Half Year Financial Results and Accounts

RNS Number : 9969J
Resolute Mining Limited
27 August 2021
 

27 August 2021

Resolute Mining Limited

(Resolute or the Company)

 

Appendix 4D

Half Year Report for the six months ended 30 June 2021

Reporting Period

The reporting period is for the half year ended 30 June 2021 with the corresponding reporting period being for the six months ended 30 June 2020.

Results for Announcement to the Market

 

30 June 2021

$'000

30 June 2020

$'000

Up / (Down)

$'000

% Increase / (Decrease)

Revenues from ordinary activities (including discontinued operations)

261,311

305,291

(43,980)

(14%)

Earnings before interest, tax, depreciation, amortisation and fair value adjustments (EBITDA) (including discontinued operations)

77,720

101,110

(23,390)

(23%)

Profit/(loss) after income tax (including discontinued operations)

(219,790)

36,293

(256,083)

(706%)

Profit/(loss) from ordinary activities after income tax attributable to members/net profit for the year (including discontinued operations)

(183,851)

34,240

(218,091)

(637%)

Dividend Information

 

Amount per share

$

Franked amount per share

$

Interim dividend for the half-year ended 30 June 2021

NA

NA

Net Tangible Assets

 

30 June 2021

$

31 December 2020

$

Net tangible assets per share

0.51

0.71

This half year report should be read in conjunction with the most recent annual financial report for the year ended
31 December 2020. All dollar figures are United States dollar (US$) currency unless otherwise stated.

 

Corporate Directory

Directors

Non-Executive Chairman   Martin Botha

Managing Director and CEO   Stuart Gale

Non-Executive Director   Yasmin Broughton

Non-Executive Director   Mark Potts

Non-Executive Director   Sabina Shugg

Non-Executive Director   Adrian Reynolds

Company Secretary

Richard Steenhof

Registered Office and Business Address

Level 2, Australia Place

15-17 William Street

Perth, Western Australia 6000

Postal

PO Box 7232 Cloisters Square

Perth, Western Australia 6850

Telephone: + 61 8 9261 6100

Facsimile: + 61 8 9322 7597

Email: contact@rml.com.au

ABN 39 097 088 689

Website

Resolute Mining Limited maintains a website where all announcements are available: www.rml.com.au

 

Share Registry

Computershare Investor Services Pty Limited

Level 11, 172 St Georges Terrace

Perth, Western Australia 6000

Home Exchange

Australian Securities Exchange

Level 40, Central Park

152 St Georges Terrace

Perth, Western Australia 6000

 

Quoted on the official lists of the

Australian Securities Exchange (ASX) and London Stock Exchange (LSE)

 

ASX/LSE Ordinary Share Code: "RSG"

Securities on Issue (30/06/2021)

Ordinary Shares   1,103,892,706 Performance Rights        6,304,228

Auditor

Ernst & Young

Ernst & Young Building

11 Mounts Bay Rd

Perth, Western Australia 6000

 

Shareholders wishing to receive copies of Resolute's ASX announcements by e-mail should register their interest by contacting the Company at contact@rml.com.au

 

 

Table of Contents

Directors' Report                                                           4 4

Auditor's Independence Declaration                              9

Consolidated Statement of Comprehensive Income    10

Consolidated Statement of Financial Position             12 12

Consolidated Statement of Changes in Equity            14 14

Consolidated Cash Flow Statement                            16 16

Notes to the Financial Statements                               17 17

Directors' Declaration                                                   36

Independent Auditor's Review Report                         37

 

 

Directors' Report

Your directors present their half year report on the consolidated entity (referred to hereafter as the "Group" or "Resolute") consisting of Resolute Mining Limited and the entities it controlled at the end of or during the half year ended 30 June 2021 (H1 21).

Corporate Information

Resolute Mining Limited ("Resolute" or "the Company") is a company limited by shares that is incorporated and domiciled in Australia.

Directors

The names of the Company's directors in office during the entire half year period and until the date of this report are set out below. Directors were in office for this entire period unless otherwise stated.

Martin Botha (Non-Executive Chairman)

Stuart Gale (Managing Director and CEO) (appointed 17 May 2021)

Yasmin Broughton (Non-Executive Director)

Mark Potts (Non-Executive Director)

Sabina Shugg (Non-Executive Director)

Adrian Reynolds (Non-Executive Director) (appointed 28 May 2021)

Peter Sullivan (Non-Executive Director) (resigned 27 May 2021)

Company Secretary

Richard Steenhof (appointed 23 July 2021)

Amber Stanton (resigned 23 July 2021)

Key Highlights

Key highlights for half year ended 30 June 2021 include:

· Net loss after tax of $220 million inclusive of non-cash impairment charge of $167 million on the Syama mine

· On site COVID-19 vaccination program has seen 1,114 employees and contractors immunised with no disruption to operations

· $20 million voluntary debt repayment completed earlier than scheduled

· Restoration of the Bibiani Mining Lease

Operations Review

In H1 21, a total of 163,118 ounces (oz) of gold were produced (poured) at an All-In Sustaining Cost (AISC) of $1,277/oz with total gold sales of 151,503oz at an average realised price of $1,723/oz.

During H1 21, 3 million tonnes (Mt) of ore was milled at an average grade of 2.11 grams per tonne (g/t Au) for 162,705oz of gold recovered. Group's gold in circuit balance of 83,213oz valued at $146 million based on a gold price of $1,755/oz at 30 June 2021.

 

 

Directors' Report

Production and Cost Summary for H1 21

 

Units

Syama Sulphide

Syama Oxide

Syama Total

Mako

Group
Total

UG Lateral Development

M

4,176

-

4,176

-

4,176

UG Vertical Development

M

58

-

58

-

58

Total UG Development

M

4,234

-

4,234

-

4,234

UG Ore Mined

T

1,249,872

-

1,249,872

-

1,249,872

UG Grade Mined

g/t Au

2.41

-

2.41

-

2.41

OP Operating Waste

BCM

5,029

2,052,797

2,057,826

3,795,243

5,853,069

OP Ore Mined

BCM

9,846

298,857

308,703

428,567

737,270

OP Grade Mined

g/t Au

1.98

1.98

1.99

1.99

Total Ore Mined

T

1,270,746

641,958

1,912,704

1,206,766

3,119,470

Total Tonnes Processed

T

1,093,460

752,666

1,846,126

981,872

2,827,998

Grade Processed

g/t Au

2.52

1.43

2.07

2.18

2.11

Recovery

%

77.8

86.4

81.3

93.1

85.4

Gold Recovered

Oz

68,915

29,880

98,795

63,910

162,705

Gold in Circuit Drawdown/(Addition)

Oz

1,765

(948)

817

(404)

413

Gold Produced (Poured)

Oz

70,680

28,932

99,612

63,506

163,118

Gold Bullion in Metal Account Movement (Increase)/Decrease

Oz

19,440

(27,810)

(8,370)

(3,245)

(11,615)

Gold Sold

Oz

90,120

1,122

91,242

60,261

151,503

Achieved Gold Price

$/oz

 

 

 

 

1,723

Cost Summary

 

Mining

$/oz

743

373

636

435

558

Processing

$/oz

429

470

441

352

406

Site Administration

$/oz

147

263

181

126

159

Site Operating Cost

$/oz

1,319

1,106

1,258

913

1,123

Royalties

$/oz

95

98

96

82

93

By-Product Credits + Corp Admin

$/oz

(1)

(1)

(1)

-

49

Total Cash Operating Costs

$/oz

1,414

1,204

1,354

995

1,265

Sustaining Capital + Others

$/oz

104

118

108

115

111

Total Cash Expenditure

$/oz

1,518

1,322

1,462

1,110

1,376

Stockpile Adjustments

$/oz

(122)

65

(68)

(23)

(50)

Gold in Circuit Movement

$/oz

(94)

(13)

(71)

(23)

(52)

Asset Reclamation & Remediation

$/oz

5

5

5

-

3

Total Non-Cash Adjustments

$/oz

(211)

57

(134)

(46)

(99)

All-In Sustaining Cost (AISC)

AISC is calculated on gold produced (poured)

$/oz

1,307

1,379

1,328

1,064

1,277

 

 

 

Directors' Report

COVID-19

Resolute in partnership with the Malian and Senegalese health authorities, have vaccinated a total of 1,114 employees and contractors at Syama and Mako. These vaccination programs are ongoing.

