TIDMRSG
RNS Number : 0576K
Resolute Mining Limited
22 August 2023
22 August 2023
2023 Half Year Financial Results
-- Total Recordable Injury Frequency Rate (TRIFR) decreased to 0.79 from 0.89 in H1 2022
-- Gold production of 176,629 ounces (oz) (H1 2022: 170,903oz)
driven by the expected increased production at the Syama
operations
-- Revenue of $329.5 million, an increase of 3.7% from the same
period last year (H1 2022: $317.7 million), from gold sales of
173,058oz at an average realised price of $1,906/oz (H1 2022:
173,717oz at $1,824/oz)
-- Earnings before interest, tax, depreciation, and amortisation
(EBITDA) of $101.4 million, an increase of 29% from same period
last year (H1 2022: $78.5 million). The increase is due to a 4%
increase in gold price, and a 5% decrease in operating costs which
benefited from a onetime non-cash benefit of $16.4 million relating
to a reversal of a historic provision relating to a tax exoneration
timing dispute in Senegal which was clarified in H1 2023
-- Net income after tax of $87.7 million (H1 2022: net loss of
$24.1 million) due to the increase in EBITDA, as well as unrealised
treasury gains related to foreign exchange
-- All-In Sustaining Cost (AISC) of $1,469/oz was comparable to
H1 2022 ($1,463/oz), and continued to track below the $1,480 per oz
guidance, with the successful cost reduction strategies ongoing and
expected to continue through H2 2023
-- Capital expenditure of $36.7 million (H1 2022: $37.2
million), with the Company tracking below $88.0 million guidance
for 2023
-- The balance sheet continued to strengthen with net debt
decreased to $17.2 million (31 December 2022: $31.6 million) with
cash and bullion at 30 June 2023 of $85.7 million
-- $25.0 million was repaid on the Group's term loan facility
(outstanding balance $49.9 million), and $5.0 million was repaid on
the Revolving Credit Facility (RCF)
-- Syama Phase 1 Expansion progressing with long lead items
being purchased. Commissioning expected in H1 2025 bringing Syama
annual gold production to over 250,000 oz and reducing costs by up
to $200/oz
-- Full year 2023 production and cost Guidance maintained at 350,000oz at an AISC of $1,480/oz
Note: Unless otherwise stated, all dollar figures are United
States dollars (US$).
Resolute Mining Limited (Resolute or the Company) (ASX/LSE: RSG)
presents the Company's half year financial results for the half
year ended 30 June 2023 (H1 2023).
Resolute's Chief Executive Officer, Mr Terry Holohan, commented:
"The first half of 2023 has again demonstrated continued positive
momentum across all operations keeping Resolute on track to meet
its full year Guidance and longer-term growth plans. The Company
remains focused on further cost savings and stability of gold
production over the second half of the year. Moreover, we are
confident our cost reduction initiatives, including the monetising
of working capital, will be realised.
The Company's strong balance sheet enables us to pursue organic
growth opportunities including the $52 million Phase I Expansion at
Syama. This low-capex project is expected to increase Syama gold
production to over 250,000 oz per annum and reduce overall AISC at
the mine by up to $200/oz.
We have also continued to invest in our exciting exploration
programmes across Mali, Senegal and Guinea. The Infill drilling
program over H1 23 at Syama North will improve the current maiden
Mineral Resource Estimate. The increase in this asset will, as
previously advised, feed into ongoing Engineering studies to
further improve the overall economics of the Syama North Phase I
Expansion Project. At the same time our near-mine exploration in
Senegal has continued to gather pace and our drilling plus
geophysical surveys in Guinea are showing exciting results."
Corporate
Officer Appointment
On 3 February 2023, the Company announced the appointment of Mr
Chris Eger as Chief Financial Officer (CFO). Chris is a highly
regarded CFO, with extensive global experience in the resource and
investment banking sector. During his 25-year career, he held a
number of senior financial, commercial and leadership roles in
these sectors.
