REG - Resolute Mining Ltd - Preliminary Final Report
RNS Number : 4712EResolute Mining Limited28 February 202028 February 2020
Resolute Mining Limited
(Resolute or the Company)
Preliminary Final Report
for the year ended 31 December 2019
`
Highlights for the 12 months to 31 December 2019
· Sales revenue of A$770m (FY18: A$466m) comprising A$656m from continuing operations at Syama and Mako, and A$114m from Ravenswood which has been treated as a discontinuing operation for financial reporting purposes
· Underlying EBITDA of A$202m after adjustments for non-recurring items including one-off inventory valuation adjustments incurred due to the Syama roaster being taken offline for repairs (FY18: A$51m)
· Net operating cash flow of A$124m (FY18: A$34m)
· Net loss after tax for continuing operations of A$59m corresponding with a loss per share of A$0.07
· Investment in growth projects and other capital and exploration expenditure of A$308m (FY18: A$181m)
· Group gold sales of 394,920oz with an average gold price received of A$1,933/oz (US$1,344/oz)
· Group gold production of 384,731oz at an AISC of A$1,577/oz (US$1,090/oz)
· Cash and bullion of A$151m with listed investments of A$30m at 31 December 2019 (FY18: A$117m)
· Gross debt of A$611m at 31 December 2019 (FY18: A$207m)
· Net debt of A$460m at 31 December 2019 (FY18: A$129m)
· Declaration of a Final Dividend for FY19 deferred
· Improved safety performance; TRIFR of 2.09 at 31 December 2019 (from 2.77 at 30 June 2019)
· Value accretive, low cost, high quality production from Mako added to portfolio with acquisition of Toro Gold Limited
· Syama Underground Mine fully commissioned with roaster returned to full operating capacity following repairs
· Power supply agreement signed with Aggreko plc for a new solar hybrid power solution at Syama
· New Syama Mining Convention signed and new Mining Permit issued
· Exploration success at Tabakoroni; study work commenced on future high-grade underground mine
· Ravenswood strategic review concluded with sale agreement to generate proceeds of up to A$300m
· Bibiani strategic review initiated in response to inbound interest
· Syama power supply signed with Aggreko for new solar hybrid power solution
· Mineral Resources increased to 19.1Moz of gold inclusive of 7.4Moz of gold in Ore Reserves
· Listing on London Stock Exchange completed with first trading in June 2019
· FY20 guidance of 500,000oz at an AISC of US$980/oz (to be updated post completion of Ravenswood sale)
Resolute Mining Limited (Resolute or the Company) (ASX/LSE: RSG) has today released an Appendix 4E Preliminary Final Report disclosing the Company's unaudited financial results for the 12 months to 31 December 2019 (FY19).
Resolute produced 384,731 ounces (oz) of gold at an All-In Sustaining Cost (AISC) of US$1,090/oz (A$1,577/oz) with total gold sales of 394,920oz at an average realised gold price of US$1,344/oz (A$1,933/oz). The Company generated A$770m revenue from the sale of 394,920oz of gold and silver from the Syama Gold Mine in Mali (Syama), the Ravenswood Gold Mine in Australia (Ravenswood) and the Mako Gold Mine in Senegal (Mako). Underlying EBITDA from continuing operations in FY19 was A$202m after inventory valuation adjustments related to Syama and Mako, and other non-recurring items. An underlying net profit after tax from continuing operations was reported as A$19m. Once the net loss associated with discontinuing operations (Ravenswood) and other non-recurring items were taken into account, a net loss after tax was recorded for the period of A$59m.
FY19 was a pivotal year which saw the Company commission the Syama Underground Mine in Mali and enhance the quality of its portfolio through the acquisition of Mako, a low cost, high quality gold mine. Exploration success at Tabakoroni provided confidence to commence study work on the opportunity for a further strongly cash flow generative future underground mine. Operationally, Resolute generated strong results at the Tabakoroni Open Pit Mine (Tabakoroni) south of Syama and at Mako. Results for Syama were negatively affected by the detection of a crack in the shell of the Syama roaster in the December 2019 Quarter. The roaster is a key component of the sulphide processing circuit and the resulting downtime adversely affected sulphide production and resulted in lower output than forecast from Syama for FY19. Pleasingly, repairs to the roaster were safely and efficiently completed by mid-December 2019, with gold production from the sulphide circuit recommencing and ramping up to capacity. The Company has generated strong recoveries from the sulphide circuit since it was brought back online.
Managing Director and CEO, Mr John Welborn, noted the Company's financial performance, the progress made on key strategic objectives in FY19, and the positive outlook for FY20:
"Resolute's financial performance was negatively impacted in FY19 by the ramp up of the Syama Underground Mine and the structural repairs required to the Syama roaster. These operational issues, combined with various accounting treatments relating to inventory valuations and the acquisition of Toro Gold, resulted in the Company recording a net loss for the period. This disappointment is balanced by the optimism within our team for a much stronger performance in 2020, our commitment to meet current guidance, and Syama and Mako's ability to generate strong ongoing free cash flow based on the investments we have made in both assets in FY19."
"During FY19, we generated strong revenues and an underlying EBITDA from continuing operations of A$202m. Delivering our strategy in the face of operational challenges was the theme for Resolute's 2019 Financial Year. Our team have achieved goals that we set at the beginning of the year. We fully commissioned our Syama Underground Mine, pursued and executed a value accretive acquisition with the addition of the Mako Gold Mine to our portfolio, and achieved exploration success right across our portfolio with particularly exceptional results from our work at Tabakoroni. We also completed the strategic review of the Ravenswood Expansion Project which culminated in the successful sale of Ravenswood on positive terms and significantly progressed the strategic review of Bibiani. We enter 2020 in a strong position to deliver on the full potential of our asset base and generate long-term value for our shareholders and broader stakeholders."
