REG - Resolute Mining Ltd - Half Year Financial Results Summary

Resolute MiningAnnouncement

29/08/2024 08:15

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RNS Number : 1491C  Resolute Mining Limited  29 August 2024

29 August 2024

 

2024 Half Year Financial Results

·    Total Recordable Injury Frequency Rate (TRIFR) of 2.11 at the end of
H1 2024 with nine recordable injuries during the period of which 5 were
medical treatment cases

·    Gold production of 167,140 ounces (oz) (H1 2023: 176,631 oz) in line
with expectations reflecting lower production in Q1 due to the scheduled
14-day maintenance shutdown at the Syama Sulphide Plant and final portion of
waste stripping at Mako

·    Revenue of $341.5 million, an increase of 4% from the same period
last year (H1 2023: $329.5 million), from gold sales of 157,321 oz at an
average realised price of $2,170/oz (H1 2023: 173,058oz at $1,906/oz)

·    Earnings before interest, tax, depreciation, and amortisation
(EBITDA) of $116.4 million, an increase of 14% from same period last year (H1
2023: $101.4 million) with a 14% increase in gold price and 2% decrease in
operating costs offsetting a 9% reduction in gold sold

·    Net income after tax of $33.4 million (H1 2023: $87.7 million) due to
$16.7 million of extra tax expense as the tax exoneration in Senegal ended in
July 2023, as well as $37.5 million of non-cash unrealised foreign exchange
differences

·    Improved All-In Sustaining Cost (AISC) of $1,442/oz, 2% lower than H1
2023 ($1,469/oz). AISC is expected to continue to track lower in H2

·    Capital expenditure (excluding exploration) of $44.3 million (H1
2023: $36.7 million), with spend expected to be H2-weighted and in line with
full-year guidance of $115 - 145 million

·    Net cash increasing to $96.6 million (H1 2023 net debt of $17.2
million) with cash and bullion at 30 June 2024 of $143.4 million

·    Final $25.0 million of Group loan facility repaid; Company borrowings
of $47.5 million consisting of in-country overdraft facilities in Mali and
Senegal

·    Syama Sulphide Conversion Project (SSCP) progressing on plan with
most of the earth and civil works engineering and design works nearing
completion

·    Full year 2024 production and cost guidance maintained at 345,000 -
365,000 oz at an AISC of $1,300 -1,400/oz

 

Note: Unless otherwise stated, all dollar figures are United States dollars
(US$).

 

 

Resolute Mining Limited (Resolute, Group or the Company) (ASX/LSE: RSG) is
pleased to announce the Company's half year financial results for the half
year ended 30 June 2024 (H1 2024).

 

Resolute's Chief Executive Officer, Mr Terry Holohan, commented:

 

"It has been an exciting first half of 2024 for Resolute. With a net cash
position of $96.6 million and remaining fully unhedged the Company is in its
strongest position for several years and on track to meet its full year
guidance and longer-term growth plans, including the SSCP and mine-life
extension at Mako.

The SSCP is progressing on schedule with most of the earthworks and
foundations complete. This project will add flexibility to the Syama operation
from mid-2025 allowing up to 4Mtpa of the higher-grade sulphide ores to be
processed whilst retaining the ability to process oxide material.

 

In Q1 this year we took the Sulphide plant off-line for a 14- day extended
maintenance to perform repairs but also to fully inspect the condition of the
plant following the major rebuild that took place in Q1 2022. I am pleased to
report that the plant remains in a great condition. It is now clear to me that
over the last two years we have demonstrated our ability to operate and
maintain the plant and produce gold from sulphide ore both efficiently and
economically. This now gives us all the full confidence to systematically
increase our treatment rates of our higher grade sulphide mineral resources
over the next 5 to 10 years.

 

In parallel, the Company remains focused on extending the life of the Mako
operation and is pleased with the results of drilling at both the nearby
Tomboronkoto and Bantaco exploration projects.  An updated Mineral Resource
Estimate for Tomboronkoto is expected in Q3 2024, along with an initial
Mineral Resource Estimate for the Mansala Prospect in Guinea.

