Preliminary Final Report

RNS Number : 4712E
Resolute Mining Limited
28 February 2020
 

28 February 2020

 

Resolute Mining Limited

(Resolute or the Company)

 

Preliminary Final Report

 

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Highlights for the 12 months to 31 December 2019

· Sales revenue of A$770m (FY18: A$466m) comprising A$656m from continuing operations at Syama and Mako, and A$114m from Ravenswood which has been treated as a discontinuing operation for financial reporting purposes

· Underlying EBITDA of A$202m after adjustments for non-recurring items including one-off inventory valuation adjustments incurred due to the Syama roaster being taken offline for repairs (FY18: A$51m)

· Net operating cash flow of A$124m (FY18: A$34m)

· Net loss after tax for continuing operations of A$59m corresponding with a loss per share of A$0.07

· Investment in growth projects and other capital and exploration expenditure of A$308m (FY18: A$181m)

· Group gold sales of 394,920oz with an average gold price received of A$1,933/oz (US$1,344/oz)

· Group gold production of 384,731oz at an AISC of A$1,577/oz (US$1,090/oz)

· Cash and bullion of A$151m with listed investments of A$30m at 31 December 2019 (FY18: A$117m)

· Gross debt of A$611m at 31 December 2019 (FY18: A$207m)

· Net debt of A$460m at 31 December 2019 (FY18: A$129m)

· Declaration of a Final Dividend for FY19 deferred

· Improved safety performance; TRIFR of 2.09 at 31 December 2019 (from 2.77 at 30 June 2019)

· Value accretive, low cost, high quality production from Mako added to portfolio with acquisition of Toro Gold Limited

· Syama Underground Mine fully commissioned with roaster returned to full operating capacity following repairs

· Power supply agreement signed with Aggreko plc for a new solar hybrid power solution at Syama

· New Syama Mining Convention signed and new Mining Permit issued

· Exploration success at Tabakoroni; study work commenced on future high-grade underground mine

· Ravenswood strategic review concluded with sale agreement to generate proceeds of up to A$300m

· Bibiani strategic review initiated in response to inbound interest

· Syama power supply signed with Aggreko for new solar hybrid power solution

· Mineral Resources increased to 19.1Moz of gold inclusive of 7.4Moz of gold in Ore Reserves

· Listing on London Stock Exchange completed with first trading in June 2019

· FY20 guidance of 500,000oz at an AISC of US$980/oz (to be updated post completion of Ravenswood sale)

 

Resolute Mining Limited (Resolute or the Company) (ASX/LSE: RSG) has today released an Appendix 4E Preliminary Final Report disclosing the Company's unaudited financial results for the 12 months to 31 December 2019 (FY19).

Resolute produced 384,731 ounces (oz) of gold at an All-In Sustaining Cost (AISC) of US$1,090/oz (A$1,577/oz) with total gold sales of 394,920oz at an average realised gold price of US$1,344/oz (A$1,933/oz). The Company generated A$770m revenue from the sale of 394,920oz of gold and silver from the Syama Gold Mine in Mali (Syama), the Ravenswood Gold Mine in Australia (Ravenswood) and the Mako Gold Mine in Senegal (Mako).   Underlying EBITDA from continuing operations in FY19 was A$202m after inventory valuation adjustments related to Syama and Mako, and other non-recurring items.  An underlying net profit after tax from continuing operations was reported as A$19m. Once the net loss associated with discontinuing operations (Ravenswood) and other non-recurring items were taken into account, a net loss after tax was recorded for the period of A$59m.

FY19 was a pivotal year which saw the Company commission the Syama Underground Mine in Mali and enhance the quality of its portfolio through the acquisition of Mako, a low cost, high quality gold mine. Exploration success at Tabakoroni provided confidence to commence study work on the opportunity for a further strongly cash flow generative future underground mine. Operationally, Resolute generated strong results at the Tabakoroni Open Pit Mine (Tabakoroni) south of Syama and at Mako. Results for Syama were negatively affected by the detection of a crack in the shell of the Syama roaster in the December 2019 Quarter. The roaster is a key component of the sulphide processing circuit and the resulting downtime adversely affected sulphide production and resulted in lower output than forecast from Syama for FY19. Pleasingly, repairs to the roaster were safely and efficiently completed by mid-December 2019, with gold production from the sulphide circuit recommencing and ramping up to capacity. The Company has generated strong recoveries from the sulphide circuit since it was brought back online.

Managing Director and CEO, Mr John Welborn, noted the Company's financial performance, the progress made on key strategic objectives in FY19, and the positive outlook for FY20:

"Resolute's financial performance was negatively impacted in FY19 by the ramp up of the Syama Underground Mine and the structural repairs required to the Syama roaster. These operational issues, combined with various accounting treatments relating to inventory valuations and the acquisition of Toro Gold, resulted in the Company recording a net loss for the period. This disappointment is balanced by the optimism within our team for a much stronger performance in 2020, our commitment to meet current guidance, and Syama and Mako's ability to generate strong ongoing free cash flow based on the investments we have made in both assets in FY19."

"During FY19, we generated strong revenues and an underlying EBITDA from continuing operations of A$202m. Delivering our strategy in the face of operational challenges was the theme for Resolute's 2019 Financial Year. Our team have achieved goals that we set at the beginning of the year. We fully commissioned our Syama Underground Mine, pursued and executed a value accretive acquisition with the addition of the Mako Gold Mine to our portfolio, and achieved exploration success right across our portfolio with particularly exceptional results from our work at Tabakoroni.  We also completed the strategic review of the Ravenswood Expansion Project which culminated in the successful sale of Ravenswood on positive terms and significantly progressed the strategic review of Bibiani. We enter 2020 in a strong position to deliver on the full potential of our asset base and generate long-term value for our shareholders and broader stakeholders."