Sustainability and Safety
Resolute seeks to operate its business responsibly, with careful consideration for the health and safety of our people and the communities and environment surrounding our sites. In FY19, Resolute assisted in the development of, and ultimately committed to, the World Gold Council's Responsible Gold Mining Principles. These principles are contained in Resolute's Sustainability Performance Framework which reflects our commitment to operate in accordance with international standards of good practice in areas of social development, human rights, environmental protection and health and safety. An integrated Sustainability Report in accordance with the Global Reporting Initiative Sustainability Standards is currently being prepared.
Safe work practices are at the core of Resolute's business and the Company continues to focus on delivering positive safety outcomes as part of its operations. Resolute's safety performance strengthened relative to the previous corresponding period with a material reduction in the Total Recordable Injury Frequency Rate to 2.09 (2.77 at 30 June 2019). This improvement was driven by a company-wide focus on effective management of sub-contractors and the active management of key operational risks which will continue into FY20.
Operations
Syama Gold Mine, Mali
At Syama, Resolute completed the commissioning of its Syama Underground Mine with commercial production rates being achieved in June 2019, an important milestone after three years of development. Automated drilling, loading and truck haulage were all achieved at Syama in FY19. The Company remains committed to the achievement of the cost and productivity targets we have set for Syama. Total gold production from the Syama sulphide operation was 62,524oz of gold, reflecting the progress of the ramp-up of underground production in FY19 and interruptions to processing caused by the identification of cracks in the shell of the Syama roaster. The Syama roaster was offline for the majority of the December 2019 Quarter but was successfully returned to nameplate capacity prior to the end of FY19.
Record gold production was achieved from oxide operations at Syama. Tabakoroni, located 32km south of the Syama processing plant, produced 180,534oz of gold with a processed grade of 4.22 grams per tonne of gold (g/t Au). Tabakoroni outperformed the original Ore Reserve, and Mineral Resources continued to grow at the project. Resolute is confident that a high-grade long life underground operation will follow the open pit mining phase.
Mako Gold Mine, Senegal
In August 2019, Mako was added to Resolute's portfolio as part of the Company's acquisition of Toro Gold Limited (Toro Gold) (see ASX Announcement dated 31 July 2019). Since acquisition, Mako has operated beyond initial expectations with excellent plant throughput, grades and recoveries. In the 5 months under Resolute's ownership in FY19, a total of 811,831 tonnes of ore was processed at an average processed grade of 2.86 g/t Au for the recovery of 87,187oz of gold. This was inclusive of gold in circuit drawdown of 16,540oz which was poured subsequent to acquisition.
Ravenswood Gold Mine, Australia
At Ravenswood, FY19 saw the completion of underground operations at the Mt Wright Underground Mine (Mt Wright), after life-of-mine production of over 1 million ounces (Moz) of gold. Mt Wright has been a very successful operation and many of the techniques pioneered at this site are being applied to the Company's flagship asset, the Syama Underground Mine. With the completion of underground mining, the third ball mill at Ravenswood was recommissioned in late 2019. This will allow the operation to return to its former configuration and restores capacity to process up to 5 million tonnes per annum (Mtpa). Initially, this increased capacity will be used to process mineralised waste stocks.
Financial Performance and Cash Flow
Resolute generated A$770m revenue from the sale of 394,920oz of gold and silver from Syama, Ravenswood and Mako. At 31 December 2019, Ravenswood was a held for sale asset and as a result has been classified as a discontinuing operation and reported separately in the Company's FY19 financial statements. The table below combines Resolute's financial performance from its continuing operations at Syama and Mako together with discontinuing operations at Ravenswood.
Underlying EBITDA from continuing operations in FY19 was A$202m after inventory valuation adjustments associated with roaster downtime during the December 2019 Quarter, the uplift in inventory valuation as well as transaction costs associated with the acquisition of Toro Gold and other non-recurring items. An underlying net profit after tax from continuing operations was reported at A$19m. Once the net loss associated with discontinuing operations (Ravenswood) and other non-recurring items were taken into account, the Company reported a net loss after tax of A$63m.
Resolute generated strong operating cash flow in FY19 of A$124m with total investments in development, property, plant and equipment of A$199m. A total investment of A$14m in exploration and evaluation delivered excellent results with a maiden high grade underground Mineral Resource being reported at Tabakoroni of 850,000oz grading 5.1 g/t Au (see ASX announcement dated 29 April 2019). Drilling activities undertaken at Ravenswood resulted in an increase in Ore Reserves at Ravenswood of 1Moz to 2.7Moz of gold, representing growth of 58%. Mineral Resources at Ravenswood increased by 24% to 5.9Moz of gold (see ASX announcement dated 22 July 2019). At year end, Resolute reported Global Mineral Resources of 19.1Moz of gold inclusive of Ore Reserves of 7.4Moz of gold (see ASX Announcement dated 18 February 2020).
As part of the Company's listing on the London Stock Exchange and to synchronise the consolidation of its African subsidiary companies' accounts, Resolute changed its financial year end to 31 December and FY19 is the first year in which the Company is reporting to a 31 December year end. As such, comparatives provided in this announcement for FY18 are for a previously unreported and unreported 12-month period to 31 December 2018 as opposed to the Company's most recent previous Financial Report which was for the 6-month period to 31 December 2018.