 

The Company's TRIFR increased in H1 to 2.11 from 1.20. While these reflect
minor incidents, and not Lost-Time Injuries (LTIs), safety remains our number
one priority and we are working hard to continue improving our safety culture
and reduce all incidents.

 

As evidenced by the steady decrease in AISC from Q1 to Q2, the Company has
also demonstrably continued its efforts to lower costs. We anticipate a
continuation of this trend in the second half of 2024. This core focus, in
addition to prioritising the stability of gold production, is key to further
strengthening Resolute's position as well as underpin the Company's promising
growth initiatives."

 

Corporate

Director Appointments

On 20 March 2024, the Company announced the appointment of Ms Adrienne Parker
as a Non-Executive Director of the Company. Ms Parker joins as a member of
both the Audit & Risk as well as the Remuneration Committees.

 

Ms Parker is a lawyer with over 25 years' experience in the resources, energy,
and infrastructure sectors, with an additional emphasis on major projects as
well as running complex disputes. Adrienne was most recently Partner and Head
of the Perth office at global law firm Pinsent Masons, where she advised in
connection with the procurement and delivery of infrastructure in the mining,
oil and gas and renewables sectors, including rail, roads, ports and
airports.

 

Her experience in the resources and energy sector includes major projects in
Australia, Papua New Guinea and Africa. This has included advice on risk
assessment and management, procurement models and strategy, the preparation
and negotiation of mining services and supply agreements, as well as EPC and
EPCM contracts. Ms Parker has also acted in large-scale disputes in many
jurisdictions.

 

Chair Transition

On 28 May 2024, the Company announced the appointment of Mr Andrew Wray as a
Non-Executive Director of the Company and advised that Mr Martin Botha will
retire as Chair and Non-Executive Director on 31 August 2024. Mr Wray has been
appointed as a member of the Audit & Risk, Remuneration and Nomination
Committees and will succeed Mr Botha as Chair of the Board of Directors of
Resolute.

 

Mr Wray is a seasoned mining executive with extensive executive and
board-level experience in Africa. Mr Wray has held positions at both CEO and
CFO level, as well as having substantial banking and finance experience
advising companies in the mining and other sectors. He has led successful
business turnarounds with responsible project development, built leadership
teams, and executed corporate acquisitions as well as asset sales.

 

Mr Wray, the former CFO of Acacia Mining, was most recently CEO of West
African focused gold miner Golden Star Resources. Prior to this Mr Wray was
CEO of the specialist mining investment company La Mancha.

 

SSCP Update

The SSCP, that will increase sulphide processing capacity from the current
level of 2.4Mtpa to 4Mtpa, is progressing well with no LTI's after
approximately 76,500 person-hours worked until the end of June 2024.

 

Most of the earth and civil works engineering and design works are complete,
with minor items outstanding. Structural engineering and design are in
progress and most of the mechanical engineering design is complete with a few
minor packages outstanding. The manufacture of the long lead items is
progressing and on schedule.

 

Commissioning remains on track for mid-2025, and the project remains on
budget.

 

Ravenswood Update

During the first half of 2024, Resolute and Ravenswood Gold Pty Ltd, the owner
for the Ravenswood Gold Mine, worked to restructure the Gold Price Contingent
Promissory Note and Vendor Financing Promissory Note to support the Ravenswood
Mine in its financing.

 

Resolute and Ravenswood agreed to amend the Gold Price Contingent Promissory
Note, including that the requirements of the clause regarding Payment of Gold
Price Contingent Amount of the Original Gold Price Contingent Promissory Note
were deemed to have been met. The Gold Price Contingent Amount payable to
Resolute is A$50 million (the highest payable amount) and is payable in two
tranches as follows:

 

·      A$30 million paid to Resolute and received on 19 June 2024; and

·      A$20 million to be paid to Resolute no later than 30 September
2024.