Resolute continues to manage strict COVID-19 protocols across the Group to protect the health, safety and wellbeing of our people and has not experienced any ongoing disruption to operations as a result. 

Syama Gold Mine

At the Syama Gold Mine in Mali (Syama), H1 21 production was 99,612oz at an AISC of $1,328/oz.

Sulphide Operations

During H1 21, production from the Syama sulphide circuit was 70,680oz at an AISC of $1,307/oz. Gold production from the sulphide circuit increased by 21% in H1 21 compared to H1 20. The consistent improvement in H1 gold production is driven by record levels of processing and roaster throughput achieved year to date. This was offset by a lower processed grade coinciding with an increase in ore mined (drawn) from the sub-level cave. Grade impacts are expected to be temporary and reflect the location of the current draw points.

Oxide Operations

During H1 21, production was 28,932oz at an AISC of $1,379/oz. Oxide ore mining continued at the Cashew open pit south of Syama. Ore supply to the mill comprised a combination of run of mine material from Cashew and low-grade stockpiles.

Processing volumes, which were affected by material handling issues arising from processing of low-density, sticky ore from Cashew. The grade processed was below expectation as a result of the requirement to blend lower grade material to minimise the material handling issues experienced with Cashew ore.

Mining commenced at Tabakoroni where an extension to the previously mined Splay pit is now underway and will be the principal ore source for the remainder of 2021.

Exploration

In Mali, reverse circulation (RC) and diamond drilling programs continue the focus on identifying additional oxide and sulphide mineral resources within trucking distance of the Syama treatment facility.  RC drill programs concentrated on resource drilling of oxide mineralisation adjacent to the satellite pits north of Syama. Diamond drilling continues at the Tabakoroni Main Shear Zone with the primary focus to infill and expand the high-grade lens of gold mineralisation located underneath the south pit.

In Senegal, an auger drilling program is underway on the Koulountou East permit which is located 25km east of the Mako site. Early results show anomalous gold from the Koulountou granite and on the contact with the mafic volcanics.

In Guinea, auger drilling programs were undertaken at the Niagassolo and Doko permits during H1 21. Early analytical results have outlined the SW corner at Niagassola as of particular interest in an area which coincides with widespread artisanal mining activity. A soil geochemistry survey over the Kourouba West JV property has identified two strong gold in soil anomalies which will be followed up later in 2021.

Mako Gold Mine

During H1 21, production from the Mako Gold Mine was 63,506oz at an AISC of $1,064/oz. During the H1 21, Mako continued to perform to plan, production is lower as a cut-back of the main pit is currently being undertaken which will provide access to deeper sections of the deposit in line with the updated Life of Mine Plan.

 

 

Directors' Report

Bibiani Gold Mine

On 19 August 2021, the Group completed the sale of the Bibiani Gold Mine in Ghana to Asante Gold Corporation for $90 million with $30 million paid up front, $30 million on or before 6 months from completion and $30 million on or before 12 months from completion.

Financial Overview

Profit and Loss Analysis
($'000s)

H1 21
Group

 

H1 20
Group

Revenue

261,311

 

305,291

Cost of sales excluding depreciation and amortisation

(132,689)

 

(153,208)

Royalties and other operating expenses

(30,173)

 

(35,047)

Administration and other corporate expenses

(9,035)

 

(11,329)

Exploration and business development expenditure

(11,694)

 

(4,597)

EBITDA

77,720

 

101,110

Depreciation and amortisation

(60,626)

 

(92,712)

Net interest and finance costs

(7,222)

 

(13,558)

Fair value movements and unrealised treasury transactions

(26,282)

 

15,661

Other

(2,281)

 

305

Impairment expense

(172,460)

 

-

Gain on disposal

-

 

41,475

Net profit/(loss) before tax

(191,151)

 

52,281

Indirect tax expense

(13,101)

 

-

Income tax expense

(15,538)

 

(15,988)

Net profit/(loss) after tax

(219,790)

 

36,293

Financial Performance

Revenue for H1 21 was $261 million, inclusive of discontinued operations, from gold sales of 151,503oz at an average realised price of $1,723/oz compared to the average spot price over the period of $1,803/oz.

Gross Profit from Operations was $39 million after depreciation and amortisation of $59 million. Resolute reported a Net Loss After Tax of $220 million. Resolute continued to invest heavily in the business in H1 21 with capital expenditures on development, property, plant and equipment totalling $31 million and exploration and evaluation expenditure of $6 million.

 

 

Directors' Report

As a result of the combination of historical operational performance, increased discount rate and decreased gold price assumptions, a net impairment loss of $167 million was recorded in the current period against the Syama Gold Mine.

Financial Position

As at 30 June 2021, Resolute has cash ($52 million), bullion (20,475oz of gold valued at $36 million using
30 June 2021 spot rate), additional liquid assets ($53 million) and a Promissory note valued at $40 million (A$54 million). The Group's borrowings inclusive of the Facility and its Bank du Mali (BDM) overdraft facility was $310 million at 30 June 2021. Resolute also held receivables of $67 million associated with Malian VAT paid and refundable.

 

Significant Events After Balance Date

On 19 August 2021, the Group announced the successful completion of the sale of the Bibiani Gold Mine in Ghana to Asante Gold Corporation for $90 million.

Auditor's Independence

Refer to page 9 for a copy of the Auditor's Independence Declaration to the Directors of Resolute Mining Limited.

Rounding

Resolute is a company of the kind specified in Australian Securities and Investments Commission Corporations (Rounding in Financial Directors' Reports) Instrument 2016/191. In accordance with that Instrument, amounts in the financial report and the Directors' Report have been rounded to the nearest thousand dollars unless specifically stated to be otherwise.

Signed in accordance with a resolution of the directors.

 

Signed version available at Resolute website: www.rml.com.au 

 

Stuart Gale

Managing Director & CEO

 

Perth, Western Australia

27 August 2021

 

 

 

 

 

AUDITOR'S INDEPENDENCE DECLARATION

 

Declaration available on full report at www.rml.com.au 

Consolidated Statement of Comprehensive Income

 

Note

For the half year ended 30-Jun-21

US$'000

For the half year ended 30-Jun-20

US$'000

Continuing operations

 

 

 

Revenue from contracts with customers for gold and silver sales

3

261,311

290,023

Costs of production relating to gold sales

3

(132,689)

(140,139)

Gross profit before depreciation, amortisation and other operating costs

 

128,622

149,884

 

 

 

 

Depreciation and amortisation relating to gold sales

3

(59,421)

(90,841)

Other operating costs relating to gold sales

3

(30,173)

(32,916)

Gross profit from continuing operations

 

39,028

26,127

 

 

 

 

Interest income

3

1,186

1,005

Other income / (expense)

3

264

(88)

Exploration and business development expenditure

3

(11,694)

(4,418)

Impairment of exploration and evaluation assets

3

(5,087)

-

Impairment of mine properties and property, plant and equipment

3

(167,373)

-

Administration and other corporate expenses

3

(8,511)

(10,260)

Share-based payments expense

3

(524)

(897)

Treasury - realised gains/(losses)

3

(1,333)

(187)

Fair value movements and unrealised treasury transactions

3

(26,282)

