REG - Resolute Mining Ltd - Appendix 4E Preliminary Final Report
24/02/2023 07:01
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RNS Number : 9693Q Resolute Mining Limited 24 February 2023
Appendix 4E
Preliminary Final Report
For the year ended 31 December 2022
24 February 2023
Reporting Period
The reporting period is the year ended 31 December 2022 with the corresponding
reporting period being for the year ended 31 December 2021. Unless otherwise
stated, all dollar figures are United States dollars ($).
Results for Announcement to the Market
12 months ended 12 months ended
31 December 2022 31 December 2021
$'000 $'000
Revenue from ordinary activities Up 19% to 651,129 549,242
Loss for the period Down 91% to (34,665) (367,471)
Loss after tax attributable to members Down 89% to (34,083) (319,203)
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
12 months ended 12 months ended
31 December 2022 31 December 2021
$'000 $'000
Net tangible assets backing (per share)(1) 0.22 0.38
(1. Net tangible assets excludes right of use assets from the reported net
assets in the statement of financial position.)
This Appendix 4E - Preliminary final report has not been subject to audit and
there is no audit report provided. This report should be read in conjunction
with the Financial Report for the period ended 31 December 2021. The Financial
Report for the period ended 31 December 2022 is currently being audited by
Ernst & Young and will be finalised for lodgement with ASX in March 2023.
2022 Financial and operational overview
In 2022, a total of 353,609 ounces (oz) of gold were produced (poured) at an
All-In Sustaining Cost (AISC) of $1,498/oz with total gold sales of 357,447oz
at an average realised price of $1,819/oz.
Further details by operation are provided below.
Financial Performance
The Group's underlying net profit after tax (before abnormal items) was $20.3
million, with a reported net loss after tax of $34.7 million. The financial
performance of Resolute for the year ended 31 December 2022 is summarised
below:
Profit and Loss Analysis(1) 2022 2021
($'000s)
Group
Group
Revenue 651,129 549,242
Cost of sales excluding depreciation and amortisation (411,482) (324,984)
Royalties and other operating expenses (62,016) (59,066)
Administration and other corporate expenses (14,850) (16,809)
Exploration and business development expenditure (14,615) (18,484)
EBITDA 148,166 129,899
Depreciation and amortisation (85,894) (120,993)
Net interest and finance costs (15,273) (11,741)
Inventories NRV movements and obsolete consumables (36,077) (44,258)
Fair value movements and unrealised treasury transactions (13,345) (27,697)
Other 1,767 (3,481)
Impairment expense - (227,464)
Gain on disposal - 2,707
Indirect tax expense (13,449) (24,760)
Net loss before tax (14,105) (327,789)
Income tax expense (20,560) (39,682)
Reported net loss after tax (34,665) (367,471)
Abnormal items(2):
+ Disputed Senegalese tax expense 23,926 7,132
+ Historical tax adjustments 14,809 39,334
+ Impairment of obsolete consumables 16,249 -
+ Impairment expense - 227,464
Underlying net profit/(loss) after tax(2) 20,319 (93,541)
(1. Amounts presented above are aggregate balances of certain line items
presented in the Consolidated Statement of Comprehensive Income.)
(2. This financial performance indicator is a non-IFRS measure. It is used
internally by management to assess the performance of the business)
(and is therefore considered relevant to readers of this document.)
Group EBITDA of $148.2 million 2022 was a 14% improvement on the comparative
period reflecting:
· Higher revenue of $651.1 million from gold sales of 357,447oz (up
13%) at an average realised price of $1,819/oz (up 5%). The higher ounces sold
reflects increased gold production (up 19%) due to:
o improved Sulphide processing performance with gold recovered up 4% (gold
poured up 19%);
o higher gold recovered from both Syama Oxide (up 8%) and Mako (up 2%); and
o significant drawdown from gold in circuit of 21,752oz (2021: 3,084oz).
