board's decision to recommend doubling the dividend. We had a significant gain as forecast increased in the net cash of just under 40%. Little bit ahead of our guidance as we benefitted from the all spreads in the gold price as we came today end of the year, which no one ever complains about. But apart from that, it shouldn't come as a surprise to anyone because we have flagging the strategy for some time. Turning now to the operations. The Loulo complex maintained as I said its outstanding performance. And increased production impacted positively on total cash cost which were down 4% year-on-year to a very credible $540 an ounce. And if you look at the Loulo standalone significant here was that the underground the two-underground mine achieved the long-time injury free 2017 which is significant in anyone's books for two big underground operations. And at the same time if we look at the results a very credible $535 an ounce total cash cost which certainly makes Southern Loulo underground operations one of the most profitable in our industry. And even more significant when you consider Loulo is a moderate grade mine. And on the underground the team continued to deliver on its objectives following the contractor and I think no one can be in any doubt that that was the right decision and we are very proud of our all mining and management team that's taken this business to a new level and you must see the sort of work that is being done on planned maintenance and really getting this squeezing the efficiencies in our mining operations including the use of mechanized mining, remote mining and we are already starting to test automated hauling. And like all our mines, the big producers you got to keep replacing what you mined and Yalea continued to produce the results in our brownfield projects, already highlighting the ability to continue to replace all the deficient and you can see that the central conversion target that's circled as a target there comes with 500,000 ounces plus four rams resource potential and in the presentation in the graph in the slide you'll see, not short of potential ounces, in the various ground to the South and also depth extensions of the high-grade into the Yalea. Loulo 3 work continues with focus on extending the high-grade zone below the Loulo throughput and we see this ultimately ending up with the small underground mining section, and again as such the brownfields work at Loulo remains rich in opportunities and as we continue to explore it's still producing primary targets, and you can see some of these targets are delivering some interesting numbers. We move to Gounkoto the pushback for the throughput as you know during the year, and challenged us with unrestricted assets to the high grade ore at the base, but we worked through that and the mine delivered a better and improvement on last year's performance and again the super pit is well on its way to be developed with the approval of the Mining Ministry and we're now working with them to accommodate to the new investment in the Gounkoto mining convention. Gounkoto's numbers as with Loulo speak for themselves and attest to a solid performance in what can be described as a challenging year. And last, Gounkoto, as you know, Gounkoto has plenty of opportunity in Australia and the real focus is the as I spoke last quarter is the real -- the delineation of the main library which is the main structure, we're not absolutely clear it is that controls the multiple Gounkoto orebody and we just intersected it South of Gounkoto and to really work to trace that, both to the north south of the main pits. And this is the consolidated production full cost, going forward -- so the full cost is for the Loulo-Gounkoto complex is 690,000 ounces at just under $600 per ounce and as you can see here with roughly five year extended full cost for your reference. Moving on then still staying with the subject of opportunities this is an overview of the landholdings in the Kenieba, which includes Loulo-Gounkoto and Massawa as the struggling geological Birimian rocks across the eastern part of Senegal and Western Mali. And we continue to expand the operation there with the Bambadji joint venture, new mining convention, which we expect to be approved by the Senegal government shortly. And on to the Kenya Makamba premise which is the Massawa main permit area and exploration continues with produce on getting beyond that magical 3 million ounces for this project. And as you can see our workers starting to return some stronger results right now, KB target and the extensions to the Aliyah as well the ongoing work within the main Massawa orebody. On the feasibility itself it continued to progress this project and we should be in a position to make a production decision about the project later this year and we are working to get past that magical 3 million ounces but just for those who are interested and if you want to do a sun sketch of this project is the main capital somewhere between 500 million and 600 million to 50,000 ounces a year Kenya and its domestic total cash cost around $660 an ounce. Second, Mali Morila outperformed its production and cost challenged thanks to the contribution of the higher of the higher rate or from the recently developed deposit and the significant increase in production was attributable to the feeding of the Domba ore in the addition to the GSF material which resulted in improved rate, better recovery and of course the ounces were up and we beat our guidance. On Morila closure is currently scheduled for early 2020 and this really depends on the Birimian targets currently being evaluated under our Permian transaction which we announced last year. In the meantime, Morila is targeting production over the 95,000 ounces at around $1000 an ounce cash cost for 2018. Moving further south to the coast of ore as I pointed out in the beginning delivered an excellent performance slightly ahead of its guidance. And this is a significant achievement I would breakout for a mine that is based in and is still facing more of its share of challenges aside from its technical issues and Tongon as you're all aware, has also had to deal with the social and political complexity in the north of the Cote d'Ivoire