Chris has extensive experience in North America, Europe, and the
UK. He is fluent in French and English and holds a Master of
Business Administration from Kellogg School of Management and a BA
in Physics & Economics from Colgate University.
Director Appointment
On 19 June 2023, the Company announced the appointment of Mr
Keith Marshall as a Non-Executive Director of the Company.
Mr Marshall is a mining engineer with a wealth of technical and
managerial expertise gained over 40 years in the sector, with the
last fifteen years spent in senior mine leadership roles. His
experience in underground mining and caving is particularly
relevant. Mr Marshall's last two operational roles were both with
Rio Tinto, with whom he has worked for 22 years, as Managing
Director of the Phalabora Mining Company in South Africa and as
President of the Oyu Tolgoi Project in Mongolia.
Mr Marshall holds a mining engineering degree from the Royal
School of Mines at Imperial College London and currently serves on
the Board of Shanta Gold Ltd as a Non-Executive Director where he
Chairs the Remuneration Committee.
Syama Phase I Expansion Project
In July the Company provided an update on the Phase I Expansion
Project which will increase the production profile of Syama to over
250,000 oz per annum and reduce the cost profile by up to $200/oz.
This will be achieved by modifications to the oxide comminution
circuit to enable it to process sulphide ore thereby increasing
overall sulphide processing capacity at Syama by 60% from 2.4Mtpa
to 4.0Mtpa. The project has a capital cost of $52 million with
commissioning expected in H1 2025.
The changes to the plant will enable overall concentrate
production to be higher than the roasting circuit can process, and
the excess concentrate will be stored in ponds to be reclaimed and
treated while the comminution circuit is treating oxide ores. The
flexibility of excess concentrate production is a key focus of the
Project, which will allow calcine production at full roaster
throughput capacity, when the modified comminution circuit is
switched to treat Oxide ore, but also provides concentrate
inventory to continue calcine production if one of the flotation
circuits were not available. When the modified Oxide comminution
circuit is switched to treat Oxide ore from Syama North or from
future discoveries, the resulting Oxide slurry will be leached in
the existing Oxide carbon-in-leach circuit.
Assessments are also being carried out, as part of a Syama Phase
II Expansion study, to further increase the roasting circuit
throughput with lower capital options than those initially
anticipated. The addition of oxygen to manage the next phase of
expanded throughput capacity remains an option for the roasting
circuit. The current Sulphide ore production mix for the modified
comminution circuit comprises of the majority of ore being fed from
Syama North open pit mining operations, but then supplemented by
ore fed from the Syama underground mine and existing stockpiles. A
low capital option has been recognised and proposed to sustainably
increase production from the Syama underground mine from its'
present nominal 2.4Mtpa (original design 2.1Mtpa), to a nominal
2.8Mtpa, by increasing the mining fleet and ventilation air.
During the second Quarter, mine and process design was completed
at pre-feasibility study accuracy, and the first draft operational
and capital cost estimates were prepared. Furthermore, all
geotechnical drilling within the open pit designs was completed and
these results are expected in August 2023.
M anagement is initiating work/studies in developing a Phase II
expansion of Syama targeting annual gold production in excess of
400koz in order to capitalize on the significant Mineral Resource
at Syama.
Environment and Social Governance
Resolute's TRIFR at 30 June 2023 was 0.79, a remarkable
improvement over the period. Resolute recorded no Lost-time
Injuries, significant environmental incidents, regulatory
non-compliances, or grievances in H1 2023. We were successfully
audited against the Responsible Gold Guidance at both Mako and
Syama in Q2. The WGC's Responsible Gold Mining Principles Year 3
final audit is ongoing with a site visit to Mako in July and full
100% compliance anticipated by the end of Q3. We are also actively
engaging with ESG Rating agencies to improve the Company's ratings
over 2023. Resolute's employees' and contractors' health, safety,
and well-being remain its top priority.
