REG - Resolute Mining Ltd - Appendix 4E Preliminary Final Report
24/02/2022 07:18
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RNS Number : 6865C Resolute Mining Limited 24 February 2022
24 February 2022
Resolute Mining Limited
(Resolute or the Company)
Appendix 4E Preliminary Final Report
For the year ended 31 December 2021
Resolute Mining Limited (ASX/LSE: RSG) (Resolute or the Company) advises that
its Appendix 4E Preliminary Final Report has been released to the Australian
Securities Exchange.
Reporting Period
The reporting period is the year ended 31 December 2021 with the corresponding
reporting period being for the year ended 31 December 2020.
Results for Announcement to the Market
12 months ended 31 December 2021 12 months ended 31 December 2020
$'000 $'000
Revenue from ordinary activities (including discontinued operations) down 11% to 549,242 618,253
(Loss)/profit for the period (including discontinued operations) up N/A to (367,471) 4,995
(Loss)/profit after tax attributable to members up N/A to (319,203) 15,941
Amount per Franked amount
security
Dividends per security
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 31 December 2021 12 months ended 31 December 2020
$'000 $'000
Net tangible asset backing (per share) 0.38 0.71
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 2020. The Financial
Report for the period ended 31 December 2021 is currently being audited by
Ernst & Young and will be finalised for lodgement with ASX in March 2022.
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2021
$'000 Note 2021 2020
(Restated)((1))
Continuing operations
Revenue from contracts with customers for gold and silver sales 1 549,242 602,985
Costs of production relating to gold sales 1 (324,984) (301,635)
Gross profit before depreciation, amortisation and other operating costs 224,258 301,350
Depreciation and amortisation of mine assets 1 (118,621) (172,606)
Other operating costs relating to gold sales 1 (59,066) (71,339)
Gross profit from continuing operations 46,571 57,405
Interest income 1 5,141 2,152
Other income 1 3,248 -
Exploration and business development 1 (18,484) (10,910)
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 (15,687) (17,456)
Share based payments expense 1 (1,122) (1,178)
Treasury - realised gains/(losses) 1 (185) 867
Fair value movements and unrealised treasury transactions 1 (71,955) 16,143
Share of associates' losses 1 (3,838) (1,661)
Depreciation of non-mine site assets 1 (2,372) (2,725)
Finance costs 1 (16,882) (24,676)
Other expenses 1 - (88)
Indirect tax expense 1 (24,760) (24,308)
(Loss) before tax from continuing operations (327,789) (6,435)
Tax expense 1 (39,682) (30,045)
(Loss) for the year from continuing operations (367,471) (36,480)
Discontinued operations
- 41,475
Gain/(loss) for the year from discontinued operations (2)
(Loss)/gain for the year (367,471) 4,995
(Loss)/gain attributable to:
Members of the parent (319,203) 15,941
Non-controlling interest (48,268) (10,946)
(367,471) 4,995
(1) Discontinued operations relates to the Group's Ravenswood gold mine
(2) A reclassification of net realisable value adjustments has been made in
the 2020 comparatives above to present these movements below in Fair value
movements and unrealised treasury transactions to ensure consistency with the
presentation of these amounts in 2021.
