REG - Resolute Mining Ltd - Half Year Financial Results and Accounts
27 August 2021
Resolute Mining Limited
(Resolute or the Company)
Appendix 4D
Half Year Report for the six months ended 30 June 2021
Reporting Period
The reporting period is for the half year ended 30 June 2021 with the corresponding reporting period being for the six months ended 30 June 2020.
Results for Announcement to the Market
30 June 2021
$'000
30 June 2020
$'000
Up / (Down)
$'000
% Increase / (Decrease)
Revenues from ordinary activities (including discontinued operations)
261,311
305,291
(43,980)
(14%)
Earnings before interest, tax, depreciation, amortisation and fair value adjustments (EBITDA) (including discontinued operations)
77,720
101,110
(23,390)
(23%)
Profit/(loss) after income tax (including discontinued operations)
(219,790)
36,293
(256,083)
(706%)
Profit/(loss) from ordinary activities after income tax attributable to members/net profit for the year (including discontinued operations)
(183,851)
34,240
(218,091)
(637%)
Dividend Information
Amount per share
$
Franked amount per share
$
Interim dividend for the half-year ended 30 June 2021
NA
NA
Net Tangible Assets
30 June 2021
$
31 December 2020
$
Net tangible assets per share
0.51
0.71
This half year report should be read in conjunction with the most recent annual financial report for the year ended
31 December 2020. All dollar figures are United States dollar (US$) currency unless otherwise stated.
Corporate Directory
Directors
Non-Executive Chairman Martin Botha
Managing Director and CEO Stuart Gale
Non-Executive Director Yasmin Broughton
Non-Executive Director Mark Potts
Non-Executive Director Sabina Shugg
Non-Executive Director Adrian Reynolds
Company Secretary
Richard Steenhof
Registered Office and Business Address
Level 2, Australia Place
15-17 William Street
Perth, Western Australia 6000
Postal
PO Box 7232 Cloisters Square
Perth, Western Australia 6850
Telephone: + 61 8 9261 6100
Facsimile: + 61 8 9322 7597
Email: contact@rml.com.au
ABN 39 097 088 689
Website
Resolute Mining Limited maintains a website where all announcements are available: www.rml.com.au
Share Registry
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace
Perth, Western Australia 6000
Home Exchange
Australian Securities Exchange
Level 40, Central Park
152 St Georges Terrace
Perth, Western Australia 6000
Quoted on the official lists of the
Australian Securities Exchange (ASX) and London Stock Exchange (LSE)
ASX/LSE Ordinary Share Code: "RSG"
Securities on Issue (30/06/2021)
Ordinary Shares 1,103,892,706 Performance Rights 6,304,228
Auditor
Ernst & Young
Ernst & Young Building
11 Mounts Bay Rd
Perth, Western Australia 6000
Shareholders wishing to receive copies of Resolute's ASX announcements by e-mail should register their interest by contacting the Company at contact@rml.com.au
Table of Contents
Directors' Report 44
Auditor's Independence Declaration 9
Consolidated Statement of Comprehensive Income 10
Consolidated Statement of Financial Position 1212
Consolidated Statement of Changes in Equity 1414
Consolidated Cash Flow Statement 1616
Notes to the Financial Statements 1717
Directors' Declaration 36
Independent Auditor's Review Report 37
Directors' Report
Your directors present their half year report on the consolidated entity (referred to hereafter as the "Group" or "Resolute") consisting of Resolute Mining Limited and the entities it controlled at the end of or during the half year ended 30 June 2021 (H1 21).
Corporate Information
Resolute Mining Limited ("Resolute" or "the Company") is a company limited by shares that is incorporated and domiciled in Australia.
Directors
The names of the Company's directors in office during the entire half year period and until the date of this report are set out below. Directors were in office for this entire period unless otherwise stated.
Martin Botha (Non-Executive Chairman)
Stuart Gale (Managing Director and CEO) (appointed 17 May 2021)
Yasmin Broughton (Non-Executive Director)
Mark Potts (Non-Executive Director)
Sabina Shugg (Non-Executive Director)
Adrian Reynolds (Non-Executive Director) (appointed 28 May 2021)
Peter Sullivan (Non-Executive Director) (resigned 27 May 2021)
Company Secretary
Richard Steenhof (appointed 23 July 2021)
Amber Stanton (resigned 23 July 2021)
Key Highlights
Key highlights for half year ended 30 June 2021 include:
· Net loss after tax of $220 million inclusive of non-cash impairment charge of $167 million on the Syama mine
· On site COVID-19 vaccination program has seen 1,114 employees and contractors immunised with no disruption to operations
· $20 million voluntary debt repayment completed earlier than scheduled
· Restoration of the Bibiani Mining Lease
Operations Review
In H1 21, a total of 163,118 ounces (oz) of gold were produced (poured) at an All-In Sustaining Cost (AISC) of $1,277/oz with total gold sales of 151,503oz at an average realised price of $1,723/oz.
During H1 21, 3 million tonnes (Mt) of ore was milled at an average grade of 2.11 grams per tonne (g/t Au) for 162,705oz of gold recovered. Group's gold in circuit balance of 83,213oz valued at $146 million based on a gold price of $1,755/oz at 30 June 2021.
Directors' Report
Production and Cost Summary for H1 21
Units
Syama Sulphide
Syama Oxide
Syama Total
Mako
Group
TotalUG Lateral Development
M
4,176
-
4,176
-
4,176
UG Vertical Development
M
58
-
58
-
58
Total UG Development
M
4,234
-
4,234
-
4,234
UG Ore Mined
T
1,249,872
-
1,249,872
-
1,249,872
UG Grade Mined
g/t Au
2.41
-
2.41
-
2.41
OP Operating Waste
BCM
5,029
2,052,797
2,057,826
3,795,243
5,853,069
OP Ore Mined
BCM
9,846
298,857
308,703
428,567
737,270
OP Grade Mined
g/t Au
-
1.98
1.98
1.99
1.99
Total Ore Mined
T
1,270,746
641,958
1,912,704
1,206,766
3,119,470
Total Tonnes Processed
T
1,093,460
752,666
1,846,126
981,872
2,827,998
Grade Processed
g/t Au
2.52
1.43
2.07
2.18
2.11
Recovery
%
77.8
86.4
81.3
93.1
85.4
Gold Recovered
Oz
68,915
29,880
98,795
63,910
162,705
Gold in Circuit Drawdown/(Addition)
Oz
1,765
(948)
817
(404)
413
Gold Produced (Poured)
Oz
70,680
28,932
99,612
63,506
163,118
Gold Bullion in Metal Account Movement (Increase)/Decrease
Oz
19,440
(27,810)
(8,370)
(3,245)
(11,615)
Gold Sold
Oz
90,120
1,122
91,242
60,261
151,503
Achieved Gold Price
$/oz
1,723
Cost Summary
Mining
$/oz
743
373
636
435
558
Processing
$/oz
429
470
441
352
406
Site Administration
$/oz
147
263
181
126
159
Site Operating Cost
$/oz
1,319
1,106
1,258
913
1,123
Royalties
$/oz
95
98
96
82
93
By-Product Credits + Corp Admin
$/oz
(1)
(1)
(1)
-
49
Total Cash Operating Costs
$/oz
1,414
1,204
1,354
995
1,265
Sustaining Capital + Others
$/oz
104
118
108
115
111
Total Cash Expenditure
$/oz
1,518
1,322
1,462
1,110
1,376
Stockpile Adjustments
$/oz
(122)
65
(68)
(23)
(50)
Gold in Circuit Movement
$/oz
(94)
(13)
(71)
(23)
(52)
Asset Reclamation & Remediation
$/oz
5
5
5
-
3
Total Non-Cash Adjustments
$/oz
(211)
57
(134)
(46)
(99)
All-In Sustaining Cost (AISC)
AISC is calculated on gold produced (poured)
$/oz
1,307
1,379
1,328
1,064
1,277
Directors' Report
COVID-19
Resolute in partnership with the Malian and Senegalese health authorities, have vaccinated a total of 1,114 employees and contractors at Syama and Mako. These vaccination programs are ongoing.