Sustainability and Safety

Resolute seeks to operate its business responsibly, with careful consideration for the health and safety of our people and the communities and environment surrounding our sites. In FY19, Resolute assisted in the development of, and ultimately committed to, the World Gold Council's Responsible Gold Mining Principles. These principles are contained in Resolute's Sustainability Performance Framework which reflects our commitment to operate in accordance with international standards of good practice in areas of social development, human rights, environmental protection and health and safety. An integrated Sustainability Report in accordance with the Global Reporting Initiative Sustainability Standards is currently being prepared.

Safe work practices are at the core of Resolute's business and the Company continues to focus on delivering positive safety outcomes as part of its operations. Resolute's safety performance strengthened relative to the previous corresponding period with a material reduction in the Total Recordable Injury Frequency Rate to 2.09 (2.77 at 30 June 2019). This improvement was driven by a company-wide focus on effective management of sub-contractors and the active management of key operational risks which will continue into FY20.

Operations

Syama Gold Mine, Mali

At Syama, Resolute completed the commissioning of its Syama Underground Mine with commercial production rates being achieved in June 2019, an important milestone after three years of development. Automated drilling, loading and truck haulage were all achieved at Syama in FY19. The Company remains committed to the achievement of the cost and productivity targets we have set for Syama. Total gold production from the Syama sulphide operation was 62,524oz of gold, reflecting the progress of the ramp-up of underground production in FY19 and interruptions to processing caused by the identification of cracks in the shell of the Syama roaster. The Syama roaster was offline for the majority of the December 2019 Quarter but was successfully returned to nameplate capacity prior to the end of FY19.

Record gold production was achieved from oxide operations at Syama. Tabakoroni, located 32km south of the Syama processing plant, produced 180,534oz of gold with a processed grade of 4.22 grams per tonne of gold (g/t Au). Tabakoroni outperformed the original Ore Reserve, and Mineral Resources continued to grow at the project. Resolute is confident that a high-grade long life underground operation will follow the open pit mining phase.

Mako Gold Mine, Senegal

In August 2019, Mako was added to Resolute's portfolio as part of the Company's acquisition of Toro Gold Limited (Toro Gold) (see ASX Announcement dated 31 July 2019). Since acquisition, Mako has operated beyond initial expectations with excellent plant throughput, grades and recoveries. In the 5 months under Resolute's ownership in FY19, a total of 811,831 tonnes of ore was processed at an average processed grade of 2.86 g/t Au for the recovery of 87,187oz of gold. This was inclusive of gold in circuit drawdown of 16,540oz which was poured subsequent to acquisition.

Ravenswood Gold Mine, Australia

At Ravenswood, FY19 saw the completion of underground operations at the Mt Wright Underground Mine (Mt Wright), after life-of-mine production of over 1 million ounces (Moz) of gold. Mt Wright has been a very successful operation and many of the techniques pioneered at this site are being applied to the Company's flagship asset, the Syama Underground Mine. With the completion of underground mining, the third ball mill at Ravenswood was recommissioned in late 2019. This will allow the operation to return to its former configuration and restores capacity to process up to 5 million tonnes per annum (Mtpa). Initially, this increased capacity will be used to process mineralised waste stocks.

Financial Performance and Cash Flow

Resolute generated A$770m revenue from the sale of 394,920oz of gold and silver from Syama, Ravenswood and Mako. At 31 December 2019, Ravenswood was a held for sale asset and as a result has been classified as a discontinuing operation and reported separately in the Company's FY19 financial statements.  The table below combines Resolute's financial performance from its continuing operations at Syama and Mako together with discontinuing operations at Ravenswood.

Underlying EBITDA from continuing operations in FY19 was A$202m after inventory valuation adjustments associated with roaster downtime during the December 2019 Quarter, the uplift in inventory valuation as well as transaction costs associated with the acquisition of Toro Gold and other non-recurring items.  An underlying net profit after tax from continuing operations was reported at A$19m. Once the net loss associated with discontinuing operations (Ravenswood) and other non-recurring items were taken into account, the Company reported a net loss after tax of A$63m.

Resolute generated strong operating cash flow in FY19 of A$124m with total investments in development, property, plant and equipment of A$199m.  A total investment of A$14m in exploration and evaluation delivered excellent results with a maiden high grade underground Mineral Resource being reported at Tabakoroni of 850,000oz grading 5.1 g/t Au (see ASX announcement dated 29 April 2019). Drilling activities undertaken at Ravenswood resulted in an increase in Ore Reserves at Ravenswood of 1Moz to 2.7Moz of gold, representing growth of 58%. Mineral Resources at Ravenswood increased by 24% to 5.9Moz of gold (see ASX announcement dated 22 July 2019). At year end, Resolute reported Global Mineral Resources of 19.1Moz of gold inclusive of Ore Reserves of 7.4Moz of gold (see ASX Announcement dated 18 February 2020).

As part of the Company's listing on the London Stock Exchange and to synchronise the consolidation of its African subsidiary companies' accounts, Resolute changed its financial year end to 31 December and FY19 is the first year in which the Company is reporting to a 31 December year end.  As such, comparatives provided in this announcement for FY18 are for a previously unreported and unreported 12-month period to 31 December 2018 as opposed to the Company's most recent previous Financial Report which was for the 6-month period to 31 December 2018. 

