REG - Resolute Mining Ltd - Half Year Financial Results and Accounts
28/08/2020 07:00
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RNS Number : 4359X Resolute Mining Limited 28 August 2020
28 August 2020
Resolute Mining Limited
(Resolute or the Company)
Appendix 4D
Half Year Report for the six months ended 30 June 2020
Reporting Period
The reporting period is for the half year ended 30 June 2020 with the
corresponding reporting period being for the six months ended 30 June 2019.
Results for Announcement to the Market
30 June 2020 30 June 2019 Up / (Down) % Increase / (Decrease)
US$'000 US$'000 US$'000
Revenues from ordinary activities (including discontinued operations) 305,291 228,803 76,488 33%
Earnings before interest, tax, depreciation, amortisation and fair value 101,110 54,742 46,368 85%
adjustments (EBITDA) (including discontinued operations)
Profit after income tax (including discontinued operations) 36,293 27,448 8,845 32%
Profit from ordinary activities after income tax attributable to members/net 34,240 25,185 9,055 36%
profit for the year (including discontinued operations)
Dividend Information
Amount per share Franked amount per share
$ $
Interim dividend for the half-year ended 30 June 2020 NA NA
Net Tangible Assets
30 June 2020 31 December 2019
US$ US$
Net tangible assets per share 0.70 0.62
This half year report should be read in conjunction with the most recent
annual financial report for the year ended 31 December 2019. The consolidated
entity has changed its reporting currency from Australian dollars (A$) to
United States dollars (US$), effective 1 January 2020. Consequently, unless
otherwise stated, all reference to dollars are to US$.
Corporate Directory
Directors Share Registry
Non-Executive Chairman Martin Botha
Computershare Investor Services Pty Limited
Managing Director and CEO John Welborn Level 11, 172 St Georges Terrace
Non-Executive Director Yasmin Broughton Perth, Western Australia 6000
Home Exchange
Non-Executive Director Mark Potts
Australian Securities Exchange
Non-Executive Director Sabina Shugg Level 40, Central Park
Non-Executive Director Peter Sullivan 152 St Georges Terrace
Company Secretary
Amber Stanton Perth, Western Australia 6000
Registered Office and Business Address
Level 2, Australia Place
15-17 William Street Quoted on the official lists of the
Perth, Western Australia 6000 Australian Securities Exchange (ASX) and London Stock Exchange (LSE)
Postal
PO Box 7232 Cloisters Square
Perth, Western Australia 6850 ASX/LSE Ordinary Share Code: "RSG"
Securities on Issue (30/06/2020)
Telephone: + 61 8 9261 6100
Ordinary Shares 1,102,826,939
Facsimile: + 61 8 9322 7597 Performance Rights 10,984,313
Auditor
Email: contact@rml.com.au (mailto:contact@rml.com.au)
Ernst & Young
ABN 39 097 088 689 Ernst & Young Building
Website
Resolute Mining Limited maintains a website where all announcements are 11 Mounts Bay Rd
available: www.rml.com.au (http://www.rml.com.au)
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 (mailto:contact@rml.com.au)
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 2020 (H1 20).
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 as follows:
Martin Botha (Non-Executive Chairman)
John Welborn (Managing Director and CEO)
Yasmin Broughton (Non-Executive Director)
Mark Potts (Non-Executive Director)
Sabina Shugg (Non-Executive Director)
Peter Sullivan (Non-Executive Director)
Company Secretary
Amber Stanton
Key Highlights
Key highlights for half year ended 30 June 2020 include:
· Comprehensive response plan in place to the COVID 19 pandemic with
no impact on H1 production
· Return of processing to full capacity
· Refinancing completed, successful equity raising and new low-cost
flexible debt facility
· Ravenswood sale completed on 31 March 2020; total proceeds
realisable of up to A$300m
· Acquisition of the existing Taurus royalty over Mako gold sales for
US$12m
· Updated Life of Mine Plan for Mako delivers 39% more gold and two
extra years of mine life
Operations Review
In H1 20, a total of 217,946 ounces (oz) of gold were produced (poured) at an
All-In Sustaining Cost (AISC) of $1,020/oz with total gold sales of 212,668oz
at an average realised price of $1,427/oz.
During H1 20, 1 million tonnes (Mt) of ore was milled at an average grade of
2.72 grams per tonne (g/t Au) for 226,752oz of gold recovered. An additional
9,241oz (excluding Ravenswood) was held in circuit at the end of H1 20
relative to 31 December 2019, taking the Group's gold in circuit balance to
82,506oz valued at $146m based on a gold price of $1,768 at 30 June 2020.