16,179

Share of associates' losses

3

(1,212)

(347)

Depreciation of non-mine site assets

3

(1,205)

(1,824)

Finance costs

3

(8,408)

(14,484)

Indirect tax expense

3

(13,101)

-

 

 

 

 

(Loss)/ profit before tax from continuing operations

 

(204,252)

10,806

 

 

 

 

Income tax expense

3&6

(15,538)

(15,988)

(Loss) for the period from continuing operations

 

(219,790)

(5,182)

 

 

 

 

Discontinued operations

 

 

 

Gain for the period from discontinued operations

12

-

41,475

Profit for the period

(219,790)

36,293

 

 

 

 

Profit attributable to:

 

 

 

Members of the parent

 

(183,851)

34,240

Non-controlling interest

 

(35,939)

2,053

 

 

(219,790)

36,293

 

 

 

 

 

 

Consolidated Statement of Comprehensive Income (continued)

 

Note

For the half year ended 30-Jun-21

US$'000

For the half year ended 30-Jun-20

US$'000

Profit for the period (brought forward)

 

(219,790)

36,293

 

 

 

 

Other comprehensive income/(loss)

 

 

 

 

 

 

 

Items that may be reclassified subsequently to profit or loss

 

 

 

 

 

 

 

Exchange differences on translation of foreign operations:

 

 

 

- Members of the parent

 

(9,143)

(2,590)

 

 

 

 

Items that may not be reclassified subsequently to profit or loss

 

 

 

 

 

 

 

Exchange differences on translation of foreign operations:

 

 

 

- Non-controlling interest

 

1,829

20

Changes in the fair value/realisation of financial assets at fair value through other comprehensive income, net of tax

 

(10,981)

7,474

 

 

 

 

Other comprehensive income/ (loss) for the period, net of tax

 

(18,295)

4,904

 

 

 

 

Total comprehensive income/ (loss) for the period

 

(238,085)

41,197

 

 

 

 

Total comprehensive income/ (loss) attributable to:

 

 

 

Members of the parent

 

(203,975)

39,124

Non-controlling interest

 

(34,110)

2,073

 Total comprehensive income/ (loss) for the period

 

(238,085)

41,197

 

 

 

 

Earnings (loss) per share for net income (loss) attributable for operations to the ordinary equity holders of the parent:

 

 

 

Basic earnings per share

 

(16.65) cents

3.27 cents

Diluted earnings per share

 

(16.65) cents

3.27 cents

 

 

 

 

Loss per share for net loss attributable for continuing operations to the ordinary equity holders of the parent:

 

 

 

Basic (loss)/ earnings per share

 

(16.65) cents

(0.69) cents

Diluted (loss)/ earnings per share

 

(16.65) cents

(0.69) cents

 

 

 

 

 

 

 

 

 

 

Consolidated Statement of Financial Position

 

Note

30-Jun-21
US$'000

31-Dec-20
US$'000

Current assets

 

 

 

Cash and cash equivalents

 

52,295

88,591

Receivables

7

77,489

78,852

Inventories

8

181,548

158,929

Financial assets at fair value through other comprehensive income

16

23,407

36,004

Asset held for sale

 

83,916

80,608

Current tax asset

 

18,046

17,911

Prepayments and other assets

 

12,936

8,785

Financial derivative assets

15 & 16

946

-

Total current assets

 

450,583

469,680

Non current assets

 

 

 

Inventories

8

68,133

67,923

Prepayments

 

4,571

-

Investments in associates

 

4,168

4,649

Promissory note receivable

12

40,370

40,262

Contingent consideration receivable

12

15,014

15,417

Deferred tax assets

 

-

10,081

Exploration and evaluation

 

1,339

6,469

Mine Properties

9

369,594

495,281

Property, plant and equipment

 

209,522

292,678

Right-of-use assets

 

14,228

22,518

Total non current assets

 

726,939

955,278

Total assets

 

1,177,522

1,424,958

Current liabilities

 

 

 

Payables

 

100,622

83,832

Financial derivative liabilities

15 & 16

-

415

Interest bearing liabilities

10

81,661

62,558

Provisions

11

84,776

75,720

Lease liabilities

 

5,186

11,249

Liabilities associated with the assets held for sale

 

9,925

8,821

Total current liabilities

 

282,170

242,595

Non current liabilities

 

 

 

Interest bearing liabilities

10

228,548

273,613

Provisions

11

69,977

71,863

Deferred tax liabilities

 

9,652

9,422

Lease liabilities

 

9,592

12,358

Total non current liabilities

 

317,769

367,256

Total liabilities

 

599,939

609,851

Net assets

 

577,583

815,107

 

 

Consolidated Statement of Financial Position (continued)

 

Note

30-Jun-21
US$'000

31-Dec-20
US$'000

Equity attributable to equity holders of the parent

 

 

 

Contributed equity

13

777,021

777,021

Reserves

 

4,612

24,175

Retained earnings/accumulated losses

 

(142,330)

41,521

Total equity attributable to equity holders of the parent

 

639,303

842,717

Non-controlling interest

 

(54,467)

(20,629)

Non-controlling interest of disposal group held for sale

 

(7,253)

(6,981)

Total equity

 

577,583

815,107

 

 

 

Consolidated Statement of Changes in Equity

 

Contributed equity

Net unrealised gain/(loss) reserve

Convertible notes / Share options equity reserve

Non-controlling interests reserve

Employee equity benefits reserve

Foreign currency translation reserve

Retained earnings/ accumulated losses

Non-controlling interest

Non-controlling interest of disposal

group held for sale

Total

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2021

777,021

4,350

4,876

(724)

18,607

(2,934)

41,521

(20,629)

(6,981)

815,107

 

 

 

 

 

 

 

 

 

 

 

Loss for the period

-

-

-

-

-

-

(183,851)

(35,667)

(272)

(219,790)

Other comprehensive (loss)/income, net of tax

-

(10,981)

-

-

-

(9,143)

-

1,829

-

(18,295)

Total comprehensive (loss)/income for the period, net of tax

-

(10,981)

-

-

-

(9,143)

(183,851)

(33,838)

(272)

(238,085)

 

 

 

 

 

 

 

 

 

 

 

Share-based payments to employees

-

-

-

-

561

-

-

-

-

561

At 30 June 2021

777,021

(6,631)

4,876

(724)

19,168

(12,077)

(142,330)

(54,467)

(7,253)

577,583

 

 

 

 

 

Consolidated Statement of Changes in Equity (continued)

 

Contributed equity

Net unrealised gain/(loss) reserve

Convertible notes / Share options equity reserve

Non-controlling interests reserve

Employee equity benefits reserve

Foreign currency translation reserve

Retained earnings

Non-controlling interest

Total

 

 

 

 

 

 

 

 

 

 

At 1 January 2020

639,859

(12,287)

4,876

(724)

17,077

(55,383)

25,449

5,228

624,095

 

 

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

-

34,240

2,053

36,293

Other comprehensive (loss)/income, net of tax

-

7,474

-

-

-

(2,590)

-

20

4,904

Total comprehensive (loss)/income for the period, net of tax

-

7,474

-

-

-

(2,590)

34,240

2,073

41,197

 

 

 

 

 

 

 

 

 

 

Shares issued

137,162

-

-

-

-

-

-

-

137,162

Share-based payments to employees

-

-

-

-

1,055

-

-

-

1,055

At 30 June 2020

777,021

(4,813)

4,876

(724)

18,132

(57,973)

59,689

7,301

803,509

 

 

Consolidated Cash Flow Statement

 

For the half year ended 30-Jun-21

US$'000

For the half year ended 30-Jun-20

US$'000

Cash flows from operating activities

 

 

Receipts from customers

261,224

303,582

Payments to suppliers, employees and others

(204,504)

(299,754)