 

Additionally, Resolute amended the A$50 million Vendor Financing Promissory
Note that was originally due in March 2027. The new structure is as follows:

 

·      Reset the principal to the increased amount of A$64 million to
account for capitalised accrued interest;

·      Maintain the annual coupon at 6% until 30 June 2025 after which
the annual coupon increases to 12%. Interest will be capitalised and is to be
paid to Resolute upon maturity; and

·      Promissory note maturity extended to 31 December 2027 but may be
repaid early on future Ravenswood financings, liquidity event(s), or excess
cash from Ravenswood.

 

The Upside Sharing Promissory Note (up to A$150 million) linked to the
investment outcomes of Ravenswood for EMR Capital - one of the owners of
Ravenswood - remained unchanged.

 

Mali Mining Code Update

The State of Mali adopted the implementation decree of the 2023 Mining Code on
the 9th July 2024. As noted previously, Resolute does not expect any impact on
its operation in Mali and has a Mining convention for its Syama and Tabakoroni
licences until 2029. Resolute continues to work with the government in a
clear, constructive and responsible manner.

 

Environment and Social Governance

Resolute's TRIFR as at 30 June 2024 was 2.11 and recorded no LTIs, significant
environmental incidents, regulatory non-compliances, or grievances in H1 2024.
Resolute successfully completed its annual audits against the LBMA's
Responsible Gold Guidance at both sites. The Company will be undergoing audit
against the World Gold Council's Responsible Gold Mining Principles and the
Conflict Free Gold Standard in Q3 2024.

 

In H1, Resolute improved its ESG ratings on the Sustainalytics, Bloomberg and
MSCI platforms across all Environmental, Social & Governmental pillars.
The Company's MSCI ESG rating improved to AA and is now considered a Leader by
Bloomberg and MSCI in its peer group.

 

In July, the UNESCO World Heritage Committee removed the Niokolo-Koba
National Park, located close to Resolute's Mako Mine, from the list of World
Heritage Sites in Danger. This decision was taken following the positive steps
taken by the Senegalese Government, which have contributed to improving the
natural site's state of conservation. Over the past five years, Resolute has
provided funds to the National Park via its biodiversity offset commitment as
well as supporting the efforts of the Government to improve the Park's state
of conservation.

 

Exploration & Resources

Total exploration expenditure in H1 2024 was $9.9 million, with drilling
programs continuing in Senegal ($4.4 million), Mali ($4.1 million) and Guinea
($1.4 million) throughout the first half of 2024.

 

In January an initial Mineral Resource Estimate was announced at Tomboronkoto
of 403koz grading 1.2g/t (at a cut off grade of 0.5g/t). Throughout H1
drilling at Tomboronkoto concentrated on extending the mineralisation down dip
of the existing Resource and along strike to the west. During Q2 drilling
commenced at Bantaco with a planned program of wide spaced drilling to
traverse the outcropping gold mineralisation and coincident geochemical
anomalies.

 

In Mali, diamond drilling continued at Syama North focusing on expanding the
high-grade gold mineralisation which lies below the currently planned open pit
design. These high-grade shoots have higher grade than the open pit resource.
An updated Mineral Resource Estimate for Syama North is expected to be
published during the second half of 2024.

 

In Guinea, a series of diamond drillholes were completed in Q2 to increase the
knowledge on the deposit to underpin a structural and geological model. A 3D
geological model has been built and the initial Mineral Resource Estimate is
underway. The initial Mineral Resource for Mansala is expected in Q3 2024.

 

 

Syama Gold Mine, Mali

Syama has performed in line with expectations for the first half of 2024.
Sulphide ore mined in H1 2024 was 11% higher than the prior year as a result
of productivity improvements. Underground sulphide grades were 9% lower than
H1 2023 but were in line with expectations.

 

Sulphide ore processed increased by 4% and the head grade decreased by 8% from
the same period last year leading to a 4% decrease in gold poured in the
sulphide circuit (76,637 oz vs 79,731 oz in H1 2023). The higher throughput
achieved, despite the scheduled 14-day shutdown of the plant in Q1 for
maintenance, was the result of improved plant availability and increased
milling rates due to enhancements made to the crusher circuit over the past
nine months. In Q3 2024 sulphide gold production is expected to decrease
slightly from lower tonnes milled due to constraints during the rainy season.
Milled grades and tonnages are then expected to increase in the latter part of
the year.