Profit and Loss Analysis
(A$'000s)Continuing Operations
(Syama / Mako)Discontinuing Operations
(Ravenswood)FY19
GroupFY18 (H1 + H2) for Comparative Purposes
Revenue
656,392
113,922
770,314
465,692
Cost of sales excluding depreciation and amortisation
(425,242)
(103,315)
(528,557)
(347,849)
Other operating costs relating to gold sales
(67,488)
(7,799)
(75,287)
(37,078)
Administration and other corporate expenses
(20,217)
(1,248)
(21,465)
(17,823)
Exploration and business development expenditure
(20,035)
(1,529)
(21,564)
(11,514)
EBITDA
123,410
31
123,441
51,428
Non-recurring items:
+ Inventory adjustments for Q4 roaster shutdown
45,188
0
45,188
0
+ Mako acquisition inventory adjustments and transaction costs
19,352
0
19,352
0
+ Business development costs and other
13,510
0
13,510
0
Underlying EBITDA
201,460
31
201,491
51,428
Depreciation and amortisation relating to gold sales
(108,431)
(5,152)
(113,583)
(17,368)
Net finance costs
(47,603)
(453)
(48,056)
(6,936)
Other
(1,284)
1,588
305
5,140
Underlying net profit/(loss) before tax
44,142
(3,985)
40,157
32,264
Income tax (expense)/benefit
(24,947)
0
(24,947)
1,835
Underlying net profit/(loss) after tax
19,195
(3,985)
15,210
34,099
- Adjustments made to EBITDA
(78,050)
0
(78,050)
0
Net (loss)/profit after tax
(58,855)
(3,986)
(62,841)
34,099
Note: Given the Company's change in financial year end from June to December, the previously reported FY18 financials were for the six months to 31 December 2018. For comparative purposes, the Company has prepared the FY18 summary above which is for a previously unreported 12-month period to 31 December 2018, is not audited and is being provided for comparative purposes only.
Balance Sheet
At 31 December 2019, the Company's cash and bullion was A$151m and listed investments were valued at A$30m while gross borrowings were A$610m.
Following year end, the Company undertook an equity raising comprising a two-tranche placement and share purchase plan to raise approximately A$195m (see ASX Announcement dated 21 January 2020). The proceeds of the equity raising were used to repay US$130m of debt associated with the acquisition of Toro Gold. Resolute continues to engage in positive discussions with a syndicate of supportive international lenders with respect to its broader refinancing activities.
On 27 February 2020 Resolute's subsidiary, Société des Mines de Syama S.A. (SOMISY), received a demand for payment of approximately A$51m from the Mali Tax Authorities in relation to Income Tax and Value Added Tax (VAT) for the tax years ended 31 December 2015, 2016 and 2017. The factual basis and validity of the demand will be 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 is working with its legal and tax advisors to contest the demand and will resist any efforts to enforce payment. Accordingly, this amount has not been included in Resolute's financial accounts at 31 December 2019.
Dividend Deferral
Resolute's dividend policy guides that, subject to available liquidity and at the Board's discretion, the Company will aim to pay an annual dividend of a minimum of 2% of annual gold sales revenue. The Company's intention has been to pay a sustainable and consistent dividend where possible. The most recently declared dividend was for the period to 30 June 2018 at a level of 2.0 cents per share.
With regard to the recent equity raising and the priority of strengthening the Company's balance sheet, no final dividend has been declared for FY19. The total quantum of gold sales revenues generated by the Company since 30 June 2018, the applicable date of the most recently paid dividend under the Company's Dividend Policy, will be considered when the Company next assesses its capacity to fund a dividend.
FY20 Guidance and Outlook
The Company has set guidance for FY20 at 500,000oz at an AISC of US$980/oz. This guidance will be restated following the completion of the sale of Ravenswood. Gold production from Syama is expected to be 260,000oz at an AISC of US$960/oz. Syama sulphide production is expected to be a strong performer for Resolute in FY20. Underground mining will supply 100% of sulphide mill feed and this will enable improved operating performance and recoveries from the Syama sulphide processing plant. Operational efficiency and the demonstration of consistent and sustainable improvements in recovery are a focus for FY20. Oxide circuit production will continue to be supplied from existing stockpiles and ore mined from the Tabakoroni Open Pit Mine as well as ore from the Cashew, Tellem and Paysans satellite deposits located 5-10km south of the Syama processing plant. Non-sustaining capital expenditure at Syama will greatly reduce in FY20 and is forecast to be US$15m which includes Resolute's total contribution to the new Syama solar hybrid power plant funded by Aggreko plc (see ASX Announcement dated 18 December 2019).
At Mako, mining and processing will continue in FY20 at similar rates to FY19, with ore grades expected to be slightly lower due to depletion of high-grade stockpiles. Gold production from Mako for FY20 is expected to be 160,000oz at an AISC of US$800/oz. No non-sustaining capital expenditure is forecast for Mako for FY20.
Resolute's exploration budget for FY20 has been set at US$15m with main areas of focus being the identification of oxide resources at Syama, the expansion of the underground resources at Tabakoroni, and mine life extension opportunities at Mako. The Company continues to work towards its long-term Syama production target of 300,000oz at an AISC of US$750/oz through the expansion of mining rates at the Syama Underground Mine and the addition of a future high-grade underground mine at Tabakoroni. A feasibility study on the potential for an underground mine at Tabakoroni has commenced with initial results expected mid-year.
Resolute's focus for the year ahead is to generate positive free cashflow from operations at Syama and Mako and continue to optimise the Company's asset portfolio, strengthen its balance sheet, and deliver value for shareholders.
FY19 Annual Financial Report and Conference Call
Resolute expects to publish its 2019 Annual Report including audited financial statements during March 2020.
A conference call for investors, analysts and media was held on Friday 28 February 2020. A recording of the webcast of the teleconference is available at http://www.openbriefing.com/OB/3730.aspx.
For further information, contact:
John Welborn
Managing Director & CEO
Jeremy Meynert
General Manager - Business Development & Investor Relations
About Resolute
Resolute is a successful, dividend paying gold miner with more than 30 years of experience as an explorer, developer and operator of gold mines in Australia and Africa which have produced more than 8 million ounces of gold. The Company trades on the Australian Securities Exchange (ASX) and the London Stock Exchange (LSE) under the ticker RSG.