· Higher cost of sales due to significant increases in fuel and
consumables prices as well as the impact of non-cash adjustments for bullion
and gold in circuit (as a result of the continued drawdown of material).
· Lower exploration and business development expenditure as a
result of prior year transaction costs associated with divestments (sale of
Bibiani and Cote D'Ivoire exploration assets).
The following abnormal items have been added back to the reported net loss in
arriving at the underlying net profit of $20.3 million for the year ended 31
December 2022:
· Disputed Senegalese tax expense ($23.9m), relates to an ongoing
dispute with the Senegalese tax authorities regarding PMC's tax exoneration
status;
· Historical tax adjustments ($14.8m), included within this amount
is $3.0m expected to be cash settled, with the remainder expected to be
settled with VAT and other tax credits;
· Provision for obsolete consumables ($16.2m), with $2.3m
pertaining to Mako and the remainder to Syama.
Financial Position
Net debt decreased by $197.2 million to $31.6 million at 31 December 2022 (31
December 2021:
$228.8 million). Total borrowings at 31 December 2022 were $125.6 million
comprising $80.0 million drawn on the Term Loan Facility and RCF, and
overdraft facilities in Mali and Senegal of $45.6 million. Available liquidity
of $189.0 million includes cash and bullion of $94.0 million and $95.0 million
of undrawn RCF. As at the date of this release, the RCF has been fully repaid
with $100 million available to be redrawn.
Resolute continued to invest in the business in 2022 with spending on
development, property, plant, and equipment totalling $63.0 million (2021:
$56.9 million) including outlays for tailings facilities across both sites,
capitalised stripping costs and project capital at Syama.
Syama Gold Mine, Mali
2022 production from the Syama Sulphide circuit was 161,479oz at an AISC of
$1,410/oz. A 19% increase in production at a steady AISC compared to the prior
year ($1,406/oz). Ore mined increased from 2.2Mt to 2.3Mt while the roaster
recorded its highest ever throughput, processing 175.2kt. The Syama sulphide
operation is expected to continue to benefit from the successful planned
maintenance shutdown which was completed in early April 2022.
Production from the Syama Oxide operations was 62,165oz at an AISC of
$1,801/oz. The oxide operations continued lower grade mining at several
satellite pits. Gold poured for the year increased 9%, with momentum picking
up in the second half and the highest gold production occurring in the
December quarter.
Mako Gold Mine, Senegal
2022 production from Mako was 129,425oz at an AISC of $1,318/oz. Tonnes
processed steadily increased over the year reflecting increased plant uptime
and modifications to the SAG Mill configuration. The increase in AISC
reflected a higher volume of material mined, which impacted mining costs and
continued pressure on consumables amid industry wide inflationary pressures.
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2022
$'000 Note 2022 2021
Revenue from contracts with customers for gold and silver sales 1 651,129 549,242
Costs of production relating to gold sales 1 (411,482) (324,984)
Gross profit before depreciation, amortisation and other operating costs 239,647 224,258
Depreciation and amortisation of mine assets 1 (83,706) (118,621)
Other operating costs relating to gold sales 1 (62,016) (59,066)
Gross profit from operations 93,925 46,571
Interest income 1 5,513 5,141
Other income 1 4,549 3,248
Exploration and business development 1 (14,615) (18,484)
Impairment of exploration and evaluation assets 1 - (5,068)
Impairment of mine properties and property, plant and equipment 1 - (222,396)