 

In H1 2024 at the oxide operations ore tonnes mined decreased by 54% (447kt)
at a 4% lower grade (1.62 g/t versus 1.69g/t in H1 2023) due to the reduction
in available oxide ore. Throughput and head grade were 7% and 15% lower
respectively due to the larger contribution of lower grade stockpiles. This
led to 17% less gold production in H1 2024 (27,422 oz) than the same period in
2023. During the second half of Q2 oxide ore stockpiles were blended with
higher grade ore from the Samogo and Paysans pits. In H2 2024 head grades and
processed tonnages are expected to be similar to H1 2024 with continued
blending of stockpiles and run of mine ore. In Q3 2024, due to the rainy
season, processed tonnage is expected to be 10% lower than Q2 2024 followed by
an increase in Q4 2024.

 

Table 1: Syama Production and Cost Summary

 Summary                                Units  Q2       Q1       H1         H1

2024
2024
2024
2023
 Mining      Sulphide
             Ore Mined                  t      636,539  646,959  1,283,498  1,153,690
             Mined Grade                g/t    2.68     2.57     2.62       2.87
             Oxide
             Ore Mined                  t      266,513  180,343  446,856    972,309
             Mined Grade                g/t    1.56     1.71     1.62       1.69
 Processing  Sulphide
             Ore Processed              t      609,714  511,290  1,121,004  1,074,980
             Processed Grade            g/t    2.75     2.65     2.71       2.94
             Recovery                   %      79       79       79         79
             Gold Poured                oz     41,930   34,707   76,637     79,731
             Gold Sold                  oz     42,661   29,348   72,008     77,821
             Oxide
             Ore Processed              t      374,949  377,326  752,275    809,849
             Processed Grade            g/t    1.32     1.31     1.32       1.55
             Recovery                   %      87       85       85         83
             Gold Poured                oz     13,669   13,752   27,422     33,057
             Gold Sold                  oz     13,669   13,752   27,422     32,071
 Cost        Syama combined
             Total Capital Expenditure  $m     17.0     19.0     36.0       36.8
             AISC                       $/oz   1,502    1,418    1,463      1,494

 

Mako Gold Mine, Senegal

H1 2024 mining tonnage was 19% higher than the prior year as the last portion
of the scheduled Stage 7 stripping was completed in Q1 and the mining plan was
accelerated to ensure mining completion prior to the rainy season in 2025. As
expected, the mined grade in H1 2024 was similar to the previous year period.
Ore tonnes processed increased 5% (to 1.1 million tonnes) from H1 2023 due to
a softer mill feed blend caused by reduced basalt content. The head grade
decreased 8% (from 2.08g/t in H1 2023 to 1.91g/t in H1 2024) as expected.

 

H1 2024 production from Mako was 63,081 oz at an AISC of $1,256/oz. Mako
production was very similar to the prior year period (H1 2023: 63,843 oz), at
a 4% lower AISC as a result of lower unit processing costs, lower stripping
ratio and lower sustaining capital expenditure.

 

Production is expected to be weighted towards H2. We expect AISC to fall
further and meet full year guidance of $1,100-1,200/oz as capital expenditures
continue to decrease throughout the remainder of the year.

 

Table 2: Mako Production and Cost Summary

 Summary                    Units  Q2         Q1       H1         H1

2024
2024
2024
2023
 Mining
 Ore Mined                  t      1,064,722  527,772  1,592,494  1,334,922
 Mined Grade                g/t    1.90       1.80     1.87       1.91
 Processing
 Ore Processed              t      537,787    565,370  1,103,157  1,047,790
 Processed Grade            g/t    2.15       1.73     1.91       2.08
 Recovery                   %      93         93       93         92
 Gold Poured                oz     35,188     27,892   63,081     63,843
 Gold Sold                  oz     31,991     25,900   57,891     63,166
 Financials
 Total Capital Expenditure  $m     2.6        5.8      8.4        12.5
 AISC                       $/oz   1,100      1,451    1,256      1,308

 

