Appendix 4E Preliminary Final Report

RNS Number : 6865C

Resolute Mining Limited

24 February 2022

 

24 February 2022

Resolute Mining Limited

(Resolute or the Company)

Appendix 4E Preliminary Final Report

For the year ended 31 December 2021

Resolute Mining Limited (ASX/LSE: RSG) (Resolute or the Company) advises that its Appendix 4E Preliminary Final Report has been released to the Australian Securities Exchange.

Reporting Period

The reporting period is the year ended 31 December 2021 with the corresponding reporting period being for the year ended 31 December 2020.

Results for Announcement to the Market

										12 months ended 31 December 2021	12 months ended 31 December 2020
										$'000	$'000
Revenue from ordinary activities (including discontinued operations)							down	11%	to	549,242	618,253
(Loss)/profit for the period (including discontinued operations)							up	N/A	to	(367,471)	4,995
(Loss)/profit after tax attributable to members							up	N/A	to	(319,203)	15,941
							Amount per security			Franked amount
Dividends										per security
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

 

		12 months ended 31 December 2021	12 months ended 31 December 2020
		$'000	$'000
Net tangible asset backing (per share)		0.38	0.71

This Appendix 4E - Preliminary final report has not been subject to audit and there is no audit report provided. This report should be read in conjunction with the Financial Report for the period ended 31 December 2020. The Financial Report for the period ended 31 December 2021 is currently being audited by Ernst & Young and will be finalised for lodgement with ASX in March 2022.

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2021

$'000	Note	2021	2020 (Restated)(1)
Continuingoperations
Revenuefromcontractswithcustomersforgoldandsilversales	1	549,242	602,985
Costsofproductionrelatingtogoldsales	1	(324,984)	(301,635)
Grossprofitbeforedepreciation,amortisationandotheroperatingcosts		224,258	301,350
Depreciationandamortisationof mine assets	1	(118,621)	(172,606)
Otheroperatingcostsrelatingtogoldsales	1	(59,066)	(71,339)
Grossprofitfromcontinuingoperations		46,571	57,405
Interestincome	1	5,141	2,152
Other income	1	3,248	-
Exploration andbusinessdevelopment	1	(18,484)	(10,910)
Impairment of exploration and evaluation assets	1	(5,068)	-
Impairment of mine properties and property, plant and equipment	1	(222,396)	-
Administration and other corporate expenses	1	(15,687)	(17,456)
Sharebasedpaymentsexpense	1	(1,122)	(1,178)
Treasury-realisedgains/(losses)	1	(185)	867
Fairvaluemovementsandunrealisedtreasurytransactions	1	(71,955)	16,143
Shareofassociates'losses	1	(3,838)	(1,661)
Depreciationofnon-minesiteassets	1	(2,372)	(2,725)
Finance costs	1	(16,882)	(24,676)
Other expenses	1	-	(88)
Indirecttaxexpense	1	(24,760)	(24,308)
(Loss)beforetaxfromcontinuingoperations		(327,789)	(6,435)
Taxexpense	1	(39,682)	(30,045)
(Loss)fortheyearfromcontinuingoperations		(367,471)	(36,480)
Discontinuedoperations		-	41,475
Gain/(loss)fortheyearfromdiscontinuedoperations(2)
(Loss)/gainfortheyear		(367,471)	4,995
(Loss)/gainattributableto:
Membersoftheparent		(319,203)	15,941
Non-controllinginterest		(48,268)	(10,946)
		(367,471)	4,995

(1)  Discontinued operations relates to the Group's Ravenswood gold mine

(2)  A reclassification of net realisable value adjustments has been made in the 2020 comparatives above to present these movements below in Fair value movements and unrealised treasury transactions to ensure consistency with the presentation of these amounts in 2021.