Production and Cost Summary for H1 20
Units Syama Sulphide Syama Oxide Syama Total Mako Ravens-wood Group
Total
UG Lateral Development M 4,191 - 4,191 - - 4,191
UG Vertical Development M 87 - 87 - - 87
Total UG Development M 4,278 - 4,278 - - 4,278
UG Ore Mined T 1,012,762 - 1,012,762 - - 1,012,762
UG Grade Mined g/t Au 2.72 - 2.72 - - 2.72
OP Operating Waste BCM - 1,787,453 1,787,453 2,719,996 - 4,507,449
OP Ore Mined BCM - 503,323 503,323 505,564 - 1,008,887
OP Grade Mined g/t Au - 2.32 2.32 2.32 - 2.32
Total Ore Mined T 1,012,762 1,069,800 2,082,562 1,404,125 - 3,486,687
Total Tonnes Processed T 978,333 771,300 1,749,633 1,077,980 726,735 3,554,348
Grade Processed g/t Au 2.64 2.83 2.72 2.68 0.50 2.26
Recovery % 77.8% 93.1% 84.5% 92.8% 91.8% 88.5%
Gold Recovered Oz 64,603 65,309 129,912 86,229 10,611 226,752
Gold in Circuit Drawdown/(Addition) Oz (7,924) (751) (8,675) (566) 435 (8,806)
Gold Produced (Poured) Oz 56,679 64,558 121,237 85,663 11,046 217,946
Gold Bullion in Metal Account Movement (Increase)/Decrease Oz (1,221) 1,055 (166) (3,123) (1,989) (5,278)
Gold Sold Oz 55,458 65,613 121,071 82,540 9,057 212,668
Achieved Gold Price $/oz - - - - - 1,427
Cost Summary
Mining $/oz 893 378 618 324 215 482
Processing $/oz 457 227 335 266 910 337
Site Administration $/oz 187 144 164 83 226 136
Stockpile Adjustments $/oz (85) (49) (66) (29) (18) (49)
Gold in Circuit Movement $/oz (207) (19) (107) (13) 37 (63)
Cash Cost $/oz 1,245 681 944 631 1,370 843
Royalties $/oz 80 78 79 96 59 86
By-Product Credits $/oz (2) (1) (2) - (9) (1)
Sustaining Capital + Others $/oz 98 - 46 31 27 39
Asset Reclamation & Remedies $/oz 24 31 28 - 11 16
Admin Cost Recharged to Site & Corporate Overheads $/oz - - - - - 37
All-In Sustaining Cost (AISC) $/oz 1,445 789 1,095 758 1,458 1,020
AISC is calculated on gold produced (poured)
COVID-19
The challenges presented by COVID-19 continue to change on a daily basis.
Resolute is continuously monitoring developments relating to the pandemic and
adapting the Company's response accordingly. A comprehensive response plan is
in place to manage the COVID-19 pandemic at all Company locations which
includes, in addition to hygiene, PPE and social distancing measures, testing
and mandatory isolation procedures for positive cases amongst the workforce.
The implemented protocols prioritise the health and safety of the workforce
and have enabled operational continuity with currently no negative impacts on
gold production.
Syama Gold Mine
At the Syama Gold Mine in Mali (Syama), H1 20 production was 121,237oz at an
AISC of $1,095/oz.
Sulphide Operations
During H1 20, production from the Syama sulphide circuit was 56,679oz at an
AISC of $1,445/oz. Gold production from the sulphide circuit increased by 58%
in H1 20 compared to H1 19. The consistent improvement in H1 gold production
and overall recovery rates is driven by the completion of repairs to the
roaster in December 2019. Plant throughput increased as a result of extensive
optimisation and modification of work on the crushing and milling circuits,
while recoveries reflected a similar process of optimisation in the operation
of the flotation and leach circuits.
Overall sulphide circuit recovery was 78% compared to 69% in FY19. Recoveries
of 80% were achieved during the June quarter and are expected to be above 80%
for the remainder of 2020 as the Company pursues further incremental
improvement toward the long-term target of 85% total recoveries.
Oxide Operations
During H1 20, production was 64,558oz at an AISC of $789/oz. Mining was
completed at Tabakoroni at the end of May 2020 with the excavation of the
Splay pit located north-east of the main Namakan pit. A new satellite open pit
operation at the Cashew prospect is expected to be established towards the end
of the 3(rd) quarter FY20.
Exploration
Exploration continues to identify opportunities for further open pit operation
to augment the existing stockpiles.
Mako Gold Mine
During H1 20, production from the Mako Gold Mine was 85,663oz at an AISC of
$758/oz. During the H1, work was undertaken to develop an updated Life of Mine
Plan (LOM) for Mako which was completed in July 2020 (see ASX Announcement 20
July 2020). The updated LOM has generated a 39% increase in total production
and a mine life extension of two further years. Mako is now expected to have a
total mine life of nine years and produce a total of 1.24 million ounces (Moz)
of gold. Including 2020, Resolute plans to mine a further 900,000oz of gold
from Mako until early 2027 at an average AISC over this period of $900/oz.
Ravenswood Gold Mine
On 31 March 2020, Resolute successfully completed the sale of Ravenswood Gold
Mine to a consortium comprising private equity manager EMR Capital and leading
energy and mining company Golden Energy and Resources. Resolute has received
A$100m of initial proceeds consisting of A$50m in cash up front and A$50m in
promissory notes which will earn interest at a rate of 6 per cent per annum.
In addition, Resolute retains significant upside exposure to Ravenswood with
up to A$200m in potential payments contingent on future gold prices, future
gold production from Ravenswood and the investment outcomes from Ravenswood
for EMR Capital.
Bibiani Gold Mine
Resolute is progressing a strategic review of the Bibiani Gold Mine in Ghana
designed to evaluate plans to recommission the mine, assess capital
requirements, evaluate funding alternatives and investigate expressions of
interest from third parties seeking to acquire the assets. The strategic
review is ongoing with the Company continuing to engage with third parties
despite COVID-19 restricting the ability to travel to site.
Financial Overview
Profit and Loss Analysis Continuing Operations Discontinuing Operations HY20 HY19 (Restated)
(US$'000s)
(Syama / Mako)
(Ravenswood)
Group
Revenue 290,023 15,268 305,291 228,803
Cost of sales excluding depreciation and amortisation (140,139) (13,069) (153,208) (142,737)
Other operating costs relating to gold sales (32,916) (2,131) (35,047) (17,352)
Administration and other corporate expenses (11,157) (172) (11,329) (9,649)
Exploration and business development expenditure (4,418) (179) (4,597) (4,323)
EBITDA 101,393 (283) 101,110 54,742
Non-recurring items:
+ COVID 19 costs 1,227 - 1,227 -
+ Legal costs 4,852 - 4,852 -
Underlying EBITDA 107,472 (283) 107,189 54,742
Depreciation and amortisation (92,665) (47) (92,712) (20,316)
Net finance costs (13,479) (80) (13,559) (7,964)
Other 15,557 41,885 57,442 769
Non-recurring items:
+ Non-recurring high cost interest 8,840 - 8,840 -
Underlying net profit before tax 25,725 41,475 67,200 27,231
Current Income tax (expense) (5,895) - (5,895) (9,706)
Underlying net profit after tax 19,830 41,475 61,305 17,525
Deferred Income tax (expense)/benefit (10,093) - (10,093) 9,923
- Adjustments made to EBITDA (14,919) - (14,919) -
Net (loss)/profit after tax reported (5,182) 41,475 36,293 27,448
Financial Performance
Revenue for H1 20 was $305m, inclusive of discontinued operations, from gold
sales of 212,668oz at an average realised price of $1,427/oz compared to the
average spot price over the period of $1,636/oz.