 

Financial Performance

The H1 2024 net income after tax was $33.4 million with a Group EBITDA of
$116.4 million which was 15% higher than the comparative period in 2023
reflecting:

 

·      Higher revenue of $341.5 million from gold sales of 157,321 oz at
an average realised price of $2,170/oz, up 14%, compared to H1 2023

·      Stable costs, H1 2024 AISC of $1,442/oz (versus $1,469/oz in H1
2023), despite inflationary pressures seen in fuel and consumables

·      $16.7 million of extra tax expense as the exoneration in Senegal
ended in July 2023 as well as $37.5 million of non-cash unrealised foreign
exchange differences on assets

 

H1 2024 has seen cost reductions coming through with Group AISC reducing from
$1,487/oz in Q1 to $1,402/oz in Q2. We expect further reduction in AISC across
both operation during the second half of 2024 to reach full year cost guidance
of $1,300 - 1,400/oz for the Group. The financial performance of Resolute for
H1 2024 is summarised below.

 

 

Table 3: Half year Profit and Loss

 Profit and Loss Analysis ($'000s)                                    H1 2024    H1 2023
 Revenue                                                              341,503    329,499
 Cost of sales excluding depreciation and amortisation                (193,509)  (193,413)
 Royalties                                                            (19,639)   (18,916)
 Administration and other corporate expenses                          (6,627)    (9,081)
 Exploration expense                                                  (5,340)    (6,368)
 EBITDA                                                               116,388    101,721
 Depreciation and amortisation                                        (53,162)   (47,459)
 Net interest and finance costs                                       (3,766)    (7,120)
 Inventories net realisable value movements and obsolete consumables  14,724     8,543
 Fair value movements and unrealised treasury transactions            (5,292)    29,837
 Other                                                                (15,514)   (5,271)
 Net profit before tax                                                53,377     79,801
 Income tax benefit/(expense)                                         (19,976)   7,878
 Net profit after tax                                                 33,401     87,679

 

 

Cashflow

Movements in the cash and bullion balances are summarised in the cashflow
waterfall below:

 
Figure 1: Half year cash flow

 

Balance Sheet

Net cash increased by $82.6 million to $96.6 million as at 30 June 2024 (31
December 2023:

$14.0 million) including cash and bullion of $143.4 million. Total borrowings
as at 30 June 2024 were $47.5 million consisting of in-country overdraft
facilities in Mali and Senegal.

 

During Q2 Resolute received a payment of A$30 million from the sale of
Ravenswood (in Q1 2020).

 

Resolute continued to invest across its operations in H1 2024 with spending on
development, property, plant, and equipment totalling $44.4 million (H1 2023:
$36.1 million) including expenditure on the Syama Sulphide Conversion Project,
as well as capitalised stripping costs at both mines.

 

Resolute is in the process of finalising documentation for a new working
capital facility with more details to be provided in due course. This facility
will be used for opportunistic organic and inorganic growth.

 

CY2024 Guidance

Resolute maintains its full year 2024 production guidance of 345,000 - 365,000
oz, noting the stable performance at the Syama Complex and Mako.

 

Resolute maintains its Group cost guidance at an AISC of $1,300 - 1,400/oz and
its capital expenditure guidance of $115 - 145 million.

 

Key H2 2024 Deliverables

·   Update Tomboronkoto Mineral Resource Estimate

·   Initial Mansala Mineral Resource Estimate

·   Continued construction of the SSCP

·   Initiate studies on Syama Phase II Expansion

Contact

 Resolute                                               Public Relations

                                                        Jos Simson, Tavistock

 Matthias O'Toole-Howes,                                resolute@tavistock.co.uk

 Corporate Development and Investor Relations Manager   +44 207 920 3150

 matthias.otoolehowes@resolutemining.com                Corporate Brokers

 +44 203 3017 620                                       Jennifer Lee, Berenberg

                                                        +44 20 3753 3040

                                                        Tom Rider, BMO Capital Markets

                                                        +44 20 7236 1010

 

Authorised by Mr Terry Holohan, Managing Director and Chief Executive Officer

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