Exploration and business development expenditure

(8,632)

(1,286)

Interest paid

(8,106)

(9,180)

Interest received

2

58

Income tax paid

-

(4,622)

Net cash inflows (outflows) from operating activities

39,984

(11,202)

 

 

 

Cash flows used in investing activities

 

 

Payments for property, plant & equipment

(15,645)

(36,065)

Payments for development activities

(15,688)

(12,443)

Payments for evaluation activities

(2,999)

(2,534)

Proceeds from disposal of financial assets at fair value through other comprehensive income

1,686

-

Payments for financial assets at fair value through other comprehensive income

(1,210)

-

Other investing activities

(461)

(337)

Payments for acquisition of investment in associate

-

(310)

Refund of deposit relating to assets held for sale

(5,445)

-

Proceeds from sale of assets held for sale

1,000

29,916

Net cash flows used in investing activities

(38,762)

(21,773)

 

 

 

Cash flows from/(used in) financing activities

 

 

Repayment of borrowings

(23,462)

(195,393)

Proceeds from issuing ordinary shares

-

137,428

Costs of issuing ordinary shares

-

(266)

Proceeds from drawdown of finance facilities

-

72,482

Repayment of lease liability

(6,115)

(8,807)

Net cash flows from/(used in) financing activities

(29,577)

5,444

 

 

 

Net decrease in cash and cash equivalents

(28,355)

(27,531)

 

 

 

Cash and cash equivalents at the beginning of the period

55,226

48,237

Exchange rate adjustment

(284)

995

Cash and cash equivalents at the end of the period

26,587

21,701

 

 

 

Cash and cash equivalents comprise the following:

 

 

Cash at bank and on hand

52,732

62,273

Bank overdraft

(26,145)

(40,572)

  Cash and cash equivalents at the end of the period

26,587

21,701

 

 

Notes to the Financial Statements

Note 1: Corporate Information

The financial report of Resolute Mining Limited and its controlled entities ("Resolute", the "Group" or "consolidated entity") for the half year ended 30 June 2021 was authorised for issue in accordance with a resolution of directors on 27 August 2021.

Resolute Mining Limited (the parent) is a for profit company limited by shares incorporated and domiciled in Australia whose shares are publicly traded on the Australian Securities Exchange and the London Stock Exchange.

The principal activities of entities within the consolidated entity during the half year were:

• gold mining; and,

• prospecting and exploration for minerals.

There has been no significant change in the nature of those activities during the half year.

Note 2: Basis of Preparation and Summary of Significant Accounting Practices

a)  Basis of Preparation

This interim financial report for the half year ended 30 June 2021 has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001.

The half year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the Group as the full financial report.

It is recommended that the half year financial report be read in conjunction with the Annual Report for the year ended 31 December 2020 and considered together with any public announcements made by Resolute Mining Limited during the half year ended 30 June 2021 in accordance with the continuous disclosure obligations of the Australian Securities Exchange listing rules and London Stock Exchange rules. The consolidated financial report is presented in United States dollars ("US$") rounded to the nearest thousand dollars, unless otherwise stated.

The accounting policies and methods of computation are the same as those adopted in the most recent annual financial report.

 

Notes to the Financial Statements

Note 3: Segment revenue and expenses

 

 

 

Unallocated (b)

 

 

For the half year ended 30 June 2021

Mako (Senegal)

US$'000

Syama (Mali)

US$'000

Other

US$'000

Total

US$'000

 
 

Revenue

 

 

 

 

 

Gold and silver sales to external customers

103,292

158,019

-

261,311

 

Total segment gold and silver sales revenue

103,292

158,019

-

261,311

 

Costs of production

(30,652)

(122,023)

-

(152,675)

 

Movement in gold bullion

1,411

18,575

-

19,986

 

Costs of production relating to gold sales

(29,241)

(103,448)

-

(132,689)

 

Royalty expense

(5,165)

(10,591)

-

(15,756)

 

Operational support costs

(8,749)

(2,932)

(2,736)

(14,417)

 

Other operating costs relating to gold sales

(13,914)

(13,523)

(2,736)

(30,173)

 

Administration and other corporate expenses

(2,286)

(774)

(5,451)

(8,511)

 

Share-based payments expense

-

-

(524)

(524)

 

Exploration and business development expenditure

(1,525)

(1,811)

(8,358)

(11,694)

 

Earnings/(loss) before interest, tax, depreciation and amortisation

56,326

38,463

(17,069)

77,720

 

Amortisation of evaluation, development and rehabilitation costs

(7,199)

(3,035)

-

(10,234)

 

Depreciation of mine site properties, plant and equipment

(21,741)

(27,446)

-

(49,187)

 

Depreciation and amortisation relating to gold sales

(28,940)

(30,481)

-

(59,421)

 

Segment operating result before treasury, other income/(expenses) and tax

27,386

7,982

(17,069)

18,299

 

 

 

Notes to the Financial Statements

Note 3: Segment revenue and expenses (continued)

 

 

 

Unallocated (b)

 

 

For the half year ended 30 June 2021

 Mako (Senegal)

US$'000

Syama (Mali)

US$'000

Other

US$'000

Total

US$'000

 
 

Segment operating result before treasury, other income/(expenses) and tax (brought forward)

27,386

7,982

(17,069)

18,299

 

Interest income

-

-

1,186

1,186

 

Other Income

-

-

264

264

 

Interest and fees

(314)

(1,283)

(6,882)

(8,479)

 

Gain on remeasurement for debt modification

-

-

316

316

 

Rehabilitation and restoration provision accretion

(82)

(163)

-

(245)

 

Finance costs

(396)

(1,446)

(6,566)

(8,408)

 

Realised foreign exchange gain

(878)

(193)

(262)

(1,333)

 

Realised gain on fair value movement

-

-

-

-

 

Treasury - realised gains

(878)

(193)

(262)

(1,333)

 

Inventories net realisable value movements and obsolete consumables

(19,036)

(705)

-

(19,741)

 

Unrealised foreign exchange gain/ (loss)

1,163

(3)

(5,986)

(4,826)

 

Unrealised foreign exchange loss on intercompany balances

-

-

(1,715)

(1,715)

 

Fair value movements and unrealised treasury transactions

(17,873)

(708)

(7,701)

(26,282)

 

Share of associates' losses

-

-

(1,212)

(1,212)

 

Depreciation of non-mine site assets

(72)

-

(1,133)

(1,205)

 

Impairment of exploration and evaluation assets

(4,827)

-

(260)

(5,087)

 

Impairment of mine properties and property, plant and equipment

-

(167,373)

-

(167,373)

 

Indirect tax expense

(7,000)

(5,586)

(515)

(13,101)

 

Income tax (expense)/benefit

 

(230)

(11,462)

(3,846)

(15,538)

 

(Loss)/profit for the period

(3,890)

(178,786)

(37,114)

(219,790)

 

 

Notes to the Financial Statements

Note 3: Segment revenue and expenses (continued)

 

 

 

Unallocated (b)

 

 

For the half year ended 30 June 2020

Mako (Senegal)

US$'000

Syama (Mali)

US$'000

Other

US$'000

Total

US$'000

 
 

Revenue

 

 

 

 

 

Gold and silver sales to external customers

131,335

158,688

-

290,023

 

Total segment gold and silver sales revenue

131,335

158,688

-

290,023

 

Costs of production

(28,575)

(123,878)

-

(152,453)

 

Movement in gold bullion

(533)

12,847

-

12,314

 

Costs of production relating to gold sales

(29,108)

(111,031)

-

(140,139)

 

Royalty expense

(6,651)

(11,334)

-

(17,985)

 

Operational support costs

(8,721)

(5,568)

(642)

(14,931)

 

Other operating costs relating to gold sales

(15,372)

(16,902)

(642)

(32,916)

 