Gross Profit from Operations was $26m after depreciation and amortisation of
$91m. Resolute reported a Net Profit After Tax of $36m (including
discontinuing operations). Resolute continued to invest heavily in the
business in H1 20 with capital expenditures on development, property, plant
and equipment totalling $49m and exploration and evaluation expenditure of
$4m.
Financial Position
As at 30 June 2020, Resolute has cash ($62m), bullion (14,259oz of gold valued
at $25m), additional liquid assets ($35m) and a Promissory note valued at $35m
(A$50m). The Group's borrowings inclusive of the Facility and its Bank du Mali
(BDM) overdraft facility was $308m at 30 June 2020. Resolute also held
receivables of $57m associated with Malian VAT paid and refundable.
Gold Forward Contracts
Resolute maintains a policy of undertaking discretionary short-dated hedging
to take advantage of periods of elevated gold prices to comply with funding
obligations, which require a minimum of 30% of the next 18 months of forecast
production to be hedged. Resolute's hedge book at 30 June 2020 totalled
198,000oz committed to monthly deliveries out to December 2021. This
commitment consists of between 5,000oz to 20,000oz per month, forward sold at
prices between $1,576/oz and $1,670/oz.
Significant Events After Balance Date
On 2 July 2020, Resolute drew down a further $20m on the Revolving Loan
Facility and used these funds to repay a portion of its BDM overdraft
facilities. There was no change to the Groups total debt position with total
interest payable on debt reducing as a result of this transaction. The balance
of the Syndicated loan facility that remains undrawn at the date of this
report is $25m.
Resolute is monitoring the political situation in Mali following the
resignation of the President and the dissolution of the government on 19
August 2020. The Company's operations in Mali are continuing as normal with no
impact to production or to the safety and security of employees and
contractors.
No other significant events have occurred since balance date on 30 June 2020
up to the date of this report.
Auditor's Independence
Refer to page 10 for a copy of the Auditor's Independence Declaration to the
Directors of Resolute Mining Limited.
Rounding
Resolute is a company of the kind specified in Australian Securities and
Investments Commission Corporations (Rounding in Financial Directors' Reports)
Instrument 2016/191. In accordance with that Instrument, amounts in the
financial report and the Directors' Report have been rounded to the nearest
thousand dollars unless specifically stated to be otherwise.
Currency
The Directors have elected to change the Group's presentation currency from
Australian dollars to United States (US) dollars effective 1 January 2020. All
reference to dollars, cents, US$ or $ in this document are to US currency,
unless otherwise stated.
Signed in accordance with a resolution of the directors.
[Electronically signed]
J.P. Welborn
Managing Director & CEO
Perth, Western Australia
28 August 2020
AUDITOR'S INDEPENDENCE DECLARATION
Please see report in the full version of the announcement at www.rml.com.au
(http://www.rml.com.au)
Consolidated Statement of Comprehensive Income
Note For the half year ended 30-Jun-20 For the half year ended 30-Jun-19
US$'000 US$'000 (Restated)
Continuing operations
Revenue from contracts with customers for gold and silver sales 4 290,023 193,551
Costs of production relating to gold sales 4 (140,139) (104,287)
Gross profit before depreciation, amortisation and other operating costs 149,884 89,264
Depreciation and amortisation relating to gold sales 4 (90,841) (19,579)
Other operating costs relating to gold sales 4 (32,916) (15,571)
Gross profit from continuing operations 26,127 54,114
Interest income 4 1,005 81
Other income 4 (88) -
Exploration and business development expenditure 4 (4,418) (3,757)
Administration and other corporate expenses 4 (10,260) (8,191)
Share-based payments expense 4 (897) (444)
Treasury - realised gains/(losses) 4 (187) 981
Fair value movements and unrealised treasury transactions 4 16,179 (1,074)
Share of associates' losses 4 (347) (374)
Depreciation of non-mine site assets 4 (1,824) (223)
Finance costs 4 (14,484) (7,685)
Profit before tax from continuing operations 10,806 33,428
Income tax expense/(benefit) 4&7 (15,988) 217
(Loss)/ profit for the period from continuing operations (5,182) 33,645
Discontinued operations
Gain/(losses) for the period from discontinued operations 13 41,475 (6,197)
Profit for the period 36,293 27,448
Profit attributable to:
Members of the parent 34,240 24,728
Non-controlling interest 2,053 2,720
36,293 27,448
Profit for the period (brought forward) 36,293 27,448
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 (2,590) (935)
Items that may not be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations:
- Non-controlling interest 20 41
Changes in the fair value/realisation of financial assets at fair value 7,474 (6,623)
through other comprehensive income, net of tax
Other comprehensive income/ (loss) for the period, net of tax 4,904 (7,517)
Total comprehensive income for the period 41,197 19,931
Total comprehensive income attributable to:
Members of the parent 39,124 17,170
Non-controlling interest 2,073 2,761
41,197 19,931
Earnings per share for net profit attributable to the ordinary equity holders
of the parent:
Basic earnings per share 3.27 cents 3.32 cents
Diluted earnings per share 3.27 cents 3.32 cents
(Loss) /earnings per share for net profit attributable to continuing
operations to the ordinary equity holders of the parent:
Basic (loss)/ earnings per share (0.69) cents 4.14 cents
Diluted (loss)/ earnings per share (0.69) cents 4.14 cents