Resolute continues to manage strict COVID-19 protocols across the Group to protect the health, safety and wellbeing of our people and has not experienced any ongoing disruption to operations as a result.
Syama Gold Mine
At the Syama Gold Mine in Mali (Syama), H1 21 production was 99,612oz at an AISC of $1,328/oz.
Sulphide Operations
During H1 21, production from the Syama sulphide circuit was 70,680oz at an AISC of $1,307/oz. Gold production from the sulphide circuit increased by 21% in H1 21 compared to H1 20. The consistent improvement in H1 gold production is driven by record levels of processing and roaster throughput achieved year to date. This was offset by a lower processed grade coinciding with an increase in ore mined (drawn) from the sub-level cave. Grade impacts are expected to be temporary and reflect the location of the current draw points.
Oxide Operations
During H1 21, production was 28,932oz at an AISC of $1,379/oz. Oxide ore mining continued at the Cashew open pit south of Syama. Ore supply to the mill comprised a combination of run of mine material from Cashew and low-grade stockpiles.
Processing volumes, which were affected by material handling issues arising from processing of low-density, sticky ore from Cashew. The grade processed was below expectation as a result of the requirement to blend lower grade material to minimise the material handling issues experienced with Cashew ore.
Mining commenced at Tabakoroni where an extension to the previously mined Splay pit is now underway and will be the principal ore source for the remainder of 2021.
Exploration
In Mali, reverse circulation (RC) and diamond drilling programs continue the focus on identifying additional oxide and sulphide mineral resources within trucking distance of the Syama treatment facility. RC drill programs concentrated on resource drilling of oxide mineralisation adjacent to the satellite pits north of Syama. Diamond drilling continues at the Tabakoroni Main Shear Zone with the primary focus to infill and expand the high-grade lens of gold mineralisation located underneath the south pit.
In Senegal, an auger drilling program is underway on the Koulountou East permit which is located 25km east of the Mako site. Early results show anomalous gold from the Koulountou granite and on the contact with the mafic volcanics.
In Guinea, auger drilling programs were undertaken at the Niagassolo and Doko permits during H1 21. Early analytical results have outlined the SW corner at Niagassola as of particular interest in an area which coincides with widespread artisanal mining activity. A soil geochemistry survey over the Kourouba West JV property has identified two strong gold in soil anomalies which will be followed up later in 2021.
Mako Gold Mine
During H1 21, production from the Mako Gold Mine was 63,506oz at an AISC of $1,064/oz. During the H1 21, Mako continued to perform to plan, production is lower as a cut-back of the main pit is currently being undertaken which will provide access to deeper sections of the deposit in line with the updated Life of Mine Plan.
Directors' Report
Bibiani Gold Mine
On 19 August 2021, the Group completed the sale of the Bibiani Gold Mine in Ghana to Asante Gold Corporation for $90 million with $30 million paid up front, $30 million on or before 6 months from completion and $30 million on or before 12 months from completion.
Financial Overview
Profit and Loss Analysis
($'000s)H1 21
Group
H1 20
GroupRevenue
261,311
305,291
Cost of sales excluding depreciation and amortisation
(132,689)
(153,208)
Royalties and other operating expenses
(30,173)
(35,047)
Administration and other corporate expenses
(9,035)
(11,329)
Exploration and business development expenditure
(11,694)
(4,597)
EBITDA
77,720
101,110
Depreciation and amortisation
(60,626)
(92,712)
Net interest and finance costs
(7,222)
(13,558)
Fair value movements and unrealised treasury transactions
(26,282)
15,661
Other
(2,281)
305
Impairment expense
(172,460)
-
Gain on disposal
-
41,475
Net profit/(loss) before tax
(191,151)
52,281
Indirect tax expense
(13,101)
-
Income tax expense
(15,538)
(15,988)
Net profit/(loss) after tax
(219,790)
36,293
Financial Performance
Revenue for H1 21 was $261 million, inclusive of discontinued operations, from gold sales of 151,503oz at an average realised price of $1,723/oz compared to the average spot price over the period of $1,803/oz.
Gross Profit from Operations was $39 million after depreciation and amortisation of $59 million. Resolute reported a Net Loss After Tax of $220 million. Resolute continued to invest heavily in the business in H1 21 with capital expenditures on development, property, plant and equipment totalling $31 million and exploration and evaluation expenditure of $6 million.
Directors' Report
As a result of the combination of historical operational performance, increased discount rate and decreased gold price assumptions, a net impairment loss of $167 million was recorded in the current period against the Syama Gold Mine.
Financial Position
As at 30 June 2021, Resolute has cash ($52 million), bullion (20,475oz of gold valued at $36 million using
30 June 2021 spot rate), additional liquid assets ($53 million) and a Promissory note valued at $40 million (A$54 million). The Group's borrowings inclusive of the Facility and its Bank du Mali (BDM) overdraft facility was $310 million at 30 June 2021. Resolute also held receivables of $67 million associated with Malian VAT paid and refundable.
Significant Events After Balance Date
On 19 August 2021, the Group announced the successful completion of the sale of the Bibiani Gold Mine in Ghana to Asante Gold Corporation for $90 million.
Auditor's Independence
Refer to page 9 for a copy of the Auditor's Independence Declaration to the Directors of Resolute Mining Limited.
Rounding
Resolute is a company of the kind specified in Australian Securities and Investments Commission Corporations (Rounding in Financial Directors' Reports) Instrument 2016/191. In accordance with that Instrument, amounts in the financial report and the Directors' Report have been rounded to the nearest thousand dollars unless specifically stated to be otherwise.
Signed in accordance with a resolution of the directors.