 

Profit and Loss Analysis
(A$'000s)

Continuing Operations
(Syama / Mako)

Discontinuing Operations
(Ravenswood)

FY19
Group

FY18 (H1 + H2) for Comparative Purposes

Revenue

656,392

113,922

770,314

465,692

Cost of sales excluding depreciation and amortisation

(425,242)

(103,315)

(528,557)

(347,849)

Other operating costs relating to gold sales

(67,488)

(7,799)

(75,287)

(37,078)

Administration and other corporate expenses

(20,217)

(1,248)

(21,465)

(17,823)

Exploration and business development expenditure

(20,035)

(1,529)

(21,564)

(11,514)

EBITDA

123,410

31

123,441

51,428

Non-recurring items:

 

 

 

 

+ Inventory adjustments for Q4 roaster shutdown

45,188

0

45,188

0

+ Mako acquisition inventory adjustments and transaction costs

19,352

0

19,352

0

+ Business development costs and other

13,510

0

13,510

0

Underlying EBITDA

201,460

31

201,491

51,428

Depreciation and amortisation relating to gold sales

(108,431)

(5,152)

(113,583)

(17,368)

Net finance costs

(47,603)

(453)

(48,056)

(6,936)

Other

(1,284)

1,588

305

5,140

Underlying net profit/(loss) before tax

44,142

(3,985)

40,157

32,264

Income tax (expense)/benefit

(24,947)

0

(24,947)

1,835

Underlying net profit/(loss) after tax

19,195

(3,985)

15,210

34,099

- Adjustments made to EBITDA

(78,050)

0

(78,050)

0

Net (loss)/profit after tax

(58,855)

(3,986)

(62,841)

34,099

 

Note: Given the Company's change in financial year end from June to December, the previously reported FY18 financials were for the six months to 31 December 2018.  For comparative purposes, the Company has prepared the FY18 summary above which is for a previously unreported 12-month period to 31 December 2018, is not audited and is being provided for comparative purposes only. 

Balance Sheet

At 31 December 2019, the Company's cash and bullion was A$151m and listed investments were valued at A$30m while gross borrowings were A$610m. 

Following year end, the Company undertook an equity raising comprising a two-tranche placement and share purchase plan to raise approximately A$195m (see ASX Announcement dated 21 January 2020). The proceeds of the equity raising were used to repay US$130m of debt associated with the acquisition of Toro Gold. Resolute continues to engage in positive discussions with a syndicate of supportive international lenders with respect to its broader refinancing activities.

On 27 February 2020 Resolute's subsidiary, Société des Mines de Syama S.A. (SOMISY), received a demand for payment of approximately A$51m from the Mali Tax Authorities in relation to Income Tax and Value Added Tax (VAT) for the tax years ended 31 December 2015, 2016 and 2017. The factual basis and validity of the demand will be strongly disputed by Resolute due to fundamental misinterpretations of the application of certain tax laws to SOMISY with reference to the provisions of SOMISY's Establishment Convention. Resolute is working with its legal and tax advisors to contest the demand and will resist any efforts to enforce payment. Accordingly, this amount has not been included in Resolute's financial accounts at 31 December 2019.

Dividend Deferral

Resolute's dividend policy guides that, subject to available liquidity and at the Board's discretion, the Company will aim to pay an annual dividend of a minimum of 2% of annual gold sales revenue. The Company's intention has been to pay a sustainable and consistent dividend where possible. The most recently declared dividend was for the period to 30 June 2018 at a level of 2.0 cents per share.

With regard to the recent equity raising and the priority of strengthening the Company's balance sheet, no final dividend has been declared for FY19. The total quantum of gold sales revenues generated by the Company since 30 June 2018, the applicable date of the most recently paid dividend under the Company's Dividend Policy, will be considered when the Company next assesses its capacity to fund a dividend.

FY20 Guidance and Outlook

The Company has set guidance for FY20 at 500,000oz at an AISC of US$980/oz.  This guidance will be restated following the completion of the sale of Ravenswood. Gold production from Syama is expected to be 260,000oz at an AISC of US$960/oz. Syama sulphide production is expected to be a strong performer for Resolute in FY20. Underground mining will supply 100% of sulphide mill feed and this will enable improved operating performance and recoveries from the Syama sulphide processing plant. Operational efficiency and the demonstration of consistent and sustainable improvements in recovery are a focus for FY20. Oxide circuit production will continue to be supplied from existing stockpiles and ore mined from the Tabakoroni Open Pit Mine as well as ore from the Cashew, Tellem and Paysans satellite deposits located 5-10km south of the Syama processing plant. Non-sustaining capital expenditure at Syama will greatly reduce in FY20 and is forecast to be US$15m which includes Resolute's total contribution to the new Syama solar hybrid power plant funded by Aggreko plc (see ASX Announcement dated 18 December 2019).

At Mako, mining and processing will continue in FY20 at similar rates to FY19, with ore grades expected to be slightly lower due to depletion of high-grade stockpiles. Gold production from Mako for FY20 is expected to be 160,000oz at an AISC of US$800/oz. No non-sustaining capital expenditure is forecast for Mako for FY20.

Resolute's exploration budget for FY20 has been set at US$15m with main areas of focus being the identification of oxide resources at Syama, the expansion of the underground resources at Tabakoroni, and mine life extension opportunities at Mako. The Company continues to work towards its long-term Syama production target of 300,000oz at an AISC of US$750/oz through the expansion of mining rates at the Syama Underground Mine and the addition of a future high-grade underground mine at Tabakoroni. A feasibility study on the potential for an underground mine at Tabakoroni has commenced with initial results expected mid-year.

Resolute's focus for the year ahead is to generate positive free cashflow from operations at Syama and Mako and continue to optimise the Company's asset portfolio, strengthen its balance sheet, and deliver value for shareholders. 

FY19 Annual Financial Report and Conference Call

Resolute expects to publish its 2019 Annual Report including audited financial statements during March 2020.

A conference call for investors, analysts and media was held on Friday 28 February 2020.  A recording of the webcast of the teleconference is available at http://www.openbriefing.com/OB/3 730 .aspx .

 

For further information, contact:

John Welborn

Managing Director & CEO

 

Jeremy Meynert

General Manager - Business Development & Investor Relations

 

About Resolute

Resolute is a successful, dividend paying gold miner with more than 30 years of experience as an explorer, developer and operator of gold mines in Australia and Africa which have produced more than 8 million ounces of gold. The Company trades on the Australian Securities Exchange (ASX) and the London Stock Exchange (LSE) under the ticker RSG.