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

$'000	Note	2021	2020
(Loss)/gainfortheyear(broughtforward)		(367,471)	4,995
Othercomprehensiveincome/(loss)
Itemsthatmaybereclassifiedsubsequentlytoprofitorloss
Exchangedifferencesontranslationofforeignoperations:
-Membersoftheparent		(16,106)	45,915
Itemsthatmaynotbereclassifiedsubsequentlytoprofitorloss
Exchangedifferencesontranslationofforeignoperations:
-Non-controllinginterest		4,960	(5,651)
Changesinthefairvalue/realisationoffinancialassetsatfairvaluethroughother comprehensive income, net of tax		(12,981)	16,638
Othercomprehensive (loss)/gain fortheyear,netoftax		(24,127)	56,902
Totalcomprehensive(loss)/gainfortheyear		(391,598)	61,897
Totalcomprehensive (loss)/gainattributableto:
Membersoftheparent		(348,290)	78,494
Non-controllinginterest		(43,308)	(16,597)
		(391,598)	61,897
Earnings(loss)persharefornetincome(loss)attributableforoperations to the ordinary equity holders of the parent:		cents	cents
Basic(loss)/gainpershare	3	(28.92)	1.62
Diluted(loss)/gainpershare	3	(28.92)	1.62
Losspersharefornetlossattributableforcontinuingoperations to the ordinary equity holders of the parent:		cents	cents
Basic(loss)pershare	3	(28.92)	(2.60)
Diluted(loss)pershare	3	(28.92)	(2.60)

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

Consolidated Statement of Financial Position

for the year ended 31 December 2021

$'000	Note	2021	2020
Currentassets
Cash	4	67,607	88,591
Otherfinancialassets-restrictedcash	9	9,443	-
Receivables	5	27,812	78,852
Inventories	8	156,589	158,929
Financialassetsatfairvaluethroughothercomprehensiveincome	9	20,828	36,004
Assets heldforsale		-	80,608
Prepaymentsandotherassets		12,868	8,785
Asset sale receivable	10	56,495	-
Current income taxasset		-	17,911
Totalcurrentassets		351,642	469,680
Noncurrentassets
Incometaxasset		18,273	-
Inventories	8	53,918	67,923
Investmentsinassociates	12	1,365	4,649
Promissorynotesreceivable		40,207	40,262
Contingentconsiderationreceivable		14,524	15,417
Deferredtaxassets		-	10,081
Explorationandevaluation		1,699	6,469
Development		265,701	495,281
Property,plantandequipment		229,164	292,678
Rightofuseassets		7,708	22,518
Totalnoncurrentassets		632,559	955,278
Totalassets		984,201	1,424,958
Currentliabilities
Payables		91,542	83,832
Financialderivativeliabilities	11	-	415
Interestbearingliabilities	6	92,726	62,558
Provisions	11	62,854	75,720
Leaseliabilities		2,991	11,249
Liabilitiesassociatedwiththeassetsheldforsale		-	8,821
Totalcurrentliabilities		250,113	242,595
Noncurrentliabilities
Interestbearingliabilities	6	223,979	273,613
Provisions	11	74,872	71,863
Deferredtaxliabilities		1,591	9,422
Leaseliabilities		8,086	12,358
Totalnoncurrentliabilities		308,528	367,256
Totalliabilities		558,641	609,851
Netassets		425,560	815,107
Equityattributabletoequityholdersoftheparent
Contributedequity	7	777,021	777,021
Reserves		(3,706)	24,175
Retainedearnings		(277,682)	41,521
Totalequityattributabletoequityholdersoftheparent		495,633	842,717
Non-controllinginterest		(70,073)	(20,629)
Non-controllinginterestofdisposalgroupheldforsale		-	(6,981)
Totalequity		425,560	815,107