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
$'000 Note 2021 2020
(367,471) 4,995
(Loss)/gain 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 (16,106) 45,915
Items that may not be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations:
- Non-controlling interest 4,960 (5,651)
Changes in the fair value/realisation of financial assets at fair value
through other comprehensive income, net of tax
(12,981) 16,638
Other comprehensive (loss)/gain for the year, net of tax (24,127) 56,902
Total comprehensive (loss)/gain for the year (391,598) 61,897
Total comprehensive (loss)/gain attributable to:
Members of the parent (348,290) 78,494
Non-controlling interest (43,308) (16,597)
(391,598) 61,897
Earnings (loss) per share for net income (loss) attributable for operations to
the ordinary equity holders of the parent:
cents cents
Basic (loss)/gain per share 3 (28.92) 1.62
Diluted (loss)/gain per share 3 (28.92) 1.62
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 (28.92) (2.60)
Diluted (loss) per share 3 (28.92) (2.60)
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 2021
$'000 Note 2021 2020
Current assets
Cash 4 67,607 88,591
Other financial assets - restricted cash 9 9,443 -
Receivables 5 27,812 78,852
Inventories 8 156,589 158,929
Financial assets at fair value through other comprehensive income 9 20,828 36,004
Assets held for sale - 80,608
Prepayments and other assets 12,868 8,785
Asset sale receivable 10 56,495 -
Current income tax asset - 17,911
Total current assets 351,642 469,680
Non current assets
Income tax asset 18,273 -
Inventories 8 53,918 67,923
Investments in associates 12 1,365 4,649
Promissory notes receivable 40,207 40,262
Contingent consideration receivable 14,524 15,417
Deferred tax assets - 10,081
Exploration and evaluation 1,699 6,469
Development 265,701 495,281
Property, plant and equipment 229,164 292,678
Right of use assets 7,708 22,518
Total non current assets 632,559 955,278
Total assets 984,201 1,424,958
Current liabilities
Payables 91,542 83,832
Financial derivative liabilities 11 - 415
Interest bearing liabilities 6 92,726 62,558
Provisions 11 62,854 75,720
Lease liabilities 2,991 11,249
Liabilities associated with the assets held for sale - 8,821
Total current liabilities 250,113 242,595
Non current liabilities
Interest bearing liabilities 6 223,979 273,613
Provisions 11 74,872 71,863
Deferred tax liabilities 1,591 9,422
Lease liabilities 8,086 12,358
Total non current liabilities 308,528 367,256
Total liabilities 558,641 609,851
Net assets 425,560 815,107
Equity attributable to equity holders of the parent
Contributed equity 7 777,021 777,021
Reserves (3,706) 24,175
Retained earnings (277,682) 41,521
Total equity attributable to equity holders of the parent 495,633 842,717
Non-controlling interest (70,073) (20,629)
Non-controlling interest of disposal group held for sale - (6,981)
Total equity 425,560 815,107
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Consolidated Statement of Changes in Equity
for the year ended 31 December 2021
$'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 Non-controlling interest of disposal group held for sale Total
At 1 January 2021 777,021 4,350 4,876 (724) 18,607 (2,934) 41,521 (20,629) (6,981) 815,107
Loss for the 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)
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) (277,682) (70,073) - 425,560
At 1 January 2020 639,859 (12,288) 4,876 (724) 17,077 (48,849) 25,580 (1,436) - 624,095
Gain/(loss) for the year - - - - - - 15,941 (10,946) - 4,995
Other comprehensive (loss)/income, net of tax - 16,638 - - - 45,915 - (5,651) - 56,902
Total comprehensive (loss) - 16,638 - - - 45,915 15,941 (16,597) - 61,897
/income for the year, net of tax
Shares issued (net of cost) 137,162 - - - - - - - - 137,162
Dividends paid - - - - - - - (9,577) - (9,577)
Share based payments expense - - - - 1,530 - - - - 1,530
Disposal of assets held for sale 6,981 (6,981) -
At 31 December 2021 777,021 4,350 4,876 (724) 18,607 (2,934) 41,521 (20,629) (6,981) 815,107
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Consolidated Cash Flow Statement
for the year ended 31 December 2021
$'000 Note 2021 2020
Cash flows from operating activities
Receipts from customers 549,013 617,218
Payments to suppliers, employees and others (456,999) (496,999)
