ASX:RSG | www.rml.com.au
Transforming world class gold
assets into an outstanding business
Annual Report 2016
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Contents
Transformation
A Message from the Managing Director
Highlights
Operations
Resources & Reserves
Exploration
2
4
6
10
29
32
Corporate Responsibility
Environment
Community Relations
People and Culture
Health, Safety and Security
Financial Report
37
38
43
47
49
51
Corporate Directory
PE Huston
Directors
Chairman
Chief Executive Officer JP Welborn
Non-Executive Director MJ Botha
Non-Executive Director HTS Price
Non-Executive Director PR Sullivan
Secretary
GW Fitzgerald
Registered Office and Business
Address
4th Floor, The BGC Centre
28 The Esplanade
Perth, Western Australia 6000
Postal
PO Box 7232 Cloisters Square
Perth, Western Australia 6850
Telephone:
Facsimile:
E-mail:
+ 61 8 9261 6100
+ 61 8 9322 7597
contact@rml.com.au
ABN 39 097 088 689
Website
Resolute Mining Limited maintains a web
site where all major announcements to
the ASX are available: www.rml.com.au
Bankers
Citibank Limited
Level 23, Citigroup Centre
2 Park Street
Sydney, New South Wales 2000
Investec Bank Plc
Level 23, The Chifley Tower
2 Chifley Square
Sydney, New South Wales 2000
Shareholders wishing to receive
copies of Resolute Mining Limited ASX
announcements by e-mail should register
their interest by contacting the Company
at contact@rml.com.au
Share Registry
Security Transfer Australia Pty Ltd
770 Canning Highway
Applecross, Western Australia 6153
Telephone: + 61 8 9315 2333
Facsimile:
+ 61 8 9315 2233
registrar@securitytransfer.com.au
Home Exchange
Australian Securities Exchange Limited
Central Park, 152-158 St Georges Terrace
Perth, Western Australia 6000
Quoted on the official lists of the
Australian Securities Exchange:
ASX Ordinary Share Code: “RSG”
Securities on Issue (03/10/2016)
735,452,008
Ordinary Shares
500,400
Unlisted Options
12,630,139
Performance Rights
Auditor
Ernst & Young
Ernst & Young Building
11 Mounts Bay Road
Perth, Western Australia 6000
Resolute Mining Limited | Annual Report 2016
Resolute Mining Limited (Resolute or the Company) is an experienced
S&P/ASX 200 gold miner focused on sustainable development of its long
life operations. The Company applies the operational expertise gained
from more than 25 years of continuous gold production of 7 million ounces
from nine separate operations to the pursuit of enduring value for its
shareholders. Resolute is one of the largest gold producers listed on the
ASX, with FY17 guidance of 300,000 ounces of gold production at an
All-In Sustaining Cost (AISC) of A$1,280 per ounce (US$934 per ounce).
Resolute’s flagship Syama Gold Mine in Mali is a robust long life asset
with parallel sulphide and oxide processing plants. Processing of sulphide
open pit stocks will continue in FY17 while development of the large scale
underground mine progresses.
The transition to open pit mining has commenced at the Ravenswood Gold
Mine in Queensland and The Ravenswood Extension Project has extended
the mine-life to 2029. This coincides with the completion of mining at Mt
Wright in FY17 and the staged expansion of the Nolans processing plant.
In Ghana, the Company has completed a feasibility study on the Bibiani
Gold Project focused on the development of an underground operation
requiring modest capital and using existing plant infrastructure. A program
of infill and extensional drilling will be conducted in FY17 with the aim of
extending the potential mine-life and enhancing project economics.
Resolute controls an extensive exploration footprint along the highly
prospective Syama Shear and greenstone belts in Mali and Côte d’Ivoire
and is active in reviewing new opportunities to build shareholder value. An
increased budget of $19 million in FY17 will allow extensive drilling of key
targets at the Company’s main prospects.
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Resolute Mining Limited | Annual Report 2016 Resolute Mining Limited | Annual Report 2016
Transformation
Resolute has achieved a number of crucial milestones during FY16 as
part of our transformation to establish a long life, low cost future for the
business. This ongoing organisational transformation is driven by a new
commitment to deliver greater value for shareholders from our operating
experience and success.
Key drivers in Resolute’s transformation include:
Strengthening the balance
sheet – all senior and
secured debt repaid
Developing long
mine-life opportunities
at our existing projects
Reducing our All-In
Sustaining Cost
through innovation
Diversifying our
production base
New executive team
building enhanced
performance-based culture
Ambition to produce
>450,000 ounces per
annum from three
operations by 2020
Prioritising shareholder
returns
Applying our operational
expertise globally
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2
Resolute Mining Limited | Annual Report 2016 Resolute Performance
Resolute’s strong operating performance at our Syama
and Ravenswood Gold Mines, and the implementation
of a new discipline in cost management and capital
allocation, are driving a value transformation across our
business.
During the financial year ended 30 June 2016 (FY16) this
transformation has seen the Company reduce debt,
generate a record profit, complete three major project
studies, strengthen the Company’s balance sheet, and
revitalise and revalue our existing assets.
Resolute adopted a new organisational model during
FY16 with the restructure of its senior executive team
which commenced with the appointment of a new
Chief Executive Officer. Further changes implemented
during the period created a number of new roles
within six core business functions designed to drive
innovation, growth, improved communication, and
value for our shareholders. The senior executive team
has been broadened with the number of direct reports
to the Chief Executive Officer increasing from three
to six with the division of responsibilities and core
functions as follows:
•
•
•
•
•
•
operations
finance
exploration
project delivery
corporate strategy
people, culture and information.
Resolute started the financial year with total
borrowings of A$118 million with a net debt of A$64
million and ended the year with cash and bullion
of A$102 million and net cash of A$75 million. The
Company settled a US$20 million Gold Prepay Facility,
Resolute Mining Limited | Annual Report 2016
fully repaid a US$50 million Senior Secured Cash
Advance Facility, and also converted and redeemed
A$15 million of outstanding Convertible Notes. This
impressive turnaround in balance sheet strength allows
Resolute to develop key organic growth projects with
funding confidence.
A record net profit after tax of A$213 million resulted
in diluted earnings per share of 27.6 cents. This
exceptional performance has allowed the Board to
establish a gold sales-linked dividend policy which
resulted in a final dividend payment for FY16 of 1.7 cents
per share. The policy outlines that Resolute will seek to
pay a dividend to shareholders of 2% of the gold sales
revenue from the Company’s operations. The policy
also features the innovative option for shareholders
to receive dividends in gold. The payment of a regular
dividend linked to the Company’s gold sales revenue is
driven by a new commitment to deliver greater value
for shareholders from our operating experience and
success.
Feasibility studies have been completed at all three
of Resolute’s gold assets. The Board have committed
to the development of a new underground mine at
Syama and the recommencement of open pit mining at
Ravenswood which will secure our production and cash
flow generating base for more than a decade. Work will
continue at Bibiani as we move towards bringing the
asset back into production.
FY17 will be an exciting step forward in Resolute’s
future as we develop the flagship Syama underground
mine, the long-life Ravenswood Extension Project,
and continue to work towards a production future
for Bibiani. A period of transition and transformation
will continue as we focus on maintaining Resolute
performance.