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

Consolidated Statement of Changes in Equity

for the year ended 31 December 2021

$'000	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	Non-controlling interest of disposal group held for sale	Total
At 1 January 2021	777,021	4,350	4,876	(724)	18,607	(2,934)	41,521	(20,629)	(6,981)	815,107
Loss for the year	-	-	-	-	-	-	(319,203)	(47,929)	(339)	(367,471)
Other comprehensive (loss)/income, net of tax	-	(12,981)	-	-	-	(16,106)	-	4,960	-	(24,127)
Total comprehensive (loss)	-	(12,981)	-	-	-	(16,106)	(319,203)	(42,969)	(339)	(391,598)
for the year, net of tax
Dividends paid	-	-	-	-	-	-	-	(6,475)	-	(6,475)
Share based payments expense	-	-	-	-	1,206	-	-	-	-	1,206
Disposal of assets held for sale	-	-	-	-	-	-	-	-	7,320	7,320
At 31 December 2021	777,021	(8,631)	4,876	(724)	19,813	(19,040)	(277,682)	(70,073)	-	425,560
At 1 January 2020	639,859	(12,288)	4,876	(724)	17,077	(48,849)	25,580	(1,436)	-	624,095
Gain/(loss) for the year	-	-	-	-	-	-	15,941	(10,946)	-	4,995
Other comprehensive (loss)/income, net of tax	-	16,638	-	-	-	45,915	-	(5,651)	-	56,902
Total comprehensive (loss)	-	16,638	-	-	-	45,915	15,941	(16,597)	-	61,897
/income for the year, net of tax
Shares issued (net of cost)	137,162	-	-	-	-	-	-	-	-	137,162
Dividends paid	-	-	-	-	-	-	-	(9,577)	-	(9,577)
Share based payments expense	-	-	-	-	1,530	-	-	-	-	1,530
Disposal of assets held for sale								6,981	(6,981)	-
At 31 December 2021	777,021	4,350	4,876	(724)	18,607	(2,934)	41,521	(20,629)	(6,981)	815,107

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Consolidated Cash Flow Statement

for the year ended 31 December 2021

$'000	Note	2021	2020
Cashflowsfromoperatingactivities
Receiptsfromcustomers		549,013	617,218
Paymentstosuppliers,employeesandothers		(456,999)	(496,999)
Explorationexpenditure		(13,643)	(6,052)
Interestpaid		(14,874)	(20,221)
Interestreceived		-	616
Indirect tax payments		(9,026)	-
Incometaxpaid		(9,358)	(32,610)
SettlementofTaurusroyalty		-	(12,000)
Netcashflowsfromoperatingactivities		45,113	49,952
Cashflowsusedininvestingactivities
Paymentsforproperty,plant&equipment		(30,387)	(49,724)
Paymentsfordevelopmentactivities		(22,908)	(35,455)
Paymentsforevaluationactivities		(2,926)	(5,799)
Proceeds from sale of asset		30,740	29,916
Proceeds/ (repayments) relatingtoassetsheldforsale		-	5,445
Proceedsfromsaleoffinancialassetsatfairvaluethroughothercomprehensiveincome		2,289	1,145
Paymentsforsaleoffinancialassetsatfairvaluethroughothercomprehensiveincome		(1,179)	(5,603)
Otherinvestingactivities		(697)	(418)
Netcashflowsusedininvestingactivities		(25,068)	(60,493)
Cashflowsfromfinancingactivities
Repaymentofborrowings		(29,811)	(202,963)
Proceedsfromfinancefacilities		-	110,000
Proceedsfromissuingordinaryshares		-	137,428
Paymentsforshareissue		-	(266)
Dividendspaidtonon-controllinginterest		(5,858)	(9,577)
Repaymentof lease liability		(13,823)	(18,012)
Netcashflowsfromfinancingactivities		(49,492)	16,610
Net(decrease)/increaseincashandcashequivalents		(29,447)	6,069
Cashandcashequivalentsatthebeginningoftheyear		55,226	48,237
Exchangerateadjustment		(542)	920
Cashandcashequivalentsattheendoftheyear		25,237	55,226
Cashandcashequivalentscomprisethefollowing:
Cashatbankandonhand	4	67,607	88,591
Bankoverdraft	4	(42,370)	(33,365)
Cashandcashequivalentsattheendoftheyear		25,237	55,226

The above consolidated cash flow statement should be read in conjunction with the accompanying notes

The Group had non-cash offset of VAT credits receivable from the Mali Tax Authorities against previously recognised provision for the tax years ended 31 December 2015 to 2020 amounting to $56.6m. 