Exploration & Resources
The current Mineral Resource Estimate (MRE) for Syama North was
announced on 19 January 2023 is 34 million tonnes at 2.9g/t Au for
3.18 million ounces of contained gold. Infill drilling was carried
out until late June and will be incorporated into an updated MRE
for Syama North expected shortly.
Exploration activities continued in Senegal with drilling
programs carried out on the Petowal Mining Lease and the Laminia
Joint Venture which is located 10km east of Petowal.
In Guinea, RC drilling at the Mansala Prospect intersected
encouraging gold mineralisation in several holes over a strike
length of one kilometre. A geophysical survey was also carried out
across the license and the information is being collated. Drilling
will continue once the seasonal rains have abated. A more detailed
report will be published in Q3 2023.
Operations
Syama Gold Mine, Mali
Management is very pleased with the continued progress at Syama
during the first half of 2023 and are excited about the asset's
long-term potential. In H1 2023 sulphide ore mined and the mined
grade increased 5% and 7% (to 1.15 million tonnes and 2.87g/t)
respectively from H1 2022 due to improved mining procedures.
Likewise, ore processed, and the head grade increased 12% and 17%
respectively from the same period last year leading to a 9%
increase in gold poured in the sulphide circuit (79,731oz vs 73,225
oz in H1 2022). The higher throughput was despite crusher
availability being below budget with breakdowns of the tertiary
crushers and issues with the supervisory control and data
acquisition (SCADA) system in May. The crushers have been scheduled
for replacement in H2 2023 with larger models and the SCADA has
been replaced. H1 gold production from the sulphide operation was
achieved at an AISC of $1,381/oz, 2% lower than H1 2022 (1,415/oz).
Underground mined grades are expected to be maintained at budgeted
values through H2.
In H1 2023 at the Oxide operations ore tonnes mined increased by
8% (0.97 million tonnes) at a 40% higher grade (1.69 g/t versus
1.21g/t in H1 2022) due to improvements in mining procedures.
Throughput and head grade increased 12% and 17% respectively
helping to produce 9% more gold in H1 2023 (33,057oz) than the same
period in 2022. This was driven by blend strategy improvement and
availability of the mill. Oxide ore was mainly sourced from the
Paysans pit while there was a focus on stripping and grade control
drilling at A21 pit. Mining in a section of the Tabakoroni pit was
discontinued due to the intersection of a high organic carbon
pocket with associated lower recovery rates. The open pit oxide ore
for H2 will be sources from Paysans and A21 where higher grades are
expected in Q4. Gold production was at an AISC of $1,767/oz, 6%
lower than H1 2022 due to more ounces produced.
Table 1: Syama Production and Cost Summary
Mako Gold Mine, Senegal
H1 2023 mining tonnage and grade were very similar to H1 2022.
Ore tonnes processed increased 5% (to 1.0 million tonnes) from H1
2022 as throughput increased with the SAG mill reline being
deferred to Q3 2023. The head grade decreased 8% (from 2.26g/t to
2.08g/t in H1 2023) as expected due to lower availability of
high-grade material for the period with the focus on stripping
waste to expose higher grade ore in the future.
H1 2023, production from Mako was 63,843oz at an AISC of
$1,308/oz. Mako production was 5% below H1 2022 (67,224 oz), again
as expected, due to the planned focus on waste capitalisation to
expose higher grade ore for 2024 onwards.
For the remainder of the year, the Mako pit will continue to be
extended to access the final stage of the main pit for improved
grades and a lower strip which will drive high production and lower
costs in 2024 and 2025. Lower production is expected in H2 in line
with budget. In-pit dumping will start in the Q4 leading to lower
haul costs and the completion of the oxygen plant in Q3 will
improve recoveries.