arising from the legacy of the [indiscernible]. Against this background a dedicated team increased production, reduced cost and boosted profits from mining on the back of our investments in an expanded and upgraded drums and on the back of that we've made good progress on our power management with the power utility and today our estimated production looks to 290,000 ounces for 2018 and again the same for '19 and '20 and we're guiding $700 an ounce for 2018 and it’s expected to come down to the 600 as you see in this graph in the following years. As things stand Tongon has three years of mining their product in year approaches [indiscernible] and so we really focusing on exploration as we shared with you in the last couple of quarters and that work is going to deliver the sort of new topic that we envisaged and so this season and the next so that we are critical in being able to assess whether we can extend the Tongon life or not. And despite all the challenges across Cote d'Ivoire remains Randgold's go to greenfield exploration destination and this slide really shows our expansive and still expanding footprints in that country with work already underway on our new joint ventures with Newcrest and Endeavor and the Kadjolo permits recent results from the Fonondara target have 85 multiple hardware shoots along nine kilometers of strike and the team has also pursued other projects along this 50 kilometers structure along with many other targets showing how it's made Boundiali a world-class destination which we believe it is. Also, in Cote d'Ivoire we contributed to drill that Gbongogo target and confirming plus1 million-ounce potential for the main zone in Gbongogo and we've been able to extend mineralization through changing an unlimited amount of drilling 1.3 kilometers to the south. And again, you know made some good progress on the northern extensions to this permit through the Endeavor joint venture and we plan to retire all this package of minerals together with an airborne VTEM survey early part of this year. Moving across into Kibali and the DLC as we pointed out in the introduction, Kibali past the key milestone with its extensional commissioning of its automated landing system and the integration of that with the vertical shaft. And aside from the commissioning of the third other pipeline scheduled for the middle of this year is complete the development of Kibali and brings to an end the eight-year loan capital pairing phase. Production for the year was slightly short of targets as have been mentioned very tightly short but have started lots on the underground commissioning was more -- was our real priority, which we delivered on and I would say that the team excelled in this part of the business. In any event, there's a big all-around performance improvement in the fourth quarter and as we guided and the focus is not really to optimize the underground operation and achieving --- to a hoisting rate of some 2.4 million tonnes per annum. And then we demonstrate how we’re going to get there in the next slide, which is the ratio between truck tonnes and hoisted tonnes through the year. One of the most terrifying features in Kibali and a thing that concerned some analyst was -- is the way we really picked up on the client performance and now, I think beyond doubt is the fact that we can proceed 100% so far you can see on this graph. And what’s more is that not only have we been able to demonstrate that we've got this plant as far as sulfides go that also, we’ve consistently outperformed the throughput throughout the year. I touched on the hydropower station. This is really just a snapshot of where we are with the costs, average costs, of the integrated car delivery through the combination of thermal and hydro and as a third path, we'll definitely add to that and the third power plant will support the growth in the underground ramp up. This is the guidance for the actual and -- for the production, 2018 from Kibali. We're forecasting 730,000 ounces, at around $600 per ounce and again, this is expected to decrease in the following years as we deliver on the efficiencies that we’ve invested in the underground operations. The Randgold group's search for additional ounces continues with very rewarding results -- additional ounces and [indiscernible] the extensions is our real focus at the moment, and we took out the reserves -- some reserves as we converted to estimating our underground reserves with geological models, constrained boundaries rather than sort of open geostatistical estimation and now, the focus is on putting a lot that reserve back as we constrained these major orebodies and ores that are stacked starting with 3,000 and 5,000 load and the latest sort of deeper drilling has delivered for identified an interesting new load indicated in this section with -- by the Golden model or envelope and that we are referring to is the 12,000 load at the moment. A lot of work to be done, we – I’ll come back to this just now, but we’ve relocated some of our senior exploring -- exploration geos into the underground to work on this project of extending the reserves, as we shift to this higher rate of production. With mine reaching steady state as I pointed, our focus now shifts to reflecting the ounces that we are going to be producing. Both from the continued evaluation of the open pit target along the KZ zone as shown here, and also some of the other the extensions that we've talked about. And also, the other regional exploration that we doing within the Kibali permits. In addition to that, as you know Rangold's got a portfolio, mineralized that wise that we are currently working to expand in the northeastern DRC. One of them is the Moku project that recently been caught by the U.S. sanctions that are being applied to Gounkoto and is associated business interest and just for the record we'll be respecting those -- we are expecting those sanctions conditions and we have given the holding company notice that we will not be proceeding with this project until such time their compliance. And also, that the DRC work continues on the Ngayu belt. It's a remote part of the DRC autonomous that we looking for are by their very nature to be bigger than the sort of traditional $3 