Resolute has a Global Mineral Resource base of more than 19 million ounces of gold. The Company's flagship asset is the world class Syama Gold Mine in Mali which has the ability to produce 300,000 ounces of gold per annum from existing processing infrastructure. Resolute has commissioned the world's first automated underground mine at Syama which will deliver a low cost, large scale operation with a mine life beyond 2032. The Mako Gold Mine in Senegal is a high quality, low cost asset with average annual production of approximately 140,000 ounces of gold. A binding agreement has been signed to sell the Ravenswood Gold Mine in Queensland, Australia for up to A$300 million. A strategic review is currently underway of the Bibiani Gold Mine in Ghana.
Resolute's guidance for FY20 has been set at production of 500,000 ounces of gold at an AISC of US$980 per ounce. FY20 Guidance will be revised once the sale of Ravenswood has been finalised.
Competent Persons Statement
For the purposes of ASX Listing Rule 5.23, Resolute confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements relating to exploration results or estimates of Mineral Resources or Ore Reserves referred to in this announcement and, in the case of Mineral Resources and Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. Resolute confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcement.
Contact Information
Resolute
John Welborn, Managing Director & CEO
Jeremy Meynert, General Manager - BD & IR
Telephone: +61 8 9261 6100
Email: contact@rml.com.au
Web: www.rml.com.au
Berenberg (UK Corporate Broker)
Matthew Armitt / Jennifer Wyllie/ Detlir Elezi
Telephone: +44 20 3207 7800
Tavistock (UK Public Relations)
Jos Simson / Emily Moss / Annabel de Morgan / Oliver Lamb
Telephone: +44 207 920 3150 / +44 778 855 4035
Email: resolute@tavistock.co.uk
Authorised by Mr John Welborn, Managing Director & CEO
ASX/LSE: RSG Capital Summary
Fully Paid Ordinary Shares: 1,035,886,919
Current Share Price (ASX):
A$1.14 as at 27 February 2020Market Capitalisation: A$1.2 Billion
FY20 Guidance:
500,000oz @ AISC US$980/oz
Board of Directors
Mr Martin Botha Non-Executive Chairman
Mr John Welborn Managing Director & CEOMs Yasmin Broughton Non-Executive Director
Mr Mark Potts Non-Executive Director
Ms Sabina Shugg Non-Executive Director
Mr Peter Sullivan Non-Executive Director
Contact
John Welborn Managing Director & CEO
Jeremy Meynert GM - BD & IR
Level 2, Australia Place | 15-17 William St
Perth, Western Australia 6000
T: +61 8 9261 6100 | F: +61 8 9322 7597
E: contact@rml.com.au
28 February 2020
Reporting Period
Resolute's reporting period is for the twelve months ended 31 December 2019. As a result of changing reporting periods in 2018 the corresponding prior comparative reporting period presented below is for the six months ended 31 December 2018.
Results for Announcement to the Market
12 months ended 31 December 2019
6 months ended 31 December 2018
$'000
$'000
Revenue from ordinary activities (including discontinued operations)
up
N/A
to
770,314
222,774
Loss for the period (including discontinued operations)
down
N/A
to
(62,841)
(5,324)
Loss after tax attributable to members
down
N/A
to
(57,107)
(3,302)
Amount per
security
Franked amount
per security
Dividends
Final dividend (per share)
N/A
N/A
Record date for determining entitlements to the final dividend
N/A
N/A
Payment date for the final dividend
N/A
N/A
Franking
0% franked
31 December 2019
31 December 2018
$
$
Net tangible asset backing (per share)
0.98
0.93
This report should be read in conjunction with the audited Financial Report for the year ending 31 December 2018.
Consolidated Statement of Comprehensive Income
Note
12 months to
31 December 2019
6 months to
31 December 2018
$'000
$'000
Continuing operations
Revenue from contracts with customers for gold and silver sales
1
656,392
152,270
Costs of production relating to gold sales
1
(425,242)
(103,762)
Gross profit before depreciation, amortisation and other operating costs
231,150
48,508
Depreciation and amortisation relating to gold sales
1
(108,431)
(9,487)
Other operating costs relating to gold sales
1
(67,488)
(15,210)
Gross profit from continuing operations
55,231
23,811
Interest income
1
679
329
Other income
1
111
13
Exploration and business development expenditure
1
(20,035)
(1,917)
Administration and other corporate expenses
1
(17,564)
(6,282)
Share based payments expense
1
(2,653)
(1,346)
Treasury - realised (losses)/gains
1
(2,980)
213
Fair value movements and unrealised treasury transactions
1
4,633
(13,190)
Share of associates' losses
1
(1,391)
(476)
Depreciation of non-mine site assets
1
(776)
(47)
Finance costs
1
(48,282)
(4,786)
Other expenses
1
(881)
(6)
Loss before tax from continuing operations
(33,908)
(3,684)
Tax (expense)/benefit
1
(24,947)
1,835
Loss for the period from continuing operations
(58,855)
(1,849)
Discontinued operations
Loss for the period from discontinued operations
9
(3,986)
(3,475)
Loss for the period
(62,841)
(5,324)
Loss attributable to:
Members of the parent
(57,107)
(3,302)
Non-controlling interest
(5,734)
(2,022)
(62,841)
(5,324)
Consolidated Statement of Comprehensive Income (continued)
Note
12 months to 31 December 2019
6 months to 31 December 2018
$'000
$'000
Loss for the period (brought forward)
(62,841)
(5,324)
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
754
3,460
Items that may not be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations:
- Non-controlling interest
948
(246)
Changes in the fair value/realisation of financial assets at fair value through other comprehensive income, net of tax