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Resolute Mining Limited | Annual Report 2016 TRANSFORMING WORLD CLASS GOLD ASSETS INTO AN OUTSTANDING BUSINESS
A Message from the
Managing Director
Resolute is building a remarkable gold
mining company. The foundations
of our future success are built on 25
years of hard work and consist of the
operational expertise gained from
7 million ounces of gold production
from nine separate operations. This
exceptional history continues in
our two long life production assets
in Mali and Australia, our exciting
development project in Ghana, and
our strong commitment to deliver
enduring value to shareholders.
Dear Fellow Shareholders,
I am proud to present the results of the last twelve
months of hard work at Resolute. One year ago in this
report I discussed the opportunity Resolute had to
transform itself, and the identified potential to generate
exceptional returns for shareholders. The plan was to
achieve this through the disciplined development of our
existing gold assets combined with a strong focus on cost
reduction and a commitment to prioritise strengthening
the Company’s balance sheet. Implementation of this
plan, assisted by the strength in the US$ gold price, has
seen an increase in share price over the course of the year
from A$0.30 on 1 July 2015 to a closing price of A$1.28
on 30 June 2016. The transformation of Resolute is an
ongoing process and we have much yet to achieve.
During the financial year, our mines at Syama in Mali and
at Ravenswood in Queensland produced over 315,000
ounces of gold. Revenue from gold and silver sales was
up 21% to A$555 million. Resolute achieved a record
net profit of A$213 million. Gross profit from operations
increased from A$71 million to A$167 million and a return
on equity of 129% was achieved.
Decisions to reduce capital spending and implement cost
savings allowed us to use the cash generated from our
operations to dramatically strengthen our balance sheet.
Debt was reduced by A$91 million as we settled a
US$20 million Gold Prepay Loan Facility, fully repaid a
US$50 million Senior Secured Cash Advance Facility, and
redeemed A$15 million of Convertible Notes. Resolute
not only eliminated these debt facilities, but also ended
the financial year with cash and bullion of A$102 million.
This remarkable turnaround in balance sheet strength
was built on operational performance, a higher US$ gold
price, and budget discipline across our business. Of the
A$97 million of discretionary capital identified in our
budget guidance for FY16 we only spent approximately
A$30 million.
Resolute’s strong balance sheet has been further
boosted by the recently completed A$150 million capital
raising. We can now commit to exciting organic growth
projects at Syama and Ravenswood, and continue our
development work at Bibiani with confidence these
programs are fully funded.
We have embarked on a continuous improvement
program designed to fundamentally raise performance
across the Company. This program is both operational
and cultural. Further enhancements and achievements
are expected as we focus on the actions and strategies
required to transform our gold assets into an outstanding
business that can consistently provide exceptional
rewards to our shareholders.
4
Resolute Mining Limited | Annual Report 2016 A new organisational model has been implemented and a
restructure of our senior executive team completed. The
changes created a number of new roles within six core
business functions designed to drive innovation, growth,
improved communication and value for our shareholders.
Resolute’s flagship project is the Syama Gold Mine in Mali.
Effectively two mines in one, Syama comprises a sulphide
circuit and a parallel oxide circuit, which importantly
creates flexibility in gold production. During the course of
the financial year stockpiled open pit ore was processed
through the sulphide plant, while the parallel oxide circuit
successfully completed its first full year of operation.
Most importantly we completed a Definitive Feasibility
Study into the development of the Syama underground
mine, which confirmed a low cost 12 year mine-life which
will increase total annual site production to 250,000
ounces of gold. Resolute intends to create a mine that
employs the most advanced extraction and haulage
technologies available to ensure a safe, productive and
global best practice mine. Development of the Syama
underground mine has commenced with excavation of
the decline underway.
In Queensland at the Ravenswood Gold Mine, we have
worked hard to secure a long term production future
beyond the Mt Wright underground mine. Mt Wright
has been a hugely successful project for Resolute.
The underground mine will close during FY17 and the
commencement of mining at Nolans East represents the
start of the transition back to large scale open pit mining.
The Ravenswood Extension Project has provided a staged
plan for the expansion of the Nolans Process plant back
to its former capacity of 5 million tonnes per annum
and secures a 13 year operating life for these assets. Our
plans will see total annual production from Ravenswood
increase to more than 130,000 ounces of gold. This is a
wonderful outcome with further enhancements being
explored to add additional value.
In Ghana, Resolute completed a highly encouraging
feasibility study for the Bibiani Gold Project. An initial
Ore Reserve was established of 5.4 million tonnes at 3.7
grams per tonne containing 640,000 ounces of gold.
We were delighted with the results of the study which
demonstrated a viable development path for Bibiani,
competitive costs, and excellent upside potential. Bibiani
offers the Company an increasingly attractive growth
opportunity. Further exploration which aims to upgrade
resources and extend the potential mine-life are planned
for the coming financial year. Resolute’s development
experience and operational history in Africa provide a
solid foundation for future production success at Bibiani.
Resolute recognises that to operate its mines in
Africa and Australia it requires the permission and
goodwill of local communities. Ensuring the health,
safety and security of our employees, avoiding harm
to the environment and leaving a positive legacy in
the communities in which we work is essential to the
ongoing success of our business. The Company places a
Resolute Mining Limited | Annual Report 2016
high priority on being regarded as a partner of choice for
governments and communities and seeks to achieve this
by building relationships through well-targeted safety,
environmental and sustainable social programs.
During the year Resolute recognised the remarkable
achievement of two years at Syama without a Lost Time
Injury. Given the complexity of our operations at Syama,
the diversity of our workforce, and the remote nature of
our operations, this is an exceptional accomplishment. I
congratulate all our workers at Syama, and our workers
across the Company, for our positive safety record. I also
confirm the ongoing need for vigilance on safety and
security as a priority.
With the completion of three feasibility studies in the
past year, at Syama, Ravenswood and Bibiani, the
Company now has a clear pathway for development and
growth at each of its key assets. The financial year ahead
will see us continue to advance opportunities to lower
costs, build production and increase the resilience of our
business. Resolute’s 25 years of operating experience
in Australia and Africa has allowed us to build an
experienced and highly skilled management, technical,
operational and support team. This accumulated
expertise will be applied to strengthening our focus on
wealth creation for shareholders.
I believe an important element of shareholder reward
from company success is the payment of a regular,
sustainable, and hopefully growing, dividend. Resolute
has adopted an innovative new dividend policy whereby
the Company will seek to pay shareholders an annual
dividend of 2% of our gold sales revenue. Shareholders
have the option to receive dividends from Resolute in
cash or in gold through our partnership with The Perth
Mint. Following the Board’s endorsement of the new
dividend policy, and based on this year’s revenue of
A$555 million, a final dividend was declared of 1.7 cents
per share.
Resolute has raised its performance expectations and
has implemented a strategy of transformational growth.
While the results of this journey are intended to be
positive, many of the changes required are difficult and
require a unified commitment. Credit for the success
enjoyed during the FY16 belongs to many, but particular
appreciation goes to my colleagues in our Senior
Executive Team and our site based General Managers. I
take this opportunity to thank the Board, shareholders,
and the wider Resolute team, for their support. I look
forward to sharing success with you in the financial year
ahead.