Consolidated Statement of Financial Position
Note 30-Jun-20 31-Dec-19
US$'000
US$'000 (Restated)
Current assets
Cash and cash equivalents 62,273 87,305
Other financial assets - restricted cash 2,745 2,745
Receivables 8 71,711 49,713
Inventories 9 174,780 133,171
Financial assets at fair value through other comprehensive income 17 20,849 12,704
Asset held for sale - 66,637
Current tax asset 14,254 15,139
Prepayments and other assets 10,398 5,632
Total current assets 357,010 373,046
Non current assets
Prepayment 2,987 -
Inventories 9 50,998 44,318
Investments in associates 4,255 4,314
Promissory note receivable 13 34,888 -
Contingent consideration receivable 13 13,754 -
Deferred tax assets 9,229 19,486
Exploration and evaluation 60,487 57,798
Mine Properties 10 487,677 535,829
Property, plant and equipment 311,750 309,759
Right-of-use assets 34,052 40,778
Total non current assets 1,010,077 1,012,282
Total assets 1,367,087 1,385,328
Current liabilities
Payables 76,767 104,141
Financial derivative liabilities 17 - 3,193
Interest bearing liabilities 11 54,862 238,622
Provisions 12 52,633 48,957
Current tax liabilities 21,458 21,127
Lease liabilities 13,615 15,480
Liabilities associated with the assets held for sale - 39,492
Total current liabilities 219,335 471,012
Non current liabilities
Interest bearing liabilities 11 253,282 187,392
Provisions 12 67,759 65,630
Financial derivative liabilities 17 - 9,004
Deferred tax liabilities 2,152 2,152
Lease liabilities 21,050 26,043
Total non current liabilities 344,243 290,221
Total liabilities 563,578 761,233
Net assets 803,509 624,095
Equity attributable to equity holders of the parent
Contributed equity 15 777,021 639,859
Reserves (40,502) (46,441)
Retained earnings 59,689 25,449
Total equity attributable to equity holders of the parent 796,208 618,867
Non-controlling interest 7,301 5,228
Total equity 803,509 624,095
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 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
At 1 January 2019 (Restated) 456,833 (4,793) 4,876 (724) 15,322 (60,858) 93,224 (9,706) 494,174
Profit for the period - - - - - - 24,728 2,720 27,448
Other comprehensive (loss)/income, net of tax - (6,623) - - - (935) - 41 (7,517)
Total comprehensive (loss)/income for the period, net of tax - (6,623) - - - (935) 24,728 2,761 19,931
Shares issued 482 - - - - - - - 482
Share-based payments to employees - - - - 571 - - - 571
At 30 June 2019 (Restated) 457,315 (11,416) 4,876 (724) 15,893 (61,793) 117,952 (6,945) 515,158
Consolidated Cash Flow Statement
For the half year ended 30-Jun-20 For the half year ended 30-Jun-19
US$'000 US$'000 (Restated)
Cash flows from operating activities
Receipts from customers 303,582 222,729
Payments to suppliers, employees and others (299,754) (143,193)
Exploration expenditure (1,286) (4,604)
Interest paid (9,180) (5,763)
Interest received 58 89
Income tax paid (4,622) (2,501)
Net cash inflows (outflows) from operating activities (11,202) 66,757
Cash flows used in investing activities
Payments for property, plant & equipment (36,065) (27,347)
Payments for development activities (12,443) (66,729)
Payments for evaluation activities (2,534) (11,916)
Payments for other financial assets - (176)
Other investing activities (337) (387)
Payments for acquisition of investment in associate (310) -
Proceeds from sale of assets held for sale 29,916 -
Net cash flows used in investing activities (21,773) (106,555)
Cash flows from/(used in) financing activities
Repayment of borrowings (195,393) -
Proceeds from issuing ordinary shares 137,428 -
Costs of issuing ordinary shares (266) -
Repayment of loan from unrelated parties - 2,009
Proceeds from drawdown of finance facilities 72,482 24,865
Repayment of lease liability (8,807) (2,199)
Net cash flows from/(used in) financing activities 5,444 24,675
Net decrease in cash and cash equivalents (27,531) (15,123)
Cash and cash equivalents at the beginning of the period 48,237 (20,157)
Exchange rate adjustment 995 510
Cash and cash equivalents at the end of the period 21,701 (34,770)
Cash and cash equivalents comprise the following:
Cash at bank and on hand 62,273 9,848
Bank overdraft (40,572) (44,618)
21,701 (34,770)
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 2020 was authorised for issue in accordance with a resolution of
directors on 28 August 2020.
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 2020 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 2019 and considered
together with any public announcements made by Resolute Mining Limited during
the half year ended 30 June 2020 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$") rounded to the nearest thousand dollars, unless
otherwise stated.
The accounting policies and methods of computation are the same as those
adopted in the most recent annual financial report except for those disclosed
in Note 3 below.
Contingent consideration in respect of sale of Ravenswood Gold mine
A contingent consideration is the right to consideration in exchange for
non-financial assets transferred to the buyer. If the Group performs by
transferring the non-financial assets to the buyer before the buyer pays
consideration or before payment is due, an asset is recognised for the earned
consideration that is conditional. The gold price and upside sharing
contingent consideration represents variable considerations within the scope
of AASB 15. The variable consideration measured at contract inception and at
each reporting date is constrained until it is highly probable that a
significant revenue reversal in the amount of cumulative revenue recognised
will not occur when the associated uncertainty with the variable consideration
is subsequently resolved.