Administration and other corporate expenses 1 (14,393) (15,687)
Share based payments expense 1 (457) (1,122)
Treasury - realised losses 1 (1,477) (185)
Inventories net realisable value movements and obsolete consumables 1 (36,077) (44,258)
Fair value movements and unrealised treasury transactions 1 (13,345) (27,697)
Share of associates' losses 1 (1,305) (3,838)
Depreciation of non-mine site assets 1 (2,188) (2,372)
Finance costs 1 (20,786) (16,882)
Indirect tax expense 1 (13,449) (24,760)
Profit / (loss) before tax from operations (14,105) (327,789)
Tax expense 1 (20,560) (39,682)
Loss for the year from operations (34,665) (367,471)
(Loss)/gain attributable to:
Members of the parent (34,083) (319,203)
Non-controlling interest (582) (48,268)
(34,665) (367,471)
Consolidated Statement of Comprehensive Income (continued)
for the year ended 31 December 2022
$'000 Note 2022 2021
(34,665) (367,471)
Loss for the year (brought forward)
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 (17,298) (16,106)
Items that may not be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations:
- Non-controlling interest 4,507 4,960
Changes in the fair value/realisation of financial assets at fair value
through other comprehensive income, net of tax
(717) (12,981)
Other comprehensive loss for the year, net of tax (13,508) (24,127)
Total comprehensive loss for the year (48,173) (391,598)
Total comprehensive (loss)/gain attributable to:
Members of the parent (52,098) (348,290)
Non-controlling interest 3,925 (43,308)
(48,173) (391,598)
Loss per share for net loss attributable for continuing operations to the
ordinary equity holders of the parent:
cents cents
Basic loss per share 3 (2.85) (28.92)
Diluted loss per share 3 (2.85) (28.92)
The above consolidated statement of comprehensive income should be read in
conjunction with the accompanying notes.
Consolidated Statement of Financial Position
for the year ended 31 December 2022
$'000 Note 2022 2021
(Restated)((1))
Current assets
Cash 4 80,873 67,607
Other financial assets - restricted cash 1,406 9,443
Receivables 5 48,793 27,812
Inventories 8 146,430 156,589
Financial assets at fair value through other comprehensive income - 20,828
Prepayments and other assets 11,141 12,868
Asset sale receivable - 56,495
Total current assets 288,643 351,642
Non current assets
Income tax asset 13 10,545 11,303
Inventories 8 42,434 53,918
Investments in associates - 1,365
Promissory notes receivable 40,015 40,207
Contingent consideration receivable 13,636 14,524
Exploration and evaluation 3,211 2,909
Development 227,121 264,491
Property, plant and equipment 229,735 229,164
Right of use assets 13,453 7,708
Total non current assets 580,150 625,589
Total assets 868,793 977,231
Current liabilities
Payables 63,700 91,542
Financial derivative liabilities 1,546 -
Interest bearing liabilities 6 95,634 92,726
Provisions 9 100,377 57,165
Lease liabilities 3,373 2,991
Current tax liabilities 19,107 7,137
Total current liabilities 283,737 251,561
Non current liabilities
Interest bearing liabilities 6 29,482 223,979
Provisions 9 71,544 73,424
Deferred tax liabilities - 1,591
Lease liabilities 12,536 8,086
Total non current liabilities 113,562 307,080
Total liabilities 397,299 558,641
Net assets 471,494 418,590
Equity attributable to equity holders of the parent
Contributed equity 7 882,731 777,021
Reserves (21,956) (3,706)
Retained earnings (317,341) (283,258)
Total equity attributable to equity holders of the parent 543,434 490,057
Non-controlling interest (71,940) (71,467)
Total equity 471,494 418,590
The above consolidated statement of financial position should be read in
conjunction with the accompanying notes.