Signed version available at Resolute website: www.rml.com.au
Stuart Gale
Managing Director & CEO
Perth, Western Australia
27 August 2021
AUDITOR'S INDEPENDENCE DECLARATION
Declaration available on full report at www.rml.com.au
Consolidated Statement of Comprehensive Income
Note
For the half year ended 30-Jun-21
US$'000
For the half year ended 30-Jun-20
US$'000
Continuing operations
Revenue from contracts with customers for gold and silver sales
3
261,311
290,023
Costs of production relating to gold sales
3
(132,689)
(140,139)
Gross profit before depreciation, amortisation and other operating costs
128,622
149,884
Depreciation and amortisation relating to gold sales
3
(59,421)
(90,841)
Other operating costs relating to gold sales
3
(30,173)
(32,916)
Gross profit from continuing operations
39,028
26,127
Interest income
3
1,186
1,005
Other income / (expense)
3
264
(88)
Exploration and business development expenditure
3
(11,694)
(4,418)
Impairment of exploration and evaluation assets
3
(5,087)
-
Impairment of mine properties and property, plant and equipment
3
(167,373)
-
Administration and other corporate expenses
3
(8,511)
(10,260)
Share-based payments expense
3
(524)
(897)
Treasury - realised gains/(losses)
3
(1,333)
(187)
Fair value movements and unrealised treasury transactions
3
(26,282)
16,179
Share of associates' losses
3
(1,212)
(347)
Depreciation of non-mine site assets
3
(1,205)
(1,824)
Finance costs
3
(8,408)
(14,484)
Indirect tax expense
3
(13,101)
-
(Loss)/ profit before tax from continuing operations
(204,252)
10,806
Income tax expense
3&6
(15,538)
(15,988)
(Loss) for the period from continuing operations
(219,790)
(5,182)
Discontinued operations
Gain for the period from discontinued operations
12
-
41,475
Profit for the period
(219,790)
36,293
Profit attributable to:
Members of the parent
(183,851)
34,240
Non-controlling interest
(35,939)
2,053
(219,790)
36,293
Consolidated Statement of Comprehensive Income (continued)
Note
For the half year ended 30-Jun-21
US$'000
For the half year ended 30-Jun-20
US$'000
Profit for the period (brought forward)
(219,790)
36,293
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations:
- Members of the parent
(9,143)
(2,590)
Items that may not be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations:
- Non-controlling interest
1,829
20
Changes in the fair value/realisation of financial assets at fair value through other comprehensive income, net of tax
(10,981)
7,474
Other comprehensive income/ (loss) for the period, net of tax
(18,295)
4,904
Total comprehensive income/ (loss) for the period
(238,085)
41,197
Total comprehensive income/ (loss) attributable to:
Members of the parent
(203,975)
39,124
Non-controlling interest
(34,110)
2,073
Total comprehensive income/ (loss) for the period
(238,085)
41,197
Earnings (loss) per share for net income (loss) attributable for operations to the ordinary equity holders of the parent:
Basic earnings per share
(16.65) cents
3.27 cents
Diluted earnings per share
(16.65) cents
3.27 cents
Loss per share for net loss attributable for continuing operations to the ordinary equity holders of the parent:
Basic (loss)/ earnings per share
(16.65) cents
(0.69) cents
Diluted (loss)/ earnings per share
(16.65) cents
(0.69) cents
Consolidated Statement of Financial Position
Note
30-Jun-21
US$'00031-Dec-20
US$'000Current assets
Cash and cash equivalents
52,295
88,591
Receivables
7
77,489
78,852
Inventories
8
181,548
158,929
Financial assets at fair value through other comprehensive income
16
23,407
36,004
Asset held for sale
83,916
80,608
Current tax asset
18,046
17,911
Prepayments and other assets
12,936
8,785
Financial derivative assets
15 & 16
946
-
Total current assets
450,583
469,680
Non current assets
Inventories
8
68,133
67,923
Prepayments
4,571
-
Investments in associates
4,168
4,649
Promissory note receivable
12
40,370
40,262
Contingent consideration receivable
12
15,014
15,417
Deferred tax assets
-
10,081
Exploration and evaluation
1,339
6,469
Mine Properties
9
369,594
495,281
Property, plant and equipment
209,522
292,678
Right-of-use assets
14,228
22,518
Total non current assets
726,939
955,278
Total assets
1,177,522
1,424,958
Current liabilities
Payables
100,622
83,832
Financial derivative liabilities
15 & 16
-
415
Interest bearing liabilities
10
81,661
62,558
Provisions
11
84,776
75,720
Lease liabilities
5,186
11,249
Liabilities associated with the assets held for sale
9,925
8,821
Total current liabilities
282,170
242,595
Non current liabilities
Interest bearing liabilities
10
228,548
273,613
Provisions
11
69,977
71,863
Deferred tax liabilities
9,652
9,422
Lease liabilities
9,592
12,358
Total non current liabilities
317,769
367,256
Total liabilities
599,939
609,851
Net assets
577,583
815,107
Consolidated Statement of Financial Position (continued)
Note
30-Jun-21
US$'00031-Dec-20
US$'000Equity attributable to equity holders of the parent
Contributed equity
13
777,021
777,021
Reserves
4,612
24,175
Retained earnings/accumulated losses
(142,330)
41,521
Total equity attributable to equity holders of the parent
639,303
842,717
Non-controlling interest
(54,467)
(20,629)
Non-controlling interest of disposal group held for sale
(7,253)
(6,981)
Total equity
577,583
815,107
Consolidated Statement of Changes in Equity
Contributed equity
Net unrealised gain/(loss) reserve
Convertible notes / Share options equity reserve
Non-controlling interests reserve
Employee equity benefits reserve
Foreign currency translation reserve
Retained earnings/ accumulated losses
Non-controlling interest
Non-controlling interest of disposal
group held for sale
Total
At 1 January 2021
777,021
4,350
4,876
(724)
18,607
(2,934)
41,521
(20,629)
(6,981)
815,107
Loss for the period
-
-
-
-
-
-
(183,851)
(35,667)
(272)
(219,790)
Other comprehensive (loss)/income, net of tax
-
(10,981)
-
-
-
(9,143)
-
1,829
-
(18,295)
Total comprehensive (loss)/income for the period, net of tax
-
(10,981)
-
-
-
(9,143)
(183,851)
(33,838)
(272)
(238,085)
Share-based payments to employees
-
-
-
-
561
-
-
-
-
561
At 30 June 2021
777,021
(6,631)
4,876
(724)
19,168
(12,077)
(142,330)
(54,467)
(7,253)
577,583
Consolidated Statement of Changes in Equity (continued)
Contributed equity
Net unrealised gain/(loss) reserve
Convertible notes / Share options equity reserve
Non-controlling interests reserve
Employee equity benefits reserve
Foreign currency translation reserve
Retained earnings
Non-controlling interest
Total
At 1 January 2020
639,859
(12,287)
4,876
(724)
17,077
(55,383)
25,449
5,228
624,095
Profit for the period
-
-
-
-
-
-
34,240
2,053
36,293
Other comprehensive (loss)/income, net of tax
-
7,474
-
-
-
(2,590)
-
20
4,904
Total comprehensive (loss)/income for the period, net of tax
-
7,474
-
-
-
(2,590)
34,240
2,073
41,197
Shares issued
137,162
-
-
-
-
-
-
-
137,162
Share-based payments to employees
-
-
-
-
1,055
-
-
-
1,055
At 30 June 2020
777,021
(4,813)
4,876
(724)
18,132
(57,973)
59,689
7,301
803,509
Consolidated Cash Flow Statement
For the half year ended 30-Jun-21
US$'000
For the half year ended 30-Jun-20
US$'000
Cash flows from operating activities
Receipts from customers
261,224
303,582
Payments to suppliers, employees and others
(204,504)
(299,754)
Exploration and business development expenditure
(8,632)
(1,286)
Interest paid
(8,106)
(9,180)
Interest received
2
58
Income tax paid
-
(4,622)
Net cash inflows (outflows) from operating activities
39,984
(11,202)
Cash flows used in investing activities
Payments for property, plant & equipment
(15,645)
(36,065)
Payments for development activities
(15,688)
(12,443)
Payments for evaluation activities
(2,999)
(2,534)
Proceeds from disposal of financial assets at fair value through other comprehensive income
1,686
-
Payments for financial assets at fair value through other comprehensive income
(1,210)
-
Other investing activities
(461)
(337)
Payments for acquisition of investment in associate
-
(310)
Refund of deposit relating to assets held for sale
(5,445)
-
Proceeds from sale of assets held for sale
1,000
29,916
Net cash flows used in investing activities
(38,762)
(21,773)
Cash flows from/(used in) financing activities
Repayment of borrowings
(23,462)
(195,393)
Proceeds from issuing ordinary shares
-
137,428
Costs of issuing ordinary shares
-
(266)
Proceeds from drawdown of finance facilities
-
72,482
Repayment of lease liability
(6,115)
(8,807)
Net cash flows from/(used in) financing activities
(29,577)
5,444
Net decrease in cash and cash equivalents
(28,355)
(27,531)
Cash and cash equivalents at the beginning of the period
55,226
48,237
Exchange rate adjustment
(284)
995
Cash and cash equivalents at the end of the period
26,587
21,701
Cash and cash equivalents comprise the following:
Cash at bank and on hand
52,732
62,273
Bank overdraft
(26,145)
(40,572)
Cash and cash equivalents at the end of the period
26,587
21,701
Notes to the Financial Statements
Note 1: Corporate Information
The financial report of Resolute Mining Limited and its controlled entities ("Resolute", the "Group" or "consolidated entity") for the half year ended 30 June 2021 was authorised for issue in accordance with a resolution of directors on 27 August 2021.