Exploration expenditure (13,643) (6,052)
Interest paid (14,874) (20,221)
Interest received - 616
Indirect tax payments (9,026) -
Income tax paid (9,358) (32,610)
Settlement of Taurus royalty - (12,000)
Net cash flows from operating activities 45,113 49,952
Cash flows used in investing activities
Payments for property, plant & equipment (30,387) (49,724)
Payments for development activities (22,908) (35,455)
Payments for evaluation activities (2,926) (5,799)
Proceeds from sale of asset 30,740 29,916
Proceeds/ (repayments) relating to assets held for sale - 5,445
Proceeds from sale of financial assets at fair value through other 2,289 1,145
comprehensive income
Payments for sale of financial assets at fair value through other (1,179) (5,603)
comprehensive income
Other investing activities (697) (418)
Net cash flows used in investing activities (25,068) (60,493)
Cash flows from financing activities
Repayment of borrowings (29,811) (202,963)
Proceeds from finance facilities - 110,000
Proceeds from issuing ordinary shares - 137,428
Payments for share issue - (266)
Dividends paid to non-controlling interest (5,858) (9,577)
Repayment of lease liability (13,823) (18,012)
Net cash flows from financing activities (49,492) 16,610
Net (decrease)/increase in cash and cash equivalents (29,447) 6,069
Cash and cash equivalents at the beginning of the year 55,226 48,237
Exchange rate adjustment (542) 920
Cash and cash equivalents at the end of the year 25,237 55,226
Cash and cash equivalents comprise the following:
Cash at bank and on hand 4 67,607 88,591
Bank overdraft 4 (42,370) (33,365)
Cash and cash equivalents at the end of the year 25,237 55,226
The above consolidated cash flow statement should be read in conjunction with the accompanying notes
The Group had non-cash offset of VAT credits receivable from the Mali Tax
Authorities against previously recognised provision for the tax years ended 31
December 2015 to 2020 amounting to $56.6m.
Notes to the Preliminary Final Report
For the year ended 31 December 2021
About this Report
The preliminary final report of Resolute Mining Limited and its subsidiaries
("Resolute" or the "Group") for the year ended 31 December 2021 was authorised
for issue in accordance with a resolution of directors.
Resolute Mining Limited (the parent) is a for profit company limited by shares
incorporated and domiciled in Australia whose shares are publicly traded on
the Australian Securities Exchange and the London Stock Exchange.
Basis of Preparation
This report is based on accounts that are in the process of being audited.
This report does not include all of the notes normally included in an Annual
Financial Report. Accordingly, this report is to be read in conjunction with
the financial report for the year ended 31 December 2020 and any public
announcements made by RML during the reporting period in accordance with the
continuous disclosure requirements of the Corporations Act 2001.
Rounding of Amounts
The Financial Report has been prepared in United States dollars and all values
are rounded to the nearest thousand dollars ($'000) unless otherwise stated.
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 (52,553) 8,930 (28,332) (71,955)
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)
Loss for the 12 months to 31 December 2021 (83,451) (212,288) (71,732) (367,471)
1 Segment revenues and expenses (continued)
Unallocated (b)
31 December 2020 (Restated) Mako (Senegal) Syama (Mali) Corporate/
$'000 Other Total
Revenue
Gold and silver sales at spot to external customers (a) 274,400 328,585 - 602,985
Total segment gold and silver sales revenue 274,400 328,585 - 602,985
Costs of production (59,019) (236,519) - (295,538)
Gold in circuit inventories movement (5,578) (519) - (6,097)
Costs of production relating to gold sales (64,597) (237,038) - (301,635)
Royalty expense (13,720) (23,365) - (37,085)
Operational support costs (18,470) (12,304) (3,480) (34,254)
Other operating costs relating to gold sales (32,190) (35,669) (3,480) (71,339)
Administration and other corporate expenses (3,717) (3,266) (10,473) (17,456)
Share-based payments expense - - (1,178) (1,178)
Exploration, business development and impairment of investments (1,624) (2,512) (6,774) (10,910)