Notes to the Preliminary Final Report

For the year ended 31 December 2021

About this Report

The preliminary final report of Resolute Mining Limited and its subsidiaries ("Resolute" or the "Group") for the year ended 31 December 2021 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.

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 2020 and any public announcements made by RML during the reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

Rounding of Amounts

The Financial Report has been prepared in United States dollars and all values are rounded to the nearest thousand dollars ($'000) unless otherwise stated.

				Unallocated (b)
31December 2021 $'000		Mako (Senegal)	Syama (Mali)	Corporate/ Other	Total
Revenue
Goldandsilversalesatspottoexternalcustomers(a)	221,478		327,764	-	549,242
Totalsegmentgoldandsilversalesrevenue	221,478		327,764	-	549,242
Costsof production	(87,541)		(245,920)	-	(333,461)
Goldincircuitinventoriesmovement	583		7,894	-	8,477
Costsofproductionrelatingtogoldsales	(86,958)		(238,026)	-	(324,984)
Royalty expense	(11,074)		(21,863)	-	(32,937)
Operationalsupportcosts	(17,528)		(5,344)	(3,257)	(26,129)
Otheroperatingcostsrelatingtogoldsales	(28,602)		(27,207)	(3,257)	(59,066)
Administrationandothercorporateexpenses	(5,060)		(1,617)	(9,010)	(15,687)
Share-basedpaymentsexpense	-		-	(1,122)	(1,122)
Exploration, business development and impairment of investments	(3,512)		(4,802)	(10,170)	(18,484)
Earnings/(loss) before interest, tax, depreciation and amortisation	97,346		56,112	(23,559)	129,899
Amortisationofevaluation,developmentandrehabilitationcosts	(15,600)		(25,894)	-	(41,494)
Depreciationofminesiteproperties,plantand equipment	(40,262)		(36,865)	-	(77,127)
Depreciation and amortisation relating to gold sales	(55,862)		(62,759)	-	(118,621)
Segmentoperatingresultbeforetreasury,otherincome/(expenses)and tax	41,484		(6,647)	(23,559)	11,278
Interestincome	69		-	5,072	5,141
Otherincome	-		-	3,248	3,248
Interestandfees	(434)		(2,854)	(13,312)	(16,600)
Gainonremeasurementforrefinancing	-		-	316	316
Rehabilitationandrestorationprovisionaccretion	(165)		(433)	-	(598)
Financecosts	(599)		(3,287)	(12,996)	(16,882)
Realisedforeignexchange(loss)/gain	(1,431)		387	859	(185)
Treasury-realisedgains/(losses)	(1,431)		387	859	(185)
Inventories net realisable value movements and obsolete consumables	(53,188)		8,930	-	(44,258)
Unrealisedforeignexchange(loss)/gain	635		-	(17,120)	(16,485)
Unrealisedforeignexchangelossonintercompanybalances	-		-	(11,212)	(11,212)
Fairvaluemovementsandunrealisedtreasurytransactions	(52,553)		8,930	(28,332)	(71,955)
Shareofassociates'losses	-		-	(3,838)	(3,838)
Depreciationofnon-minesiteassets	(151)		-	(2,221)	(2,372)
Impairment of exploration and evaluation assets	(4,808)		-	(260)	(5,068)
Impairment of mine properties and property, plant and equipment	(55,023)		(167,373)	-	(222,396)
Indirect tax expense	(9,026)		(9,874)	(5,860)	(24,760)
Incometaxexpense	(1,413)		(34,424)	(3,845)	(39,682)
Lossforthe12monthsto31December2021	(83,451)		(212,288)	(71,732)	(367,471)