Resolute Mining Limited (the parent) is a for profit company limited by shares incorporated and domiciled in Australia whose shares are publicly traded on the Australian Securities Exchange and the London Stock Exchange.
The principal activities of entities within the consolidated entity during the half year were:
• gold mining; and,
• prospecting and exploration for minerals.
There has been no significant change in the nature of those activities during the half year.
Note 2: Basis of Preparation and Summary of Significant Accounting Practices
a) Basis of Preparation
This interim financial report for the half year ended 30 June 2021 has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001.
The half year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the Group as the full financial report.
It is recommended that the half year financial report be read in conjunction with the Annual Report for the year ended 31 December 2020 and considered together with any public announcements made by Resolute Mining Limited during the half year ended 30 June 2021 in accordance with the continuous disclosure obligations of the Australian Securities Exchange listing rules and London Stock Exchange rules. The consolidated financial report is presented in United States dollars ("US$") rounded to the nearest thousand dollars, unless otherwise stated.
The accounting policies and methods of computation are the same as those adopted in the most recent annual financial report.
Notes to the Financial Statements
Note 3: Segment revenue and expenses
Unallocated (b)
For the half year ended 30 June 2021
Mako (Senegal)
US$'000
Syama (Mali)
US$'000
Other
US$'000
Total
US$'000
Revenue
Gold and silver sales to external customers
103,292
158,019
-
261,311
Total segment gold and silver sales revenue
103,292
158,019
-
261,311
Costs of production
(30,652)
(122,023)
-
(152,675)
Movement in gold bullion
1,411
18,575
-
19,986
Costs of production relating to gold sales
(29,241)
(103,448)
-
(132,689)
Royalty expense
(5,165)
(10,591)
-
(15,756)
Operational support costs
(8,749)
(2,932)
(2,736)
(14,417)
Other operating costs relating to gold sales
(13,914)
(13,523)
(2,736)
(30,173)
Administration and other corporate expenses
(2,286)
(774)
(5,451)
(8,511)
Share-based payments expense
-
-
(524)
(524)
Exploration and business development expenditure
(1,525)
(1,811)
(8,358)
(11,694)
Earnings/(loss) before interest, tax, depreciation and amortisation
56,326
38,463
(17,069)
77,720
Amortisation of evaluation, development and rehabilitation costs
(7,199)
(3,035)
-
(10,234)
Depreciation of mine site properties, plant and equipment
(21,741)
(27,446)
-
(49,187)
Depreciation and amortisation relating to gold sales
(28,940)
(30,481)
-
(59,421)
Segment operating result before treasury, other income/(expenses) and tax
27,386
7,982
(17,069)
18,299
Notes to the Financial Statements
Note 3: Segment revenue and expenses (continued)
Unallocated (b)
For the half year ended 30 June 2021
Mako (Senegal)
US$'000
Syama (Mali)
US$'000
Other
US$'000
Total
US$'000
Segment operating result before treasury, other income/(expenses) and tax (brought forward)
27,386
7,982
(17,069)
18,299
Interest income
-
-
1,186
1,186
Other Income
-
-
264
264
Interest and fees
(314)
(1,283)
(6,882)
(8,479)
Gain on remeasurement for debt modification
-
-
316
316
Rehabilitation and restoration provision accretion
(82)
(163)
-
(245)
Finance costs
(396)
(1,446)
(6,566)
(8,408)
Realised foreign exchange gain
(878)
(193)
(262)
(1,333)
Realised gain on fair value movement
-
-
-
-
Treasury - realised gains
(878)
(193)
(262)
(1,333)
Inventories net realisable value movements and obsolete consumables
(19,036)
(705)
-
(19,741)
Unrealised foreign exchange gain/ (loss)
1,163
(3)
(5,986)
(4,826)
Unrealised foreign exchange loss on intercompany balances
-
-
(1,715)
(1,715)
Fair value movements and unrealised treasury transactions
(17,873)
(708)
(7,701)
(26,282)
Share of associates' losses
-
-
(1,212)
(1,212)
Depreciation of non-mine site assets
(72)
-
(1,133)
(1,205)
Impairment of exploration and evaluation assets
(4,827)
-
(260)
(5,087)
Impairment of mine properties and property, plant and equipment
-
(167,373)
-
(167,373)
Indirect tax expense
(7,000)
(5,586)
(515)
(13,101)
Income tax (expense)/benefit
(230)
(11,462)
(3,846)
(15,538)
(Loss)/profit for the period
(3,890)
(178,786)
(37,114)
(219,790)
Notes to the Financial Statements
Note 3: Segment revenue and expenses (continued)
Unallocated (b)
For the half year ended 30 June 2020
Mako (Senegal)
US$'000
Syama (Mali)
US$'000
Other
US$'000
Total
US$'000
Revenue
Gold and silver sales to external customers
131,335
158,688
-
290,023
Total segment gold and silver sales revenue
131,335
158,688
-
290,023
Costs of production
(28,575)
(123,878)
-
(152,453)
Movement in gold bullion
(533)
12,847
-
12,314
Costs of production relating to gold sales
(29,108)
(111,031)
-
(140,139)
Royalty expense
(6,651)
(11,334)
-
(17,985)
Operational support costs
(8,721)
(5,568)
(642)
(14,931)
Other operating costs relating to gold sales
(15,372)
(16,902)
(642)
(32,916)
Administration and other corporate expenses
(952)
(787)
(8,521)
(10,260)
Share-based payments expense
-
-
(897)
(897)
Exploration and business development expenditure
(560)
(953)
(2,905)
(4,418)
Earnings/(loss) before interest, tax, depreciation and amortisation
85,343
29,015
(12,965)
101,393
Amortisation of evaluation, development and rehabilitation costs
(10,900)
(12,548)
-
(23,448)
Depreciation of mine site properties, plant and equipment
(39,338)
(27,451)
(604)
(67,393)
Depreciation and amortisation relating to gold sales
(50,238)
(39,999)
(604)
(90,841)
Segment operating result before treasury, other income/(expenses) and tax
35,105
(10,984)
(13,569)
10,552
Notes to the Financial Statements
Note 3: Segment revenue and expenses (continued)
Unallocated (b)
For the half year ended 30 June 2020
Mako (Senegal)
US$'000
Syama (Mali)
US$'000
Other
US$'000