Administration and other corporate expenses

(952)

(787)

(8,521)

(10,260)

 

Share-based payments expense

-

-

(897)

(897)

 

Exploration and business development expenditure

(560)

(953)

(2,905)

(4,418)

 

Earnings/(loss) before interest, tax, depreciation and amortisation

85,343

29,015

(12,965)

101,393

 

Amortisation of evaluation, development and rehabilitation costs

(10,900)

(12,548)

-

(23,448)

 

Depreciation of mine site properties, plant and equipment

(39,338)

(27,451)

(604)

(67,393)

 

Depreciation and amortisation relating to gold sales

(50,238)

(39,999)

(604)

(90,841)

 

Segment operating result before treasury, other income/(expenses) and tax

35,105

(10,984)

(13,569)

10,552

 

 

 

Notes to the Financial Statements

Note 3: Segment revenue and expenses (continued)

 

 

 

Unallocated (b)

 

 

For the half year ended 30 June 2020

 Mako (Senegal)

US$'000

Syama (Mali)

US$'000

Other

US$'000

Total

US$'000

 
 

Segment operating result before treasury, other income/(expenses) and tax (brought forward)

35,105

(10,984)

(13,569)

10,552

 

Interest income

87

918

-

1,005

 

Other Income

-

-

(88)

(88)

 

Interest and fees

(2,674)

-

(6,957)

(9,631)

 

Loss on remeasurement for refinancing

-

-

(4,711)

(4,711)

 

Rehabilitation and restoration provision accretion

(142)

-

-

(142)

 

Finance costs

(2,816)

-

(11,668)

(14,484)

 

Realised foreign exchange gain

21

693

(288)

426

 

Realised gain on fair value movement

(613)

-

-

(613)

 

Treasury - realised gains

(592)

693

(288)

(187)

 

Inventories net realisable value movements and obsolete consumables

1,775

6,789

-

8,564

 

Unrealised foreign exchange gain

653

338

103

1,094

 

Unrealised foreign exchange gain on intercompany balances

-

6,521

-

6,521

 

Fair value movements and unrealised treasury transactions

2,428

13,648

103

16,179

 

Share of associates' losses

-

-

(347)

(347)

 

Depreciation of non-mine site assets

(91)

-

(1,733)

(1,824)

 

Income tax (expense)/benefit

 

(9)

(5,886)

(10,093)

(15,988)

 

(Loss)/profit for the period

34,112

(1,611)

(37,683)

(5,182)

 

 

 

 

 

Notes to the Financial Statements

Note 3: Segment revenue and expenses (continued)

(a)  Revenue from external sales for each reportable segment is derived from several customers.

(b)  This information does not represent an operating segment as defined by AASB 8 and forms part of the reconciliation of the results and positions of the operating segments to the financial statements.

Note 4: Segment cash flow, expenditure, assets and liabilities

 

 

 

Unallocated (a)

 

 

For the half year ended 30 June 2021

 Mako (Senegal)

US$'000

Syama (Mali)

US$'000

Other

US$'000

Total

US$'000

 
 

Cash flow by segment, including gold bullion, and gold shipped but unsold and held in metal accounts

 

 

 

 

 

Reconciliation of cash flow by segment to the cash flow statement:

25,460

9,073

(74,063)

(39,530)

 

Movement in gold shipped but unsold and held in metal accounts

 

 

 

18,862

 

Mark to market movement in gold unsold

 

 

 

(234)

 

Movement in bank overdraft, including foreign exchange movements

 

 

 

(7,220)

 

Exchange rate adjustment in cash on hand

 

 

 

(233)

 

Cash flows from discontinued operations

 

 

 

-

 

Movement in cash and cash equivalents per consolidated cash flow statement

 

 

 

(28,355)

 

Segment balance sheet items:

 

 

 

 

 

Capital expenditure

9,637

18,231

6,299

34,167

 

 

 

 

 

 

 

Segment assets (excluding assets held for sale)

348,479

620,169

124,958

1,093,606

 

Segment liabilities (excluding liabilities associated with assets held for sale)

73,500

225,639

290,874

590,013

 

 

Notes to the Financial Statements

Note 4: Segment cash flow, expenditure, assets and liabilities (continued)

 

 

 

Unallocated (a)

 

 

For the half year ended 30 June 2020

 Mako (Senegal)

US$'000

Syama (Mali)

US$'000

Other

US$'000

Total

US$'000

 
 

Cash flow by segment, including gold bullion, and gold shipped but unsold and held in metal accounts

 

 

 

 

 

Reconciliation of cash flow by segment to the cash flow statement:

58,888

(29,641)

(102,766)

(73,519)

 

Movement in gold shipped but unsold and held in metal accounts

 

 

 

7,448

 

Mark to market movement in gold unsold

 

 

 

(22)

 

Movement in bank overdraft, including foreign exchange movements

 

 

 

4,874

 

Exchange rate adjustment in cash on hand

 

 

 

(393)

 

Cash flows from discontinued operations

 

 

 

34,080

 

Movement in cash and cash equivalents per consolidated cash flow statement

 

 

 

(27,532)

 

Segment balance sheet items:

 

 

 

 

 

Capital expenditure

4,624

29,392

5,584

39,600

 

 

 

 

 

 

 

Segment assets (excluding assets held for sale)

380,329

788,850

197,908

1,367,087

 

Segment liabilities (excluding liabilities associated with assets held for sale)

58,352

248,090

257,136

563,578

 

 

(a)  This information does not represent an operating segment as defined by AASB 8 and forms part of the reconciliation of the results and positions of the operating segments to the financial statements.

Note 5: Dividend

There were no interim dividends paid or provided for during the half year end up to the date of this report (half year ended 30 June 2020: $nil).

 

 

 

Notes to the Financial Statements

Note 6: Taxes

At 30 June 2021, the Group has an income tax expense of $16 million (30 June 2020: $16 million). The Income tax expense comprises current income tax of $5 million and $10 million of deferred tax expense.

Note 7: Receivables

Current receivables at 30 June 2021 primarily relate to indirect taxes owing to the Group by the Republic of Mali.

Note 8: Inventories

 

 

30-Jun-21

 

31-Dec-20

 

US$'000

US$'000

Current

 

 

Ore stockpiles - at cost

62,828

71,082

Ore stockpiles - at net realisable value

7,036

4,237

Total ore stockpiles

69,864

75,319

 

 

 

Gold in circuit - at cost

17,172

23,038

Gold in circuit - at net realisable value

10,235

2,745

Gold bullion on hand - at cost

26,413

  9,887

Gold bullion on hand - at net realisable value

5,308

-

Consumables at cost

52,556

47,940

Total Inventory (current)

181,548

158,929

Non Current

 

 

Ore stockpiles - at cost

1,638

2,803

Ore stockpiles - at net realisable value

23,390

26,695

Gold in circuit - at net realisable value

43,105

38,425

Total Inventory (non current)

68,133

67,923

Note 9: Mine properties

At 30 June 2021, the Group's mine properties amount to $370 million (31 December 2020: $495 million). During the six-month period to 30 June 2021, further payments for development activities were made of $16 million, partially offset by amortisation recognised on production assets.   An impairment loss of $92 million was recorded against mine properties for the Syama CGU. Refer to Note 19 for further details.

 

 

Notes to the Financial Statements

Note 10: Interest bearing liabilities

 

 

30-Jun-21

 

31-Dec-20

US$'000

US$'000

Interest bearing liabilities (current)

 

 

Bank overdraft

26,145

33,365

Insurance premium funding

2,925

483

Borrowings

52,591

28,710

Total Interest bearing liabilities (current)

81,661

62,558

Interest bearing liabilities (non current)

 

 

Borrowings

228,548

273,613

Total Interest bearing liabilities (non current)

228,548

273,613

 

 

 

Total

310,209

336,171

 

In June 2021, the Group had made a voluntary early repayment of its Revolving Credit Facility by $20 million.