Earnings/(loss) before interest, tax, depreciation and amortisation 172,272 50,100 (21,905) 200,467
Amortisation of evaluation, development and rehabilitation costs (20,012) (20,116) - (40,128)
Depreciation of mine site properties, plant and equipment (67,853) (63,335) (1,290) (132,478)
Depreciation and amortisation relating to gold sales (87,865) (83,451) (1,290) (172,606)
Segment operating result before treasury, other income/(expenses) and tax
84,407 (33,351) (23,195) 27,861
Interest income 431 300 1,421 2,152
Interest and fees (3,459) (1,493) (14,235) (19,187)
Loss on remeasurement for refinancing - - (4,711) (4,711)
Rehabilitation and restoration provision accretion (386) (392) - (778)
Finance costs (3,845) (1,885) (18,946) (24,676)
Realised foreign exchange (loss)/gain 912 (381) 336 867
Treasury - realised gains/(losses) 912 (381) 336 867
Inventories net realisable value movements and obsolete consumables (5,304) 5,192 287 175
Unrealised foreign exchange (loss)/ gain (1,650) 5 33,133 31,488
Unrealised loss on derivative financial liability (1,167) - - (1,167)
Unrealised foreign exchange loss on intercompany balances - - (14,353) (14,353)
Fair value movements and unrealised treasury transactions (8,121) 5,197 19,067 16,143
Other expenses - - (88) (88)
Share of associates' losses - - (1,661) (1,661)
Depreciation of non-mine site assets (133) - (2,592) (2,725)
Indirect tax expense - (24,308) - (24,308)
Income tax (expense)/benefit (15,768) (4,184) (10,093) (30,045)
Profit/(loss) for the 12 months to 31 December 2020 57,883 (58,612) (35,751) (36,480)
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.
c) Segment note references continuing operations
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 2021.
3 Earnings/(loss) per share
$'000 31 December 2021 31 December 2020
Basic (loss)/earnings per share
(Loss)/profit attributable to ordinary equity holders for operation of the (319,203) 15,941
parent for basic loss per share ($'000)
Weighted average number of ordinary shares outstanding during the year 981,553,095
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) (28.92) 1.62
Diluted (loss)/earnings per share from operations (cents per share)(1) (28.92) 1.62
Basic loss per share - continuing operations
Loss attributable to ordinary equity holders for continuing operations of the
parent for basic loss per share ($'000)
(319,203) (25,534)
Weighted average number of ordinary shares outstanding during the year used
in the calculation of basic EPS
1,103,896,747 981,553,095
cents cents
Basic loss per share from continuing operations (cents per share) (28.92) (2.60)
Diluted loss per share from continuing operations (cents per share)(2) (28.92) (2.60)
1 Potentially
dilutive instruments have not been included in the calculation of diluted earnings per share for 31 December 2021 because the result for the year was a loss. For 31 December 2020, the
performance rights outstanding are not dilutive as performance conditions
were not met at 31 December 2020.
2 Potentially
dilutive instruments have not been included in the calculation of diluted earnings per share for continuing operations for 31 December 2021 and 31 December 2020 because the result for
the year was a loss.
4 Cash
31 December 2021 31 December 2020
$'000 $'000
67,607 88,591
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 67,607 88,591
Bank overdraft (Note 6) (42,370) (33,365)
Cash and cash equivalents at the end of the year 25,237 55,226
5 Receivables
31 December 2021 31 December 2020
$'000 $'000
441 258
Trade and other receivables
Taxation receivables 27,371 78,594
Total receivables 27,812 78,852
During the year Resolute's subsidiary SOMISY, has received a letter from
the Mali Tax Authorities notifying the company that they have offset VAT
credits against previously recognised provision
for the tax years ended 31 December 2015 to 2020 amounting to $56.6m. As
at 31 December 2021 this notification of offset has been reflected in the
above amounts in line with the requirements of the accounting standards.
Resolute continues to work with its legal and tax advisors to contest the
position taken by the Authorities. Additionally, at 31 December 2021,
Resolute has recognised $10.1m of VAT assets for the Mako operations due to
the reduction in the tax exoneration period to 5 years. Refer to Note 10.