million-ounce hurdle that we have in other parts of Africa. But again, we've got some very big targets. We are currently focusing on some 3 targets associated with the Deluca granite toyed. You can see there is a table in the slide. And up in in Nagara, that's really our big focus. It's one of the biggest player in all of these. We've come across and now working in the part of the world. And so, we'll be working in the last six months to get access into that region. That covers our operations. And I've often say to run a mine in Africa, you need a social license as well as the normal security permit that you have to get to operate. We'll continue to ensure that our stakeholder investment through with the communities or our local contractor relationships or just our employees, who are because of our quality of developing host country nationals or an integral part of our community. And so, I believe that it's very important, that we at least take a portion of the value of ore bodies and make sure that they allocated to the future economic sustainability of the surrounding areas and the population of that around our operations. This is our true forecast for 2018 and beyond. We're targeting 1.3 million to 1.35 million ounces for 2018 at a total cost cash per grams in the range of 590 to 640. And we're in fact looking $225 million gram down from just over $300 million in 2017 as far as capital goes. And finally ladies and gentlemen, I'll conclude it with the just pointing to our core set of KBRs, and again if you can -- if we were to explain these graphs back another three, four or five years, the trend would be the same and I think as I've touched on in the introduction the big one is that 12 year consistent delivery and growth of our dividends to our shareholders which brings us to a point that we've always been about profitability, profitability should deliver free cash flow and if you do develop profitable businesses you should be able to contribute to the total shareholder return in the form of dividend yields, and that’s where we believe we are and I just point out that you can't just build gold companies based on gross through never increasing production ounces because it gets to a point where that's unsustainable so, dividends are an integral part of being able to deliver long term shareholder value. And with that Brady we will pass back to the operator to take questions. I have just received an email question from Adrian Hammond of Standard Bank and he's asked, could you please clear the fiscal parameters according to the new DLT mining curve, and whether rent goals currently complying to them as understand the tax rate stays at 30, royalty rates increased, royalty was 2.5 plus one for same period fee [indiscernible] mentioned 4.5, so where we are at the moment and we're still doing the full fiscal analysis. As Kibali goes we are really taking 4.5% royalties and so the way we read this is that we are already complaint because we're are paying under risk. The government through Akiva owns 28% of the Kibali mine which again fits with the new legislation and that's -- they own that 10% because we insisted that they didn't shell the whole amount, which they wanted to and we loved to work with in countries where the country has the seat adopt operating board table and has given the [indiscernible] want of a better word. So, we're already compliant on that, there's no change in the tax cut rate of 30%. The windfall tax is another case of clauses which haven't got regulation and the way we read it is that we made a decision to develop Kibali with dollars around $1,600 an ounce, so that's not being triggered at the moment and the real issue we have with the DLT issue is the lack of consultation and the windfall tax which has never worked and there is no current example globally of a country that applied it effectively and more importantly the suggestion that the 10 year stability clause which is entrenched in the legislation, the previous 2002 code is summarily dismissed and we're a little confused about how its replace the five year tax holiday without respecting any contractual assurances. Randgold, in addition, has additional warranties from the states of the DRC, that's the Republic of the DRC rather than just the government, which is tied to in its investment and as far as we concerned we have protection and we do seek when we invest in countries. And our real engagement is the fact that the mining industry we watched go through two reviews a constant sort of policy increasing in case from the mining industry and which if you start fiddling with your contract to global investors, then it starts to bring into question the confidence that one can take and look in to reinvesting or new investment into a country. And this legislation has impacted everyone, not only the two major companies [indiscernible] and Randgold who are invested under the mining current but also those that are invested under conventions because again the way we read it is they are suggesting that those agreements are also in size, and so what it's done is it's driven the industry, for the first time, to work and represent itself as foreign investors in this country which as we all know, has a huge upside. But for some reason, always fails to be able to really deliver something for its country citizens. And for the first time in Africa we got all the different international investors invested in the mining industry in the form of whether its North America or Europe or Asia and specifically the Chinese in this case all not only being challenged thus far, investments are concerned in country but also there is no doubt that for DRC to deliver its real potential it needs a lot more investment from the very same investors. And me personally I believe that every reason to believe that we will find an amicable agreement or solution to this in part, going forward the challenges doesn’t have to go through more trauma or can we all sit down around the table in a constructive way negotiate something that’s good for the Congo, and my point is that if it's good to the Congo its always going to be good for the industry. So, with that operator we pass it back to you and you can manage the questions going forward.