 

Resolute has a Global Mineral Resource base of more than 19 million ounces of gold. The Company's flagship asset is the world class Syama Gold Mine in Mali which has the ability to produce 300,000 ounces of gold per annum from existing processing infrastructure. Resolute has commissioned the world's first automated underground mine at Syama which will deliver a low cost, large scale operation with a mine life beyond 2032. The Mako Gold Mine in Senegal is a high quality, low cost asset with average annual production of approximately 140,000 ounces of gold. A binding agreement has been signed to sell the Ravenswood Gold Mine in Queensland, Australia for up to A$300 million. A strategic review is currently underway of the Bibiani Gold Mine in Ghana.

 

Resolute's guidance for FY20 has been set at production of 500,000 ounces of gold at an AISC of US$980 per ounce. FY20 Guidance will be revised once the sale of Ravenswood has been finalised. 

 

Competent Persons Statement

For the purposes of ASX Listing Rule 5.23, Resolute confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements relating to exploration results or estimates of Mineral Resources or Ore Reserves referred to in this announcement and, in the case of Mineral Resources and Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. Resolute confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcement.

Contact Information

Resolute

John Welborn, Managing Director & CEO

Jeremy Meynert, General Manager - BD & IR

Telephone: +61 8 9261 6100

Email: contact@rml.com.au

Web: www.rml.com.au

 

Berenberg (UK Corporate Broker)

Matthew Armitt / Jennifer Wyllie/ Detlir Elezi

Telephone: +44 20 3207 7800

Tavistock (UK Public Relations)

Jos Simson / Emily Moss / Annabel de Morgan / Oliver Lamb

Telephone: +44 207 920 3150 / +44 778 855 4035

Email: resolute@tavistock.co.uk

 

Authorised by Mr John Welborn, Managing Director & CEO

ASX/LSE: RSG Capital Summary

Fully Paid Ordinary Shares: 1,035,886,919

Current Share Price (ASX):
A$1.14 as at 27 February 2020

Market Capitalisation: A$1.2 Billion

FY20 Guidance:

500,000oz @ AISC US$980/oz 

Board of Directors

Mr Martin Botha Non-Executive Chairman
Mr John Welborn Managing Director & CEO

Ms Yasmin Broughton Non-Executive Director

Mr Mark Potts Non-Executive Director

Ms Sabina Shugg Non-Executive Director

Mr Peter Sullivan Non-Executive Director

Contact

John Welborn Managing Director & CEO

Jeremy MeynertGM -BD & IR
Level 2, Australia Place | 15-17 William St
Perth, Western Australia 6000
T: +61 8 9261 6100 | F: +61 8 9322 7597
E:
contact@rml.com.au

 

 

 

 

 

 

28 February 2020 

Reporting Period

Resolute's reporting period is for the twelve months ended 31 December 2019. As a result of changing reporting periods in 2018 the corresponding prior comparative reporting period presented below is for the six months ended 31 December 2018.

Results for Announcement to the Market

 

 

 

 

 

 

 

 

 

 

12 months ended 31 December 2019

6 months ended 31 December 2018

 

 

 

 

 

 

 

 

 

 

$'000 

$'000 

Revenue from ordinary activities (including discontinued operations)

up

N/A

to

770,314

222,774

Loss for the period (including discontinued operations)

down

N/A

to

(62,841)

(5,324)

Loss after tax attributable to members

 

 

down

N/A

to

(57,107)

(3,302)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount per

security

Franked amount

per security

Dividends

 

 

 

 

 

Final dividend (per share)

 

N/A

N/A

Record date for determining entitlements to the final dividend

 

 

N/A

N/A

Payment date for the final dividend

 

 

N/A

N/A

Franking

 

 

 

0% franked

 

 

 

31 December 2019

31 December 2018

 

 

$

$

Net tangible asset backing (per share)

 

0.98

0.93

 

This report should be read in conjunction with the audited Financial Report for the year ending 31 December 2018.

 

 

 

Consolidated Statement of Comprehensive Income

 

Note

12 months to

31 December 2019

6 months to

31 December 2018

$'000

$'000

Continuing operations

 

 

 

Revenue from contracts with customers for gold and silver sales

1

656,392

152,270

Costs of production relating to gold sales

1

(425,242)

(103,762)

Gross profit before depreciation, amortisation and other operating costs

 

231,150

48,508

 

 

 

 

Depreciation and amortisation relating to gold sales

1

(108,431)

(9,487)

Other operating costs relating to gold sales

1

(67,488)

(15,210)

Gross profit from continuing operations

 

55,231

23,811

 

 

 

 

Interest income

1

679

329

Other income

1

111

13

Exploration and business development expenditure

1

(20,035)

(1,917)

Administration and other corporate expenses

1

(17,564)

(6,282)

Share based payments expense

1

(2,653)

(1,346)

Treasury - realised (losses)/gains

1

(2,980)

213

Fair value movements and unrealised treasury transactions

1

4,633

(13,190)

Share of associates' losses

1

(1,391)

(476)

Depreciation of non-mine site assets

1

(776)

(47)

Finance costs

1

(48,282)

(4,786)

Other expenses

1

(881)

(6)

 

 

 

 

Loss before tax from continuing operations

 

(33,908)

(3,684)

 

 

 

 

Tax (expense)/benefit

1

(24,947)

1,835

Loss for the period from continuing operations

 

(58,855)

(1,849)

 

 

 

 

 

 

 

 

Discontinued operations

 

 

 

Loss for the period from discontinued operations

9

(3,986)

(3,475)

Loss for the period

 

(62,841)

(5,324)

 

 

 

 

Loss attributable to:

 

 

 

Members of the parent

 

(57,107)

(3,302)

Non-controlling interest

 

(5,734)

(2,022)

 

 

(62,841)

(5,324)

 

 

 

Consolidated Statement of Comprehensive Income (continued)

 

Note

12 months to 31 December 2019

6 months to 31 December 2018

$'000

$'000

Loss for the period (brought forward)

 

(62,841)

(5,324)

 

 

 

 

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

 

754

3,460

 

 

 

 

Items that may not be reclassified subsequently to profit or loss

 

 

 

 

 

 

 

Exchange differences on translation of foreign operations:

 

 

 

- Non-controlling interest

 

948

(246)

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

 

(10,780)