(10,780)
(7,061)
Other comprehensive loss for the period, net of tax
(9,078)
(3,847)
Total comprehensive loss for the period
(71,919)
(9,171)
Total comprehensive loss attributable to:
Members of the parent
(67,133)
(6,903)
Non-controlling interest
(4,786)
(2,268)
(71,919)
(9,171)
Loss per share for net loss attributable for continuing operations to the ordinary equity holders of the parent:
Basic loss per share
3
(7.00) cents
(0.44) cents
Diluted loss per share
3
(7.00) cents
(0.44) cents
Consolidated Statement of Financial Position
Note
As at 31 December 2019
As at 31 December 2018
$'000
$'000
Current assets
Cash
4
124,495
38,717
Other financial assets - restricted cash
3,915
3,890
Receivables
59,998
56,822
Inventories
189,999
178,623
Financial assets at fair value through other comprehensive income
18,116
28,324
Assets held for sale
9
95,022
-
Prepayments and other assets
8,031
8,296
Current tax asset
21,588
17,561
Total current assets
521,164
332,233
Non current assets
Prepayments
-
3,609
Inventories
60,912
-
Investments in associates
11
6,151
9,583
Deferred tax assets
27,786
19,261
Other financial assets
-
32
Exploration and evaluation
82,952
62,904
Development
776,736
405,382
Property, plant and equipment
441,708
288,481
Right of use assets
7
58,149
-
Total non current assets
1,454,394
789,252
Total assets
1,975,558
1,121,485
Current liabilities
Payables
140,008
119,982
Financial derivatives liabilities
4,553
-
Interest bearing liabilities
5
343,902
68,513
Provisions
13,918
23,259
Current tax liabilities
30,127
-
Lease liabilities
7
22,074
-
Liabilities associated with the assets held for sale
9
56,325
-
Total current liabilities
610,907
211,754
Non current liabilities
Interest bearing liabilities
5
266,354
138,711
Provisions
93,586
70,321
Financial derivative liabilities
12,716
-
Deferred tax liabilities
13,327
-
Lease liabilities
7
37,139
-
Total non current liabilities
423,122
209,032
Total liabilities
1,034,029
420,786
Net assets
941,529
700,699
Equity attributable to equity holders of the parent
Contributed equity
6
829,021
559,809
Reserves
27,454
34,956
Retained earnings
58,509
115,616
Total equity attributable to equity holders of the parent
914,984
710,381
Non-controlling interest
26,545
(9,682)
Total equity
941,529
700,699
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
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
At 1 January 2019
559,809
(7,837)
6,371
(934)
18,122
19,234
115,616
(9,682)
700,699
Loss for the period
-
-
-
-
-
-
(57,107)
(5,734)
(62,841)
Other comprehensive (loss)/income, net of tax
-
(10,780)
-
-
-
754
-
948
(9,078)
Total comprehensive (loss)/income for the period, net of tax
-
(10,780)
-
-
-
754
(57,107)
(4,786)
(71,919)
Shares issued
269,212
-
-
-
-
-
-
-
269,212
Share-based payments to employees
-
-
-
-
2,524
-
-
-
2,524
Acquisition of non-controlling interest
-
-
-
-
-
-
-
41,013
41,013
At 31 December 2019
829,021
(18,617)
6,371
(934)
20,646
19,988
58,509
26,545
941,529
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/ (accumulated losses)
Non-controlling interest
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
At 1 July 2018
544,972
(776)
6,371
(934)
16,576
15,774
134,073
(7,414)
708,642
Loss for the period
-
-
-
-
-
-
(3,302)
(2,022)
(5,324)
Other comprehensive (loss)/income, net of tax
-
(7,061)
-
-
-
3,460
-
(246)
(3,847)
Total comprehensive (loss)/income for the period, net of tax
-
(7,061)
-
-
-
3,460
(3,302)
(2,268)
(9,171)
Shares issued
14,837
-
-
-
-
-
-
-
14,837
Dividends paid
-
-
-
-
-
-
(15,155)
-
(15,155)
Share-based payments to employees
-
-
-
-
1,546
-
-
-
1,546
At 31 December 2018
559,809
(7,837)
6,371
(934)
18,122
19,234
115,616
(9,682)
700,699
Consolidated Cash Flow Statement
Note
12 months to 31 December 2019
6 months to 31 December 2018
$'000
$'000
Cash flows from operating activities
Receipts from customers
759,219
222,738
Payments to suppliers, employees and others
(589,808)
(181,435)
Exploration expenditure
(3,546)
(2,924)
Interest paid
(37,134)
(4,926)
Interest received
668
396
Income tax paid
(5,437)
-
Net cash flows from operating activities
123,962
33,849
Cash flows used in investing activities
Payments for property, plant & equipment
(94,693)
(82,444)
Payments for development activities
(104,179)
(92,533)
Payments for evaluation activities
(14,181)
(6,898)
Payments for other financial assets
(249)
(848)
Loan received from unrelated parties
2,999
2,230
Other investing activities
(1,076)
(209)
Payment for acquisition of subsidiaries (net of cash acquired)
(96,141)
-
Loans to associates
-
(750)
Proceeds from sale of available for sale financial assets
-
417
Net cash flows used in investing activities
(307,520)
(181,035)
Cash flows from financing activities
Repayment of borrowings
(23,526)
-
Dividend paid
-
(15,155)
Proceeds from finance facilities
314,066
136,732
Repayment of lease liability
(7,790)
-
Net cash flows from financing activities
282,750
121,577
Net increase/(decrease) in cash and cash equivalents
99,172
(25,609)
Cash and cash equivalents at the beginning of the financial period
(28,581)
(4,837)
Exchange rate adjustment
(1,806)
1,865
Cash and cash equivalents at the end of the period
68,785
(28,581)
Cash and cash equivalents comprise the following:
Cash at bank and on hand
4
124,495
38,717
Bank overdraft
4
(55,710)
(67,298)
68,785
(28,581)
About this Report
a) Corporate information
The preliminary final report of Resolute Mining Limited and its subsidiaries ("Resolute" or the "Group") for the year ended 31 December 2019 was authorised for issue in accordance with a resolution of directors.