John Welborn
Managing Director and Chief Executive Officer
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Resolute Mining Limited | Annual Report 2016 Resolute Mining Limited | Annual Report 2016
HIGHLIGHTS
Financial
Cash and bullion
$102M
Net profit after tax
$213M
Average cash price of gold sold (A$)
Revenue from gold and silver sales
↑20%
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6
Resolute Mining Limited | Annual Report 2016 Resolute Mining Limited | Annual Report 2016
Record gross profit from operations
↑135% to $167M
Return on equity
129%
Diluted earnings
per share
27.6c
Debt reduced
↓$91M
• No secured debt as at 30 June 2016
• US$20 million Gold Prepay Loan Facility
settled in full with final gold instalment
delivery in October 2015
• US$50 million Senior Secured Cash Advance
Facility fully repaid in June 2016
• A$15 million of Convertible Notes converted
and redeemed in June 2016
Net operating cash inflows
Net investing cash outflows
Net financing outflows
$193M $43M $79M
M
7
7
Resolute Mining Limited | Annual Report 2016 Resolute Mining Limited | Annual Report 2016
HIGHLIGHTS
Operations
Yielded in excess of
315,000oz
of gold
All-In Sustaining Cost
A$1,200/oz
(US$874/oz)
Successful completion of primary crusher change-out and major
roaster shutdown at Syama Gold Mine in Mali
Maintained steady production from Ravenswood Gold Mine in
Queensland, Australia as the Mt Wright underground operation
approached end of mine-life
8
8
Resolute Mining Limited | Annual Report 2016 Resolute Mining Limited | Annual Report 2016
HIGHLIGHTS
Corporate
Successful divestment of remaining interests in Tanzania
completed, following closure, decommissioning and rehabilitation
of Golden Pride mine
Senior executive team broadened with the number of direct
reports to the Chief Executive Officer increasing from three to six
Gold sales-linked dividend policy established,
featuring innovative option for shareholders to
receive dividends in gold
9
9
Resolute Mining Limited | Annual Report 2016 Resolute Mining Limited | Annual Report 2016
Operations
FY2016 guidance outperformed for
both production and cost per ounce
Three key feasibility studies were
completed at Syama, Ravenswood
and Bibiani
Resolute’s established operations produced a total of 315,169
ounces at an All-In Sustaining Cost of A$1,200 per ounce
(US$874 per ounce).
In the coming financial year, Resolute’s mines at Syama in
Mali and Ravenswood in Queensland are together forecast to
produce a minimum of 300,000 ounces of gold at an All-In
Sustaining Cost of A$1,280 per ounce (US$934 per ounce).
Syama
Gold Mine
Mali
Ghana
Bibiani
Gold Project
Ravenswood
Gold Mine
Australia
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10
Resolute Mining Limited | Annual Report 2016 Resolute Mining Limited | Annual Report 2016
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Resolute Mining Limited | Annual Report 2016 Resolute Mining Limited | Annual Report 2016
OPERATIONS
Syama
Resolute is developing
the Syama underground
operation to be a long-life
flagship gold mine with
robust economics and
enormous optionality
The Syama Gold Mine (Syama) is located in the
south of Mali, West Africa approximately 30
kilometres (km) from the Côte d’Ivoire border
and 300km south east of the capital Bamako.
Resolute has an 80% interest in the project
through its equity in Sociêtê des Mines de
Syama S.A. (SOMISY). The Malian Government
holds a 20% interest in SOMISY.
Syama benefits from two fully operational
processing plants: a 2.1 million tonnes per
annum (Mtpa) sulphide processing circuit and
a 1.3Mtpa oxide processing circuit.
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Resolute Mining Limited | Annual Report 2016 Going underground at Syama
developing a robust, long life flagship gold mine
Resolute Mining Limited | Annual Report 2016
Life of Underground Mine
All-In Sustaining Cost
US$881/oz
Initial
12 YEAR
operating life
Pre-production capital of
US$95M
fully funded
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Resolute Mining Limited | Annual Report 2016 Mining at the main Syama open pit was completed in May 2015 with ore for the sulphide circuit being sourced
from the previously stockpiled sulphide ore which will provide ore feed until production from underground mining
commences. Ore for the oxide circuit is sourced from current mining activity at the A21 satellite ore body.
Due to the refractory nature of the sulphide ore, it is treated using conventional three-stage crushing, ball
milling, sulphide flotation and dewatering, roasting, calcine leaching and elution. The oxide processing circuit is a
conventional crushing, SAG milling, and leaching circuit.
A Definitive Feasibility Study (DFS) completed in June 2016 confirmed a new underground operation will extend
mine-life at Syama beyond 2028 and underground development commenced in September 2016.
Two mines in one
Operations Review
Sulphide
During FY16 the sulphide processing plant treated 1.50
million tonnes (Mt) (2015: 1.95Mt) of ore at an overall
head grade of 3.53 grams per tonne (g/t) Au (2015:
3.77g/t Au) to produce 129,585 ounces (oz) (2015:
178,995oz) of gold at a cash cost of A$710/oz (2015:
A$830/oz). The lower throughput was due to a planned
change out of the primary crusher with associated
changes to the crushing circuit resulting in a more
reliable and cost efficient crushing operation.
Gold production in the sulphide processing plant was
lower than the previous year primarily as a result of
the major modifications to the crushing circuit to lift
capacity. A 40 day planned major roaster shutdown
was also successfully completed during October
and November 2015. Repairs to the refractory and
modifications to the roaster air supply were completed,
allowing an increase in throughput rate to be achieved.
Both shutdowns will be pivotal in the success of lifting
production rates in FY17. The mill availability was down
on the prior year to 75.3% (2015: 89.4%) due to the
planned crusher and roaster shutdowns. The overall
plant recovery was higher than the previous year at
76.3% (2015 75.8%). The use of a new flotation promoter
and improved grind size through more efficient
cyclone classification being the key drivers.
Roaster reliability and operational performance have
significantly improved following the major shutdown.
Feed rates have reached 26 tonnes per hour (tph)
14
(name plate design rate 24tph) which will allow
the reduction of gold in circuit held in concentrate
inventory during FY17.
There has been no mining operations at the main
Syama open pit since completion in May 2015. As
such, all ore supply for the sulphide processing plant
for the period was sourced from existing sulphide ore
stockpiles.
During the June 2016 quarter the Resolute Board
approved the immediate development of the
Syama underground mine and initial development
commenced in mid-September 2016.
The planned transition of Syama to an underground
mining operation has provided an opportunity to
fundamentally review all aspects of the Syama
operation. This work has been ongoing since January
2016 and all key areas of the operation have begun
realising value from implementation of ideas generated
to date. Dedicated continuous improvement personnel
have been appointed to continue to assist operational
teams to drive performance and cost objectives.
Sulphide and oxide ore stockpiles at year-end were
approximately 7.3Mt at a grade of 1.6g/t. These ore
stockpiles together with mining of sulphide ore from
the satellite pits will be the primary ore source for the
sulphide processing plant over the next two years
whilst the development of the Syama underground is
undertaken.