(7,061)

 

 

 

 

Other comprehensive loss for the period, net of tax

 

(9,078)

(3,847)

 

 

 

 

Total comprehensive loss for the period

 

(71,919)

(9,171)

 

 

 

 

Total comprehensive loss attributable to:

 

 

 

Members of the parent

 

(67,133)

(6,903)

Non-controlling interest

 

(4,786)

(2,268)

 

 

(71,919)

(9,171)

 

 

 

 

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

 

 

 

Basic loss per share

3

(7.00) cents

(0.44) cents

Diluted loss per share

3

(7.00) cents

(0.44) cents

 

 

 

Consolidated Statement of Financial Position

 

Note

As at 31 December 2019

As at 31 December 2018

$'000

$'000

Current assets

 

 

 

Cash

4

124,495

38,717

Other financial assets - restricted cash

 

3,915

3,890

Receivables

 

59,998

56,822

Inventories

 

189,999

178,623

Financial assets at fair value through other comprehensive income

 

18,116

28,324

Assets held for sale

9

95,022

-

Prepayments and other assets

 

8,031

8,296

Current tax asset

 

21,588

17,561

Total current assets

 

521,164

332,233

 

 

 

 

Non current assets

 

 

 

Prepayments

 

-

3,609

Inventories

 

60,912

-

Investments in associates

11

6,151

9,583

Deferred tax assets

 

27,786

19,261

Other financial assets

 

-

32

Exploration and evaluation

 

82,952

62,904

Development

 

776,736

405,382

Property, plant and equipment

 

441,708

288,481

Right of use assets

7

58,149

-

Total non current assets

 

1,454,394

789,252

Total assets

 

1,975,558

1,121,485

 

 

 

 

Current liabilities

 

 

 

Payables

 

140,008

119,982

Financial derivatives liabilities

 

4,553

-

Interest bearing liabilities

5

343,902

68,513

Provisions

 

13,918

23,259

Current tax liabilities

 

30,127

-

Lease liabilities

7

22,074

-

Liabilities associated with the assets held for sale

9

56,325

-

Total current liabilities

 

610,907

211,754

Non current liabilities

 

 

 

Interest bearing liabilities

5

266,354

138,711

Provisions

 

93,586

70,321

Financial derivative liabilities

 

12,716

-

Deferred tax liabilities

 

13,327

-

Lease liabilities

7

37,139

-

Total non current liabilities

 

423,122

209,032

Total liabilities

 

1,034,029

420,786

Net assets

 

941,529

700,699

Equity attributable to equity holders of the parent

 

 

 

Contributed equity

6

829,021

559,809

Reserves

 

27,454

34,956

Retained earnings

 

58,509

115,616

Total equity attributable to equity holders of the parent

 

914,984

710,381

Non-controlling interest

 

26,545

(9,682)

Total equity

 

941,529

700,699

 

 

 

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

Total

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

At 1 January 2019

559,809

(7,837)

6,371 

(934)

18,122

19,234

115,616

(9,682)

700,699

 

 

 

 

 

 

 

 

 

 

Loss for the period

-

-

-

-

-

-

(57,107)

(5,734)

(62,841)

Other comprehensive (loss)/income, net of tax

-

(10,780)

-

-

-

754

-

948

(9,078)

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

-

(10,780)

-

-

-

754

(57,107)

(4,786)

(71,919)

 

 

 

 

 

 

 

 

 

 

Shares issued

269,212

-

-

-

-

-

-

-

269,212

Share-based payments to employees

-

-

-

-

2,524

-

-

-

2,524

Acquisition of non-controlling interest

-

-

-

-

-

-

-

41,013

41,013

At 31 December 2019

829,021

(18,617)

6,371 

(934)

20,646

19,988

58,509

26,545

941,529

 

 

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/ (accumulated losses)

Non-controlling interest

Total

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

At 1 July 2018

544,972

(776)

6,371

(934)

16,576

15,774

134,073

(7,414)

708,642

 

 

 

 

 

 

 

 

 

 

Loss for the period

-

-

-

-

-

-

(3,302)

(2,022) 

(5,324)

Other comprehensive (loss)/income, net of tax

-

(7,061)

-

-

-

3,460

-

(246)

(3,847)

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

-

(7,061)

-

-

-

3,460

(3,302)

(2,268)

(9,171)

 

 

 

 

 

 

 

 

 

 

Shares issued

14,837

-

-

-

-

-

-

-

14,837

Dividends paid

-

-

-

-

-

-

(15,155)

-

(15,155)

Share-based payments to employees

-

-

-

-

1,546

-

-

-

1,546

At 31 December 2018

559,809

(7,837)

6,371 

(934)

18,122

19,234

115,616

(9,682)

700,699

 

 

Consolidated Cash Flow Statement

 

Note

12 months to 31 December 2019

6 months to 31 December 2018

$'000

$'000

Cash flows from operating activities

 

 

 

Receipts from customers

 

759,219

222,738

Payments to suppliers, employees and others

 

(589,808)

(181,435)

Exploration expenditure

 

(3,546)

 (2,924)

Interest paid

 

(37,134)

 (4,926)

Interest received

 

668

 396

Income tax paid

 

(5,437)

 -

Net cash flows from operating activities

 

123,962

33,849

 

 

 

 

Cash flows used in investing activities

 

 

 

Payments for property, plant & equipment

 

(94,693)

(82,444)

Payments for development activities

 

(104,179)

(92,533)

Payments for evaluation activities

 

(14,181)

(6,898)

Payments for other financial assets

 

(249)

(848)

Loan received from unrelated parties

 

2,999

2,230

Other investing activities

 

(1,076)

(209)

Payment for acquisition of subsidiaries (net of cash acquired)

 

(96,141)

-

Loans to associates

 

-

(750)

Proceeds from sale of available for sale financial assets

 

-

417

Net cash flows used in investing activities

 

(307,520)

(181,035)

 

 

 

 

Cash flows from financing activities

 

 

 

Repayment of borrowings

 