(1) Refer to restatement of comparative information Note 13
Consolidated Statement of Changes in Equity
for the year ended 31 December 2022
$'000 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((1)) Non-controlling interest of disposal group held for sale Total
(Restated)((1))
At 1 January 2022 777,021 (8,631) 4,876 (724) 19,813 (19,040) (283,258) (71,467) - 418,590
Loss for the year - - - - - - (34,083) (582) - (34,665)
Other comprehensive (loss)/income, net of tax - (717) - - - (17,298) - 4,507 - (13,508)
Total comprehensive (loss) - (717) - - - (17,298) (34,083) 3,925 - (48,173)
/income for the year, net of tax
Shares issued (net of cost) 105,710 - - - - - - - - 105,710
Dividends paid - - - - - - - (4,398) - (4,398)
Share based payments expense - - - - (235) - - - - (235)
At 31 December 2022 882,731 (9,348) 4,876 (724) 19,578 (36,285) (317,341) (71,940) - 471,494
At 1 January 2021 777,021 4,350 4,876 (724) 18,607 (2,934) 35,945 (22,023) (6,981) 808,137
Loss for the year - - - - - - (319,203) (47,929) (339) (367,471)
Other comprehensive (loss)/income, net of tax - (12,981) - - - (16,106) - 4,960 - (24,127)
Total comprehensive (loss) - (12,981) - - - (16,106) (319,203) (42,969) (339) (391,598)
/income for the year, net of tax
Dividends paid - - - - - - - (6,475) - (6,475)
Share based payments expense - - - - 1,206 - - - - 1,206
Disposal of assets held for sale - - - - - - - - 7,320 7,320
At 31 December 2021 777,021 (8,631) 4,876 (724) 19,813 (19,040) (283,258) (71,467) - 418,590
The above consolidated statement of changes in equity should be read in
conjunction with the accompanying notes.
(1) Refer to restatement of comparative information Note 13
Consolidated Cash Flow Statement
for the year ended 31 December 2022
$'000 Note 2022 2021
Cash flows from operating activities
Receipts from customers 650,591 549,013
Payments to suppliers, employees and others (524,706) (451,554)
Exploration expenditure (10,745) (13,643)
Interest paid (16,619) (14,874)
Interest received 214 -
Indirect tax receipts/ (payments) 164 (14,853)
Income tax paid (7,994) (3,531)
Net cash flows from operating activities 90,905 50,558
Cash flows used in investing activities
Payments for property, plant & equipment (35,811) (30,387)
Payments for development activities (27,602) (22,908)
Payments for evaluation activities (4,372) (2,926)
Proceeds from sale of asset 60,000 30,740
Payments relating to asset held for sale - (5,445)
Proceeds from sale of investment in associate 4,534 -
Proceeds from sale of financial assets at fair value through other 19,148 2,289
comprehensive income
Payments for sale of financial assets at fair value through other - (1,179)
comprehensive income
Other investing activities (725) (697)
Net cash flows from/(used in) investing activities 15,172 (30,513)
Cash flows from financing activities
Repayment of borrowings (195,000) (79,811)
Proceeds from finance facilities - 50,000
Proceeds from issuing ordinary shares 110,289 -
Payments for share issue costs (4,579) -
Dividends paid to non-controlling interest (5,089) (5,858)
Repayment of principal portion of lease liability (3,457) (13,823)
Net cash flows (used in)/from financing activities (97,837) (49,492)
Net increase/(decrease) in cash and cash equivalents 8,240 (29,447)
Cash and cash equivalents at the beginning of the year 25,237 55,226
Exchange rate adjustment 1,982 (542)
Cash and cash equivalents at the end of the year 35,459 25,237
Cash and cash equivalents comprise the following:
Cash at bank and on hand 4 80,873 67,607
Bank overdraft 4 (45,414) (42,370)
Cash and cash equivalents at the end of the year 35,459 25,237
The above consolidated cash flow statement should be read in conjunction with
the accompanying notes
Notes to the Preliminary Final Report
for the year ended 31 December 2022
About this Report
The preliminary final report of Resolute Mining Limited and its subsidiaries
("Resolute" or the "Group") for the year ended 31 December 2022 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.
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 2021 and any public
announcements made by RML during the reporting period in accordance with the
continuous disclosure requirements of the Corporations Act 2001.
Rounding of Amounts
The Financial Report has been prepared in United States dollars and all values
are rounded to the nearest thousand dollars ($'000) unless otherwise stated.