Resolute Mining Limited | Annual Report 2016 Operating Performance at a glance - Sulphide
Syama – Sulphide Ore Reserves as at 30 June 2016
Units
2015/16
2014/15
Category
Tonnes
Grade
Ounces
Ore Mined
Ore Milled
Head Grade
Recovery Rate
Gold Produced
Cash Cost
Cash Cost
Mt
Mt
g/t Au
%
oz
A$/oz
US$/oz
All-In Sustaining Cost
A$/oz
All-In Sustaining Cost
US$/oz
0.41
1.50
3.53
76.3
3.21
1.95
3.77
75.8
129,585
178,995
710
517
917
669
830
694
992
830
Proved
(stockpiled)
Probable
(insitu)
Underground
Probable
(stockpiled)
413,000
2.9
38,000
23,863,000
2.8 2,173,000
4,150,000
1.5
206,000
Total
28,426,000
2.6 2,417,000
Oxide
The oxide processing circuit treated 1.26Mt (2015:
0.58Mt) at an overall head grade of 2.30g/t Au (2015:
2.72g/t Au) to produce 80,032oz (2015: 45,916oz) at
a cash cost of A$1026/oz (A$675/oz). Modifications
were carried out during the year to the cyclone feed
distributor and mill water pumping and piping system
as part of an improvement process to increase the
milling rate to 1.5Mtpa during FY17.
The oxide mill availability was higher than the previous
year at 90.4% (2015: 89.2%), with fewer unplanned
events occurring with improved preventative
maintenance regimes. The leaching recovery was
86.2% (2015: 90.6%) which was lower than the previous
year with treatment of transitional material affecting
recovery.
During the financial year, mining at the A21_10 North
satellite pit located approximately 6.5km to the north
of the Syama operations was the main source of ore
supply to the oxide processing plant. This pit was
completed during May 2016 at which time the adjacent
A21_10S pit was commenced ensuring continuity of ore
delivery to the plant.
Total waste material mined from the A21 pits for the
financial year was 4.53M bank cubic metres (BCM) of
material (2015: 3.48M BCM). At the end of the financial
year, the A21_10 North pit had reached the final level of
265 metres relative level (mRL) and the A21_10S pit had
reached the 340mRL level. During this period 0.75M
BCM of ore was mined at a grade of 2.23g/t Au (2015:
0.48M BCM @ 2.53g/t Au).
African Mining Services continued to undertake
all contract mining of the satellite pits. Prior to
March 2016, all ore mined from the satellite pits was
stockpiled near A21 before undertaking rehandle
and hauling operations to the Syama oxide ROM pad
stockpiles. To reduce ore handling costs through
elimination of secondary loading operations, all ROM
ore is now transported directly from the mining
location to the Syama plant for processing.
Operating Performance at a glance - Oxide
Syama – Oxide Ore Reserves as at 30 June 2016
Units
2015/16
2014/15
Category
Tonnes
Grade
Ounces
Ore Mined
Ore Milled
Head Grade
Recovery Rate
Gold Produced
Cash Cost
Cash Cost
Mt
Mt
g/t Au
%
oz
A$/oz
US$/oz
All-In Sustaining Cost
A$/oz
All-In Sustaining Cost
US$/oz
1.13
1.26
2.30
86.2
0.87
0.58
2.72
90.6
80,032
45,916
1,026
747
1,561
1,137
675
565
1,363
1,141
Proved
(stockpiled)
Probable
(insitu)
Probable
(stockpiled)
Proved (insitu)
2,790,000
263,000
2.7
1.8
240,000
15,000
4,678,000
2.5
372,000
846,000
1.8
49,000
Total
8,577,000
2.5
676,000
15
Resolute Mining Limited | Annual Report 2016 Development
The sulphide crushing circuit upgrade was successfully
completed in October 2015 with replacement of the
primary jaw crusher, upgrading the product screen
and other circuit modifications. The upgrade has been
successful in allowing a higher throughput rate through
the crushing plant.
Laboratory and pilot plant testwork programs were
conducted at Outotec Oyj’s roasting test facility on
improvements in the materials handling and roasting
performance. The initial pilot plant testwork results
were sufficiently encouraging to justify ongoing
development of the program.
The electrical distribution network at Syama was
upgraded during the year to distribute power around
the site at 11kV. The engineering design for the
connection of Syama to the West African power grid
was finalised and contracts developed. The execution
of the power project has been deferred pending
finalisation of tariff negotiations with government.
SYAMA UNDERGROUND PROJECT
In June 2016, Resolute completed a positive DFS for an
underground mine (Syama UG) at Syama in Mali. The
DFS confirmed Syama UG as a long life, low cost mine,
which will continue to deliver strong operating margins
for the Company for more than a decade.
The highlights of the DFS included:
•
•
•
a Life of Mine All-In Sustaining Cost of US$881/oz
and strong Life of Mine margins
initial operating life of more than 12 years
total Syama production will grow to 250,000oz
(koz) per annum
•
•
•
pre-production capital of US$95 million (M) which
will be fully funded from current balance sheet and
future operating cash flows
processing innovation will continue to enhance
project economics
underground development has commenced and
first ore is expected to be delivered to the mill
in December 2016 which allows for continuous
production from Syama to be maintained
• Resolute’s successful Mt Wright underground
experience to deliver efficiency and productivity
gains at Syama underground mine
•
substantial upside with opportunities to extend
mine-life, increase mining recovery and further
reduce the All-In Sustaining Cost.
Excavation of the decline commenced in the
September 2016 quarter, following mobilisation
of a mining contractor to site in July 2016. First
development ore is expected to be delivered in
December 2016, with stoping commencing in
December 2017. This timing will allow continuous
production to be maintained from Syama from the
current stockpiled sulphide material and ongoing
satellite open pit deposits.
Once in full production Syama UG will be a consistent,
large scale underground operation. Resolute intends
to create a mine that employs the most advanced
extraction and haulage technologies available to
ensure a safe, productive and global best practice
mine. This approach was adopted by the Company in
its development of the Mt Wright underground mine
at Ravenswood where a unique mining solution was
devised to ensure highly profitable extraction of a far
smaller deposit.
16
Resolute Mining Limited | Annual Report 2016 Key outcomes from the DFS are summarised below:
Underground development
Units
Decline development
Vertical development
Level development
Total development
Ore production
Development ore
Stoping ore
Total ore
Metal grade (ROM)
Metal contained (ROM)
Metal recovery
Processing recovery
Metal (recovered)
Operating unit cost (including pre-production)
Mining
Processing
G&A
Royalty, refining costs & silver credits
Ore
Mine-life (incl. pre-production)
Costs
Pre-production capital
Pre-production operating
Sustaining capital
Operating cost (including royalties)
All-In Sustaining Cost
Outlook
Commencement of the in-pit portal and decline
development took place during September 2016.
Scheduling is also underway to commence the
development of the surface box-cut during the
December 2016 quarter.
Oxide ore mining will continue at the northern
satellite pits with scheduled completion of the A21
pits (A21_10 South, A21_20, and A21_20 East) and the
commencement of BA01 pit. Strip ratios will fluctuate
during the year as A21_10 South reaches the lower
elevations and BA01 commences with higher waste
stripping from the surface.
Throughput for the sulphide mill will increase in
the coming year as a result of the crushing circuit
modifications in late 2015 having increased crushed
stocks available to the mill. This will facilitate further
optimisation of the grinding and flotation circuits.
m
m
m
m
kt
kt
kt
g/t
koz
%
koz
US$/t
US$/t
US$/t
US$/t
years
US$M
US$M
US$M
US$M
US$/oz
Value
8,594
3,554
62,717
74,865
4,195
20,954
25,150
2.81
2,271
89.4%
2,030
25.2
25.0
4.9
5.8
13.0
95
13
270
1,519
881
Throughput for the oxide processing plant will maintain
1.3Mtpa rates initially, building up through circuit
optimisation to 1.5Mtpa rates over FY17.