Operator: [Operator Instructions] We have a question from Joshua Wolfson from Desjardins Securities. Please go ahead.

Joshua Wolfson: First question I had was on Massawa. Earlier in the call, you mentioned initial capital would be on the order of $500 million to $600 million. I think the old number you had discussed was $438 million. Does the new number include life of mine sustaining capital as well as the initial capital? Or is that the new upfront number being $500 million to $600 million?

Mark Bristow: No Josh I just stated if you want to hear a quick and dirty sort of numbers that you can look at, we definitely won't be more than. I think just a sort of rough estimate at this stage and when you take that even with that higher capital it’s still an attractive return and its still very low capital intensity as gold mining projects go. So, you know that's the details that this is probably at the end of the whole program around 500 million to 600 million including sustaining capital is the standard for a 10 year mine, if you go back and you look at Tongon, historically that’s the sort of number that comes up.

Joshua Wolfson: Got it. And so, from, I guess, a big picture perspective, the project has always screened well relative to other West African ones. If the project, I guess, fails to meet the 20% IRR but it comes pretty close, would you still advance it later this year? Or is that 20% rule kind of going to be maintained?

Mark Bristow: I think as I always said, we retain the right to change our mind in perfect harmony with changing circumstances. So, you know the one things that is embedded in our cost guidance for this year is we have a view that there is more upward pressure or there's going to be more upward pressure in the input costs this year than there was in the previous three years. And so, whether it’s the oil cost which we forecast the higher across or just the general input costs of mine. I think the other thing that's changed a lot is the fiscal foundation across sub-Saharan African in developing new mines and Massawa is privileged to have a grandfathered fiscal regime which comes with a five, it's actually a seven year as pointed out earlier today. Seven years from the circular production decision, [indiscernible] for five years tax holiday. It's got 3% royalty, the 25% tax rate, so you know that's a very attractive fiscal regime and it’s not one that's going to be readily available to any investor in the not too distant future, so we will certainly look at the benefits of being able to do that, the overall prospectivity of Massawa. But right now, we're really comfortable to pass this and get our board's approval without having to sort of negotiate on any one particular component.