Resolute Mining Limited (the parent) is a for profit company limited by shares incorporated and domiciled in Australia whose shares are publicly traded on the Australian Securities Exchange and the London Stock Exchange.
b) Basis of preparation
This report is based on accounts that are in the process of being audited.
This report does not include all of the notes normally included in an Annual Financial Report. Accordingly, this report is to be read in conjunction with the financial report for the year ended 31 December 2018 and any public announcements made by RML during the reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. The impact of AASB 16 on transition is disclosed in the Half Year Financial Report for the six months ended 30 June 2019.
Notes to the Preliminary Final Report
1. Segment revenues and expenses
For the 12 months ended 31 December 2019
Mako (Senegal)
Syama (Mali)
Bibiani (Ghana)
Unallocated (b)
Total
Corporate/
OtherTreasury
$'000
$'000
$'000
$'000
$'000
$'000
Revenue
Gold and silver sales at spot to external customers
165,528
490,864
-
-
-
656,392
Total segment gold and silver sales revenue
165,528
490,864
-
-
-
656,392
Costs of production
(61,476)
(358,078)
-
-
-
(419,554)
Gold in circuit inventories movement
272
(5,960)
-
-
-
(5,688)
Costs of production relating to gold sales
(61,204)
(364,038)
-
-
-
(425,242)
Royalty expense
(8,277)
(32,586)
-
-
-
(40,863)
Operational support costs
(11,222)
(15,403)
-
-
-
(26,625)
Other operating costs relating to gold sales
(19,499)
(47,989)
-
-
-
(67,488)
Administration and other corporate expenses
(2,489)
(2,796)
(3,282)
(8,997)
-
(17,564)
Share-based payments expense
-
-
(313)
(2,340)
-
(2,653)
Exploration and business development expenditure
(1,491)
(3,816)
(440)
(14,288)
-
(20,035)
Earnings/(loss) before interest, tax, depreciation and amortisation
80,845
72,225
(4,035)
(25,625)
-
123,410
Amortisation of evaluation, development and rehabilitation costs
(10,285)
(22,480)
-
-
-
(32,765)
Depreciation of mine site properties, plant and equipment
(40,931)
(32,994)
(1,741)
-
-
(75,666)
Depreciation and amortisation relating to gold sales
(51,216)
(55,474)
(1,741)
-
-
(108,431)
Segment operating result before treasury, other income/(expense) and tax
29,629
16,751
(5,776)
(25,625)
-
14,979
Notes to the Preliminary Final Report (Continued)
1. Segment revenues and expenses (continued)
For the 12 months ended 31 December 2019
Mako (Senegal)
Syama (Mali)
Bibiani (Ghana)
Unallocated (b)
Total
Corporate/ Other
Treasury
$'000
$'000
$'000
$'000
$'000
$'000
Segment operating result before treasury, other income/(expense) and tax (brought forward)
29,629
16,752
(5,776)
(25,625)
-
14,979
Interest income
509
-
-
-
170
679
Other income
-
2
-
(109)
217
111
Interest and fees
(7,514)
-
-
-
(39,858)
(47,372)
Rehabilitation and restoration provision accretion
(153)
(757)
-
-
-
(910)
Finance costs
(7,667)
(757)
-
-
(39,858)
(48,282)
Realised foreign exchange (loss)/gain
(1,163)
-
-
-
1,910
747
Realised gain/(loss) on forward contracts
2,767
-
-
-
(6,494)
(3,727)
Treasury - realised gains/(losses)
1,604
-
-
-
(4,584)
(2,980)
Inventories net realisable value movements and obsolete consumables
-
24,890
-
-
-
24,890
Unrealised foreign exchange loss
(1,731)
(85)
-
-
(2,551)
(4,367)
Unrealised loss on gold forward sales contract
(1,704)
-
-
-
-
(1,704)
Unrealised foreign exchange loss on intercompany balances
-
-
-
-
(14,186)
(14,186)
Fair value movements and unrealised treasury transactions
(3,435)
24,805
-
-
(16,737)
4,633
Other expenses
-
(881)
-
-
-
(881)
Share of associates' losses
-
-
-
-
(1,391)
(1,391)
Depreciation of non-mine site assets
-
-
-
(776)
-
(776)
Income tax (expense)/benefit
(58)
(33,413)
-
8,524
-
(24,947)
Profit/(loss) for the 12 months ended 31 December 2019
20,582
6,508
(5,776)
(17,986)
(62,183)
(58,855)
Notes to the Preliminary Final Report (Continued)
1. Segment revenues and expenses (continued)
For the six months ended 31 December 2018
Ravenswood (Australia)
Syama (Mali)
Bibiani (Ghana)
Unallocated (b)
Total
Corporate/
OtherTreasury
$'000
$'000
$'000
$'000
$'000
$'000
Revenue
Gold and silver sales at spot to external customers
70,504
152,270
-
-
-
222,774
Total segment gold and silver sales revenue
70,504
152,270
-
-
-
222,774
Costs of production
(60,193)
(101,538)
-
-
-
(161,731)
Gold in circuit inventories movement
(5,364)
(2,224)
-
-
-
(7,588)
Costs of production relating to gold sales
(65,557)
(103,762)
-
-
-
(169,319)
Royalty expense
(3,521)
(9,709)
-
-
-
(13,230)
Operational support costs
(165)
(5,500)
-
(1)
-
(5,666)
Other operating costs relating to gold sales
(3,686)
(15,209)
-
(1)
-
(18,896)
Administration and other corporate expenses
(2,216)
(2,123)
-
(4,159)
-
(8,498)
Share-based payments expense
-
-
-
(1,346)
-
(1,346)
Exploration and business development expenditure
(1,007)
(55)
(1,182)
(680)
-
(2,924)