Derecognition of financial Liability
A financial liability is derecognised when the associated obligation is
discharged or cancelled or expires. When an existing financial liability is
replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an
exchange or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in the
respective carrying amounts is recognised in profit or loss and other
comprehensive income.
Note 3: Changes in accounting policies
Change in presentation currency
The Directors have elected to change the Group's presentation currency from
Australian dollars (A$) to United States (US) dollars effective 1 January
2020. The change in presentation currency is a voluntary change which is
accounted for retrospectively. All other accounting policies are consistent
with those adopted in the annual financial report from the year ended 31
December 2019. The financial report has been restated to US dollars using the
procedures outlined below:
1. Income statement and Statement of Cash Flow have been translated into
US dollars using average foreign currency rates prevailing from the relevant
period. For material income statement items the spot rate at the date of
transaction was used.
2. Assets and liabilities in the Statement of Financial Position have been
translated into US dollars at the closing foreign currency rate on the
relevant balance sheet dates.
3. The equity section of the Statement of Financial Position, including
foreign currency translation reserve, retained earnings, share capital and
other reserves, has been translated into US dollars on the basis that the
Group had always reported in US dollars.
4. Earnings per share and dividend disclosure have also been restated to
US dollars to reflect the change in presentation currency.
Note 4: Segment revenue and expenses
Unallocated (b)
For the half year ended 30 June 2020 Mako (Senegal) Syama (Mali) Other Total
US$'000 US$'000 US$'000 US$'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
Segment operating result before treasury, other income/(expenses) and tax 35,105 (10,984) (13,569) 10,552
(brought forward)
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)
Unallocated (b)
For the half year ended 30 June 2019 (Restated) Syama (Mali) Other Total
US$'000 US$'000 US$'000
Revenue
Gold and silver sales to external customers 193,551 - 193,551
Total segment gold and silver sales revenue 193,551 - 193,551
Costs of production (106,470) - (106,470)
Movement in gold bullion 2,183 - 2,183
Costs of production relating to gold sales (104,287) - (104,287)
Royalty expense (12,818) - (12,818)
Operational support costs (2,753) - (2,753)
Other operating costs relating to gold sales (15,571) - (15,571)
Administration and other corporate expenses (1,668) (6,523) (8,191)
Share-based payments expense - (444) (444)
Exploration and business development expenditure (2,591) (1,166) (3,757)
Earnings/(loss) before interest, tax, depreciation and amortisation 69,434 (8,133) 61,301
Amortisation of evaluation, development and rehabilitation costs (9,131) - (9,131)
Depreciation of mine site properties, plant and equipment (10,448) - (10,448)
Depreciation and amortisation relating to gold sales (19,579) - (19,579)
Segment operating result before treasury, other income/(expenses) and tax 49,855 (8,133) 41,722
Unallocated (b)
For the half year ended 30 June 2019 (Restated) Syama (Mali) Other Total
US$'000 US$'000 US$'000
Segment operating result before treasury, other income/(expenses) and tax 49,855 (8,133) 41,722
(brought forward)
Interest income - 81 81
Interest and fees (2,914) (4,469) (7,383)
Rehabilitation and restoration provision accretion (302) - (302)
Finance costs (3,216) (4,469) (7,685)
Realised foreign exchange gain - 981 981
Treasury - realised gains - 981 981
Inventories net realisable value movements and obsolete consumables 8,257 - 8,257
Unrealised foreign exchange loss - (3,185) (3,185)
Unrealised loss on gold forward sales contracts - (3,461) (3,461)
Unrealised foreign exchange loss on intercompany balances - (2,685) (2,685)
Fair value movements and unrealised treasury transactions 8,257 (9,331) (1,074)
Share of associates' losses - (374) (374)
Depreciation of non-mine site assets - (223) (223)
Income tax (expense)/benefit (9,728) 9,945 217
(Loss)/profit for the period 45,168 (11,523) 33,645
(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.
(c) The discrete financial information for Bibiani (Ghana) is no
longer regularly reviewed by the Chief Operating Decision Maker on a
standalone basis and now forms part of the reconciliation of the results and
positions of the operating segments to the financial statements. As such,
Bibiani is no longer presented as a reported segment. The comparative
information have also been restated to reflect this.
Note 5: Segment cash flow, expenditure, assets and liabilities
Unallocated (a)
For the half year ended 30 June 2020 Mako (Senegal) Syama (Mali) Other Total
US$'000 US$'000 US$'000 US$'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 380,329 788,850 197,908 1,367,087
Segment liabilities 58,352 248,090 257,136 563,578
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: (571) (1,701) (2,272)
Movement in gold shipped but unsold and held in metal accounts (3,101)
Mark to market movement in gold unsold 63
Movement in bank overdraft, including foreign exchange movements 2,616
Exchange rate adjustment in cash on hand (129)
Cash flows from discontinued operations (12,299)
Movement in cash and cash equivalents per consolidated cash flow statement (15,122)
Capital expenditure 74,252 10,488 84,740
Segment assets 660,230 152,607 812,837
Segment liabilities 212,812 112,009 324,821
(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 6: 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 2019: $nil).
Note 7: Taxes
At 30 June 2020, the Group has an income tax expense of $16m (30 June 2019:
$0.2m). The Income tax expense comprises current income tax of $6m for the
Mali operations and $10m of deferred tax expense in relation to the sale of
the Ravenswood mine.
Note 8: Receivables
Current receivables at 30 June 2020 primarily relate to indirect taxes owing
to the Group by the Republic of Mali.