Table 2: Mako Production and Cost Summary
Financial Performance
The H1 2023 net income after tax of $87.7 million with a Group
EBITDA of $101.4 million was 29% higher than the comparative period
in 2022 reflecting:
-- Higher revenue of $329.5 million from gold sales of 173,058oz
at an average realised price of $1,906/oz (up 4%) compared to the
comparative period.
-- Stable costs, AISC of $1,469/oz (versus $1,463/oz in H1
2022), despite inflationary pressures seen in fuel and
consumables.
-- In H1 2023 the Group reversed historic provisions related to
the tax exoneration timing dispute in Senegal increasing Net Profit
by $26.1 million. This resulted in a onetime non-cash benefit of
$16.4 million to EBITDA.
H1 has seen a renewed focus on cost discipline across all assets
and we expect several areas of cost reductions starting to come
through during the second half of 2023. The financial performance
of Resolute for H1 2023 is summarised below:
Profit and Loss Analysis ($'000s) H1 2023 H1 2022
Revenue 329,499 317,658
----------------------------------------------------------- ---------- ----------
Cost of sales excluding depreciation and amortisation (182,551) (193,116)
Royalties and other operating expenses (29,777) (30,030)
Administration and other corporate expenses (9,425) (7,853)
Exploration and business development expenditure (6,368) (8,187)
---------- ----------
EBITDA 101,378 78,472
----------------------------------------------------------- ---------- ----------
Depreciation and amortisation (47,459) (43,566)
Net interest and finance costs (7,121) (5,725)
Fair value movements and unrealised treasury transactions 37,924 (35,440)
Other 352 3,702
Indirect tax expense (5,273) (5,451)
Income tax benefit/(expense) 7,878 (16,138)
---------- ----------
Net profit/(loss) after tax 87,679 (24,146)
----------------------------------------------------------- ---------- ----------
Table 3: Half year Profit and Loss
Cashflow
Movements in the cash and bullion balances are summarised in the
cashflow waterfall below:
Figure 2: Half year cash flow
Balance Sheet
Net debt decreased by $14.2 million to $17.2 million of 30 June
2023 (31 December 2022:
$31.6 million) including cash and bullion of $85.7 million.
Total borrowings as of 30 June 2023 were $105.3 million including
$49.9 million drawn on the Term Loan Facility ($100.0 million) and
overdraft facilities in Mali and Senegal of $53.0 million.
Resolute continued to invest in the business in H1 2023 with
spending on development, property, plant, and equipment totalling
$34.2 million (H1 2022: $33.2 million) including outlays for the
powerplant at Mako which will reduce operating costs moving
forward, capital items associated to the Syama expansion and other
various project capital items at Syama, as well as capitalised
stripping costs at both mines.
The Company continues to explore opportunities to reduce the
cost of capital and improve its liquidity profile.
CY23 Guidance
Resolute maintains its full year 2023 production guidance of
350,000oz, noting the stable performance at the Syama Complex and
Mako.
Cost saving initiatives are expected to come through in the
remainder of the year as well as lower fuel prices. Resolute
maintains its cost guidance at an AISC of $1,480/oz however, notes
that unit costs may be adversely affected if input costs continue
to rise.
We are tracking below our $88 million guidance on capital
expenditure.
Key H2 2023 Deliverables
-- Update Syama North Mineral Resource Estimate
-- Group exploration activities report
-- Execute Phase I Expansion for Syama
-- Initiate studies on Syama Phase II Expansion
-- 3-year guidance on Syama and Mako based on Syama Phase 1
Expansion Project and general corporate activities
Contact
Resolute Public Relations
Matthias O'Toole-Howes, Jos Simson / Emily Moss, Tavistock
Corporate Development and Investor resolute@tavistock.co.uk
Relations +44 207 920 3150 / +44 7788
matthias.otoolehowes@resolutemining.co 554 035
m
Corporate Broker
Jennifer Lee, Berenberg
+44 20 3207 7800
Authorised by Mr Terry Holohan, Managing Director and Chief
Executive Officer
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