Note 11: Provisions

 

 

30-Jun-21

 

31-Dec-20

 

US$'000

US$'000

Current

 

 

Site restoration

346

352

Employee entitlements

2,929

4,922

Dividend payable

155

104

Withholding taxes

169

237

Provision for indirect taxes1

75,763

68,533

Other provision

5,414

1,572

Total provisions (current)

84,776

75,720

 

 

 

Non Current

 

 

Site restoration

69,727

71,335

Employee entitlements

250

528

Total provisions (non current)

69,977

71,863

(1) Resolute's Mali subsidiary has received demands for payment to the Mali Tax Authorities in relation to Income Tax and Value Added Tax (VAT) for the tax years ended 31 December 2015 to 2020 and Resolute's Senegalese subsidiary has received a demand in relation to Withholding tax. Based on the facts and circumstances available at the date of this report and in line with requirements of the accounting standards, the Group has provided an additional $12 million for the demands as at 30 June 2021, with the provisions for these matters totalling $76 million. The factual basis and validity of these demands are being strongly disputed by Resolute due to fundamental misinterpretations of the application of certain tax. Resolute continues to work with its legal and tax advisors to contest the demand and will resist any efforts to enforce payment. The demand for Income Tax has been disclosed as a contingent liability. Refer to Note 17.
 

Notes to the Financial Statements

Note 12: Asset held for sale and discontinued operation

Sale of Ravenswood Gold Mine

On 15 January 2020, Resolute signed a definitive agreement for the sale of the Ravenswood Gold Mine in Queensland to a consortium comprising of a fund managed by private equity manager EMR Capital and energy and mining company Golden Energy and Resources Limited. The consideration for the sale comprised A$50 million of cash up front, A$50 million promissory note and up to A$200 million potential payments. The asset sale was completed on 31 March 2020 and was reported in the comparative period as a discontinued operation.

Results of the disposal group held for sale asset:

 

For the half year ended 30-Jun-21

For the half year ended 30-Jun-20

US$'000

US$'000

(Restated)

Revenue

-

15,268

Cost of production relating to gold sales

-

(13,069)

Other operating costs relating to gold sales

-

(2,131)

Administration and other corporate expenses

-

(172)

Exploration and business development expenditure

-

(179)

Depreciation and amortisation

-

(47)

Finance cost

-

(80)

Fair value movements and unrealised treasury transactions

-

(47)

Loss before tax for the period

-

(457)

Tax expense

-

-

Loss for the period

-

(457)

 

 

 

Gain on disposal of discontinued operation (net of tax expense)

-

41,932

Total profit/(loss) after tax from discontinued operations

-

41,475

Earnings/ (loss) per share

 

 

Basic earnings/(loss) per share of discontinued operation

-

3.96 cents

Diluted earnings/(loss) per share of discontinued operation

-

3.96 cents

 

Cash flow information for disposal group:

 

For the half year ended 30-Jun-21

US$'000

 

For the half year ended 30-Jun-20

US$'000(Restated)

Operating cash flows

-

(2,611)

Investing cash flows

-

28,758

Financing cash flows

-

-

Net cash flow

-

26,147

 

 

Notes to the Financial Statements

Note 12: Asset held for sale and discontinued operation (continued)

Sale of Bibiani Gold Mine

On 5 August 2021, Resolute entered into a binding agreement to sell the Bibiani Gold Mine (Bibiani disposal group) in Ghana to Asante Gold Corporation (Asante). Cash consideration of $90 million consisting of $30 million paid up front, $30 million on or before 6 months from completion and $30 million on or before 12 months from completion is agreed for the transaction. The asset sale was completed on 19 August 2021 and is reported in the current year as held for sale assets and liabilities. The Bibiani disposal group is not presented as a discontinued operation in the Consolidated Statement of Comprehensive Income as it does not meet the definition under the accounting standards.

Sale of Cote d'Ivoire Assets

On 18 May 2021, Resolute and Manas Resources signed a comprehensive agreement to acquire Resolute's exploration interest in Côte d'Ivoire (Cote d'Ivoire disposal group) covering Predictive Discovery CDI SARL, Toro Gold CDI SARL, DS Resources Joint Venture, Resolute CDI SARL and Nimba Resources SARL for A$1 million cash and A$4 million contingent consideration. As the sale was expected to be completed within 12 months, the net assets of the sale group had been classified as a disposal group held for sale. In accordance with the requirements of AASB 5: Non-current Assets Held for Sale and Discontinued Operations, the Group had conducted an impairment assessment immediately before the initial classification as a disposal group held for sale. As a result, the Group had recognised an impairment loss amounting to $5 million, primarily in relation to the exploration and evaluation assets held in Cote d'Ivoire. Subsequent to balance date in August 2021, the Group had completed the sale process for the Cote d'Ivoire disposal group held for sale. The net assets of the sale group are reported in the current year as held for sale assets and liabilities. The Cote d'Ivoire disposal group is not presented as a discontinued operation in the Consolidated Statement of Comprehensive Income as it does not meet the definition under the accounting standards.

Carrying value of net assets at date of disposal:

 

30 June
2021

31 December 2020

Bibiani and CDI disposal group

Bibiani disposal group

US$'000

US$'000

Assets

 

 

Cash

437

381

Other financial assets - restricted cash

2,745

2,745

Other assets

269

141

Inventories

1,622

1,651

Property, plant and equipment

22,439

22,361

Exploration and evaluation

56,404

53,329

Total assets

83,916

80,608

 

 

 

Liabilities

 

 

Payables

1,365

358

Provisions

463

366

Site restoration

8,097

8,097

Total liabilities

9,925

8,821

Net Assets held for sale

73,991

71,787

 

 

 

Notes to the Financial Statements

Note 13: Contributed Equity (continued)

 

 

Total Number

Number Quoted

US$'000

At 1 January 2021

1,103,892,706

1,103,892,706

777,021

Changes during current period, net of issue costs:

-

-

-

At 30 June 2021

1,103,892,706

1,103,892,706

777,021

 

 

Issue Date

Total Number

Fair Value per Right at Grant Date

Vesting Date

Performance rights on issue

 

 

 

 

Band A1 to A2

26/10/2018

248,967

$0.92

30/06/2021

Band A0

26/10/2018

215,879

$0.77

30/06/2021

Band A0

21/05/2019

426,977

$0.88

31/12/2021

Band A1 to A2

21/05/2019

614,248

$0.93

31/12/2021

Band A0

21/11/2019

732,600

$0.72

30/06/2021

Band A1 to A2

22/05/2020

500,000

$0.49

31/12/2021

Band A1 to A2

22/05/2020

43,668

$0.93

31/12/2021

Band A1 to A2

22/05/2020

1,422,465

$0.85

31/12/2022

Band A0

22/05/2020

194,532

$0.56

31/12/2022

Band A0

14/05/2021

904,892

$0.57

31/12/2023

Band A0

14/05/2021

1,000,000

$0.48

31/03/2024

As at 30 June 2021

 

6,304,228

 

 

 

 

Date of Change

Total Number

Fair Value per Right at Grant Date

Vesting Date

Opening number of performance rights

 

5,173,888

 

 

Decrease through lapsing of performance rights (Band A1 to A2)

11/02/2021

(128,574)

$0.92

30/06/2021

Decrease through lapsing of performance rights (Band A1 to A2)

11/02/2021

(20,311)

$0.92

30/06/2021

Decrease through lapsing of performance rights (Band A1 to A2)

30/04/2021

(8,627)

$0.92

30/06/2021

Decrease through lapsing of performance rights (Band A1 to A2)

28/05/2021

(8,407)

$0.92

30/06/2021

Decrease through lapsing of performance rights (Band A1 to A2)

11/02/2021

(299,488)

$0.93

31/12/2021

Decrease through lapsing of performance rights (Band A1 to A2)

11/02/2021

(309,145)

$0.85

31/12/2022

Increase through issue of performance rights to eligible employees (Band A0)

14/05/2021

904,892

$0.57

31/12/2023

Increase through issue of performance rights to eligible employees (Band A0)

14/05/2021

1,000,000

$0.48

31/03/2024

Closing number of performance rights

 

6,304,228

 

 

*The terms and conditions of the Remuneration Framework are consistent with those disclosed in the Annual Report for the year ended 31 December 2020 and the Notice of Annual General Meeting sent to shareholders on 23 April 2021.