1  Segment revenues and expenses  (continued)

			Unallocated(b)
31December 2020 (Restated) $'000	Mako (Senegal)	Syama (Mali)	Corporate/ Other	Total
Revenue
Goldandsilversalesatspottoexternalcustomers(a)	274,400	328,585	-	602,985
Totalsegmentgoldandsilversalesrevenue	274,400	328,585	-	602,985
Costsof production	(59,019)	(236,519)	-	(295,538)
Goldincircuitinventoriesmovement	(5,578)	(519)	-	(6,097)
Costsofproductionrelatingtogoldsales	(64,597)	(237,038)	-	(301,635)
Royalty expense	(13,720)	(23,365)	-	(37,085)
Operationalsupportcosts	(18,470)	(12,304)	(3,480)	(34,254)
Otheroperatingcostsrelatingtogoldsales	(32,190)	(35,669)	(3,480)	(71,339)
Administrationandothercorporateexpenses	(3,717)	(3,266)	(10,473)	(17,456)
Share-basedpaymentsexpense	-	-	(1,178)	(1,178)
Exploration, business development and impairment of investments	(1,624)	(2,512)	(6,774)	(10,910)
Earnings/(loss) before interest, tax, depreciation and amortisation	172,272	50,100	(21,905)	200,467
Amortisationofevaluation,developmentandrehabilitationcosts	(20,012)	(20,116)	-	(40,128)
Depreciationofminesiteproperties,plantand equipment	(67,853)	(63,335)	(1,290)	(132,478)
Depreciationandamortisationrelatingtogoldsales	(87,865)	(83,451)	(1,290)	(172,606)
Segmentoperatingresultbeforetreasury,otherincome/(expenses)and tax	84,407	(33,351)	(23,195)	27,861
Interestincome	431	300	1,421	2,152
Interestandfees	(3,459)	(1,493)	(14,235)	(19,187)
Lossonremeasurementforrefinancing	-	-	(4,711)	(4,711)
Rehabilitationandrestorationprovisionaccretion	(386)	(392)	-	(778)
Financecosts	(3,845)	(1,885)	(18,946)	(24,676)
Realisedforeignexchange(loss)/gain	912	(381)	336	867
Treasury-realisedgains/(losses)	912	(381)	336	867
Inventories net realisable value movements and obsolete consumables	(5,304)	5,192	287	175
Unrealisedforeignexchange(loss)/gain	(1,650)	5	33,133	31,488
Unrealisedlossonderivativefinancialliability	(1,167)	-	-	(1,167)
Unrealisedforeignexchangelossonintercompanybalances	-	-	(14,353)	(14,353)
Fairvaluemovementsandunrealisedtreasurytransactions	(8,121)	5,197	19,067	16,143
Other expenses	-	-	(88)	(88)
Shareofassociates'losses	-	-	(1,661)	(1,661)
Depreciationofnon-minesiteassets	(133)	-	(2,592)	(2,725)
Indirecttaxexpense	-	(24,308)	-	(24,308)
Incometax(expense)/benefit	(15,768)	(4,184)	(10,093)	(30,045)
Profit/(loss)forthe12monthsto31December2020	57,883	(58,612)	(35,751)	(36,480)

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, however this information is analysed in this format by the Chief Operating Decision maker, and forms part of the reconciliation of the results and positions of the operating segments to the financial statements.

c)  Segment note references continuing operations

2  Dividends paid or proposed

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 2021.

3  Earnings/(loss) per share

$'000	31December 2021	31December2020
Basic (loss)/earningspershare
(Loss)/profit attributable to ordinary equity holders for operation  ofthe parentfor basicloss pershare ($'000)	(319,203)	15,941
Weightedaveragenumberofordinarysharesoutstandingduringtheyear  usedin the calculation of basic and diluted EPS	1,103,896,747	981,553,095
	cents	cents
Basic (loss)/earnings persharefromoperations(centspershare)	(28.92)	1.62
Diluted (loss)/earningspersharefromoperations(centspershare) (1)	(28.92)	1.62
Basiclosspershare - continuing operations
Loss attributable to ordinary equity holders for continuing operations of theparentfor basic loss pershare ($'000)	(319,203)	(25,534)
Weightedaveragenumberofordinarysharesoutstandingduringtheyearused  inthe calculation of basic EPS	1,103,896,747	981,553,095
	cents	cents
Basiclosspersharefromcontinuingoperations(centspershare)	(28.92)	(2.60)
Dilutedlosspersharefromcontinuingoperations(centspershare) (2)	(28.92)	(2.60)