(Loss)/earnings before interest, tax, depreciation and amortisation
(1,962)
31,121
(1,182)
(6,186)
-
21,791
Amortisation of evaluation, development and rehabilitation costs
(117)
(3,369)
-
-
-
(3,486)
Depreciation of mine site properties, plant and equipment
(506)
(6,118)
-
-
-
(6,624)
Depreciation and amortisation relating to gold sales
(623)
(9,487)
-
-
-
(10,110)
Segment operating result before treasury, other (expenses)/income and tax
(2,585)
21,634
(1,182)
(6,186)
-
11,681
Notes to the Preliminary Final Report (Continued)
1. Segment revenues and expenses (continued)
For the six months ended 31 December 2018
Ravenswood (Australia)
Syama (Mali)
Bibiani (Ghana)
Unallocated (b)
Total
Corporate/ Other
Treasury
$'000
$'000
$'000
$'000
$'000
$'000
Segment operating result before treasury, other (expenses)/income and tax (brought forward)
(2,585)
21,634
(1,182)
(6,186)
-
11,681
Interest income
-
-
-
-
329
329
Other income
-
-
-
-
13
13
Interest and fees
-
-
-
-
(4,371)
(4,371)
Rehabilitation and restoration provision accretion
(478)
(415)
-
-
-
(893)
Finance costs
(478)
(415)
-
-
(4,371)
(5,264)
Realised foreign exchange loss
-
-
-
-
(139)
(139)
Realised gain on forward contracts
-
-
-
-
352
352
Treasury - realised gains
-
-
-
-
213
213
Inventories net realisable value movements and obsolete consumables
(412)
(28,745)
-
-
-
(29,157)
Unrealised foreign exchange loss
-
-
-
-
(1,477)
(1,477)
Unrealised foreign exchange gain on intercompany balances
-
-
-
-
17,032
17,032
Fair value movements and unrealised treasury transactions
(412)
(28,745)
-
-
15,555
(13,602)
Other expenses
-
-
(6)
-
-
(6)
Share of associates' losses
-
-
-
-
(476)
(476)
Depreciation of non-mine site assets
-
-
-
(47)
-
(47)
Income tax (expense)/benefit
-
(4,283)
-
6,118
-
1,835
(Loss)/profit for the six months ended 31 December 2018
(3,475)
(11,809)
(1,188)
(115)
11,263
(5,324)
Notes to the Preliminary Final Report (Continued)
2. Dividends paid or proposed
12 months to 31 December 2019
6 months to 31 December 2018
$'000
$'000
Proposed dividends on ordinary shares:
Final dividend for the year ended 31 December 2019: 0.0 cents per share (6 months ended 31 December 2018: 0.0 cents per share)
-
-
The company's dividend policy is, subject to board discretion, to pay a minimum of 2% of gold sales revenue as a dividend. A dividend has not been declared for the year ended 31 December 2019.
3. Loss per share
12 months to 31 December 2019
6 months to
31 December 2018Basic loss per share
Loss attributable to ordinary equity holders for continued operations of the parent for basic loss per share ($'000)
(57,107)
(3,302)
Weighted average number of ordinary shares outstanding during the period used in the calculation of basic EPS
816,354,938
755,294,647
Basic loss per share from continuing operations (cents per share)
(7.00)
(0.44)
Diluted loss per share from continuing operations (cents per share) (1)
(7.00)
(0.44)
¹ Dilutive instruments have not been included in the calculation of diluted earnings per share for 31 December 2019 and 2018 because the result for the period was a loss.
4. Cash
As at 31 December 2019
As at 31 December 2018
$'000
$'000
Cash at bank and on hand
124,495
38,717
Reconciliation to cash flow statement
For the purpose of the cash flow statement, cash and cash equivalents comprise the following at the end of each period:
Cash at bank and on hand
124,495
38,717
Bank overdraft
(55,710)
(67,298)
68,785
(28,581)
Notes to the Preliminary Final Report (Continued)
5. Interest bearing liabilities
As at 31 December 2019
As at 31 December 2018
$'000
$'000
Interest bearing liabilities (current)
Bank overdraft
55,710
67,298
Insurance premium funding
400
1,215
Borrowings
287,792
-
343,902
68,513
Interest bearing liabilities (non current)
Borrowings
266,354
138,711
266,354
138,711
610,256
207,224
6. Contributed Equity
12 months to 31 December 2019
6 months to 31 December 2018
$'000
$'000
Ordinary share capital:
903,153,734 ordinary fully paid shares (2018: 757,512,088)
829,021
559,809
Movements in contributed equity, net of issuing costs:
Balance at the beginning of the period
559,809
544,972
Issue of shares to Manas Resources1
343
417
Issue of shares to Oklo Resources2
323
-
Issue of shares to Toro3
265,052
-
Issue of shares to Taurus4
3,494
-
Issue of shares to Orca Gold
-
11,774
Issue of shares to Loncor Resources
-
2,646
Balance at the end of the period
829,021
559,809
¹This relates to the purchase of 79,294,874 shares in Manas Resources Limited which resulted in the issue of 300,000 Resolute shares.
2This relates to the purchase of 1,297,944 shares in Oklo Resources Limited which resulted in the issue of 282,500 Resolute shares.
3This relates to the acquisition of Toro Gold Limited which resulted in the issue of 142,500,000 Resolute shares.
4This relates to the transactional costs in Taurus Financing which resulted in the issue of 1,800,000 Resolute shares.