(23,526)

-

Dividend paid

 

-

(15,155)

Proceeds from finance facilities

 

314,066

136,732

Repayment of lease liability

 

(7,790)

-

Net cash flows from financing activities

 

282,750

121,577

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

99,172

(25,609)

 

 

 

 

Cash and cash equivalents at the beginning of the financial period

 

(28,581)

(4,837)

Exchange rate adjustment

 

(1,806)

1,865

Cash and cash equivalents at the end of the period

 

68,785

(28,581)

 

 

 

 

Cash and cash equivalents comprise the following:

 

 

 

Cash at bank and on hand

4

124,495

38,717

Bank overdraft

4

(55,710)

(67,298)

 

 

68,785

(28,581)

 

 

About this Report

a) Corporate information

The preliminary final report of Resolute Mining Limited and its subsidiaries ("Resolute" or the "Group") for the year ended 31 December 2019 was authorised for issue in accordance with a resolution of directors.

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.

b) Basis of preparation

This report is based on accounts that are in the process of being audited.

This report does not include all of the notes normally included in an Annual Financial Report. Accordingly, this report is to be read in conjunction with the financial report for the year ended 31 December 2018 and any public announcements made by RML during the reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. The impact of AASB 16 on transition is disclosed in the Half Year Financial Report for the six months ended 30 June 2019.

 

 

Notes to the Preliminary Final Report

1. Segment revenues and expenses

For the 12 months ended 31 December 2019

Mako (Senegal)

Syama (Mali)

Bibiani (Ghana)

Unallocated (b)

Total

Corporate/
Other

Treasury

$'000

$'000

$'000

$'000

$'000

$'000

Revenue

 

 

 

 

 

 

Gold and silver sales at spot to external customers

165,528

490,864

-

-

-

656,392

Total segment gold and silver sales revenue

165,528

490,864

-

-

-

656,392

Costs of production

(61,476)

(358,078)

-

-

-

(419,554)

Gold in circuit inventories movement

272

(5,960)

-

-

-

(5,688)

Costs of production relating to gold sales

(61,204)

(364,038)

-

-

-

(425,242)

Royalty expense

(8,277)

(32,586)

-

-

-

(40,863)

Operational support costs

(11,222)

(15,403)

-

-

-

(26,625)

Other operating costs relating to gold sales

(19,499)

(47,989)

-

-

-

(67,488)

Administration and other corporate expenses

(2,489)

(2,796)

(3,282)

(8,997)

-

(17,564)

Share-based payments expense

-

-

(313)

(2,340)

-

(2,653)

Exploration and business development expenditure

(1,491)

(3,816)

(440)

(14,288)

-

(20,035)

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

80,845

72,225

(4,035)

(25,625)

-

123,410

Amortisation of evaluation, development and rehabilitation costs

(10,285)

(22,480)

-

-

-

(32,765)

Depreciation of mine site properties, plant and equipment

(40,931)

(32,994)

(1,741)

-

-

(75,666)

Depreciation and amortisation relating to gold sales

(51,216)

(55,474)

(1,741)

-

-

(108,431)

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

29,629

16,751

(5,776)

(25,625)

-

14,979

 

 

 

Notes to the Preliminary Final Report (Continued)

1. Segment revenues and expenses (continued)

 

For the 12 months ended 31 December 2019

Mako (Senegal)

Syama (Mali)

Bibiani (Ghana)

Unallocated (b)

Total

Corporate/ Other

Treasury

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

29,629

16,752

(5,776)

(25,625)

-

14,979

Interest income

509

-

-

-

170

679

Other income

-

2

-

(109)

217

111

Interest and fees

(7,514)

-

-

-

(39,858)

(47,372)

Rehabilitation and restoration provision accretion

(153)

(757)

-

-

-

(910)

Finance costs

(7,667)

(757)

-

-

(39,858)

(48,282)

Realised foreign exchange (loss)/gain

(1,163)

-

-

-

1,910

747

Realised gain/(loss) on forward contracts

2,767

-

-

-

(6,494)

(3,727)

Treasury - realised gains/(losses)

1,604

-

-

-

(4,584)

(2,980)

Inventories net realisable value movements and obsolete consumables

-

24,890

-

-

-

24,890

Unrealised foreign exchange loss

(1,731)

(85)

-

-

(2,551)

(4,367)

Unrealised loss on gold forward sales contract

(1,704)

-

-

-

-

(1,704)

Unrealised foreign exchange loss on intercompany balances

-

-

-

-

(14,186)

(14,186)

Fair value movements and unrealised treasury transactions

(3,435)

24,805

-

-

(16,737)

4,633

Other expenses

-

(881)

-

-

-

(881)

Share of associates' losses

-

-

-

-

(1,391)

(1,391)

Depreciation of non-mine site assets

-

-

-

(776)

-

(776)

Income tax (expense)/benefit

(58)

(33,413)

-

8,524

-

(24,947)

Profit/(loss) for the 12 months ended 31 December 2019

20,582

6,508

(5,776)

(17,986)

(62,183)

(58,855)

 

 

Notes to the Preliminary Final Report (Continued)

1. Segment revenues and expenses (continued)

For the six months ended 31 December 2018

Ravenswood (Australia)

Syama (Mali)

Bibiani (Ghana)

Unallocated (b)

Total

Corporate/
Other

Treasury

$'000

$'000

$'000

$'000

$'000

$'000

Revenue

 

 

 

 

 

 

Gold and silver sales at spot to external customers

70,504

152,270

222,774

Total segment gold and silver sales revenue

70,504

152,270

222,774

Costs of production

(60,193)

(101,538)

(161,731)

Gold in circuit inventories movement

(5,364)

(2,224)

(7,588)

Costs of production relating to gold sales

(65,557)

(103,762)

(169,319)

Royalty expense

(3,521)

(9,709)

(13,230)

Operational support costs

(165)

(5,500)

(1)

(5,666)

Other operating costs relating to gold sales

(3,686)

(15,209)

(1)

(18,896)