1  Potentially d ilutive instruments have not been included in the calculation of diluted earnings per share for 31 December 2021 because the result for the year was a loss. For 31 December 2020, the performance rights outstanding are not dilutive as performance conditions were not met at 31 December 2020.

2  Potentially dilutive instruments have not been included in the calculation of diluted earnings per share for continuing operations for 31 December 2021 and 31 December 2020 because the result for the year was a loss.

4  Cash

	31December 2021	31December2020
	$'000	$'000
Cashatbankandonhand	67,607	88,591
Reconciliationtocashflowstatement
Forthepurposeofthecashflowstatement,cashandcashequivalentscomprisethe following at the end of each year:
Cashatbankandonhand	67,607	88,591
Bankoverdraft (Note 6)	(42,370)	(33,365)
Cashandcashequivalentsattheendoftheyear	25 ,237	55,226

5  Receivables

	31December 2021	31December2020
	$'000	$'000
Tradeandotherreceivables	441	258
Taxationreceivables	27,371	78,594
Totalreceivables	27,812	78,852

During the year Resolute's subsidiary SOMISY, has received a letter from the Mali Tax Authorities notifying the company that they have offset VAT credits against previously recognised provision for the tax years ended 31 December 2015 to 2020 amounting to $56.6m. As at 31 December 2021 this notification of offset has been reflected in the above amounts in line with the requirements of the accounting standards. Resolute continues to work with its legal and tax advisors to contest the position taken by the Authorities.  Additionally, at 31 December 2021, Resolute has recognised $10.1m of VAT assets for the Mako operations due to the reduction in the tax exoneration period to 5 years. Refer to Note 10.

6  Interest bearing liabilities

	31December 2021 $'000	31 December 2020 $'000
Interestbearingliabilities(current) Bankoverdraft (Note 4) Insurancepremium fundingBank borrowings	42,370 109 50,247	33,365 483 28,710
TotalInterestbearingliabilities(current)	92,726	62,558
Interest bearing liabilities (non current) Bank borrowings	223,979	273,613
TotalInterestbearingliabilities(noncurrent)	223,979	273,613

7  Contributed Equity

	31December2021	31December2020
	$'000	$'000
Ordinaryshare capital:
1,103,931,520ordinaryfullypaidshares(2020:1,103,892,706)	777,021	777,021
Movementsincontributedequity,netofissuingcosts:
Balanceatthe beginningof theyear	777,021	639,859
Placementofsharestoinstitutionalinvestors	-	137,428
Shareissuecosts	-	(266)
Balanceattheendoftheyear	777,021	777,021

8  Inventories

	31December 2021	31December2020
	$'000	$'000
Current
Orestockpiles
-Atcost	47,054	71,082
-Atnetrealisablevalue	6,381	4,237
Totalcurrentorestockpiles	53,435	75,319
Goldincircuit -atcost	22,353	23,038
Goldincircuit-atnetrealisablevalue	1,503	2,745
Goldbullion onhand -at cost	15,697	9,887
Goldbulliononhand-atnetrealisable value	1,722	-
Consumablesatcost	61,879	47,940
Totalinventory(current)	156,589	158,929
Non Current
Orestockpiles-atcost	1,935	2,803
Orestockpiles-atnetrealisablevalue	6,559	26,695
Goldincircuit-atnetrealisablevalue	45,424	38,425
Totalinventory(noncurrent)	53,918	67,923

9  Other financial assets

	31December 2021 $'000	31 December 2020 $'000
Financial assets at fair value through other comprehensive income (current)
Shares at fair value- listed	20,828	36,004
Other financial assets - restricted cash (current)
Environmental bond - restricted cash (face value approximates fair value)	518	-
Restricted cash1	8,925	-
Total other financial assets - restricted cash (current)	9,443	-

1) this balance relates to an overpayment received on a gold sale at 31 December 2021. The amount was returned immediately post year end.