Notes to the Preliminary Final Report (Continued)
7. Leases
Buildings
Plant and Equipment
Total
$'000
$'000
$'000
Lease assets
At 1 January 2019 (on transition to AASB 16)
3,007
9,426
12,433
Additions
-
32,619
32,619
Acquisition of subsidiary
571
25,515
26,086
Depreciations
(626)
(11,425)
(12,051)
Foreign exchange
(19)
(919)
(938)
Balance at the end of the year
2,933
55,216
58,149
Lease liabilities
At 1 January 2019 (on transition to AASB 16)
3,007
9,426
12,433
Additions
-
32,619
32,619
Acquisition of subsidiary
582
25,947
26,529
Repayments
(672)
(12,605)
(13,277)
Accretion of interest
149
1,572
1,721
Foreign exchange
(20)
(792)
(812)
Balance at the end of the year
3,046
56,167
59,213
8. Business Combination
Acquisition of Toro Gold Limited
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 for US$130m of cash and 142.5 million Resolute fully paid ordinary shares. The shares were measured at a deemed value of A$1.45 per share-based on Resolute's 30-day volume weighted average prices (VWAP). The cash component of the consideration was funded through a US$130m financing facility provided by Taurus Funds Management Pty Limited ("Taurus Facility") which is non-recourse to the Group.
Assets acquired and liabilities assumed
The provisional values of the net identifiable assets acquired, and liabilities assumed and recognised at the date of acquisition are as follows:
Fair value recognised on acquisition
$'000
Assets
Cash and cash equivalents
94,775
Other assets
6,983
Inventories
87,876
Property, plant and equipment
138,101
Exploration and evaluation
5,523
Development
368,369
Right of use asset
25,118
Total assets
726,745
Notes to the Preliminary Final Report (Continued)
8. Business Combination (Continued)
Fair value recognised on acquisition
$'000
Liabilities
Payables
37,058
Interest bearing liabilities
113,710
Decommissioning provision
34,758
Derivative financial liabilities
20,478
Deferred tax liabilities
13,327
Provisions
138
Lease liabilities
25,545
Total Liabilities
245,014
Fair value of non-controlling interest
38,952
Fair value of identifiable net assets
442,779
Total identifiable net assets at fair value
442,779
Consideration:
Fair value recognised on acquisition
$'000
Cash
185,342
Resolute shares (142,500,000 ordinary shares) 1
257,437
Purchase consideration transferred
442,779
1 Shares valuation based on the RSG share price as at the close of trading on 2 August 2019, being A$1.86
9. Assets held for sale
On 15 January 2020, Resolute signed a definitive agreement for the sale of the Ravenwood Gold Mine in Queensland to a consortium comprising of a fund managed by private equity manager EMR Capital Management Limited ("EMR Capital") and energy and mining company Golden Energy and Resources Limited. The consideration for the sale comprised $100 million of upfront value and up to $200 million potential payments. This is 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. As at 31 December 2019, Ravenwood Gold Mine was classified as a disposal group held for sale and disclosed as a discontinued operation.
Notes to the Preliminary Final Report (Continued)
9. Assets held for sale (Continued)
Results of the disposal group held for sale asset:
12 months to 31 December 2019
6 months to 31 December 2018
$'000
$'000
Revenue
113,922
70,504
Cost of production relating to gold sales
(103,315)
(65,557)
Other operating cost relating to gold sales
(7,799)
(3,686)
Administration and other corporate expenses
(1,248)
(2,216)
Exploration and business development expenditure
(1,529)
(1,007)
Depreciation and amortisation
(5,152)
(623)
Finance cost
(453)
(478)
Fair value movements and unrealised treasury transactions
1,588
(412)
Loss from discontinued operations
(3,986)
(3,475)
Loss per share
Basic loss per share of discontinued operation
(0.49)
(0.46)
Diluted loss per share of discontinued operation
(0.49)
(0.46)
Cash flow information for disposal group:
12 months to 31 December 2019
6 months to 31 December 2018
$'000
$'000
Operating cash flows
22,525
(2,580)
Investing cash flows
(17,421)
(7,514)
Financing cash flows
-
3,521
Net cash flows
5,104
(6,573)
The major categories of assets and liabilities within the disposal group as at 31 December 2019 are as follows:
As at 31 December 2019
$'000
Assets
Other assets
613
Inventories
11,977
Property, plant and equipment
51,195
Development
31,237
Total assets
95,022
Liabilities
Payables
16,712
Provisions
39,613
Total liabilities
56,325
Net assets held for sale
38,697
Notes to the Preliminary Final Report (Continued)
10. Contingent liabilities
On 27 February 2020 Resolute's subsidiary, Société des Mines de Syama S.A. (SOMISY), received a demand for payment of approximately A$51m from the Mali Tax Authorities in relation to Income Tax and Value Added Tax (VAT) for the tax years ended 31 December 2015, 2016 and 2017. The factual basis and validity of the demand will be 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 is working with its legal and tax advisors to contest the demand and will resist any efforts to enforce payment. Accordingly, this amount has not been included in Resolute's financial accounts at 31 December 2019.
11. Investments in associates
12 months to 31 December 2019
6 months to 31 December 2018
12 months to 31 December 2019
6 months to 31 December 2018
12 months to 31 December 2019
6 months to 31 December 2018
Kilo Goldmines Ltd
Manas Resources Ltd
Loncor Resources Inc
Shares held in associates (No. of shares)
46,568,000
46,568,000
682,484,709
603,189,835
25,500,000
51,000,000
Percentage of ownership (%)
27.44%
27.44%
25.82%
22.82%
26.93%
27.22%
$'000
$'000
$'000
$'000
$'000
$'000
Carrying Value
255
2,893
1,480
1,541
4,416
5,149
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDFR QVLBLBLLEBBV
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