The Feasibility Study Process and Selecting the

Best Option

John Elkington General Manager – UK

From Idea to Production

• Develop corporate plan and strategy • The path to production is complex • When is a project feasible? • Preparation is the key to success • Break the process into logical steps • Save time – Save money

The feasibility study process

Concept (Ideas)

Scoping (Viability)

Pre-feasibility (Selection)

Feasibility (Definition)

Level of study

Know

ledg

e

Collection and analysis Understanding the project Selection

Confirmation and increased confidence

A Snowden perspective

Concept Study

• Objective   Identify a potential project (the idea)   Identify options that should be considered   SWOT analysis   Review the corporate strategy   Decision to proceed to next stage   Develop work plan and budget for the next stage

Scoping Study (preliminary economic assessment)

• Objective   Identify potentially technically and economically viable options   Demonstrate potential viability of one option   Risk analysis, fatal flaws and major risks identified   Indicated and inferred resource   Simple cashflow model   Discard unviable options if possible   Technical peer review   Review strategy   Identify decisions that need to be made at the next level of study   Develop work plan and budget for the next stage

Pre-feasibility Study (Options study)

• Objective   Investigate viable options from the scoping study   Risk analysis, fatal flaws and major risks identified   Detailed cashflow model for all options   Determine a single option to take forward to feasibility   Review strategy   Identify data requirements for the next stage   Measured/Indicated Mineral Resource; Probable Ore Reserve   Technical peer review and independent due diligence   Develop work plan and budget for the next stage

Feasibility Study

• Objective   Determine feasibility   Detail a single viable option from the pre-feasibility study

  Capex, Opex and mining schedules(+/-10% to 15%)   Measured/Indicated Resource; Proved/Probable Reserve   Detailed cashflow model with financial analysis   Compare with PFS and review strategy   Project Execution Plan   Risk Analysis with mitigation strategies   Technical reviews completed   No outstanding issues

Consequences

Mexico ∆% Alaska ∆% Australia ∆%Year Cu Co Zn Year Au Ag Year Iron ore

PFS 2007 0.54 2006 2.56 FS 2007 0.57 5% 2009 5.28 107% 2007 1.71Post 2010 1.03 82% 2011 6.68 26% 2011 2.57 51%

El Boleo Donlin Creek KararaBaja Mining NovaGold Barrick JV Gindalbie

USDbn Capex

Capital

Mexico ∆% Alaska ∆% Australia ∆%Year Cu Co Zn Year Au Ag Year Iron ore

PFS 2007 0.54 2006 2.56 FS 2007 0.57 5% 2009 5.28 107% 2007 1.71Post 2010 1.03 82% 2011 6.68 26% 2011 2.57 51%

El Boleo Donlin Creek KararaBaja Mining NovaGold Barrick JV Gindalbie

USDbn Capex

Source: Public information, August 2012

Markets

Risk

Sustainability

Randgold Resources Market Cap 2012 USD 8.9 bn