Total
US$'000
Segment operating result before treasury, other income/(expenses) and tax (brought forward)
35,105
(10,984)
(13,569)
10,552
Interest income
87
918
-
1,005
Other Income
-
-
(88)
(88)
Interest and fees
(2,674)
-
(6,957)
(9,631)
Loss on remeasurement for refinancing
-
-
(4,711)
(4,711)
Rehabilitation and restoration provision accretion
(142)
-
-
(142)
Finance costs
(2,816)
-
(11,668)
(14,484)
Realised foreign exchange gain
21
693
(288)
426
Realised gain on fair value movement
(613)
-
-
(613)
Treasury - realised gains
(592)
693
(288)
(187)
Inventories net realisable value movements and obsolete consumables
1,775
6,789
-
8,564
Unrealised foreign exchange gain
653
338
103
1,094
Unrealised foreign exchange gain on intercompany balances
-
6,521
-
6,521
Fair value movements and unrealised treasury transactions
2,428
13,648
103
16,179
Share of associates' losses
-
-
(347)
(347)
Depreciation of non-mine site assets
(91)
-
(1,733)
(1,824)
Income tax (expense)/benefit
(9)
(5,886)
(10,093)
(15,988)
(Loss)/profit for the period
34,112
(1,611)
(37,683)
(5,182)
Notes to the Financial Statements
Note 3: Segment revenue and expenses (continued)
(a) Revenue from external sales for each reportable segment is derived from several customers.
(b) This information does not represent an operating segment as defined by AASB 8 and forms part of the reconciliation of the results and positions of the operating segments to the financial statements.
Note 4: Segment cash flow, expenditure, assets and liabilities
Unallocated (a)
For the half year ended 30 June 2021
Mako (Senegal)
US$'000
Syama (Mali)
US$'000
Other
US$'000
Total
US$'000
Cash flow by segment, including gold bullion, and gold shipped but unsold and held in metal accounts
Reconciliation of cash flow by segment to the cash flow statement:
25,460
9,073
(74,063)
(39,530)
Movement in gold shipped but unsold and held in metal accounts
18,862
Mark to market movement in gold unsold
(234)
Movement in bank overdraft, including foreign exchange movements
(7,220)
Exchange rate adjustment in cash on hand
(233)
Cash flows from discontinued operations
-
Movement in cash and cash equivalents per consolidated cash flow statement
(28,355)
Segment balance sheet items:
Capital expenditure
9,637
18,231
6,299
34,167
Segment assets (excluding assets held for sale)
348,479
620,169
124,958
1,093,606
Segment liabilities (excluding liabilities associated with assets held for sale)
73,500
225,639
290,874
590,013
Notes to the Financial Statements
Note 4: Segment cash flow, expenditure, assets and liabilities (continued)
Unallocated (a)
For the half year ended 30 June 2020
Mako (Senegal)
US$'000
Syama (Mali)
US$'000
Other
US$'000
Total
US$'000
Cash flow by segment, including gold bullion, and gold shipped but unsold and held in metal accounts
Reconciliation of cash flow by segment to the cash flow statement:
58,888
(29,641)
(102,766)
(73,519)
Movement in gold shipped but unsold and held in metal accounts
7,448
Mark to market movement in gold unsold
(22)
Movement in bank overdraft, including foreign exchange movements
4,874
Exchange rate adjustment in cash on hand
(393)
Cash flows from discontinued operations
34,080
Movement in cash and cash equivalents per consolidated cash flow statement
(27,532)
Segment balance sheet items:
Capital expenditure
4,624
29,392
5,584
39,600
Segment assets (excluding assets held for sale)
380,329
788,850
197,908
1,367,087
Segment liabilities (excluding liabilities associated with assets held for sale)
58,352
248,090
257,136
563,578
(a) This information does not represent an operating segment as defined by AASB 8 and forms part of the reconciliation of the results and positions of the operating segments to the financial statements.
Note 5: Dividend
There were no interim dividends paid or provided for during the half year end up to the date of this report (half year ended 30 June 2020: $nil).
Notes to the Financial Statements
Note 6: Taxes
At 30 June 2021, the Group has an income tax expense of $16 million (30 June 2020: $16 million). The Income tax expense comprises current income tax of $5 million and $10 million of deferred tax expense.
Note 7: Receivables
Current receivables at 30 June 2021 primarily relate to indirect taxes owing to the Group by the Republic of Mali.
Note 8: Inventories
30-Jun-21
31-Dec-20
US$'000
US$'000
Current
Ore stockpiles - at cost
62,828
71,082
Ore stockpiles - at net realisable value
7,036
4,237
Total ore stockpiles
69,864
75,319
Gold in circuit - at cost
17,172
23,038
Gold in circuit - at net realisable value
10,235
2,745
Gold bullion on hand - at cost
26,413
9,887
Gold bullion on hand - at net realisable value
5,308
-
Consumables at cost
52,556
47,940
Total Inventory (current)
181,548
158,929
Non Current
Ore stockpiles - at cost
1,638
2,803
Ore stockpiles - at net realisable value
23,390
26,695
Gold in circuit - at net realisable value
43,105
38,425
Total Inventory (non current)
68,133
67,923
Note 9: Mine properties
At 30 June 2021, the Group's mine properties amount to $370 million (31 December 2020: $495 million). During the six-month period to 30 June 2021, further payments for development activities were made of $16 million, partially offset by amortisation recognised on production assets. An impairment loss of $92 million was recorded against mine properties for the Syama CGU. Refer to Note 19 for further details.
Notes to the Financial Statements
Note 10: Interest bearing liabilities
30-Jun-21
31-Dec-20
US$'000
US$'000
Interest bearing liabilities (current)
Bank overdraft
26,145
33,365
Insurance premium funding
2,925
483
Borrowings
52,591
28,710
Total Interest bearing liabilities (current)
81,661
62,558
Interest bearing liabilities (non current)
Borrowings
228,548
273,613
Total Interest bearing liabilities (non current)
228,548
273,613
Total
310,209
336,171
In June 2021, the Group had made a voluntary early repayment of its Revolving Credit Facility by $20 million.