Gold production will be a minimum of 200koz in FY17.
Processing of Syama sulphide open pit ore stockpiles
will continue and be supplemented by sulphide
material from satellite open pits. Mill throughput is
expected to increase as a result of the improvements
made to the processing facilities in FY16. The higher
grade satellite sulphide open pit feed will partially
offset falling stockpile grades. Oxide production will be
at similar levels to FY16.
Gold sales will again exceed gold produced, as gold in
circuit at Syama, which is largely comprised of sulphide
concentrate stocks, is progressively reduced. These
concentrate stocks are able to be reduced because the
Syama roaster is now operating at around 20% above
design capacity.
17
Resolute Mining Limited | Annual Report 2016 Resolute Mining Limited | Annual Report 2016
OPERATIONS
Ravenswood
The Ravenswood
Extension Project extends
mine-life to 2029 with
a further 13 years of
operations at an average
annual gold production
of 120,000oz and a Life
of Mine All-In Sustaining
Cost of A$1,166/oz.
The Ravenswood Gold Mine (Ravenswood)
is located approximately 95km south west of
Townsville and 65km east of Charters Towers in
north-east Queensland, Australia. Resolute has a
100% interest in the mine through its subsidiary
Carpentaria Gold Pty Ltd.
Ore for the Ravenswood Operations was
primarily sourced from the Mt Wright
underground mine plus a minor amount of
remnant low grade stocks from various sources.
The versatile Nolans process plant is currently
configured for processing 1.8Mtpa of ore using
two stage crushing, SAG and ball milling and
carbon-in-pulp processing with a gravity circuit
for recovery of free gold.
18
18
Resolute Mining Limited | Annual Report 2016 Ravenswood Extension Project
a long life low cost open pit operation
Resolute Mining Limited | Annual Report 2016
Life of Mine All-In Sustaining Cost
A$1,166/oz
13 YEAR mine-life
A$134M start up capital and 5.0Mtpa processing capacity
Sarsfield
1.2Moz Reserve &
2.6Moz Resource
Buck Reef West
0.5Moz Reserve &
1.3Moz Resource
Nolans East 71koz Reserve
19
19
Resolute Mining Limited | Annual Report 2016 Operations Review
During FY16 the Ravenswood operations produced
105,552oz (2015: 103,773oz) of gold at a cash cost of
$1,033/oz (2015: $940/oz). The increase in ounces
produced is the net result of lower production from
the Mt Wright underground operation offset by higher
throughput at the Nolans Process Plant enabled by
the crushing circuit upgrade completed in 2015. The
increased plant capacity allowed the processing of
additional tonnes from available remnant low grade
stocks.
Ore production from the Mt Wright underground mine
was 1.31Mt (2015: 1.48Mt) @ 2.38g/t Au (2015: 2.40g/t
Au). The lower production was due to a reduced
number of draw-points being available for production.
This was in line with expectations due to the narrowing
of the ore body near the bottom of the mine.
Underground development was completed during the
year, achieving 1,807 metres (m) (2015: 2,978m). Due to
improvements in the Australian dollar gold price and
design changes, the Mt Wright operation was extended
down to the 500 level. The addition of the 500 level
and the updated mining schedule extends the planned
life of Mt Wright underground to June 2017.
Mt Wright reserves at the end of June 2016 are 0.94Mt
@ 2.7g/t Au, compared to 2.15Mt @ 2.5g/t Au at June
2015.
The processing plant treated 1.70Mt (2015: 1.44Mt) at
an average head grade of 2.05g/t Au (2015: 2.37g/t
Au) including material sourced as supplementary mill
feed from low grade stockpiles of 0.33Mt @ 0.65g/t
Au (2015: 0.04Mt @ 1.17g/t Au). The increased mill
throughput was due to an upgrade of the crushing
circuit with the installation of a secondary crusher,
which allowed for the processing of available remnant
low grade ore stocks in addition to the primary ore
from Mt Wright. The decrease in head grade was
directly attributable to the addition of the lower grade
ore. Recovery decreased slightly to 94.3% (2015: 94.7%)
due to the addition of the low grade ore.
Operating Performance at a glance - Ore
Ravenswood - Ore Reserves as at 30 June 2016
Units
2015/16
2014/15
Category
Tonnes
Grade
Ounces
Ore Mined
Ore Milled
Head Grade
Recovery Rate
Gold Produced
Cash Cost
Cash Cost
Mt
Mt
g/t
%
o
A$/oz
US$/oz
All-In Sustaining Cost
A$/oz
All-In Sustaining Cost
US$/oz
1.31
1.70
2.05
94.3
1.48
1.44
2.37
94.7
105,552
103,773
1,033
752
1,225
892
940
787
1,180
988
Proved Mt Wright
682,000
2.7
60,000
(insitu)
Proved Sarsfield
28,450,000
0.8
747,000
(insitu)
Proved Nolans
1,818,000
0.8
46,000
East (insitu)
Probable Mt
Wright (insitu)
248,000
2.7
21,000
Probable Mt
8,000
3.0
1,000
Wright (stockpile)
Probable
18,640,000
0.7
423,000
Sarsfield (insitu)
Probable Nolans
846,000
0.9
25,000
East (insitu)
Total
50,692,000
0.8
1,323,000
20
Resolute Mining Limited | Annual Report 2016 Development
RAVENSWOOD EXTENSION PROJECT STUDY
The Ravenswood Extension Project (REP) was
established with the aim of maintaining continuity
of production at Ravenswood as the Mt Wright
underground mine prepares for closure in 2017.
Resolute has recently commenced a transition back to
open pit mining, with open pit operations at the Nolans
East deposit having commenced in August 2016. The
REP will see the eventual development of three open
pits at Nolans East, Sarsfield and Buck Reef West.
The REP Study identified the following development
sequence:
• Mt Wright underground operations continuing
until eventual closure in mid-2017
• mining underway, with first ore processed in
September 2016 from Nolans East
•
•
•
•
increase in processing capacity to 2.8Mtpa from
October 2016
approval for mining of Sarsfield open pit in
January 2017
approval for mining of Buck Reef West open pit in
mid-2018
expansion of mill capacity to 5.0Mtpa to
commence in FY18.
The REP Study envisages an expansion to 5.0Mtpa in
the year following approval of the Sarsfield open pit.
The Company has already commenced increasing
plant throughput to 2.8Mtpa which is expected to be
achieved from October 2016.
In September 2016, a feasibility study into the REP
was completed, which confirmed a long life, low risk,
low cost development plan with robust economics.
Under the REP, average annual production will increase
to approximately 120koz of gold. Mine-life will be
extended by 13 years with operations continuing until
at least 2029. The operation will generate a Life of Mine
All-In Sustaining Cost of A$1,166/oz (US$880/oz). Total
Ravenswood Ore Reserves increased to 1.8 million
ounces.
The staged development plan requires no immediate
additional capital expenditure during FY17. Start-up
capital comprises only A$134M for pre-stripping and
staged processing plant expansion to 5.0Mtpa. Life
of Mine major project capital comprises of A$258M
(including A$134M start-up) staged over six years
to 2022. Significant potential remains for economic
upside and further extensions.