Joshua Wolfson: Got it. And 2 other sorts of quick questions on the tax or dividend paying side of things. The first up, for Loulo, it looks like you'll recover your capital at some point maybe in the next year or 2. Are you expected to start paying dividends at that point? And is there any sort of ability to leverage that against the outstanding VAT arbitration proceedings? Or are those 2 completely separate items?

Mark Bristow: So, TVA [indiscernible] so as you see a slight improvement, increase in TVA that's really managing the amount of revenue net revenue coming out of the operations with the increased investment in Gounkoto. But we're pretty relaxed and no country including the DRC, has any dispute on the actual TVA credit and it needs to be paid back. As far as mining and disputed files goes, again we made good progress on that front, and we're, we have an agreement in principle with the Ministry of Finance on moving forward to select the mutually acceptable specific way to develop the work with our teams to deal internally with undisputed and come up with amicable settlements for the all damage of disputes. So that's good news, and again I want to reiterate on the TVA front we do have the right of offset that we do exit that. And we're not stating with any conflict when it comes to the aspect around this.

Joshua Wolfson: Okay. And my last question also on taxes. With regards to the comments that Gecamines is making with, I guess related to its own interest, and I guess not having seen profits there, how are -- how do you navigate that situation when you have I guess 2 different entities kind of coming out for -- or looking for more money? And also, that in the context of elections later this year. And what are implications are for ...

Mark Bristow: There is a lot of Paranoia probably in our foreign investors are more paranoid than we are. And at Gecamines there is special types of I mean sarcastically. It is a parasite who has operated in an insolvent and now that the Chief Executive first of all one minute is masquerading as the representative for private investment in the country and then the next minute, he's trying to harvest a whole lot money to fully open the business. And I mean it doesn't all the well for any business partnership when you stand up in public and demand that you have a right to jazz more although to really jazz relationships. The good news is that we don't have to deal with Gecamines. And I think that the takeaway is that ultimately the lot of commercial balance will prevail. Because either there will be profitable partnership with real opportunities for the partners to be able to deliver for its shareholders or it will still go on very quickly. And I think that and then with that we will get a new set of investors with a new set of projects. But I think without a job it's we're dealing now with individuals within this Congolese structure demanding sort of imaginative changes in the contracts with investors including some of the biggest investors in the world who have stepped up to the plate and put real hard money into these relationships. So, I am, we'll see how that works out. And we see that before Josh, across the continent and ultimately, I think today, the world is very difficult to operate in an island. I think on the flipside, what we can say is, our relationship is Kemah is healthy, it's robust. They are an integral part of our business and we are very committed to continue to develop additional projects with the Kemah coordinates and its operating team. And I think that would be our jolt.

Operator: Our next question is from David Haughton from CIBC. Please go ahead.

David Haughton: Good evening, Mark. Thank you for the update and thanks for all the color on the DRC. Obviously, a lot of attention there. I've got a different question on the DRC. Kibali, you've now got the underground handling system up and running. I just wondering, what your ramp expectation is for throughput from the undergrounding. And are you targeting still getting 3.6 million per ounce from the undergrounded 2019.

Mark Bristow: Yes. The capacity of 3.6 million tons on an annualized basis. In one of the slides in our slide show, you will see the monthly forecast for this year. We don’t actually get to 3.6 aggregate at the end of the year. Because we have swings and roundabouts. So certainly, some of the mines are up there at 3.6 million tons. And it's really the way the mine schedule works, but we are, as you go and analyze that slide it is very important for you. It's a combination of what's hoisted and chasable of being hoisted. Yeah.

David Haughton: But there does appear to be a bit of mismatch between what you've got in that slide and what you're saying in the quarter for the tons mined. And I'm just wondering, when we are looking at this, should we be thinking that you can easily exit 2018 at a consistent 3.6 million tons?

Mark Bristow: Sure. The production is 3.3 million tons at 4.8 grams a ton.

David Haughton: Great. And then similar kind of question just at Tongon. You've got stabilization up to now. Just wondering is it a sustainable 4.5 million tons grams through that plant?

Mark Bristow: You're talking about Tongon?