Note 9: Inventories
30-Jun-20 31-Dec-19
US$'000 US$'000
(Restated)
Current
Ore stockpiles - at cost 64,575 38,256
Ore stockpiles - at net realisable value 19,102 28,353
Total ore stockpiles 83,677 66,609
Gold in circuit - at cost 7,879 5,549
Gold in circuit - at net realisable value 23,361 12,555
Gold bullion on hand - at cost 15,680 10,468
Consumables at cost 44,183 37,990
174,780 133,171
Non Current
Ore stockpiles - at cost 1,418 -
Ore stockpiles - at net realisable value 2,532 -
Gold in circuit - at cost 47,048 -
Gold in circuit - at net realisable value - 44,318
50,998 44,318
Note 10: Mine properties
At 30 June 2020, the Group's mine properties amounts to $488m (31 December
2019: $536m). During the six-month period to 30 June 2020, further payments
for development activities were made of $15m, partially offset by amortisation
recognised on production assets.
Note 11: Interest bearing liabilities
30-Jun-20 31-Dec-19
US$'000 US$'000 (Restated)
Interest bearing liabilities (current)
Bank overdraft 40,572 39,068
Insurance premium funding 2,525 281
Borrowings 11,765 199,273
54,862 238,622
Interest bearing liabilities (non current)
Borrowings 253,282 187,392
253,282 187,392
308,144 426,014
Syndicated facilities
As part of the process of syndication of the Syndicated Facility Agreement
(the "SFA"), the facility limit of Facility C was expanded to a term loan
amounting to $150m with 6 banks maturing on 26 March 2023 with the option to
extend for 1 year. Under the facility expansion, the $150m Facility A was also
rolled into the SFA with the new maturity of 26 March 2023. The expanded
facility was signed 25 March 2020.
Other than the security disclosed in the annual financial report for year
ended 31 December 2019, the updated SFA and hedging facilities, additionally
provided the lenders or their affiliates the following security:
(i) Security Agreement granted by Resolute Treasury UK Limited over all
current and future assets including bank accounts and assignment of all
Hedging contracts,
(ii) Specific Security Deed granted by Resolute over all its share in
Resolute (Finkolo) Pty Ltd and a featherweight security over its assets not
secured under a Security Document,
(iii) Share Pledge Agreement granted by Toro Gold Limited over all its share
in Bambuk Mineral Limited; and,
(iv) Mortgage of Contractual Rights granted by Resolute (Bibiani) Pty Ltd
over loans provided to Drilling and Mining Services Limited, Noble Mining
Ghana Limited and Mensin Gold Bibiani Limited.
Neither the covenants nor the negative pledges has been breached at any time
during the reporting period.
Note 12: Provisions
30-Jun-20 31-Dec-19
US$'000 US$'000
(Restated)
Current
Site restoration 22 22
Employee entitlements 4,960 4,521
Dividend payable 93 95
Withholding taxes 211 217
Provision for Mali indirect taxes(1) 43,308 40,258
Other provision 4,039 3,844
52,633 48,957
Non Current
Site restoration 67,530 65,165
Employee entitlements 229 465
67,759 65,630
(1) Resolute's subsidiary SOMISY, 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, 2016, 2017 and 2018. 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 for the VAT
demands as at 30 June 2020 amounting to $43m. The factual basis and validity
of these demands are being strongly disputed by Resolute due to fundamental
misinterpretations of the application of certain tax laws to SOMISY with
reference to the provisions of SOMISY's Establishment Convention. Resolute
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 18.
Note 13: Discontinued operation
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$50m of cash up front, A$50m promissory note and up to A$200m potential
payments. The potential payments are contingent on future gold prices and
future gold production from the Ravenswood Gold Mine as well as the investment
outcomes from the Ravenswood Gold Mine for EMR Capital. The sale was completed
31 March 2020.
Transaction consideration comprises total cash payments to Resolute of up to
A$300m as follows:
- A$100m of immediate value represented by
o A$50m of cash; and
o A$50m in Promissory Note;
- Up to A$50m via a Gold Price Contingent Payment instrument; and
- Up to A$150m via an Upside Sharing Payment instrument
The consideration received from EMR is being accounted for under AASB 15:
Revenue from Contract with Customers.
Promissory Note
A A$50m promissory note with an annual coupon rate of 6% to be paid in cash to
Resolute at maturity. The receivable matures at the earlier of liquidity date
or maximum term of seven years.
The Promissory Note is initially valued at net present value of A$50m ($31m)
and subsequently measured at amortised cost under AASB 9 of A$51m ($35m) as at
30 June 2020.
The carrying amount of the promissory note at 30 June 2020 approximates its
fair value.
Gold Price Contingent Payment Instrument
A Gold Price Contingent Payment is payable to Resolute for years following
Financial Close based on the following bands:
- A$10m if the average gold price is greater than A$1,900/oz,
- A$20m if the average gold price is greater than A$1,975/oz,
- A$30m if the average gold price is greater than A$2,050/oz,
- A$40m if the average gold price is greater than A$2,075/oz, and
- A$50m if the average gold price is greater than A$2,100/oz.
Payment of the Gold Price Contingent Payment is subject to the cumulative
ounces produced from Ravenswood exceeding 500,000oz of gold over the four-year
period and is subject to adjustment if the production adopted by the buyer is
reduced or lower than expected.
For the Gold Price Contingent Payment Instrument, we have assessed the
likelihood of the production target being met as well as the likely weighted
average gold price to be achieved over the 4-year period. We have used the
following assumptions in the determination of this variable consideration:
- Resolute assumed that the 500,000oz of gold production over the four
year period will be met.
- Resolute used forecast gold prices submitted by reputable banks and
brokerage firms and forecast out to a period of up to 5 years.
- Resolute assessed that the occurrence of a liquidity event within
the 4-year period to be unlikely.
The Gold Price Contingent Payment Instrument is valued at a net present value
of A$20m ($14m) at 30 June 2020, based on the most likely amount method.
