Resolute Mining Limited (ASX:RSG) is a successful gold mine operator that owns three mines; the Syama Gold Mine in Mali, the Ravenswood Gold Mine in Australia and the Bibiani Gold Mine in Ghana. The Company has future potential to produce 500,000oz of gold a year with a total resource base of 16.8Moz.

What are the HY19 results for RSG?

This morning (30th August 2019) RSG reported their Half-year results that are detailed below:

  • Half-year increase in EBITDA of 171% to $78m
  • Sales revenue up 33% to $324m
  • Net operating profit after tax $39m consistent with HY18
  • Gold production of 176,237oz up from 141,437 at HY18
  • All in sustaining costs (AISC) at $1,173oz down from $1,317oz at HY18
  • Gold price up at $1, 800oz from $1,723oz at HY18.

What are the key drivers of this result?

Despite significant growth in production and sales revenue Resolute mining have reported no net profit after tax growth for HY19, this is a result of the Company’s reinvestment into the development of its operations valued at $150m. Resolute’s Syama mine began commercial production in June 2019 and is expected to reach full capacity by the end of the year, RSG is also expanding its Ravenswood operations to take advantage of 1-2.7Moz reserves discovered during the first half of 2019. Additionally, the acquisition of Toro Gold has allowed RSG to incorporate Mako Gold mine into its operations increasing the Company’s mineral reserves by 2.5Moz.

What is the future outlook for RSG?

The Company has offered full year guidance of production of 400,000oz of gold at an AISC of $960oz, RSG’s mines are well positioned to generate returns over a long-term period out to 10+ years due to their large gold reserves. Gold is a store of value for investors in times of uncertainty, given the increasingly unstable trade war between the US and China and falling confidence in global markets the price of gold could continue to rise in the medium term, increasing margins and profit for RSG.

How has the market reacted?

The share price has fallen by 3.78% in response to a price of $1.65,  as investors were expecting considerable profit growth that hasn’t delivered and the announcement that no interim dividends will be paid.



This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

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August 30, 2019