Note 11: Provisions
30-Jun-21
31-Dec-20
US$'000
US$'000
Current
Site restoration
346
352
Employee entitlements
2,929
4,922
Dividend payable
155
104
Withholding taxes
169
237
Provision for indirect taxes1
75,763
68,533
Other provision
5,414
1,572
Total provisions (current)
84,776
75,720
Non Current
Site restoration
69,727
71,335
Employee entitlements
250
528
Total provisions (non current)
69,977
71,863
(1) Resolute's Mali subsidiary has received demands for payment to the Mali Tax Authorities in relation to Income Tax and Value Added Tax (VAT) for the tax years ended 31 December 2015 to 2020 and Resolute's Senegalese subsidiary has received a demand in relation to Withholding tax. Based on the facts and circumstances available at the date of this report and in line with requirements of the accounting standards, the Group has provided an additional $12 million for the demands as at 30 June 2021, with the provisions for these matters totalling $76 million. The factual basis and validity of these demands are being strongly disputed by Resolute due to fundamental misinterpretations of the application of certain tax. Resolute continues to work with its legal and tax advisors to contest the demand and will resist any efforts to enforce payment. The demand for Income Tax has been disclosed as a contingent liability. Refer to Note 17.
Notes to the Financial Statements
Note 12: Asset held for sale and discontinued operation
Sale of Ravenswood Gold Mine
On 15 January 2020, Resolute signed a definitive agreement for the sale of the Ravenswood Gold Mine in Queensland to a consortium comprising of a fund managed by private equity manager EMR Capital and energy and mining company Golden Energy and Resources Limited. The consideration for the sale comprised A$50 million of cash up front, A$50 million promissory note and up to A$200 million potential payments. The asset sale was completed on 31 March 2020 and was reported in the comparative period as a discontinued operation.
Results of the disposal group held for sale asset:
For the half year ended 30-Jun-21
For the half year ended 30-Jun-20
US$'000
US$'000
(Restated)
Revenue
-
15,268
Cost of production relating to gold sales
-
(13,069)
Other operating costs relating to gold sales
-
(2,131)
Administration and other corporate expenses
-
(172)
Exploration and business development expenditure
-
(179)
Depreciation and amortisation
-
(47)
Finance cost
-
(80)
Fair value movements and unrealised treasury transactions
-
(47)
Loss before tax for the period
-
(457)
Tax expense
-
-
Loss for the period
-
(457)
Gain on disposal of discontinued operation (net of tax expense)
-
41,932
Total profit/(loss) after tax from discontinued operations
-
41,475
Earnings/ (loss) per share
Basic earnings/(loss) per share of discontinued operation
-
3.96 cents
Diluted earnings/(loss) per share of discontinued operation
-
3.96 cents
Cash flow information for disposal group:
For the half year ended 30-Jun-21
US$'000
For the half year ended 30-Jun-20
US$'000 (Restated)
Operating cash flows
-
(2,611)
Investing cash flows
-
28,758
Financing cash flows
-
-
Net cash flow
-
26,147
Notes to the Financial Statements
Note 12: Asset held for sale and discontinued operation (continued)
Sale of Bibiani Gold Mine
On 5 August 2021, Resolute entered into a binding agreement to sell the Bibiani Gold Mine (Bibiani disposal group) in Ghana to Asante Gold Corporation (Asante). Cash consideration of $90 million consisting of $30 million paid up front, $30 million on or before 6 months from completion and $30 million on or before 12 months from completion is agreed for the transaction. The asset sale was completed on 19 August 2021 and is reported in the current year as held for sale assets and liabilities. The Bibiani disposal group is not presented as a discontinued operation in the Consolidated Statement of Comprehensive Income as it does not meet the definition under the accounting standards.
Sale of Cote d'Ivoire Assets
On 18 May 2021, Resolute and Manas Resources signed a comprehensive agreement to acquire Resolute's exploration interest in Côte d'Ivoire (Cote d'Ivoire disposal group) covering Predictive Discovery CDI SARL, Toro Gold CDI SARL, DS Resources Joint Venture, Resolute CDI SARL and Nimba Resources SARL for A$1 million cash and A$4 million contingent consideration. As the sale was expected to be completed within 12 months, the net assets of the sale group had been classified as a disposal group held for sale. In accordance with the requirements of AASB 5: Non-current Assets Held for Sale and Discontinued Operations, the Group had conducted an impairment assessment immediately before the initial classification as a disposal group held for sale. As a result, the Group had recognised an impairment loss amounting to $5 million, primarily in relation to the exploration and evaluation assets held in Cote d'Ivoire. Subsequent to balance date in August 2021, the Group had completed the sale process for the Cote d'Ivoire disposal group held for sale. The net assets of the sale group are reported in the current year as held for sale assets and liabilities. The Cote d'Ivoire disposal group is not presented as a discontinued operation in the Consolidated Statement of Comprehensive Income as it does not meet the definition under the accounting standards.
Carrying value of net assets at date of disposal:
30 June
202131 December 2020
Bibiani and CDI disposal group
Bibiani disposal group
US$'000
US$'000
Assets
Cash
437
381
Other financial assets - restricted cash
2,745
2,745
Other assets
269
141
Inventories
1,622
1,651
Property, plant and equipment
22,439
22,361
Exploration and evaluation
56,404
53,329
Total assets
83,916
80,608
Liabilities
Payables
1,365
358
Provisions
463
366
Site restoration
8,097
8,097
Total liabilities
9,925
8,821
Net Assets held for sale
73,991
71,787
Notes to the Financial Statements
Note 13: Contributed Equity (continued)
Total Number
Number Quoted
US$'000
At 1 January 2021
1,103,892,706
1,103,892,706
777,021
Changes during current period, net of issue costs:
-
-
-
At 30 June 2021
1,103,892,706
1,103,892,706
777,021
Issue Date
Total Number
Fair Value per Right at Grant Date
Vesting Date
Performance rights on issue
Band A1 to A2
26/10/2018
248,967
$0.92
30/06/2021
Band A0
26/10/2018
215,879
$0.77
30/06/2021
Band A0
21/05/2019
426,977
$0.88
31/12/2021
Band A1 to A2
21/05/2019
614,248
$0.93
31/12/2021
Band A0
21/11/2019
732,600
$0.72
30/06/2021
Band A1 to A2
22/05/2020
500,000
$0.49
31/12/2021
Band A1 to A2
22/05/2020
43,668
$0.93
31/12/2021
Band A1 to A2
22/05/2020
1,422,465
$0.85
31/12/2022
Band A0
22/05/2020
194,532
$0.56
31/12/2022
Band A0
14/05/2021
904,892
$0.57
31/12/2023
Band A0
14/05/2021
1,000,000
$0.48
31/03/2024
As at 30 June 2021
6,304,228
Date of Change
Total Number
Fair Value per Right at Grant Date
Vesting Date
Opening number of performance rights
5,173,888
Decrease through lapsing of performance rights (Band A1 to A2)
11/02/2021
(128,574)
$0.92
30/06/2021
Decrease through lapsing of performance rights (Band A1 to A2)
11/02/2021
(20,311)
$0.92
30/06/2021
Decrease through lapsing of performance rights (Band A1 to A2)
30/04/2021
(8,627)
$0.92
30/06/2021
Decrease through lapsing of performance rights (Band A1 to A2)
28/05/2021
(8,407)
$0.92
30/06/2021
Decrease through lapsing of performance rights (Band A1 to A2)
11/02/2021
(299,488)
$0.93
31/12/2021
Decrease through lapsing of performance rights (Band A1 to A2)
11/02/2021
(309,145)
$0.85
31/12/2022
Increase through issue of performance rights to eligible employees (Band A0)
14/05/2021
904,892
$0.57
31/12/2023
Increase through issue of performance rights to eligible employees (Band A0)
14/05/2021
1,000,000
$0.48
31/03/2024
Closing number of performance rights
6,304,228
*The terms and conditions of the Remuneration Framework are consistent with those disclosed in the Annual Report for the year ended 31 December 2020 and the Notice of Annual General Meeting sent to shareholders on 23 April 2021.