6 Interest bearing liabilities
31 December 2021 31 December 2020
$'000 $'000
Interest bearing liabilities (current)
33,365
Bank overdraft (Note 4) 42,370 483
Insurance premium funding Bank borrowings 109 28,710
50,247
Total Interest bearing liabilities (current) 92,726 62,558
Interest bearing liabilities (non current)
Bank borrowings 223,979 273,613
Total Interest bearing liabilities (non current) 223,979 273,613
7 Contributed Equity
31 December 2021 31 December 2020
$'000 $'000
Ordinary share capital:
1,103,931,520 ordinary fully paid shares (2020: 1,103,892,706) 777,021 777,021
Movements in contributed equity, net of issuing costs:
Balance at the beginning of the year 777,021 639,859
Placement of shares to institutional investors - 137,428
Share issue costs - (266)
Balance at the end of the year 777,021 777,021
8 Inventories
31 December 2021 31 December 2020
$'000 $'000
Current
Ore stockpiles
- At cost 47,054 71,082
- At net realisable value 6,381 4,237
Total current ore stockpiles 53,435 75,319
Gold in circuit - at cost 22,353 23,038
Gold in circuit - at net realisable value 1,503 2,745
Gold bullion on hand - at cost 15,697 9,887
Gold bullion on hand - at net realisable value 1,722 -
Consumables at cost 61,879 47,940
Total inventory (current) 156,589 158,929
Non Current
Ore stockpiles - at cost 1,935 2,803
Ore stockpiles - at net realisable value 6,559 26,695
Gold in circuit - at net realisable value 45,424 38,425
Total inventory (non current) 53,918 67,923
9 Other financial assets
31 December 2021 31 December 2020
$'000 $'000
Financial assets at fair value through other comprehensive income (current)
Shares at fair value- listed 20,828 36,004
Other financial assets - restricted cash (current)
Environmental bond - restricted cash (face value approximates fair value) 518 -
Restricted cash(1) 8,925 -
Total other financial assets - restricted cash (current) 9,443 -
1) this balance relates to an overpayment received on a gold sale at 31
December 2021. The amount was returned immediately post year end.
10 Asset sale receivable
This balance represents the outstanding amounts receivable from the sale of
the Bibiani gold mine amounting to $56.5m. This balance was initially
recognised at fair value less transaction costs and subsequently at amortised
cost. The balance of the consideration is receivable in two equal instalments
of $30.0m on or before six and twelve months following completion.
11 Provisions
31 December 2021 31 December 2020
$'000 $'000
Current
Site restoration 347 352
Employee entitlements 2,511 4,922
Dividend payable 150 104
Withholding taxes - 237
Provision for indirect taxes 50,381 68,533
Provision for direct taxes 7,137 -
Other provisions 2,327 1,572
Total provisions (current) 62,854 75,720
Non Current
Site restoration 73,620 71,335
Employee entitlements 1,252 528
Total provisions (non current) 74,872 75,863
Resolute's subsidiaries SOMISY and
PMC, have received demands for payment to the Local
Tax Authorities in relation to Income Tax and Value Added Tax (VAT)
for the tax years ended 31 December 2015 to 2020.
At 31 December 2021 the company has recognised an additional $30.9m of
indirect tax provisions in Mali in line with the correspondences received
during the financial year along with the requirements of the accounting
standards. As noted above, the Group has recorded approximately $56.6m of
demands offsets against carried forward VAT receivables. 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.
Due to the reduction in the Mako tax exoneration period to 5 years, Resolute
has recognised tax provisions comprising $10.1m relating to the VAT receivable
(refer Note 5) and $8.2m in tax provisions for income tax and duties. These
amounts are recognised as provisions, however Resolute is firmly of the view
that it has complied with all the requirements for the extension of the tax
exoneration and will continue to work with the Senegalese authorities to
resolve this matter.
12 Investments in associates
31 December 2021 31 December 2020
31 December 2021 31 December 2020
Continuing Operations
Turaco Gold Ltd
(formally
Manas Resources Ltd)
Loncor Gold Inc
Shares held in associates
(No. of shares) 68,248,471 682,484,709 31,450,000 29,650,000
Percentage of ownership (%) 16.01%((a)) 24.73% 23.61% 26.42%
$'000 $'000 $'000 $'000
Carrying Value - 1,038 1,180 3,097
(a) Resolute holds a position on the board of directors and has significant
influence over Turaco Gold Ltd.