 

 

Notes to the Financial Statements

Note 14: Gold forward contracts

As part of its risk management policy, the Group enters into gold forward contracts to manage the gold price of a proportion of anticipated sales of gold.

Gold forward contracts commitment at 30 June 2021 (not recorded as derivatives):

 

Gold for Physical Delivery oz

Average Contracted Gold Sale Price per oz (US$)

Value of Committed sales

US$'000

30 June 2021

 

 

 

Within one year

88,000

1,721

151,448

Total

88,000

 

151,448

 

 

Gold for Physical Delivery oz

Average Contracted Gold Sale Price per oz (EURO)

Value of Committed sales

EURO'000

30 June 2021

 

 

 

Within one year

23,000

1,488

34,224

Total

23,000

 

34,224

Note 15: Derivative Financial Assets and Labilities

At 30 June 2021, the Group had 65,000oz of zero-cashflow collar contracts outstanding whereby the Group purchased a total of 65,000 ounces of gold call options and sold a total of 65,000 ounces of gold put options contracts with equal and offsetting values at inception. These contracts are comprised of put options at $1,600/oz to $1,750/oz and call options at an average of $2,119/oz. All these contracts mature over the July to December 2021 period. The gold zero-cashflow collars are classified as level 2 in the fair value hierarchy and valued at an asset of $1 million as at 30 June 2021 ($0.5 million liability as at 31 December 2020). These zero-cashflow collar contracts are valued using valuation techniques, which employ the use of market observable inputs. The most frequently applied valuation techniques include forward pricing using present value calculations.

 

 

 

Notes to the Financial Statements

Note 16: Financial Instruments

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

Disclosure of fair value measurements is by level of the following fair value measurement hierarchy:

(a)  quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)

(b)  inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices or indirectly (derived from prices) (Level 2), and

(c)  inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

At June 2021, the Group does not have any Level 3 financial instruments.

The following table presents the fair value measurement hierarchy of the Group's financial assets and liabilities carried at fair value at 30 June 2021 and 31 December 2020.

Consolidated entity - at 30 June 2021

Level 1

US$'000

Level 2

US$'000

Level 3

US$'000

Total

US$'000

Assets

 

 

 

 

Financial instruments through other comprehensive income ("OCI"):

 

 

 

 

-  Equity securities

23,407

-

-

23,407

Financial derivative assets

-

946

-

946

Total Assets

23,407

946

-

24,353

 

Consolidated entity - at 31 December 2020

Level 1

US$'000

Level 2

US$'000

Level 3

US$'000

Total

US$'000

Assets

 

 

 

 

Financial instruments through OCI:

 

 

 

 

-  Equity securities

36,004

-

-

36,004

Total Assets

36,004

-

-

36,004

Financial derivative liabilities

-

(415)

-

(415)

Total Liabilities

-

(415)

-

(415)

(i)  There is an active market for the Group's listed equity investments.

The carrying value of other financial assets and liabilities approximate fair value.

 

 

Notes to the Financial Statements

Note 17: Contingent liabilities

Amounts potentially payable to historical Bibiani creditors

In June 2014, Mensin Gold Bibiani Limited, Drilling and Mining Services Limited and Noble Mining Ghana Limited (collectively referred to as the "Companies") entered into court approved Schemes of Arrangement ("Scheme") with their creditors and employees ("Scheme Creditors").  The Scheme enabled Resolute to secure with the endorsement of the Ghanaian government, ultimate ownership of the Bibiani Gold Mine with protection from those liabilities which had been incurred at a time when the mine was under the control of the prior owner (Noble Mineral Resources Limited). The Scheme set out the timing and amounts of payments that were to be made by the Companies to a Scheme Fund and to a Future Fund, from which funds, payments are to be made to the Scheme Creditors.  The Scheme Creditors arise from transactions that occurred prior to the Companies becoming part of the Group.  The Scheme Fund and the Future Fund are effectively administered by representatives of KPMG. 

 

Subject to the issue discussed below regarding two Ghanaian creditors, the implementation of the Scheme had the effect of removing from the Companies' balance sheets all historical liabilities relating to amounts payable to Scheme Creditors and replacing those liabilities with an obligation to fund the Scheme Fund and Future Fund, as and when necessary.  The unconditional obligations to make payments to the Scheme Fund were paid in 2014.  In addition to those unconditional obligations to pay into the Scheme Fund, the Scheme imposed the following contingent liabilities to provide funding to the Scheme Fund and Future Fund:

 

· Payment to the Scheme Fund of US$3.6 million (A$4.8 million) if, following receipt of the Feasibility Study, the Board of Resolute, in its absolute discretion, made a decision to proceed with the development of the Bibiani Gold Mine; and

· Payment to a Future Fund of up to US$7.8 million (A$10.5 million) conditional upon the generation of free cashflow from Bibiani mine operations for the period of 5 years from the date that Commercial Production is declared ("Future Cashflow Payment").  Free Cashflow means 25% of effectively, Project Revenue for that year less Permitted Payments for that year, which Permitted Payments include: 

operational expenses and capital costs paid in connection with the mining operations; and

repayment of principal and interest relating to funds advanced by Resolute up to the commencement of mining operations.

 

The Scheme provided that if Commercial Production had not been achieved by June 2019, then the Bibiani Gold Mine had to be sold and the proceeds applied in the manner set out in the Scheme. On the basis that, in late 2018 it became clear that Commercial Production would not be achieved by June 2019, and in order to avoid the need to sell the Bibiani Gold Mine, an Amended Scheme was proposed to Scheme Creditors, which effectively allowed additional time to commence mining at Bibiani. In consideration for the Scheme Creditors agreeing to the extended timeframe to commence mining, the Amended Scheme provided that upon the Amended Scheme becoming operative, the payment of US$3.6 million (A$4.8 million) referred to at 1 above would be immediately payable (i.e. it would not be dependent upon the decision of the board of Resolute to proceed with the development of Bibiani). At the meetings of Scheme Creditors to consider the Amended Scheme in April 2019, the Scheme Creditors approved the Amended Scheme, which was subsequently approved by the Court and became operative in May 2019. As a consequence, in mid-2019 Resolute paid the sum of US$3.6 million (A$4.8 million) under the Amended Scheme. The obligation to make the Future Cashflow Payment in the circumstances described above remains in place under the Amended Scheme.

 

Notwithstanding the Scheme's approval by the Ghanaian High Court, the Scheme Creditors, and the Ghanaian Minister of Mines, two Ghanaian creditors (Riasand and Scan Minerals) sought to circumvent the operation of the Scheme (and Amended Scheme) and are seeking to enforce a winding up order against Mensin, on the basis of debts incurred prior to implementation of the Scheme.

Notes to the Financial Statements

Note 17: Contingent liabilities (continued)

Resolute is defending Mensin's right to unencumbered debt-free ownership of the Bibiani Gold Mine, which was a key element of the Scheme supported by both Resolute and the Ghanaian government. 

 

The appeal proceedings involving Riasand have been settled on the basis of a payment to Riasand (which has been fully paid) and the Ghanaian Supreme Court made orders to dismiss the winding up proceedings on 23 February 2021.