Notes to the Financial Statements
Note 14: Gold forward contracts
As part of its risk management policy, the Group enters into gold forward contracts to manage the gold price of a proportion of anticipated sales of gold.
Gold forward contracts commitment at 30 June 2021 (not recorded as derivatives):
Gold for Physical Delivery oz
Average Contracted Gold Sale Price per oz (US$)
Value of Committed sales
US$'000
30 June 2021
Within one year
88,000
1,721
151,448
Total
88,000
151,448
Gold for Physical Delivery oz
Average Contracted Gold Sale Price per oz (EURO)
Value of Committed sales
EURO'000
30 June 2021
Within one year
23,000
1,488
34,224
Total
23,000
34,224
Note 15: Derivative Financial Assets and Labilities
At 30 June 2021, the Group had 65,000oz of zero-cashflow collar contracts outstanding whereby the Group purchased a total of 65,000 ounces of gold call options and sold a total of 65,000 ounces of gold put options contracts with equal and offsetting values at inception. These contracts are comprised of put options at $1,600/oz to $1,750/oz and call options at an average of $2,119/oz. All these contracts mature over the July to December 2021 period. The gold zero-cashflow collars are classified as level 2 in the fair value hierarchy and valued at an asset of $1 million as at 30 June 2021 ($0.5 million liability as at 31 December 2020). These zero-cashflow collar contracts are valued using valuation techniques, which employ the use of market observable inputs. The most frequently applied valuation techniques include forward pricing using present value calculations.
Notes to the Financial Statements
Note 16: Financial Instruments
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
Disclosure of fair value measurements is by level of the following fair value measurement hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)
(b) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices or indirectly (derived from prices) (Level 2), and
(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
At June 2021, the Group does not have any Level 3 financial instruments.
The following table presents the fair value measurement hierarchy of the Group's financial assets and liabilities carried at fair value at 30 June 2021 and 31 December 2020.
Consolidated entity - at 30 June 2021
Level 1
US$'000
Level 2
US$'000
Level 3
US$'000
Total
US$'000
Assets
Financial instruments through other comprehensive income ("OCI"):
- Equity securities
23,407
-
-
23,407
Financial derivative assets
-
946
-
946
Total Assets
23,407
946
-
24,353
Consolidated entity - at 31 December 2020
Level 1
US$'000
Level 2
US$'000
Level 3
US$'000
Total
US$'000
Assets
Financial instruments through OCI:
- Equity securities
36,004
-
-
36,004
Total Assets
36,004
-
-
36,004
Financial derivative liabilities
-
(415)
-
(415)
Total Liabilities
-
(415)
-
(415)
(i) There is an active market for the Group's listed equity investments.
The carrying value of other financial assets and liabilities approximate fair value.
Notes to the Financial Statements
Note 17: Contingent liabilities
Amounts potentially payable to historical Bibiani creditors
In June 2014, Mensin Gold Bibiani Limited, Drilling and Mining Services Limited and Noble Mining Ghana Limited (collectively referred to as the "Companies") entered into court approved Schemes of Arrangement ("Scheme") with their creditors and employees ("Scheme Creditors"). The Scheme enabled Resolute to secure with the endorsement of the Ghanaian government, ultimate ownership of the Bibiani Gold Mine with protection from those liabilities which had been incurred at a time when the mine was under the control of the prior owner (Noble Mineral Resources Limited). The Scheme set out the timing and amounts of payments that were to be made by the Companies to a Scheme Fund and to a Future Fund, from which funds, payments are to be made to the Scheme Creditors. The Scheme Creditors arise from transactions that occurred prior to the Companies becoming part of the Group. The Scheme Fund and the Future Fund are effectively administered by representatives of KPMG.
Subject to the issue discussed below regarding two Ghanaian creditors, the implementation of the Scheme had the effect of removing from the Companies' balance sheets all historical liabilities relating to amounts payable to Scheme Creditors and replacing those liabilities with an obligation to fund the Scheme Fund and Future Fund, as and when necessary. The unconditional obligations to make payments to the Scheme Fund were paid in 2014. In addition to those unconditional obligations to pay into the Scheme Fund, the Scheme imposed the following contingent liabilities to provide funding to the Scheme Fund and Future Fund:
· Payment to the Scheme Fund of US$3.6 million (A$4.8 million) if, following receipt of the Feasibility Study, the Board of Resolute, in its absolute discretion, made a decision to proceed with the development of the Bibiani Gold Mine; and
· Payment to a Future Fund of up to US$7.8 million (A$10.5 million) conditional upon the generation of free cashflow from Bibiani mine operations for the period of 5 years from the date that Commercial Production is declared ("Future Cashflow Payment"). Free Cashflow means 25% of effectively, Project Revenue for that year less Permitted Payments for that year, which Permitted Payments include:
o operational expenses and capital costs paid in connection with the mining operations; and
o repayment of principal and interest relating to funds advanced by Resolute up to the commencement of mining operations.
The Scheme provided that if Commercial Production had not been achieved by June 2019, then the Bibiani Gold Mine had to be sold and the proceeds applied in the manner set out in the Scheme. On the basis that, in late 2018 it became clear that Commercial Production would not be achieved by June 2019, and in order to avoid the need to sell the Bibiani Gold Mine, an Amended Scheme was proposed to Scheme Creditors, which effectively allowed additional time to commence mining at Bibiani. In consideration for the Scheme Creditors agreeing to the extended timeframe to commence mining, the Amended Scheme provided that upon the Amended Scheme becoming operative, the payment of US$3.6 million (A$4.8 million) referred to at 1 above would be immediately payable (i.e. it would not be dependent upon the decision of the board of Resolute to proceed with the development of Bibiani). At the meetings of Scheme Creditors to consider the Amended Scheme in April 2019, the Scheme Creditors approved the Amended Scheme, which was subsequently approved by the Court and became operative in May 2019. As a consequence, in mid-2019 Resolute paid the sum of US$3.6 million (A$4.8 million) under the Amended Scheme. The obligation to make the Future Cashflow Payment in the circumstances described above remains in place under the Amended Scheme.
Notwithstanding the Scheme's approval by the Ghanaian High Court, the Scheme Creditors, and the Ghanaian Minister of Mines, two Ghanaian creditors (Riasand and Scan Minerals) sought to circumvent the operation of the Scheme (and Amended Scheme) and are seeking to enforce a winding up order against Mensin, on the basis of debts incurred prior to implementation of the Scheme.
Notes to the Financial Statements
Note 17: Contingent liabilities (continued)
Resolute is defending Mensin's right to unencumbered debt-free ownership of the Bibiani Gold Mine, which was a key element of the Scheme supported by both Resolute and the Ghanaian government.