21
21
Resolute Mining Limited | Annual Report 2016 Key study outputs are summarised below.
Production
Underground mining
Ore mined
Ore grade
Metal contained (ROM)
Open pit mining
Ore mined:
Run of mine
Low grade
Waste mine
Total movement
Units
kt
g/t
koz
kt
kt
kt
kt
Life of mine strip ratio
Waste:Ore
Ore grade:
Run of mine
Low grade
Metal contained (ROM)
Processing
Total ore processed*
Metal grade (ROM)
Metal contained (ROM)
Processing recovery
Metal (recovered)
Mine-life (incl. pre-production)
Cost Analysis
Costs
Mining
Processing
G&A
Royalty
Sustaining capital
Unit costs
All-In Sustaining Cost
g/t
g/t
koz
kt
g/t
koz
%
koz
years
A$M
566
861
207
126
30
A$M
1,790
LOM Output
931
2.72
81
35,419
35,269
96,705
167,392
1.3
0.97
0.50
1,663
58,557
0.91
1,712
90%
1,536
13.0
A$/t
9.7
14.7
3.5
2.2
0.5
A$/oz
1,166
*= Beneficiated low grade + Open pit ROM + UG ore
The REP will utilise a number of innovative approaches
to mine scheduling, tailings management, waste water
treatment and open pit blasting practices in order to
minimise initial capital costs and ensure best practice
environmental and community outcomes are achieved.
Mining and processing of Sarsfield ore will include
a beneficiation stage for low grade ore, nominally
0.3-0.7g/t, which will reject approximately 30-40% of
crushed ore, for the loss of around 4% of contained gold.
Resolute is working collaboratively with the Queensland
Government to achieve an amended Environmental
Authority (EA) for Sarsfield by late 2016. The amended
EA for the Sarsfield Expansion Project is the final
approval required to allow mining activities to
recommence in the Sarsfield Pit. Resolute will also
commence the formal approval process for the Buck
Reef West Project in late 2016. It is anticipated that this
will allow final approvals to be obtained by mid-2018.
The Company has worked closely with the Ravenswood
community in developing its plans for the REP. Projects
are being developed to preserve and rehabilitate a
number of heritage buildings and artefacts in the vicinity
of the proposed open pits. Resolute welcomes the
opportunity provided by the REP to further enhance its
legacy at Ravenswood and continue its role as a major
employer in the greater Charters Towers region of
Northern Queensland.
22
Resolute Mining Limited | Annual Report 2016 Resolute Mining Limited | Annual Report 2016
Outlook
Mt Wright ore production is expected to be lower due
to decreasing draw-point availability as the operation
approaches completion and will cease operation in FY17.
Continuous improvement efforts will focus on maintaining
operational efficiencies and controlling unit costs in the
mines final year of operation.
Open pit mining re-commenced during the first quarter of
FY17 at Nolans East.
The processing plant will treat Mt Wright, Nolans East
and low grade stockpiled ore. Mt Wright ore will be batch
treated separately from the other ore sources due to
different metallurgical requirements. A tertiary crusher
and other minor process plant upgrades will be installed in
the first half of FY17 to increase the nominal plant capacity
to 2.8Mtpa to match planned production rates. The plant
will continue to concentrate on continuous improvement
efforts to focus on plant recovery and reduction of unit
costs following the upgrade.
Gold production is expected to be similar in FY17 with
reduced production from Mt Wright underground
operations offset by the commencement of Nolans East
open pit production. Cash cost per ounce is expected to
increase due to higher unit cost from Mt Wright.
23
23
Resolute Mining Limited | Annual Report 2016 Resolute Mining Limited | Annual Report 2016
OPERATIONS
Bibiani
Resolute is seeking to
re-establish a successful
underground mine at
the Bibiani Gold Project
in Ghana.
In June 2016 a feasibility study was
completed which contemplates production
of up to 1.2Mtpa from Long Hole Open Stope
underground mining. Processing of the ore
will occur at the existing Bibiani processing
plant. The majority of the US$72M of upfront
capital is allocated to the refurbishment of
the plant.
24
24
Resolute Mining Limited | Annual Report 2016 Bibiani feasibility study confirms viable
pathway to production
Resolute Mining Limited | Annual Report 2016
9 month
timeline to production
Life of Mine
All-In Sustaining Cost
US$858/oz
Pre-production capital of
US$72M
Initial Ore Reserve of
containing
5.4Mt @ 3.7g/t
640,000oz of gold
25
25
Resolute Mining Limited | Annual Report 2016 Resolute Mining Limited | Annual Report 2016
An initial Ore Reserve of 5.4Mt at 3.7g/t containing
640koz was established. Gold production is expected
to be maintained at approximately 100koz per annum,
which will sustain a five year mine-life on the initial
Ore Reserve. All-In Sustaining Cost is expected to be
US$858/oz for Life of Mine production of 561koz of
gold.
Start-up capital of US$72M including US$29M of
underground mining equipment has been estimated.
Bibiani has a short timeline to production with only a
nine month development and refurbishment period.
Resolute believes that the location and characteristics
of Bibiani are well matched to the technical capabilities
of the Company. In addition, substantial upside
remains with ongoing work scheduled to focus on
upgrading and expanding the orebody to extend mine-
life and reduce operating costs.
A technical report on the reopening of Bibiani
was completed in June 2016 and the Company is
submitting applications to initiate additional drilling
and conduct environmental baseline studies.
26
26
Resolute Mining Limited | Annual Report 2016 Key outcomes of the study are summarised below.
