Resolute Mining has lifted its underlying profits by 28 per cent during the 2010 financial year to $36 million but still recorded a loss of $56.6 million.
Resolute Mining has lifted its underlying profits by 28 per cent during the 2010 financial year to $36 million but still recorded a loss of $56.6 million.
The company said in a statement, "Net loss of $56.6 million primarily results from a $74.5 million unrealised foreign exchange loss on loans with Resolute Mining subsidiaries."
This compared to a profit of $30.7 million in the 2009 financial year.
"It's important to note that the reported loss on this intergroup transaction has no cashflow or economic impact on the Resolute Mining group," the statement said.
Revenue from Resolute's gold sales increased by 14 per cent during the 2010 financial year to $342.5 million.
The company will not issue a dividend.
Resolute has interests in Queensland, Tanzania and Mali.
See company statement below:
HIGHLIGHTS
-Strong underlying profit before unrealised treasury and tax of $36.0m
-Total gold production of over 350,000 ounces
-Production up 16% compared to the corresponding period
-Cash and bullion of $27.9m
-Over 40% reduction in hedge commitments.
-Ramp up of Syama and Mt Wright mines.
-Development and Exploration activities bring forward a wide range of growth opportunities
-2010/11 forecast group production of 380,000 ounces
RESULTS
-Revenues from gold sales increased by 14% to $342.5m (2009: $299.7).
-Profit before unrealised treasury and tax increased by 28% to $36.0m (2009: $28.2m).
-Net loss of $56.6m (2009: $30.7m profit) primarily results from a $74.5m unrealised foreign exchange loss (2009: $0.3m gain) on loans with Resolute Mining subsidiaries. This relates to the accounting treatment of the Australian dollar denominated intercompany loan from Resolute Mining to its 80% owned Malian operating subsidiary, Societe des Mines de Syama S.A, more fully explained in the March quarterly report. It is important to note that the reported loss on this intergroup translation has no cashflow or economic impact on the Resolute Mining group.
OPERATIONS
-The Group gold production for the year was 352,302 ounces (2009: 303,722 oz) of gold at an average cash cost of A$741/oz (2009: A$714/oz).
-Golden Pride gold mine in Tanzania produced 148,675 ounces (2009: 127,047 oz) at a cash cost
of A$583/oz (or US$514/oz) (2009: A$656/oz or US$486/oz).
-Ravenswood gold mine in Queensland, Australia, produced 125,652 ounces (2009: 151,913 oz) at a
cash cost of A$804/oz (2009: A$763/oz)
-Syama gold mine in Mali produced a total of 77,975 ounces (2009: 24,762 oz). For the 6
months to 30 June 2010, 41,689 ounces were produced at a cash cost of A$1,114/oz or
(US$1,001/oz). The mine was considered to be in "pre-production" up to 31 December 2009.
DEVELOPMENT
Mali
-Feasibility study on treatment of Syama free milling ore completed and review work to determine best circuit design continues
-Commencement of a feasibility study into the supply and installation of a high voltage power grid
connection from Sikasso (approximately 80km away) to Syama gold mine.
-The Finkolo Exploitation permit application, including the Tabakoroni Deposit Feasibility Study
and Environmental and Social Impact Assessment was completed and submitted to the Mali Government for approval.
Queensland
-Completion of a new underground mine design and infill drilling resulted in the conversion of
previously reported resources to proven and probable reserves of 6.17 mt @ 2.7g/t Au for
535,000 ounces. Diamond drilling is planned to further test the open down plunge extent of the Mt
Wright deposit.
Tanzania
-Updated pit designs completed on Maji and Golden Pride saw incremental reserve additions of
880,000 t @ 1.8g/t Au for approximately 50,000 ounces.
-At Nyakafuru, an environmental scoping report was completed during the period. An
Environmental and Social Impact Study along with the Nyakafuru Feasibility Study will now be
submitted as part of the Nyakafuru Mining Lease application.
EXPLORATION
Mali
Drilling focused on the Syama shear and greenstone belt to the north and south of Syama.
-Infill drilling at Tellem, Syama Extension and Alpha added combined resources totalling 5.82 mt @ 2.3 g/t Au for 428,000 ounces, at a 1.0 g/t cut off, to the resource inventory at Syama.
-Excellent intercepts were returned from wide spaced drilling on the 12km long Paysans-Senufo
trend including 11m @ 3.17g/t Au from 21m, 7m @ 3.84g/t Au from 37m, 3m @ 6.38g/t Au from 26m, 20m @ 1.32g/t Au from 20m, and 8m @ 2.69g/t Au from 35m.
Queensland
-First pass diamond drilling at the Welcome Breccia prospect produced some exceptional drill
intercepts including 18m @ 3.92g/t Au from 215m, 19m @ 4.52g/t from 359m, 113m @ 7.7g/t Au
from 316m (including 19m @ 31.3g/t Au from 401m), and 53m @ 2.02g/t Au from 475m.