David Haughton: Tongon now.

Mark Bristow: Yeah sure. So, I mean we're comfortable there David, we've just put in another 8-megawatt motor not to expand it even further. But if you look at quarter 4, we're pretty much there. Just to be able to give us the extra capacity to ensure that our maintenance management is able to support consistent 4.5 million tons throughput.

David Haughton: And returning now to the political scene in the DRC what's the next step for you, is the government open to negotiations with you or what's the next step?

Mark Bristow: So, right now we've engaged as the industry and individually winning goals for Kibali, with the authorities from the highest level of the government and all the other stakeholders including civil society, parliamentarians, citizens and so on, and it's all very early days David, so for me to meet out any I do this, they do this, and we don’t respond like this, first of all I don't think it share that in a public forum and then secondly if there is still a way to go before this thing actually gets to a point where we have to deal with options. I think first part for everyone is sanity prevails and we sit down around the table with the executive governments and work out something that's good for everyone.

David Haughton: So, parliament has passed the bill as we've seen the headlines, the President is yet to sign off, so can the President with your negotiations push it back tell them saying not good enough guys, we want to recheck it?

Mark Bristow: Yes. The President today anything he likes.

David Haughton: So, you have to think I mean the President that changes are needed and then process sort of goes through an [update]?

Mark Bristow: Yes. And I mean this is not a one man show and that seems in that the remaining advisors and other sort of influential chancellors for the want of a better word that are [indiscernible] final stakeholder relationship.

David Haughton: So, until he signs it, the door is still open.

Mark Bristow: Exactly and even subsequent to that because we have recourse to engaging arbitration and more sort of confrontational approaches which is not the most constructive way to deal with things like this.

Operator: Our next question is from Howard Flinker from Flinker & Co. Please go ahead.

Howard Flinker: Did you say your CapEx this year will be 300 million? I didn't hear it clearly.

Mark Bristow: 225. Last year it was just over 300.

Operator: Our next question is from Tanya Jakusconek from Scotia Bank. Please go ahead.

Tanya Jakusconek: I just have -- and this is, Mark, from a very cold Toronto, like minus 10. So, it's sunny but cold. Just wanted to ask you, going back to Kibali and I know that Dave asked about the President and where we go from here. Thank you for mentioning the royalty and the ownership, the 10% and the 30% no change. But just on the windfall, you've seen, I guess, what's come back. Is there a mathematical formula or something you can share with us in terms of what they're asking from a windfall perspective?

Mark Bristow: Sure, its 25% above the feasibility study goal thrust and there's no provision for the feasibility per se, in the previous stages sanctioned. But if you go back its probably realistic to point out that on the developed -- on the investment decision, it was average commodity price global commodity price for that period and so 25% on that price would be -- would attract additional tax however, in part of normal tax rate, which is 30%, and the indication to just get to be around 50, instead of 30.

Mark Bristow: There is a differential.

Mark Bristow: Yes, the differential.

Tanya Jakusconek: So instead of paying a 30% tax rate, you'll be paying 50%?

Mark Bristow: On that differential, yes.

Tanya Jakusconek: Okay, that’s great.

Mark Bristow: Tanya, I was going to note, which Mark pointed out on the call earlier is that at the time that we made the development decision the gold price was [$1500] an ounce. So, in theory, it would have to go above that before this would apply to us.

Tanya Jakusconek: Yes. No, I appreciate but if they're changing all sorts of things, you may guess that they might even change -- bring it to spot pricing, I'm not sure. Okay, so but it's helpful that…

Mark Bristow: I know it's very cold in Canada and all that sort of thing and you feel like better interested and jealous that we are sitting in the sun but we have got enough problems dealing with these government officials and we don’t know any additional for legislation to already complex one.

Tanya Jakusconek: No, we are not adding legislation, just trying to understand the mathematics of it. And then you said the $0.04 royalty unchanged, 10% ownership unchanged and 30% tax rate unchanged.