Underground development
Ore development
Waste development
Vertical development
Total development
Ore production
Development ore
Stoping ore
Total ore
Metal grade (ROM)
Metal contained (ROM)
Metal recovery
Processing recovery
Metal (recovered)
Operating unit cost (including pre-production)
Mining
Processing
G&A
Royalty and refining costs
Ore
Mine-life (incl. pre-production)
Costs
Pre-production capital
Pre-production operating
Sustaining capital
Operating cost
All-In Sustaining Cost
Units
m
m
m
m
kt
kt
kt
g/t
koz
%
koz
US$/t
US$/t
US$/t
US$/t
years
US$M
US$M
US$M
US$M
US$/oz
Value
9,841
16,389
1,280
27,510
609
4,748
5,357
3.7
644.5
87%
560.7
34.3
21.3
11.2
8.0
6.25
71.5
10.7
89.6
391.7
$858
27
Resolute Mining Limited | Annual Report 2016 Group Production Summary
Ore Mined
Tonnes
Ore Milled
Tonnes
Head
Grade
g/t
Recovery
%
Mine
Production
oz
Cash Cost
$/oz
All-In
Sustaining
Cost $/oz
Syama Sulphide
413,038
1,497,103
3.53
76.3
129,585
Syama Oxide
1,132,468
1,257,948
2.30
86.2
80,032
Syama sub-total
1,545,506
2,755,051
2.97
79.8
209,617
Ravenswood
1,305,585
1,700,386
2.05
94.3
105,552
TOTAL
2,851,091
4,455,437
2.61
84.1
315,169
A$710
(US$517)
A$1,026
(US$747)
A$830
(US$605)
A$1,033
(US$752)
A$898
(US$654)
A$917
(US$669)
A$1,561
(US$1,137)
A$1,163
(US$848)
A$1,225
(US$892)
A$1,200
(US$874)
Group Project Summary
Country
Mali
Project
Syama
Finkolo
Pitiangoma JV
Other Tenure
Côte d’Ivoire
Taruga JV
Other tenure
Ghana
Bibiani
Other Tenure
Granted
Area km²
Application
Area km²
Commodity
Location
201
148
106
524
979
695
779
1,474
50
39
89
0
0
0
399
399
399
2,394
2,793
0
0
0
Gold
Gold
Gold
Gold
Gold
Gold
Gold
Africa
Africa
Africa
Africa
Africa
Africa
Africa
Sub Total Africa
2,542
3,192
Australia
Ravenswood
Sub Total Australia
Total Resolute Tenure
1,708
1,708
4,250
456
456
3,648
Gold
Queensland
28
Resolute Mining Limited | Annual Report 2016
Resources
RESOLUTE MINING LIMITED MINERAL RESOURCES (Inclusive of Ore Reserves)
MINERAL
RESOURCES 1
MEASURED
INDICATED
INFERRED
TOTAL
Group
share
kt
g/t
koz
kt
g/t
koz
kt
g/t
koz
kt
g/t
koz
koz
At June 2016
Ravenswood (Australia)
100%
Sarsfield (insitu) 2
46,453
0.8
1,186 57,664
0.7
892
22,192
0.7
521 126,309
0.6
2,599
2,599
Buck Reef West
17,857
1.0
598
11,582
0.9
323
12,360
0.9
356
41,799
1.0
1,277
1,277
Sub Total O/C
64,310
0.9
1,784 69,246
0.5
1,215
34,552
0.8
877 168,108
0.7
3,876
3,876
Mt Wright (insitu) 3
826
2.9
78
354
3.3
38
1,079
3.1
107
2,259
3.1
223
223
Welcome Breccia
Stockpiles
0
0
0.0
0.0
0
0
0
8
Sub Total UG
826
2.9
78
362
0.0
3.0
3.4
0
2,036
3.2
208
2,036
3.2
208
208
1
0
0.0
0
8
3.0
1
1
39
3,115
3.1
315
4,303
3.1
432
432
Ravenswood Total
65,136
0.9
1,862 69,608
0.6
1,254
37,667
1.0
1,192
172,411
0.8
4,308
4,308
Syama (Mali)
80%
Syama UG (insitu) 5
0
0.0
0 40,857
2.8
3,736
3,048
2.2
211 43,905
2.8
3,947
3,158
Sulphide
Stockpiles
Sub Total (Sulphides)
Syama Oxide
Satellites
Syama Satellite
Stockpiles
413
413
3,778
263
Sub Total Satellites
4,041
Mali (other)
2.9
2.9
2.1
1.8
2.1
38
4,150
1.5
206
0
0.0
0
4,563
1.7
244
195
38 45,007
2.7
3,942
3,048
211 48,468
2.7
4,191
3,353
2.2
2.2
257
6,222
15
1,353
2.1
1.4
420
3,072
219
13,072
59
0
0.0
0
1,616
272
7,575
2.0
479
3,072
2.2
219
14,688
2.1
1.4
2.1
896
717
74
59
970
776
85%
Tabakoroni
2,331
2.9
220
4,495
2.7
387
3,132
2.2
219
9,958
2.6
826
702
Syama Total
6,785
2.4
530 57,077
2.6
4,808
9,252
2.2
649
73,114
2.5
5,987
4,831
Bibiani (Ghana)
Bibiani (insitu) 4
Bibiani Total
0
0
0.0
0.0
0
0
11,180
3.3
1,184
4,485
11,180
3.3
1,184
4,485
4.1
4.1
591
15,665
3.5
1,775
1,598
591
15,665
3.5
1,775
1,598
90%
Total Resources
71,921
1.0
2,392 137,865
1.6
7,246
51,404
1.5
2,432 261,190
1.4
12,070 10,736
1. Mineral Resources are inclusive of Ore Reserves - differences may occur due to rounding.
2. All Resources and Reserves are reported above 1.0g/t cut-off except Nolans East and Buck Reef West above 0.5g/t cut off, and
Sarsfield above 0.4g/t cut off.
3. Mt Wright Reserves are reported above 2.3g/t cut off and Resources above 1.8g/t cut off.
4.
5.
Bibiani Reserves and Resources quoted above a 2.0g/t cut off.
Syama Underground Reserves quoted above a 1.9g/t cut off.
29
Resolute Mining Limited | Annual Report 2016
Reserves
RESERVES
At June 2016
RESOLUTE MINING LIMITED ORE RESERVES
PROVED
PROBABLE
TOTAL
Group
share
kt
g/t
koz
kt
g/t
koz
kt
g/t
koz
koz
Ravenswood (Australia)
Sarsfield (insitu) 2
Nolans East
Sub Total O/C
Mt Wright (insitu) 3
Stockpiles
Sub Total UG
28,450
1,818
30,268
682
0
682
Ravenswood Total
30,950
Syama (Mali)
Syama UG (insitu) 5
Sulphide Stockpiles
Sub Total (Sulphides)
0
413
413
Syama Oxide Satellites
1,455
Syama Satellite Stockpiles
263
Sub Total Satellites
1,718
Mali (other)
Tabakoroni
Syama Total
Bibiani (Ghana)
Bibiani (insitu) 4
Bibiani Total
Nyakafuru (Tanzania)
Nyakafuru (insitu) 2
Nyakafuru Total
1,335
3,466
0
0
0
0
Total Reserves
34,416
0.8
0.8
0.8
2.7
0.0
2.7
0.9
0.0
2.9
2.9
2.3
1.8
2.2
3.1
2.6
0.0
0.0
0.0
0.0
1.0
747
18,640
46
846
793
19,486
60
0
60
248
8
256
853
19,742
0
23,863
38
38
4,150
28,013
107
2,857
15
846
122
3,703
0.7
0.9
0.7
2.7
3.0
2.7
0.7
2.8
1.5
2.6
2.3
1.8
2.2
2,173
23,863
206
4,563
2,379
28,426
209
4,312
49
1,109
258
5,421
133
1,821
2.8
163
3,156
293
33,537
2.6
2,800
37,003
0
0
0
0
5,480
5,480
0
0
3.7
3.7
0.0
0.0
644
5,480
644
5,480
0
0
0
0
423
47,090
25
2,664
448
49,754
21
1
22
930
8
938
0.8
0.8
0.8
2.7
3.0
2.7
100%
1,170
1,170
71
71
1,241
1,241
81
1
82
81
1
82
470
50,692
0.8
1,323
1,323
80%
2,173
1,738
244
195
2,417
1,934
316
64
253
51
380
304
85%
296
252
3,093
2,489
90%
580
580
98%
0
0
644
644
0
0
2.8
1.7
2.6
2.3
1.8
2.2
2.9
2.6
3.7
3.7
0.0
0.0
1,146
58,759
2.1
3,914
93,175
1.7
5,060
4,392
1. Mineral Resources are inclusive of Ore Reserves - differences may occur due to rounding.
2. All Resources and Reserves are reported above 1.0g/t cut-off except Nyakafuru, Nolans East and Buck Reef West above 0.5g/t cut
off, and Sarsfield above 0.4g/t cut off.
3. Mt Wright Reserves are reported above 2.3g/t cut off and Resources above 1.8g/t cut off.
4.
5.
