Resolute Mining Limited (ASX: RSG) reported results this morning for the six months ended 30th June 2019. Here are some of the key points.
About Resolute
Resolute has more than 30 years of experience as an explorer, developer and operator of gold mines in Australia and Africa and has produced more than 8 million ounces of gold.
Since listing on the London Stock Exchange two months ago, Resolute now reports its financial year ending 31st December, so these are the 1H19 results.
The Numbers
Resolute reported gold production of 176,237 ounces with total gold sales of 176,294 ounces at an average realised price of US$1,275 per ounce.
Total revenue was $324 million for the half-year, up 33% from $243 million in 1H18. Earnings before interest, tax, depreciation and amortisation (EBITDA) was up 171% to $78 million, while net profit after tax (NPAT) was flat at $39 million. NPAT was flat because there was $20.8 million in fair value movements and unrealised treasury transactions in 1H18 that seemed to skew the results.
Earnings per share grew by 7% to 4.71 cents per share, while net operating cash flow increased around 79% to $95 million.
The Syama Underground Mine achieved commercial production rates during the half and is expected to reach full production by the end of the year, while a study estimated that the Ravenswood Expansion Project has the potential to deliver 200,000 ounces annually.
Managing Director and CEO John Welborn said the Syama Underground Mine performance will increase the company’s cash flows further.
“The ramp up of the Syama Underground Mine to full production will further increase Resolute’s production base, margins, and cash flows,” he said.
“The acquisition of Toro Gold is a further boost to the profitability and cash generating capacity of our business.”
At the end of the half, Resolute’s cash, bullion and investment holdings totalled $56 million while its borrowings were $198 million.
FY19 Outlook
Resolute has upgraded its FY19 production guidance to 400,000 ounces at an all-in sustaining cost (AISC) of US$960 per ounce, up from previous guidance of 300,000 ounces at an AISC of US$960 per ounce.
My Take
This isn’t the type of business I would typically invest in, however, cash flows appear strong and production seems to be scaling well. Even so, I’d prefer to stick to one of the proven businesses in the free report below.
[ls_content_block id=”14945″ para=”paragraphs”]
Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