Mark Bristow: Yes. As we said we are still working through the details of the fiscal components of this legislation. But the point here is, the -- our first prize is it's relatively benign for Kibali, but that's not the point. The point is we didn’t go and $2 plus billion of our shareholders money just to exploit Kibali and be forced to hydrate it and stick to our 10-year minimum. Our change in this is to participate in the development of this mining industry in DRC and have the ability to reinvest and that’s the point we are making to everyone. Just hang on I'll be careful that you don't roast the gold in and prevent any opportunities for your investments.

Tanya Jakusconek: Okay. Well, I guess, we'll wait to see what happens as this moves along. May be just moving onto the Loulo-Gounkoto complex. Just wanted to make sure that in those 5-year forecasts that doesn't include anything from the super pit?

Mark Bristow: On the five-year forecast, yes it does, but in super pit business the contengium of you know our current business profiles, so it's picked and what the super pit did as we disclosed last time we spoke when we sort of gave you the details of the mine cast is that it pegs that [indiscernible] six-seven thousand ounces that's $600 and below dollars an ounce that's what it does. And have you know we took you through the -- you know the way we capitalize this strip and that sort of thing and that's all baked into that capital project.

Tanya Jakusconek: Okay. Just want to make sure we don't double count it. And just on the Massawa, you mentioned that we are going to get production decision sometime later this year. When is later this year? Are you targeting midyear or end of year?

Mark Bristow: So, no one usually roast me upon this today so I'm not going to get good dates and I think that the point here is, one of the things that people say is you know that they've been up a long road try to fit in and that's correct because you know Randgold has a history of making the right decisions and we allocate capital very carefully. And if you go back to when it was Morila or Loulo or Gounkoto, or Tongon we've always taken our time because we understand the one-way decision when you starting holding mines and Massawa is as far as our rental rates goes is not -- is not going to apply to any of defaulters really and very similar to Tongon when we wrestled with that decision because remember we were going to start Tongon first and then we leapfrogged towards Loulo because there's the discovery of Yalea and Yalea we were two years late in the decision after we indicated that we would told this because it didn’t fit our criteria at this stage. And so you know Massawa is you know compared to anything else in sub-Saharan Africa it's got more ounces at a lower price rate any of the undeveloped assets and it’s very close to meeting our criteria that we got a bit more work to do on the metallurgy both [indiscernible] in particular and we believe that you know additional drilling to actually get the project through our hurdles is warranted rather than try to become you know a hostage to the premise.

Tanya Jakusconek: Okay. Well maybe just to confirm some numbers that you provided to us when you were here in Toronto in November. And that was that we were still at about a hurdle rate of about 18%, and I think we were still looking for a couple of hundred thousand ounces to help get that hurdle rate to what you need. Is that something that is still on target? Is that -- has anything changed there?

Mark Bristow: Exactly that we're, we're still around that -- I think 2.6 billion ounces reserved because we haven't declared anything else but there's a couple of extra 100,000 ounces on that right now which is currently the focus of reserve conversion. And in addition to that there’s a few more targets that we’re drilling out. So, we're still very well positioned to complete a final feasibility study by the end of the year. That would require our board, in principle, to approve us; progressing towards that point sometime in the middle of the year, if that helps you with your planning. But as I pointed out, everything is conditional on that project being able to pass hurdle.

Tanya Jakusconek: Okay. Thank you. I look forward to get into more information.

Mark Bristow: And we've got the production forecast in 2021.

Operator: [Operator Instructions] We have no further question. Mr. Bristow, back to you for conclusion.

Mark Bristow: Thank you very much. Thank you, thank you, ma’am and thank you everyone for making the time and I’m sorry that you're so cold in Toronto, Tanya. So, everyone we -- as you know, it’s --- in a short while, we'll see you down in sunny Florida. And for those people who are not going to be migrating down there with the snow geeks, we'll see you in New York, and we'll be moving up through Toronto as well. So, over the next couple of weeks, we'll be catching up with all of you on a face-to-face basis. Again, thanks for joining the call.

Operator: This concludes today’s conference call. Thank you all for your participation. You may now disconnect.