 

These contingent liabilities reside in the Bibiani disposal group and will be transferred to Asante upon completion of the sale.

 

Demand of payment relating to income taxes from the Mali Tax Authorities

Resolute's subsidiary, SOMISY, received demands for payment of VAT and Income Tax for the tax years ended 31 December 2015 to 2020 from the Mali Tax Authorities. The demands relating to SOMISY's VAT have been provided for (refer to Note 11 for details). Resolute's subsidiary, SOMIFI, received a demand for payment of income taxes from the Mali Tax Authorities, relating to tax years ended 31 December 2017 and 2018.

 

The demands for income tax of US$23 million for SOMISY has not been provided for as at 30 June 2021 as the Group refute the validity and factual basis of these demands. The Group has commenced the process of disputing the income tax demands due to fundamental misinterpretations of certain income tax laws applicable to the provisions of each entity's Establishment Convention based on tax advice that the Group has received. The Group is working with its legal and tax advisors to contest the demands and will resist any efforts to enforce payment.

Note 18: Events Occurring after Balance Date

On 19 August 2021, the Group announced the successful completion of the sale of the Bibiani Gold Mine in Ghana to Asante Gold Corporation for US$90 million.
 

Notes to the Financial Statements

Note 19: Impairment testing

In accordance with the Group's accounting policies, each asset or cash-generating unit (CGU) is evaluated to determine whether there are any indications of impairment. If any such indications of impairment exist, a formal estimate of the recoverable amount is performed.

In assessing whether an impairment is required, the carrying value of the asset or CGU is compared with its recoverable amount. The recoverable amount is the higher of the CGU's fair value less costs of disposal (FVLCD) and value in use (VIU). Recoverable amount has been determined based on FVLCD. Given the nature of the Group's activities, information on the fair value of an asset is usually difficult to obtain unless negotiations with potential purchasers or similar transactions are taking place. Consequently, the FVLCD for each CGU is estimated based on discounted future estimated cash flows (expressed in real terms) expected to be generated from the continued use of the CGUs using market-based gold price assumptions, the level of proved and probable reserves and measured, indicated and inferred mineral resources, estimated quantities of recoverable gold, production levels, operating costs and capital requirements, including any expansion projects, and its eventual disposal, based on the CGU latest life of mine (LOM) plans. These cash flows are discounted using a real post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU. When LOM plans do not fully utilise existing mineral properties for a CGU, and options exist for the future extraction and processing of all or part of those resources, an estimate of the value of mineral properties is included in the determination of fair value.

The determination of FVLCD for each CGU are considered to be Level 3 fair value measurements, as they are derived from valuation techniques that include inputs that are not based on observable market data. The Group considers the inputs and the valuation approach to be consistent with the approach taken by market participants.

Impairment indicator assessment

At 30 June 2021, Resolute's quoted market capitalisation was lower than its net asset carrying value.  Further, Resolute noted that there was a reduction in gold prices and increase in risk free rate that underpins the applicable weighted average cost of capital when compared to 31 December 2020. These factors are considered as indicator of impairment. As a result, an impairment test was performed to determine the recoverable amounts for all CGU's of the Group, being the Syama Gold Mine and the Mako Gold Mine using the FVLCD method.

Syama CGU

Syama indicator assessment

In addition to the impairment indicators noted above, Resolute also revised the CY21 production and cost guideline for Syama. These factors collectively were considered to be indicators of impairment and as such a formal impairment test was performed to determine the recoverable amount for the Syama CGU.

Key Assumptions used to determine recoverable amount

The table below summarises the key assumptions used in the carrying value assessment:

 

30 June 2021

Gold price ($/oz)

1,798-1,465

Discount rate (post tax real)

13%

Unmined resources ($/oz)

$20-$54

Notes to the Financial Statements

Note 19: Impairment testing (continued)

Gold prices

Gold prices are estimated with reference to external market forecasts based on a consensus view of market experts.

Discount rate

In determining the recoverable amount of assets, the future cash flows were discounted using rates based on the CGU's estimated real weighted average cost of capital, with an additional premium applied having regard to the CGU's risk profile.

Unmined resources

Unmined resources which are not included in the lifeofmine plan as result of the current assessment of economic returns, timing of specific production alternatives and the prevailing economic environment have been valued and included in the assessed fair value.

Operating and capital costs

Lifeofmine operating and capital cost assumptions are based on the Group's latest budget and lifeof mine plans. Operating cost assumptions reflect an assumption of maintaining current cost, over the long term, without including expected improvements over the life of mine.

 

Recognition

The impairment loss of $167.373 million has been allocated to the Syama CGU, as summarised in the table below:

 

$'000

Mine Properties

91,727

Property, plant and equipment

75,645

Total Syama impairment

167,373

 

Syama Sensitivity Analysis

It was estimated that changes in key assumptions, in isolation, would have had the following approximate impact (increase or (decrease)) on the impairment loss recognised for the Syama CGU as at 30 June 2021.

 

Increase in key assumption

Decrease in key assumption

 

US$'000

US$'000

10% change in gold price ($ per oz)

91,796

(93,953)

1% change in discount rate

(10,394)

11,279

10% change in value of unmined resources

21,440

(21,440)

10% change in operating cost

(76,730)

75,219

 

 

Notes to the Financial Statements

 

Note 19: Impairment testing (continued)

Mako CGU

Mako indicator assessment

Whilst Mako's 2021 forecast production and cost remain in line with budget, as a result of the general indicators of impairment noted above, a formal impairment test was performed to determine the recoverable amount for the Mako CGU.

Key Assumptions

The table below summarises the key assumptions used in the carrying value assessment:

 

30 June 2021

Gold price ($/oz)

1,798-1,465

Discount rate (post tax real)

9%

Unmined resources ($/oz)

$48

Gold prices

Gold prices are estimated with reference to external market forecasts based on a consensus view of market experts.

Discount rate

In determining the recoverable amount of assets, the future cash flows were discounted using rates based on the CGU's estimated real weighted average cost of capital, with an additional premium applied having regard to the CGU's risk profile.

Unmined resources

Unmined resources which are not included in a CGU's lifeofmine plan as result of the current assessment of economic returns, timing of specific production alternatives and the prevailing economic environment have been valued and included in the assessed fair value.

Operating and capital costs

Lifeofmine operating and capital cost assumptions are based on the Group's latest budget and lifeof mine plans. Operating cost assumptions reflect the expectation that costs will, over the long term, have a degree of positive correlation to the prevailing gold price rate assumptions.

Recognition

As a result of the analysis performed, there is a headroom of $4.578 million for Mako CGU and as a result no impairment loss was recognised in 2021.

Mako Sensitivity Analysis

It was estimated that changes in key assumptions, in isolation, would have had the following approximate impact (increase or decrease) on the recoverable amount of the Mako CGU as at 30 June 2021.

 

Increase in key assumption

Decrease in key assumption

 

US$'000

US$'000

10% change in gold price ($ per oz)

76,083

(75,169)

1% change in discount rate

(6,171)

6,098

10% change in value of unmined resources

814

(814)

10% change in operating cost

(38,327)

37,977

 

 

 

Directors' Declaration

In the opinion of the directors:

a)  the financial statements and notes are in accordance with the Corporations Act 2001, including:

 

(i)  complying with Accounting Standard AASB 134 Interim Financial Reporting, the Corporations Regulations 2001; and

(ii)  giving a true and fair view of the Group's financial position as at 30 June 2021 and of its performance, as required by Accounting Standards, for the half year ended on that date.

 

b)  there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable.

 

This declaration has been made in accordance with a resolution of the directors.

 

Signed version available at Resolute website: www.rml.com.au 

 

Stuart Gale

Managing Director & CEO

 

Perth, Western Australia

27 August 2021

 

 

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