13 Subsequent events
On 31 January 2022, the Group completed the sale of its shares in Orca Gold
Inc (Orca) to Perseus Mining Limited for total consideration of $13.7 million.
On 17 February 2022, the Group announced that the Tabakoroni Measured and
Indicated Mineral Resource estimate increased to 9.2 million tonnes at 4.4g/t
for 1.3 million ounces of gold a 40% increase over previous estimate.
On 22 February 2022, the Group received $30 million for the sale of the
Bibiani Gold Mine, the final $30 million is receivable in August 2022.
14 Impairment testing
Impairment indicator assessment
At 30 June 2021, Resolute's quoted market capitalisation was lower than its
net asset carrying value. Further, Resolute noted that there was a reduction
in gold prices and increase in risk free rate that underpins the applicable
discount rate. These factors were considered as indicators of impairment. As a
result, an impairment test was performed to determine the recoverable amounts
for all CGU's of the Group, being the Syama Gold Mine and the Mako Gold Mine
using the fair value less cost to sell (FVLCD) method.
At 31 December 2021, indictors of impairment were again identified for the
Group as Resolute's quoted market capitalisation was lower than its net asset
carrying value at 31 December. As a result, an impairment test was performed
to determine the recoverable amounts for all CGU's, the results at 31 December
2021 are outline below.
Syama CGU - 30 June 2021
Syama indicator assessment
At 30 June 2021, in addition to the impairment indicators noted above,
Resolute also revised its CY21 production and cost guideline for Syama. These
factors collectively were considered to be indicators of impairment and as
such a formal impairment test was performed to determine the recoverable
amount for the Syama CGU.
Key Assumptions used to determine recoverable amount
The table below summarises the key assumptions used in the carrying value
assessment:
30 June 2021
Gold price ($/oz) 1,798-1,465
Discount rate (post tax real) 13%
Unmined resources ($/oz) $20-$54
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
An impairment loss of $167.373 million was allocated to the Syama CGU at 30
June 2021.
Syama indicator assessment
At 31 December 2021, in addition to the impairment indicators noted above,
Resolute also revised its CY21 production and cost guideline for Syama. These
factors collectively were considered to be indicators of impairment and as
such a formal impairment test was performed to determine the recoverable
amount for the Syama CGU.
Key Assumptions used to determine recoverable amount
The table below summarises the key assumptions used in the carrying value assessment:
31 December 2021
Gold price ($/oz) 1,777-1,467
Discount rate (post tax real) 14.5%
Unmined resources ($/oz) $20-$54
Recognition
As a result of the impairment test performed, no further impairment loss was
recognised at 31 December 2021, above the $167.373 million at 30 June 2021.
Mako CGU - 31 December 2021
Mako indicator assessment
Whilst Mako's 2021 forecast production and cost remain in line with budget,
as a result of the general indicators of impairment noted above and the
reduction in the tax exoneration period to 5 years (refer to Note 5), a formal
impairment test was performed to determine the recoverable amount for the Mako
CGU.
Key Assumptions
The table below summarises the key assumptions used in the carrying value
assessment:
31 December 2021
Gold price ($/oz) 1,777-1,467
Discount rate (post tax real) 11%
Unmined resources ($/oz) $48
Gold prices
Gold prices are estimated with reference to external market forecasts based on a consensus view of market experts.
Discount rate
In determining the recoverable amount of assets, the future cash flows were discounted using rates based on the CGU's estimated
real 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
The impairment loss of $55.024 million has been allocated to the Mako CGU at
31 December 2021.
A full PDF version of the announcement is available from the Company's
website: link to announcement
(https://clients3.weblink.com.au/pdf/RSG/02490912.pdf) .
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