10  Asset sale receivable

This balance represents the outstanding amounts receivable from the sale of the Bibiani gold mine amounting to $56.5m. This balance was initially recognised at fair value less transaction costs and subsequently at amortised cost. The balance of the consideration is receivable in two equal instalments of $30.0m on or before six and twelve months following completion.

11  Provisions

	31December 2021	31December2020
	$'000	$'000
Current
Site restoration	347	352
Employee entitlements	2,511	4,922
Dividend payable	150	104
Withholding taxes	-	237
Provision for indirect taxes	50,381	68,533
Provision for direct taxes	7,137	-
Other provisions	2,327	1,572
Totalprovisions(current)	62,854	75,720
Non Current
Site restoration	73,620	71,335
Employeeentitlements	1,252	528
Totalprovisions(non current)	74,872	75,863

Resolute's subsidiaries SOMISY and PMC, have received demands for payment to the Local Tax Authorities in relation to Income Tax and Value Added Tax (VAT) for the tax years ended 31 December 2015 to 2020.

At 31 December 2021 the company has recognised an additional $30.9m of indirect tax provisions in Mali in line with the correspondences received during the financial year along with the requirements of the accounting standards. As noted above, the Group has recorded approximately $56.6m of demands offsets against carried forward VAT receivables. Resolute continues to challenge the factual basis and validity of these demands which are strongly disputed due to fundamental misinterpretations of the application of certain taxes. Resolute continues to work with its legal and tax advisors to contest the positions taken by the Authorities.

Due to the reduction in the Mako tax exoneration period to 5 years, Resolute has recognised tax provisions comprising $10.1m relating to the VAT receivable (refer Note 5) and $8.2m in tax provisions for income tax and duties.  These amounts are recognised as provisions, however Resolute is firmly of the view that it has complied with all the requirements for the extension of the tax exoneration and will continue to work with the Senegalese authorities to resolve this matter. 

12  Investments in associates

31 December 2021  31 December 2020  31 December 2021  31 December 2020

Continuing Operations    Turaco Gold Ltd

  (formally Manas Resources Ltd)  Loncor Gold Inc

Shares held in associates (No.of shares)	68,248,471	682,484,709	31,450,000	29,650,000
Percentageofownership(%)	16.01%(a)	24.73%	23.61%	26.42%
	$'000	$'000	$'000	$'000
Carrying Value	-	1,038	1,180	3,097

(a)  Resolute holds a position on the board of directors and has significant influence over Turaco Gold Ltd.

13  Subsequent events

On 31 January 2022, the Group completed the sale of its shares in Orca Gold Inc (Orca) to Perseus Mining Limited for total consideration of $13.7 million.

On 17 February 2022, the Group announced that the Tabakoroni Measured and Indicated Mineral Resource estimate increased to 9.2 million tonnes at 4.4g/t for 1.3 million ounces of gold a 40% increase over previous estimate.

On 22 February 2022, the Group received $30 million for the sale of the Bibiani Gold Mine, the final $30 million is receivable in August 2022.

14  Impairment testing

Impairment indicator assessment

At 30 June 2021, Resolute's quoted market capitalisation was lower than its net asset carrying value. Further, Resolute noted that there was a reduction in gold prices and increase in risk free rate that underpins the applicable discount rate. These factors were considered as indicators of impairment. As a result, an impairment test was performed to determine the recoverable amounts for all CGU's of the Group, being the Syama Gold Mine and the Mako Gold Mine using the fair value less cost to sell (FVLCD) method.