1 Segment revenues and expenses
Unallocated (b)
31 December 2022 Mako Syama (Mali) Corporate/
$'000 (Senegal) Other Total
Revenue
Gold and silver sales at spot to external customers (a) 236,760 414,369 - 651,129
Total segment gold and silver sales revenue 236,760 414,369 - 651,129
Costs of production (129,967) (259,386) - (389,353)
Gold in circuit inventories movement (336) (21,793) - (22,129)
Costs of production relating to gold sales (130,303) (281,179) - (411,482)
Royalty expense (11,838) (27,736) - (39,574)
Operational support costs (17,714) (4,728) - (22,442)
Other operating costs relating to gold sales (29,552) (32,464) - (62,016)
Administration and other corporate expenses (4,777) (1,160) (8,456) (14,393)
Share-based payments expense - - (457) (457)
Exploration, business development and impairment of investments (4,018) (9,578) (1,019) (14,615)
Earnings/(loss) before interest, tax, depreciation and amortisation 68,110 89,988 (9,932) 148,166
Amortisation of evaluation, development and rehabilitation costs (30,496) (25,520) - (56,016)
Depreciation of mine site properties, plant and equipment (12,002) (15,688) - (27,690)
Depreciation and amortisation relating to gold sales (42,498) (41,208) - (83,706)
Segment operating result before treasury, other income/ (expenses) and tax 25,612 48,780 (9,932) 64,460
Interest income 7 24 5,482 5,513
Other income - 14 4,535 4,549
Interest and fees (442) (4,121) (14,871) (19,434)
Rehabilitation and restoration provision accretion (397) (955) - (1,352)
Finance costs (839) (5,076) (14,871) (20,786)
Realised foreign exchange (loss)/gain 853 879 (3,209) (1,477)
Treasury - realised gains/(losses) 853 879 (3,209) (1,477)
Inventories net realisable value movements and obsolete consumables (7,004) (29,073) - (36,077)
Unrealised foreign exchange (loss)/ gain (1,016) - (14,025) (15,041)
Unrealised foreign exchange loss on intercompany balances - - 1,696 1,696
Fair value movements and unrealised treasury transactions (1,016) - (12,329) (13,345)
Share of associates' losses - - (1,305) (1,305)
Depreciation of non-mine site assets (175) - (2,013) (2,188)
Indirect tax expense - (13,387) (62) (13,449)
Income tax expense (13,411) (4,178) (2,971) (20,560)
Profit/(Loss) for the 12 months to 31 December 2022 4,027 (2,017) (36,675) (34,665)
1 Segment revenues and expenses (continued)
Unallocated (b)
31 December 2021 Mako Syama (Mali) Corporate/
$'000 (Senegal) Other Total
Revenue
Gold and silver sales at spot to external customers (a) 221,478 327,764 - 549,242
Total segment gold and silver sales revenue 221,478 327,764 - 549,242
Costs of production (87,541) (245,920) - (333,461)
Gold in circuit inventories movement 583 7,894 - 8,477
Costs of production relating to gold sales (86,958) (238,026) - (324,984)
Royalty expense (11,074) (21,863) - (32,937)
Operational support costs (17,528) (5,344) (3,257) (26,129)
Other operating costs relating to gold sales (28,602) (27,207) (3,257) (59,066)
Administration and other corporate expenses (5,060) (1,617) (9,010) (15,687)
Share-based payments expense - - (1,122) (1,122)
Exploration, business development and impairment of investments (3,512) (4,802) (10,170) (18,484)
Earnings/(loss) before interest, tax, depreciation and amortisation 97,346 56,112 (23,559) 129,899
Amortisation of evaluation, development and rehabilitation costs (15,600) (25,894) - (41,494)
Depreciation of mine site properties, plant and equipment (40,262) (36,865) - (77,127)
Depreciation and amortisation relating to gold sales (55,862) (62,759) - (118,621)
Segment operating result before treasury, other income/ (expenses) and tax 41,484 (6,647) (23,559) 11,278
Interest income 69 - 5,072 5,141
Other income - - 3,248 3,248
Interest and fees (434) (2,854) (13,312) (16,600)
Gain on remeasurement for refinancing - - 316 316
Rehabilitation and restoration provision accretion (165) (433) - (598)
Finance costs (599) (3,287) (12,996) (16,882)