Upside Sharing Payment Instrument
The Upside Sharing Payment is designed to align Resolute with investment
outcomes of EMR Fund. This is determined by reference to the gross money
multiple to EMR Fund which is the gross proceeds (before the payment of the
Upside Sharing Payment) divided by the capital invested in the acquisition,
development and operation of Ravenswood by EMR Fund. Resolute will receive the
Upside Sharing Payment from EMR based on the amount by which the gross money
multiple exceeds a minimum threshold up to a cap of A$150m as follows:
- A$7.5m for each 0.1 that the gross money multiple is above 2.5 up to
4.0; and
- A$5.0m for each 0.1 that the gross money multiple is above 4.0.
Resolute has not recognised an amount for the variable consideration for the
Upside Sharing Payment instrument due to the fact that a significant risk of
reversal of any amount recognised is considered highly probable.
Results of the disposal group held for sale asset:
For the half year ended 30-Jun-20 For the half year ended 30-Jun-19
US$'000 US$'000
(Restated)
Revenue 15,268 35,252
Cost of production relating to gold sales (13,069) (38,450)
Other operating costs relating to gold sales (2,131) (1,781)
Administration and other corporate expenses (172) (547)
Exploration and business development expenditure (179) (566)
Depreciation and amortisation (47) (514)
Finance cost (80) (360)
Fair value movements and unrealised treasury transactions (47) 769
Loss before tax for the period (457) (6,197)
Tax expense - -
Loss for the period (457) (6,197)
Gain on disposal of discontinued operation (net of tax expense) 41,932 -
Total profit/(loss) after tax from discontinued operations 41,475 (6,197)
Earnings/ (loss) per share
Basic earnings/(loss) per share of discontinued operation 3.96 cents (0.82) cents
Diluted earnings/(loss) per share of discontinued operation 3.96 cents (0.82) cents
Carrying value of net assets at date of disposal:
At
31 March 2020
US$'000
Assets
Other assets 335
Inventories 8,850
Property, plant and equipment 50,222
Development 2,354
Total assets 61,761
Liabilities
Payables (5,706)
Provisions (2,873)
Site restoration (21,728)
Total liabilities (30,307)
Net Assets held for sale 31,454
Consideration received in cash and cash equivalents 31,154
Consideration receivable as a promissory note 31,154
Contingent consideration receivable 12,365
Working capital adjustments 271
Cost of Disposal (1,558)
Gain on disposal 41,932
Cash flow information for disposal group:
For the half year ended 30-Jun-20 For the half year ended 30-Jun-19
US$'000 US$'000 (Restated)
Operating cash flows (2,611) 7,796
Investing cash flows 28,758 (8,179)
Financing cash flows - -
Net cash flow 26,147 (383)
Note 14: Measurement period changes to business combination
On 31 July 2019, Resolute (through its wholly owned subsidiary, Resolute UK 2
Limited) signed a binding agreement to acquire all the shares of Toro Gold.
When Resolute issued its 31 December 2019 financial statements, the
measurement of the acquired assets and liabilities was provisional. In the 31
December 2019 financial statements, Resolute had recognised a deferred tax
liability on acquisition of $9m and mine properties and development of $257m .
During the period ended 30 June 2020:
· the valuation of the deferred tax liability was finalised and
updated to $2m following further clarification on operation of tax regime in
Senegal.
· The valuation of mine properties and development was finalised and
updated to $250m
Adjustment in the 31 December 2019 financial statements:
In accordance with accounting standards, Resolute has made retrospective
adjustments by restating the 31 December 2019 financial information in
accounting for the finalisation of the business combination as detailed below:
· the carrying amount of the deferred tax liability at 31 December
2019 decreased by $7m.
· the carrying amount of mine properties and development at 31
December 2019 decreased by $7m.
Note 15: Contributed Equity
Total Number Number Quoted US$'000
At 1 January 2020 903,153,734 903,153,734 639,859
Changes during current period, net of issue costs:
Placement of shares to institutional investors (net of costs) 199,673,205 199,673,205 137,162
At 30 June 2020 1,102,826,939 1,102,826,939 777,021
Issue Date Total Number Fair Value per Right at Grant Date Vesting Date
Performance rights on issue
Band A0 29/11/2016 1,000,000 $1.18 30/06/2020
Band A1 to A2 17/10/2017 838,135 $0.81 30/06/2020
Band A0 28/11/2017 587,500 $0.74 30/06/2020
Band A1 to A2 07/03/2018 270,469 $0.85 30/06/2020
Band A1 to A2 26/10/2018 423,098 $0.92 30/06/2021
Band A0 26/10/2018 277,559 $0.77 30/06/2021
Band A0 21/05/2019 698,690 $0.79 31/12/2021
Band A1 to A2 21/05/2019 913,736 $0.93 31/12/2021
Band A0 21/11/2019 1,000,000 $0.72 30/06/2021
Band A0 21/11/2019 1,000,000 $0.71 30/06/2022
Band A0 21/11/2019 1,000,000 $0.70 30/06/2023
Band A1 to A2 21/05/2020 43,668 $0.93 31/12/2021
Band A1 to A2 21/05/2020 500,000 $0.49 31/12/2021
Band A0 21/05/2020 699,668 $0.56 31/12/2022
Band A1 to A2 21/05/2020 1,731,790 $0.85 31/12/2022
As at 30 June 2020 10,984,313
Date of Change Total Number Fair Value per Right at Grant Date Vesting Date
Opening number of performance rights 8,657,154
Decrease through lapsing of performance rights (Band A1 to A2) 20/02/2020 (160,201) $0.81 30/06/2020
Decrease through lapsing of performance rights (Band A1 to A2) 31/03/2020 (6,349) $0.81 30/06/2020
Decrease through lapsing of performance rights (Band A1 to A2) 20/02/2020 (75,685) $0.92 30/06/2021
Decrease through lapsing of performance rights (Band A1 to A2) 31/03/2020 (15,028) $0.92 30/06/2021
Decrease through lapsing of performance rights (Band A1 to A2) 22/05/2020 (69,231) $0.92 30/06/2021
Decrease through lapsing of performance rights (Band A1 to A2) 20/02/2020 (167,896) $0.93 31/12/2021
Decrease through lapsing of performance rights (Band A1 to A2) 22/05/2020 (153,577) $0.93 31/12/2021
Increase through issue of performance rights to eligible employees (Band A1 to 21/05/2020 43,668 $0.93 31/12/2021
A2)
Increase through issue of performance rights to eligible employees (Band A0) 21/05/2020 699,668 $0.56 31/12/2022
Increase through issue of performance rights to eligible employees (Band A1 to 21/05/2020 1,731,790 $0.85 31/12/2022
A2)
Increase through issue of performance rights to eligible employees (Band A1 to 21/05/2020 500,000 $0.49 31/12/2021
A2)
Closing number of performance rights 10,984,313
*The terms and conditions of the Remuneration Framework are consistent with
those disclosed in the Annual Report for the year ended 31 December 2019 and
the Notice of Annual General Meeting sent to shareholders on 20 April 2020.