Administration and other corporate expenses

(2,216)

(2,123)

(4,159)

(8,498)

Share-based payments expense

(1,346)

(1,346)

Exploration and business development expenditure

(1,007)

(55)

(1,182)

(680)

(2,924)

(Loss)/earnings before interest, tax, depreciation and amortisation

(1,962)

31,121

(1,182)

(6,186)

21,791

Amortisation of evaluation, development and rehabilitation costs

(117)

(3,369)

(3,486)

Depreciation of mine site properties, plant and equipment

(506)

(6,118)

(6,624)

Depreciation and amortisation relating to gold sales

(623)

(9,487)

(10,110)

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

(2,585)

21,634

(1,182)

(6,186)

11,681

 

 

Notes to the Preliminary Final Report (Continued)

1. Segment revenues and expenses (continued)

For the six months ended 31 December 2018

Ravenswood (Australia)

Syama (Mali)

Bibiani (Ghana)

Unallocated (b)

Total

Corporate/ Other

Treasury

$'000

$'000

$'000

$'000

$'000

$'000

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

(2,585)

21,634

(1,182)

(6,186)

-

11,681

Interest income

329

329

Other income

13

13

Interest and fees

(4,371)

(4,371)

Rehabilitation and restoration provision accretion

(478)

(415)

(893)

Finance costs

(478)

(415)

(4,371)

(5,264)

Realised foreign exchange loss

-

(139)

(139)

Realised gain on forward contracts

-

-

-

-

352

352

Treasury - realised gains

-

-

-

-

213

213

Inventories net realisable value movements and obsolete consumables

(412)

(28,745)

(29,157)

Unrealised foreign exchange loss

(1,477)

(1,477)

Unrealised foreign exchange gain on intercompany balances

17,032

17,032

Fair value movements and unrealised treasury transactions

(412)

(28,745)

15,555

(13,602)

Other expenses

(6)

(6)

Share of associates' losses

(476)

(476)

Depreciation of non-mine site assets

-

-

-

(47)

-

(47)

Income tax (expense)/benefit

(4,283) 

6,118

1,835

(Loss)/profit for the six months ended 31 December 2018

(3,475)

(11,809)

(1,188)

(115)

11,263

(5,324)

 

 

 

 

 

Notes to the Preliminary Final Report (Continued)  

2. Dividends paid or proposed

 

12 months to 31 December 2019

6 months to 31 December 2018

$'000

$'000

Proposed dividends on ordinary shares:

Final dividend for the year ended 31 December 2019: 0.0 cents per share (6 months ended 31 December 2018: 0.0 cents per share)

-

-

The company's dividend policy is, subject to board discretion, to pay a minimum of 2% of gold sales revenue as a dividend. A dividend has not been declared for the year ended 31 December 2019.

3. Loss per share

 

12 months to 31 December 2019

6 months to
31 December 2018

Basic loss per share

 

 

Loss attributable to ordinary equity holders for continued operations of the parent for basic loss per share ($'000)

(57,107)

(3,302)

Weighted average number of ordinary shares outstanding during the period used in the calculation of basic EPS

816,354,938

755,294,647

 

 

 

Basic loss per share from continuing operations (cents per share)

(7.00)

(0.44)

 

 

 

Diluted loss per share from continuing operations (cents per share) (1)

(7.00)

(0.44)

¹ Dilutive instruments have not been included in the calculation of diluted earnings per share for 31 December 2019 and 2018 because the result for the period was a loss.

4. Cash

 

As at 31 December 2019

As at 31 December 2018

$'000

$'000

Cash at bank and on hand

124,495

38,717

Reconciliation to cash flow statement

 

 

For the purpose of the cash flow statement, cash and cash equivalents comprise the following at the end of each period:

Cash at bank and on hand

124,495

38,717

Bank overdraft

(55,710)

(67,298)

 

68,785

(28,581)

 

 

 

 

 

Notes to the Preliminary Final Report (Continued)

5. Interest bearing liabilities

 

As at 31 December 2019

As at 31 December 2018

$'000

$'000

Interest bearing liabilities (current)

 

 

Bank overdraft

55,710

67,298

Insurance premium funding

400

1,215

Borrowings

287,792

-

 

343,902

68,513

 

 

 

Interest bearing liabilities (non current)

 

 

Borrowings

266,354

138,711

 

266,354

138,711

 

 

 

 

610,256

207,224

6. Contributed Equity

 

12 months to 31 December 2019

6 months to 31 December 2018

$'000

$'000

Ordinary share capital:

 

 

903,153,734 ordinary fully paid shares (2018: 757,512,088)

829,021

559,809

 

 

 

Movements in contributed equity, net of issuing costs:

 

 

Balance at the beginning of the period

559,809

544,972

Issue of shares to Manas Resources1

343

417

Issue of shares to Oklo Resources2

323

-

Issue of shares to Toro3

265,052

-

Issue of shares to Taurus4

3,494

-

Issue of shares to Orca Gold

-

11,774

Issue of shares to Loncor Resources

-

2,646

Balance at the end of the period

829,021

559,809

¹This relates to the purchase of 79,294,874 shares in Manas Resources Limited which resulted in the issue of 300,000 Resolute shares.

2This relates to the purchase of 1,297,944 shares in Oklo Resources Limited which resulted in the issue of 282,500 Resolute shares.

3This relates to the acquisition of Toro Gold Limited which resulted in the issue of 142,500,000 Resolute shares.

4This relates to the transactional costs in Taurus Financing which resulted in the issue of 1,800,000 Resolute shares.