Additional diamond drilling is planned to test the vertical and lateral extents of this potential new
deposit. Several other Mt Wright style targets in the district are ready for ground geophysical work and/or drill testing.
Golden Pride Project, Tanzania
-A new Joint Venture agreement covering the Golden Pride West tenure was signed with Barrick
East Africa Limited. Initial wide spaced reverse circulation drilling returned significant intercepts
including 6m @ 3.48g/t from 100m, 18m @ 2.74g/t from 84m, and 9m @ 2.69g/t from 25m.
-In addition to a preliminary inferred resource of 1.85mt @ 1.2g/t Au for 71,000oz at Kavsav,
significant reverse circulation drill intercepts have been returned from the China and Kilabili
prospects including 10m @ 4.77g/t Au from 24m, 12m @ 1.84g/t Au from 40m, and 7m @ 2.12g/t Au from 43m. These results further emphasise the potential for economically viable satellite resources within trucking distance of Golden Pride.
Cote d'Ivoire
-Resolute has continued to secure significant landholdings over targeted portions of the largely
underexplored Birimian greenstone belts in Cote d'Ivoire. First pass surface geochemical programs have already defined ten significant gold and pathfinder element anomalies that will undergo further exploration in the coming year.
CASH & BORROWINGS
-Group cash and bullion at 30 June 2010 was $27.9m (2009: $13.0m).
-Net operating cash inflows during the year (which include exploration expenditure) were $29.2m
(2009: $55.3m). This does not include the $9.7m of bullion on hand at 30 June 2010 and has beenimpacted by the commencement of corporate income tax payments in Tanzania.
-Net investing cash outflows of $51.5m (2009: $160.3m) with expenditure on evaluation and
development areas of $39.6m (2009: $150.3m), including Syama pre production operating costs of $56.5m offset by pre-production sales revenue from gold shipped of $38.8m.
-Fund raising activities during the year ended 30 June 2010, by way of issuing shares, convertible
notes and options, provided gross proceeds of $44.1m. Costs associated with the fund raisings
were $2.4m.
-At 30 June 2010, Resolute's total face value of borrowings were A$134.9m (2009: A$137.4m)
and comprised US$33.6m (or A$39.4m) owing on the Barclays senior debt facility, US$8.5m (or
A$10.0m) of loans from Barclays used to purchase gold put options, A$75.6m owing to holders of
Resolute Convertible Notes, hire purchase / finance leases totalling A$3.6m, and a A$6.4m
bank overdraft facility. The borrowings amounts stated here differ to those shown on the balance
sheet as these amounts exclude sunk-cost establishment fees and apportionments between
debt and equity as required by accounting standards.
-Repayments of borrowings during the period totalled $14.4m (2009: $27.6m).
-Interest of $9.0m owing on the Resolute Convertible Notes for the 12 months ended 30
June 2010 was paid by way of an issue of Resolute ordinary shares.
-The quantity of hedging commitments decreased during the year ended 30 June 2010 by 114,423 ounces of gold, and as at 30 June 2010, Resolute has 155,080 ounces or 6% of its' attributable gold reserve committed to hedging contracts.
-The average cash price received per ounce of gold sold during the year was A$1,070/oz (2009:
A$1,051/oz).
OUTLOOK
Forecast gold production for the Group for the year ending 30 June 2010 is 380,000 ounces at a cash cost of approximately A$870 per ounce (based on an assumed USD/AUD exchange rate of 90 cents). This forecast is sensitive to the ongoing plant optimization at the Syama gold mine.
Golden Pride
As the Central Pit diminishes its productive areas, mining will focus on the South West Central Cutback.
Equipment availabilities, limited work area and remediation of existing slips in the pit continue to be the major operating challenges during the coming six months.
Mill throughput levels are expected to decline due to the hardness of the ore being treated, and in
accordance with the Life of Mine plan, head grades are expected to reduce by approximately 20%. This will lead to lower gold production and higher cash costs per ounce in the 2010/2011 financial year.
Ravenswood
Sarsfield low grade ore stockpiles are expected to continue to be treated with Mt Wright ore until March 2011.
Gold production is expected to be slightly up in the 2010/2011 financial year as a result of the expected improvement in head grade outweighing the reduced mill throughput that will occur following the depletion of the Sarsfield ore stockpiles. Cash costs per ounce are expected to remain at levels similar to those in 2009/10.
Syama
The optimisation of plant performance continues at the Syama gold mine with all areas expecting
improvement in the coming year.
Mill throughout levels and recoveries are both expected to improve materially with head grades to
remain at similar levels to 2009/10.
Gold production is expected to increase significantly and cash costs reduce in the 2010/2011 financial year