Note 16: Gold forward contracts
As part of its risk management policy, the Group enters into gold forward
contracts to manage the gold price of a proportion of anticipated sales of
gold.
Gold forward contracts commitment at 30 June 2020 (not recorded as
derivatives):
Gold for Physical Delivery oz Average Contracted Gold Sale Price per oz (US$) Value of Committed sales
US$'000
30 June 2020
Within one year 165,000 1,599 263,792
After one year but not more than two years 33,000 1,668 55,045
198,000 1,610 318,837
Note 17: Financial Instruments
The fair value of financial assets and financial liabilities must be estimated
for recognition and measurement or for disclosure purposes.
Disclosure of fair value measurements is by level of the following fair value
measurement hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or
liabilities (Level 1)
(b) inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (as prices or
indirectly (derived from prices) (Level 2), and
(c) inputs for the asset or liability that are not based on observable
market data (unobservable inputs) (Level 3).
At June 2020, the Group does not have any Level 3 financial instruments.
The following table presents the fair value measurement hierarchy of the
Group's financial assets and liabilities carried at fair value at 30 June 2020
and 31 December 2019.
Consolidated entity - at 30 June 2020 Level 1 Level 2 Level 3 Total
US$'000 US$'000 US$'000 US$'000
Assets
Financial instruments through other comprehensive income ("OCI"):
- Equity securities 20,849 - - 20,849
Total Assets 20,849 - - 20,849
Consolidated entity - at 31 December 2019 Level 1 Level 2 Level 3 Total
US$'000 US$'000 US$'000 US$'000
Assets
Financial instruments through OCI:
- Equity securities 12,704 - - 12,704
Total Assets 12,704 - - 12,704
Liabilities
Financial liabilities for which fair values are disclosed:
- Royalty payable to Taurus - - 12,197 12,197
Total Liabilities - - 12,197 12,197
(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.
Note 18: 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 following contingent liabilities to provide funding to the Scheme Fund
and Future Fund:
1) Payment to the Scheme Fund of $3.6m 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;
2) Payment to a Future Fund of up to $8.4m 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 period less
Permitted Payments for that period, which Permitted Payments include:
a. operational expenses and capital costs paid in connection with the
mining operations; and
b. 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 $3.6m referred to 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, it was subsequently approved by the
Court and became operative in May 2019. As a consequence, in mid-2019 Resolute
paid the sum of $3.6m under the Amended Scheme. The obligation to make the
Future Cashflow Payment in the circumstances described at 2 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 have
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. 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.
Demand of payment relating to income taxes from the Mali Tax Authorities
On 27 February 2020 Resolute's subsidiary, SOMISY, received a demand for
payment of VAT for the tax years ended 31 December 2015, 2016, 2017 and 2018)
and Income taxes for the tax years ended 31 December 2015, 2016 and 2017 from
the Mali Tax Authorities. The demand for payment for VAT was provided for at
31 December 2019 (refer to Note 13 for details). The demand for income tax of
$10.3m has not been provided for at 30 June 2020 as the Group refute the
validity and factual basis of this part of the demand.
In country tax and legal advice has been sought with a formal response
submitted to the Mali Tax Authorities on 19 June 2020. The formal response
outlined SOMISY's objections to the income tax demands and the calculations on
the VAT withholding demand. SOMISY is expecting a formal response from the
Mali Tax Authorities by the end of August 2020.
Note 19: Supplemental disclosure to the Consolidated Cash Flow Statement
The Group had non-cash additions to property, plant and equipment of $8m for
the period ended 30 June 2020 (30 June 2019: nil) purchased through asset
finance facilities, the cash outflows for which will be reflected as repayment
of borrowings when those asset finance facilities are repaid.
Note 20: Events Occurring after Balance Date
On 2 July 2020, Resolute drew down a further $20m on the Revolving Loan
Facility and used these funds to repay a portion of its BDM overdraft
facilities. There was no change to the Groups total debt position with total
interest payable on debt reducing as a result of this transaction. The balance
of the Syndicated loan facility that remains undrawn at the date of this
report is $25m.
Resolute is monitoring the political situation in Mali following the
resignation of the President and the dissolution of the government on 19
August 2020. The Company's operations in Mali are continuing as normal with no
impact to production or to the safety and security of employees and
contractors.
No other significant events have occurred since balance date on 30 June 2020
up to the date of this report.
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 2020 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.
[Electronically signed]
J.P. Welborn
Managing Director & CEO
Perth, Western Australia
28 August 2020
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AnnouncementREG - Resolute Mining Ltd - 2023 Annual Report
AnnouncementREG - Resolute Mining Ltd - AGM Advanced Notice
AnnouncementREG - Resolute Mining Ltd - Appendix 3X Adrienne Parker
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