Realised foreign exchange (loss)/gain (1,431) 387 859 (185)
Treasury - realised gains/(losses) (1,431) 387 859 (185)
Inventories net realisable value movements and obsolete consumables (53,188) 8,930 - (44,258)
Unrealised foreign exchange (loss)/ gain 635 - (17,120) (16,485)
Unrealised foreign exchange loss on intercompany balances - - (11,212) (11,212)
Fair value movements and unrealised treasury transactions 635 - (28,332) (27,697)
Share of associates' losses - - (3,838) (3,838)
Depreciation of non-mine site assets (151) - (2,221) (2,372)
Impairment of exploration and evaluation assets (4,808) - (260) (5,068)
Impairment of mine properties and property, plant and equipment (55,023) (167,373) - (222,396)
Indirect tax expense (9,026) (9,874) (5,860) (24,760)
Income tax expense (1,413) (34,424) (3,845) (39,682)
Profit/(Loss) for the 12 months to 31 December 2021 (83,451) (212,288) (71,732) (367,471)
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, however this information is analysed in this format by the Chief Operating
Decision maker, and forms part of the reconciliation of the results and
positions of the operating segments to the financial statements.
2 Dividends paid or proposed
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 2022.
3 Earnings/(loss) per share
$'000 31 December 2022 31 December 2021
Basic (loss)/earnings per share
(Loss)/profit attributable to ordinary equity holders for operation of the (34,083) (319,203)
parent for basic loss per share ($'000)
Weighted average number of ordinary shares outstanding during the year 1,196,856,518
used in the calculation of basic and diluted EPS
1,103,896,747
cents cents
Basic (loss)/earnings per share from operations (cents per share) (2.85) (28.92)
Diluted (loss)/earnings per share from operations (cents per share)(1) (2.85) (28.92)
Basic loss per share - continuing operations
Loss attributable to ordinary equity holders for continuing operations of the (34,083)
parent for basic loss per share ($'000)
(319,203)
Weighted average number of ordinary shares outstanding during the year used 1,196,856,518 1,103,896,747
in the calculation of basic EPS
cents cents
Basic loss per share from continuing operations (cents per share) (2.85) (28.92)
Diluted loss per share from continuing operations (cents per share)(2) (2.85) (28.92)
¹ Potentially dilutive instruments have not been included in the calculation
of diluted earnings per share for 31 December 2022 and 31 December 2021
because the result for the year was a loss.
2 Potentially dilutive instruments have not been included in the calculation
of diluted earnings per share for continuing operations for 31 December 2022
and 31 December 2021 because the result for the year was a loss.
4 Cash
31 December 2022 31 December 2021
$'000 $'000
80,873 67,607
Cash at bank and on hand
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 year:
Cash at bank and on hand 80,873 67,607
Bank overdraft (Note 6) (45,414) (42,370)
Cash and cash equivalents at the end of the year 35,459 25,237
5 Receivables
31 December 2022 31 December 2021
$'000 $'000
37 441
Trade and other receivables
Taxation receivables 48,756 27,371
Total receivables 48,793 27,812
The Taxation receivables balance comprises a receivable of $12.1 million
(2021: $9.0 million) in relation to VAT paid by the Syama operation. Also
included in the Taxation receivables is a VAT receivable of $34.9 million
(2021: $10.1 million) relating to the Mako operation ("Mako VAT"). The Mako
VAT represents the VAT which would be payable (and then refundable) in the
event the Company is unsuccessful in extending the tax exoneration by an
additional two years to July 2023. The remainder of the balance relates to
Australian Goods and services tax (GST) amounts. Resolute continues to work
with its legal and tax advisors to contest the position taken by the
Senegalese and Malian Authorities. Refer to Note 9.