At 31 December 2021, indictors of impairment were again identified for the Group as Resolute's quoted market capitalisation was lower than its net asset carrying value at 31 December. As a result, an impairment test was performed to determine the recoverable amounts for all CGU's, the results at 31 December 2021 are outline below.

Syama CGU - 30 June 2021

Syama indicator assessment

At 30 June 2021, in addition to the impairment indicators noted above, Resolute also revised its CY21 production and cost guideline for Syama. These factors collectively were considered to be indicators of impairment and as such a formal impairment test was performed to determine the recoverable amount for the Syama CGU.

Key Assumptions used to determine recoverable amount

The table below summarises the key assumptions used in the carrying value assessment:

	30June2021
Goldprice($/oz)	1,798-1,465
Discountrate(posttaxreal)	13%
Unminedresources($/oz)	$20-$54

Gold prices

Gold prices are estimated with reference to external market forecasts based on a consensus view of market experts.

Discount rate

In determining the recoverable amount of assets, the future cash flows were discounted using rates based on the CGU's estimated real weighted average cost of capital, with an additional premium applied having regard to the CGU's risk profile.

Unmined resources

Unmined resources which are not included in the life ‐ of ‐ mine plan as result of the current assessment of economic returns, timing of specific production alternatives and the prevailing economic environment have been valued and included in the assessed fair value.

Operating and capital costs

Life ‐ of ‐ mine operating and capital cost assumptions are based on the Group's latest budget and life ‐ of mine plans. Operating cost assumptions reflect an assumption of maintaining current cost, over the long term, without including expected improvements over the life of mine.

Recognition

An impairment loss of $167.373 million was allocated to the Syama CGU at 30 June 2021.

Syama indicator assessment

At 31 December 2021, in addition to the impairment indicators noted above, Resolute also revised its CY21 production and cost guideline for Syama. These factors collectively were considered to be indicators of impairment and as such a formal impairment test was performed to determine the recoverable amount for the Syama CGU.

Key Assumptions used to determine recoverable amount

The table below summarises the key assumptions used in the carrying value assessment:

	31 December2021
Goldprice($/oz)	1,777-1,467
Discountrate(posttaxreal)	14.5%
Unminedresources($/oz)	$20-$54

Recognition

As a result of the impairment test performed, no further impairment loss was recognised at 31 December 2021, above the $167.373 million at 30 June 2021.

Mako CGU - 31 December 2021

Mako indicator assessment

Whilst Mako's 2021 forecast production and cost remain in line with budget, as a result of the general indicators of impairment noted above and the reduction in the tax exoneration period to 5 years (refer to Note 5), a formal impairment test was performed to determine the recoverable amount for the Mako CGU.

Key Assumptions

The table below summarises the key assumptions used in the carrying value assessment:

	31 December 2021
Goldprice($/oz)	1,777-1,467
Discountrate(posttaxreal)	11%
Unminedresources($/oz)	$48

Gold prices

Gold prices are estimated with reference to external market forecasts based on a consensus view of market experts.

Discount rate

In determining the recoverable amount of assets, the future cash flows were discounted using rates based on the CGU's estimated  real discount rate, with an additional premium applied having regard to the CGU's risk profile.

Unmined resources

Unmined resources which are not included in a CGU's life ‐ of ‐ mine plan as result of the current assessment of economic returns, timing of specific production alternatives and the prevailing economic environment have been valued and included in the assessed  fair value.

Operating and capital costs

Life ‐ of ‐ mine operating and capital cost assumptions are based on the Group's latest budget and life ‐ of mine plans. Operating cost assumptions reflect an assumption of maintaining current cost, over the long term, without including expected improvements over the life of mine.

Recognition

The impairment loss of $55.024 million has been allocated to the Mako CGU at 31 December 2021.

A full PDF version of the announcement is available from the Company's website: link to announcement .

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 which forms part of UK law pursuant to the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via a Regulatory Information Service (RIS), this inside information is now considered to be in the public domain.

Authorised by Mr Stuart Gale, Chief Executive Officer

 

END

 

 

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