 

 

 

 

 

Notes to the Preliminary Final Report (Continued)

7. Leases

 

Buildings

Plant and Equipment

Total

$'000

$'000

$'000

Lease assets

 

 

 

At 1 January 2019 (on transition to AASB 16)

3,007

9,426

12,433

Additions

-

32,619

32,619

Acquisition of subsidiary

571

25,515

26,086

Depreciations

(626)

(11,425)

(12,051)

Foreign exchange

(19)

(919)

(938)

Balance at the end of the year

2,933

55,216

58,149

 

 

 

 

Lease liabilities

 

 

 

At 1 January 2019 (on transition to AASB 16)

3,007

9,426

12,433

Additions

-

32,619

32,619

Acquisition of subsidiary

582

25,947

26,529

Repayments

(672)

(12,605)

(13,277)

Accretion of interest

149

1,572

1,721

Foreign exchange

(20)

(792)

(812)

Balance at the end of the year

3,046

56,167

59,213

8. Business Combination

Acquisition of Toro Gold Limited

On 31 July 2019, Resolute (through its wholly-owned subsidiary, Resolute UK 2 Limited) signed a binding agreement to acquire all the shares of Toro Gold for US$130m of cash and 142.5 million Resolute fully paid ordinary shares. The shares were measured at a deemed value of A$1.45 per share-based on Resolute's 30-day volume weighted average prices (VWAP). The cash component of the consideration was funded through a US$130m financing facility provided by Taurus Funds Management Pty Limited ("Taurus Facility") which is non-recourse to the Group.

Assets acquired and liabilities assumed

The provisional values of the net identifiable assets acquired, and liabilities assumed and recognised at the date of acquisition are as follows:

 

Fair value recognised on acquisition

$'000

Assets

 

Cash and cash equivalents

94,775

Other assets

6,983

Inventories

87,876

Property, plant and equipment

138,101

Exploration and evaluation

5,523

Development

368,369

Right of use asset

25,118

Total assets

726,745

Notes to the Preliminary Final Report (Continued)

8. Business Combination (Continued)

 

Fair value recognised on acquisition

$'000

Liabilities

 

Payables

37,058

Interest bearing liabilities

113,710

Decommissioning provision

34,758

Derivative financial liabilities

20,478

Deferred tax liabilities

13,327

Provisions

138

Lease liabilities

25,545

Total Liabilities

245,014

Fair value of non-controlling interest

38,952

Fair value of identifiable net assets

442,779

Total identifiable net assets at fair value

442,779

Consideration:

 

Fair value recognised on acquisition

$'000

Cash

185,342

Resolute shares (142,500,000 ordinary shares) 1

257,437

Purchase consideration transferred

442,779

1 Shares valuation based on the RSG share price as at the close of trading on 2 August 2019, being A$1.86

9.  Assets held for sale

On 15 January 2020, Resolute signed a definitive agreement for the sale of the Ravenwood Gold Mine in Queensland to a consortium comprising of a fund managed by private equity manager EMR Capital Management Limited ("EMR Capital") and energy and mining company Golden Energy and Resources Limited. The consideration for the sale comprised $100 million of upfront value and up to $200 million potential payments. This is contingent on future gold prices and future gold production from the Ravenswood Gold Mine as well as the investment outcomes from the Ravenswood Gold Mine for EMR Capital. As at 31 December 2019, Ravenwood Gold Mine was classified as a disposal group held for sale and disclosed as a discontinued operation.

 

 

Notes to the Preliminary Final Report (Continued)

9.  Assets held for sale (Continued)

Results of the disposal group held for sale asset:

 

12 months to 31 December 2019

6 months to 31 December 2018

$'000

$'000

Revenue

113,922

70,504

Cost of production relating to gold sales

(103,315)

(65,557)

Other operating cost relating to gold sales

(7,799)

(3,686)

Administration and other corporate expenses

(1,248)

(2,216)

Exploration and business development expenditure

(1,529)

(1,007)

Depreciation and amortisation

(5,152)

(623)

Finance cost

(453)

(478)

Fair value movements and unrealised treasury transactions

1,588

(412)

Loss from discontinued operations

(3,986)

(3,475)

 

 

 

Loss per share

 

 

Basic loss per share of discontinued operation

(0.49)

(0.46)

Diluted loss per share of discontinued operation

(0.49)

(0.46)


Cash flow information for disposal group:

 

12 months to 31 December 2019

6 months to 31 December 2018

$'000

$'000

Operating cash flows

22,525

(2,580)

Investing cash flows

(17,421)

(7,514)

Financing cash flows

-

3,521

Net cash flows

5,104

(6,573)

The major categories of assets and liabilities within the disposal group as at 31 December 2019 are as follows:

 

As at 31 December 2019

$'000

Assets

 

Other assets

613

Inventories

11,977

Property, plant and equipment

51,195

Development

31,237

Total assets

95,022

 

 

Liabilities

 

Payables

16,712

Provisions

39,613

Total liabilities

56,325

Net assets held for sale

38,697

Notes to the Preliminary Final Report (Continued)

10. Contingent liabilities

On 27 February 2020 Resolute's subsidiary, Société des Mines de Syama S.A. (SOMISY), received a demand for payment of approximately A$51m from the Mali Tax Authorities in relation to Income Tax and Value Added Tax (VAT) for the tax years ended 31 December 2015, 2016 and 2017. The factual basis and validity of the demand will be strongly disputed by Resolute due to fundamental misinterpretations of the application of certain tax laws to SOMISY with reference to the provisions of SOMISY's Establishment Convention. Resolute is working with its legal and tax advisors to contest the demand and will resist any efforts to enforce payment. Accordingly, this amount has not been included in Resolute's financial accounts at 31 December 2019.

11. Investments in associates

 

12 months to 31 December 2019

 

6 months to 31 December 2018

12 months to 31 December 2019

 

6 months to 31 December 2018

12 months to 31 December 2019

 

6 months to 31 December 2018

 

Kilo Goldmines Ltd

Manas Resources Ltd

Loncor Resources Inc

Shares held in associates (No. of shares)

46,568,000

46,568,000

682,484,709

603,189,835

25,500,000

51,000,000

Percentage of ownership (%)

27.44%

27.44%

25.82%

22.82%

26.93%

27.22%

 

 

 

 

 

 

 

 

$'000

$'000

$'000

$'000

$'000

$'000

Carrying Value

255

2,893

1,480

1,541

4,416

5,149

 

 


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