6 Interest bearing liabilities
31 December 2022 31 December 2021
$'000 $'000
Interest bearing liabilities (current)
Bank overdraft (Note 4) 45,414 42,370
Insurance premium funding - 109
Bank borrowings 50,220 50,247
Total Interest bearing liabilities (current) 95,634 92,726
Interest bearing liabilities (non current)
Bank borrowings 29,482 223,979
Total Interest bearing liabilities (non current) 29,482 223,979
7 Contributed Equity
31 December 2022 31 December 2021
$'000 $'000
Ordinary share capital:
2,129,006,569 ordinary fully paid shares (2021: 1,103,931,520) 883,306 777,021
Movements in contributed equity, net of issuing costs:
Balance at the beginning of the year 777,021 777,021
Placement of shares to institutional and retail investors 110,289 -
Share issue costs (4,579) -
Balance at the end of the year 882,731 777,021
8 Inventories
31 December 2022 31 December 2021
$'000 $'000
Current
Ore stockpiles
- At cost 27,223 47,054
- At net realisable value 28,286 6,381
Total current ore stockpiles 55,509 53,435
Gold in circuit - at cost 4,186 22,353
Gold in circuit - at net realisable value 373 1,503
Gold bullion on hand - at cost 10,276 15,697
Gold bullion on hand - at net realisable value - 1,722
Consumables at net realisable value 76,086 61,879
Total inventory (current) 146,430 156,589
Non Current
Ore stockpiles - at cost 1,959 1,935
Ore stockpiles - at net realisable value 3,279 6,559
Gold in circuit - at net realisable value 37,196 45,424
Total inventory (non current) 42,434 53,918
9 Provisions
31 December 2022 31 December 2021
$'000 $'000
Current
Site restoration 1,220 1,795
Employee entitlements 4,336 2,511
Dividend payable 136 150
Provision for indirect taxes 92,936 50,381
Other provisions 1,749 2,328
Total provisions (current) 100,377 57,165
Non Current
Site restoration 70,874 72,172
Employee entitlements 670 1,252
Total provisions (non current) 71,544 73,424
Resolute's subsidiaries SOMISY(Mali) and PMC(Senegal), have received demands
for payment to the Local Tax Authorities in relation to Income Tax and
indirect tax for the years ended 31 December 2015 to 2022.
At 31 December 2022 the total provision for indirect taxes has increased from
$50.4 million to $92.9 million.
This increase is as a result of an additional $37.6 million due to the
potential reduction in the Mako tax exoneration period to 5 years. This amount
relates to provisions for customs duties and VAT. Whilst these amounts are
recognised as provisions. Resolute is firmly of the view that it has complied
with all the requirements for the extension of the tax exoneration to 7 years
and will continue to work with the Senegalese authorities to resolve this
matter.
The remainder of the increase relates to an additional $4.6 million of
indirect tax provisions in Mali based on government demands received, with a
provision recognised in line with the requirements of relevant accounting
standards. Resolute continues to challenge the factual basis and validity of
these demands which are strongly disputed due to fundamental
misinterpretations of the application of certain taxes. Resolute continues to
work with its legal and tax advisors to contest the positions taken by the
Authorities.
10 Subsequent events
On 19 January 2023, the Group announced that the Syama North Resource estimate
increased to 34.0 million tonnes at 2.9g/t for 3.2 million ounces of gold.
11 Impairment testing
Impairment indicator assessment
At 31 December 2022, Resolute's quoted market capitalisation was lower than
its net asset carrying value. Further, Resolute noted that the impact of
inflationary pressures on costs and increase in risk free rate that underpins
the applicable discount rate. These factors were considered as indicators of
impairment. As a result, an impairment test was performed to determine the
recoverable amounts for all CGU's of the Group, being the Syama Gold Mine and
the Mako Gold Mine using the fair value less cost to sell (FVLCD) method.