The appeal proceedings involving Riasand have been settled on the basis of a payment to Riasand (which has been fully paid) and the Ghanaian Supreme Court made orders to dismiss the winding up proceedings on 23 February 2021.
These contingent liabilities reside in the Bibiani disposal group and will be transferred to Asante upon completion of the sale.
Demand of payment relating to income taxes from the Mali Tax Authorities
Resolute's subsidiary, SOMISY, received demands for payment of VAT and Income Tax for the tax years ended 31 December 2015 to 2020 from the Mali Tax Authorities. The demands relating to SOMISY's VAT have been provided for (refer to Note 11 for details). Resolute's subsidiary, SOMIFI, received a demand for payment of income taxes from the Mali Tax Authorities, relating to tax years ended 31 December 2017 and 2018.
The demands for income tax of US$23 million for SOMISY has not been provided for as at 30 June 2021 as the Group refute the validity and factual basis of these demands. The Group has commenced the process of disputing the income tax demands due to fundamental misinterpretations of certain income tax laws applicable to the provisions of each entity's Establishment Convention based on tax advice that the Group has received. The Group is working with its legal and tax advisors to contest the demands and will resist any efforts to enforce payment.
Note 18: Events Occurring after Balance Date
On 19 August 2021, the Group announced the successful completion of the sale of the Bibiani Gold Mine in Ghana to Asante Gold Corporation for US$90 million.
Notes to the Financial Statements
Note 19: Impairment testing
In accordance with the Group's accounting policies, each asset or cash-generating unit (CGU) is evaluated to determine whether there are any indications of impairment. If any such indications of impairment exist, a formal estimate of the recoverable amount is performed.
In assessing whether an impairment is required, the carrying value of the asset or CGU is compared with its recoverable amount. The recoverable amount is the higher of the CGU's fair value less costs of disposal (FVLCD) and value in use (VIU). Recoverable amount has been determined based on FVLCD. Given the nature of the Group's activities, information on the fair value of an asset is usually difficult to obtain unless negotiations with potential purchasers or similar transactions are taking place. Consequently, the FVLCD for each CGU is estimated based on discounted future estimated cash flows (expressed in real terms) expected to be generated from the continued use of the CGUs using market-based gold price assumptions, the level of proved and probable reserves and measured, indicated and inferred mineral resources, estimated quantities of recoverable gold, production levels, operating costs and capital requirements, including any expansion projects, and its eventual disposal, based on the CGU latest life of mine (LOM) plans. These cash flows are discounted using a real post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU. When LOM plans do not fully utilise existing mineral properties for a CGU, and options exist for the future extraction and processing of all or part of those resources, an estimate of the value of mineral properties is included in the determination of fair value.
The determination of FVLCD for each CGU are considered to be Level 3 fair value measurements, as they are derived from valuation techniques that include inputs that are not based on observable market data. The Group considers the inputs and the valuation approach to be consistent with the approach taken by market participants.
Impairment indicator assessment
At 30 June 2021, Resolute's quoted market capitalisation was lower than its net asset carrying value. Further, Resolute noted that there was a reduction in gold prices and increase in risk free rate that underpins the applicable weighted average cost of capital when compared to 31 December 2020. These factors are considered as indicator of impairment. As a result, an impairment test was performed to determine the recoverable amounts for all CGU's of the Group, being the Syama Gold Mine and the Mako Gold Mine using the FVLCD method.
Syama CGU
Syama indicator assessment
In addition to the impairment indicators noted above, Resolute also revised the CY21 production and cost guideline for Syama. These factors collectively were considered to be indicators of impairment and as such a formal impairment test was performed to determine the recoverable amount for the Syama CGU.
Key Assumptions used to determine recoverable amount
The table below summarises the key assumptions used in the carrying value assessment:
30 June 2021
Gold price ($/oz)
1,798-1,465
Discount rate (post tax real)
13%
Unmined resources ($/oz)
$20-$54
Notes to the Financial Statements
Note 19: Impairment testing (continued)
Gold prices
Gold prices are estimated with reference to external market forecasts based on a consensus view of market experts.
Discount rate
In determining the recoverable amount of assets, the future cash flows were discounted using rates based on the CGU's estimated real weighted average cost of capital, with an additional premium applied having regard to the CGU's risk profile.
Unmined resources
Unmined resources which are not included in the 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 $167.373 million has been allocated to the Syama CGU, as summarised in the table below:
$'000
Mine Properties
91,727
Property, plant and equipment
75,645
Total Syama impairment
167,373
Syama Sensitivity Analysis
It was estimated that changes in key assumptions, in isolation, would have had the following approximate impact (increase or (decrease)) on the impairment loss recognised for the Syama CGU as at 30 June 2021.
Increase in key assumption
Decrease in key assumption
US$'000
US$'000
10% change in gold price ($ per oz)
91,796
(93,953)
1% change in discount rate
(10,394)
11,279
10% change in value of unmined resources
21,440
(21,440)
10% change in operating cost
(76,730)
75,219
Notes to the Financial Statements
Note 19: Impairment testing (continued)
Mako CGU
Mako indicator assessment
Whilst Mako's 2021 forecast production and cost remain in line with budget, as a result of the general indicators of impairment noted above, a formal impairment test was performed to determine the recoverable amount for the Mako CGU.
Key Assumptions
The table below summarises the key assumptions used in the carrying value assessment:
30 June 2021
Gold price ($/oz)
1,798-1,465
Discount rate (post tax real)
9%
Unmined resources ($/oz)
$48
Gold prices
Gold prices are estimated with reference to external market forecasts based on a consensus view of market experts.
Discount rate
In determining the recoverable amount of assets, the future cash flows were discounted using rates based on the CGU's estimated real weighted average cost of capital, with an additional premium applied having regard to the CGU's risk profile.
Unmined resources
Unmined resources which are not included in a CGU's 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 the expectation that costs will, over the long term, have a degree of positive correlation to the prevailing gold price rate assumptions.
Recognition
As a result of the analysis performed, there is a headroom of $4.578 million for Mako CGU and as a result no impairment loss was recognised in 2021.
Mako Sensitivity Analysis
It was estimated that changes in key assumptions, in isolation, would have had the following approximate impact (increase or decrease) on the recoverable amount of the Mako CGU as at 30 June 2021.
Increase in key assumption
Decrease in key assumption
US$'000
US$'000
10% change in gold price ($ per oz)
76,083
(75,169)
1% change in discount rate
(6,171)
6,098
10% change in value of unmined resources
814
(814)
10% change in operating cost
(38,327)
37,977
Directors' Declaration
In the opinion of the directors:
a) the financial statements and notes are in accordance with the Corporations Act 2001, including:
(i) complying with Accounting Standard AASB 134 Interim Financial Reporting, the Corporations Regulations 2001; and
(ii) giving a true and fair view of the Group's financial position as at 30 June 2021 and of its performance, as required by Accounting Standards, for the half year ended on that date.
b) there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable.
This declaration has been made in accordance with a resolution of the directors.
Signed version available at Resolute website: www.rml.com.au
Stuart Gale
Managing Director & CEO
Perth, Western Australia
27 August 2021
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