Syama CGU - 31 December 2022
Syama indicator assessment
Whilst Syama's 2022 forecast production remain in line with budget, as a
result of the general indicators of impairment noted above, a formal
impairment test was performed to determine the recoverable amount for the
Syama CGU.
Key Assumptions used to determine recoverable amount
The table below summarises the key assumptions used in determining the
recoverable amount:
31 December 2022 31 December 2021
Gold price ($/oz) 1,735-1,534 1,777-1,467
Discount rate (post tax real) 14.8% 14.0%
Unmined resources ($/oz) $20-$58 $20-$54
Gold prices
Gold prices are estimated with reference to external market forecasts based on
a consensus view of market experts.
Discount rate
In determining the recoverable amount of assets, the future cash flows were
discounted using rates based on the CGU's estimated real weighted average cost
of capital, with an additional premium applied having regard to the CGU's risk
profile.
Unmined resources
Unmined resources which are not included in the life‐of‐mine plan as
result of the current assessment of economic returns, timing of specific
production alternatives and the prevailing economic environment have been
valued and included in the assessed fair value.
Operating and capital costs
Life‐of‐mine operating and capital cost assumptions are based on the
Group's latest budget and life‐of mine plans. Operating cost assumptions
reflect an assumption of maintaining current cost, over the long term, without
including expected improvements over the life of mine.
Recognition
As a result of the analysis performed, there is no impairment loss recognised
for the Syama CGU for the period ended 31 December 2022.
11 Impairment of non current assets (continued)
Mako CGU - 31 December 2022
Mako indicator assessment
Whilst Mako's 2021 forecast production and cost remain in line with budget, as
a result of the general indicators of impairment noted above and the reduction
in the tax exoneration period to 5 years (refer to Note 5), a formal
impairment test was performed to determine the recoverable amount for the Mako
CGU.
Key Assumptions
The table below summarises the key assumptions used in the determining the
recoverable amount:
31 December 2022 31 December 2021
Gold price ($/oz) 1,735-1,534 1,777-1,467
Discount rate (post tax real) 10.5% 10.5%
Unmined resources ($/oz) $48 $44
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 discount rate, 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 life‐of‐mine 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
Life‐of‐mine operating and capital cost assumptions are based on the
Group's latest budget and life‐of 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
As a result of the analysis performed, there is no impairment loss recognised
for the Mako CGU for the period ended 31 December 2022.
12 Investment in associates
The Group has 23.3% investment in Loncor Resources Inc, with a carrying value of nil as at 31 December 2022 (31 December 2021:$1.2 million).
13 Restatement of comparative information
During 2022, the Group identified information that resulted in a restatement to the prior periods. The impact on previously reported amounts is summarised in the tables below, with the restatement only affecting amounts presented in the Consolidated Statement of Financial Position.
$'000 31 December 2021 Restatement 31 December 2021
As Reported Restated
Total current assets 351,642 - 351,642
Non current assets
Income tax asset 18,273 (6,970) 11,303
Total non current assets 632,559 (6,970) 625,589
Total assets 984,201 (6,970) 977,231
Total liabilities 558,641 - 558,641
Net assets 425,560 (6,970) 418,590
Equity attributable to equity holders of the parent
Contributed equity 777,021 - 777,021
Reserves (3,706) - (3,706)
Retained earnings (277,682) (5,576) (284,448)
Total equity attributable to equity holders of the parent 495,633 (5,576) 488,867
Non-controlling interest (70,073) (1,394) (71,765)
Total equity 425,560 (6,970) 417,102
The decrease in net assets at 31 December 2021 is due to the derecognition of income tax asset for the Syama operation in Mali. A reduction of CFA 4.271 billion ($6.9 million) was recorded on the basis that this amount did not meet the recognition criteria for a tax asset at 30 June 2018 and should have been recognised in the Consolidated Statement of Comprehensive Income as a tax expense.
At 1 January 2021, this resulted in the reduction of the income tax assets of $6.9 million, a reduction in retained earnings of $5.6 million and a reduction in Non-controlling interest of $1.4 million.
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