Bibiani Reserves and Resources quoted above a 2.0g/t cut off.
Syama Underground Reserves quoted above a 1.9g/t cut off
30
Resolute Mining Limited | Annual Report 2016
RESERVES
At June 2016
At June 2015
RESOLUTE MINING LIMITED ORE RESERVES
PROVED
PROBABLE
TOTAL
PROVED
PROBABLE
TOTAL
Group
share
kt
g/t
koz
kt
g/t
koz
kt
g/t
koz
koz
kt
g/t
koz
kt
g/t
koz
kt
g/t
koz
koz
Comment on Change
Sarsfield (insitu) 2
747
18,640
423
47,090
1,170
1,170
46
846
25
2,664
71
71
793
19,486
448
49,754
1,241
1,241
60
0
60
248
8
256
21
1
22
930
8
938
Ravenswood Total
30,950
853
19,742
470
50,692
0.8
1,323
1,323
28,450
0
28,450
1,644
0
1,644
30,094
0.8
0.0
0.8
2.7
0.0
2.7
0.9
747
18,640
0
0
747
18,640
144
0
144
411
91
502
891
19,142
0
23,863
2,173
23,863
2,173
1,738
0
0.0
0
25,500
Ravenswood (Australia)
Nolans East
Sub Total O/C
Mt Wright (insitu) 3
Stockpiles
Sub Total UG
Syama (Mali)
Syama UG (insitu) 5
Sulphide Stockpiles
Sub Total (Sulphides)
Mali (other)
Tabakoroni
Syama Total
Bibiani (Ghana)
Bibiani (insitu) 4
Bibiani Total
Nyakafuru (Tanzania)
Nyakafuru (insitu) 2
Nyakafuru Total
28,450
1,818
30,268
682
0
682
0
413
413
1,335
3,466
0
0
0
0
0.8
0.8
0.8
2.7
0.0
2.7
0.9
0.0
2.9
2.9
2.3
1.8
2.2
3.1
2.6
0.0
0.0
0.0
0.0
1.0
38
38
4,150
28,013
206
4,563
244
195
2,379
28,426
2,417
1,934
Syama Oxide Satellites
1,455
107
2,857
209
4,312
Syama Satellite Stockpiles
263
15
846
49
1,109
Sub Total Satellites
1,718
122
3,703
258
5,421
380
304
133
1,821
2.8
163
3,156
296
252
293
33,537
2.6
2,800
37,003
3,093
2,489
0
0
0
0
5,480
5,480
0
0
644
5,480
644
5,480
0
0
0
0
Group
share
100%
81
1
82
80%
253
51
85%
90%
580
580
98%
0
0
81
1
82
316
64
644
644
0
0
0.8
0.8
0.8
2.7
3.0
2.7
2.8
1.7
2.6
2.3
1.8
2.2
2.9
2.6
3.7
3.7
0.0
0.0
0.7
0.9
0.7
2.7
3.0
2.7
0.7
2.8
1.5
2.6
2.3
1.8
2.2
3.7
3.7
0.0
0.0
897
897
3,084
179
3,263
1,335
5,495
0
0
0
0
4.4
4.4
2.2
2.6
2.2
3.1
2.8
0.0
0.0
0.0
0.0
126
5,313
2,291
25,500
265
6,210
126
30,813
2.6
2,556
31,710
221
4,432
15
412
236
4,844
2.1
1.2
2.0
303
7,516
16
591
319
8,107
133
1,821
2.8
163
3,156
495
37,478
2.5
3,038
42,973
0
0
0
0
0
0
7,360
7,360
0.0
0.0
1.6
1.6
1.9
0
0
0
0
388
7,360
388
7,360
3,879
99,569
Total Reserves
34,416
1,146
58,759
2.1
3,914
93,175
1.7
5,060
4,392
35,589
1.2
1,386
63,980
0.7
0.0
0.7
1.8
2.4
1.9
0.7
2.8
1.6
100%
423
47,090
0
0
423
47,090
23
7
30
2,055
91
2,146
0.8
0.0
0.8
2.5
2.4
2.5
1,170
1,170
No change - JORC code 2004
0
0
Additional reserves from Updated
Feasibility Study
1,170
1,170
167
7
174
167
Depletion due to production
7 Movement in operating stockpiles
174
453
49,236
0.8
1,344
1,344
80%
2,291
1,833
Reserves adjusted from Updated
Underground Feasibility Study
391
313 Movement in operating stockpiles
2,682
2,146
524
31
419
Depletion due to production and
re-optimisation
25 Movement in operating stockpiles
555
444
85%
296
252
No change - JORC code 2004
3,533
2,841
90%
0
0
98%
380
380
0
0
388
388
Reserves upgrade from
Underground Pre-Feasibility Study
Divested Project
5,265
4,565
Depletion due to production
offset by Bibiani Upgrade
2.8
2.0
2.6
2.2
1.6
2.1
2.9
2.6
0.0
0.0
1.6
1.6
1.6
Competent Persons:
The information in this report that relates to the Exploration Results, Mineral Resources and Ore Reserves is based on information compiled by Mr Richard Bray who is
a Registered Professional Geologist with the Australian Institute of Geoscientists and Mr Andrew Goode, a member of The Australasian Institute of Mining and Metal-
lurgy. Mr Richard Bray and Mr Andrew Goode both have more than 5 years’ experience relevant to the styles of mineralisation and type of deposit under consideration
and to the activity which they are undertaking to qualify as a Competent Person, as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves”. Mr Richard Bray and Mr Andrew Goode are full time employees of Resolute Mining Limited Group and each hold equity
securities in the Company. They have consented to the inclusion of the matters in this report based on their information in the form and context in which it appears.
This information was prepared and disclosed under the JORC code 2012 except where otherwise noted. Particularly Reserves and Resources remain 2004 JORC com-
pliant and not updated to JORC code 2012 on the basis that information has not materially changed since it was last reported.
31
Resolute Mining Limited | Annual Report 2016 Exploration
Renewed focus to unlock value and
create opportunity
Resolute is committed to expanding its gold
resources and production base through exploration.
The main thrust of exploration activities has been on
our tenure close to our existing operations or strategic
joint ventures on ground that has been identified
through our regional studies. An increased budget of
$19 million in FY17 will allow extensive drilling of key
targets at the Company’s main prospects.
In Mali, deep diamond drilling at the Syama mine has
outlined significant extensions to the mineralisation
which are expected to extend the underground mine-
life at Syama and may provide opportunity for future
expansion of the underground project.
In Queensland, drilling and metallurgical testwork
continued at Buck Reef West to build the resource
growth for the Ravenswood extension program.
Resolute is exploring more than 4,200km2 of
prospective tenure across two continents
Mali
Resolute controls an 80km strike of the highly prospective Syama Shear and surrounding
Birimian Greenstone Belt
Syama
It is expected the Syama mineral resource will increase
substantially when these results are incorporated into
the next resource calculation. Results from the deep
resource extension drilling program are expected
to extend the underground mine-life at Syama and
may provide opportunity for future expansion of the
underground project.
The initial success of the deep extensional drilling
program will ensure that drilling will now continue
throughout 2016. The planned program will now
include step out positions that, based on the high
grade results received to date, are expected to deliver
major extensions to the Syama deposit.
The Syama deep drilling program commenced in late
2015 with the ambition of substantially expanding the
Syama underground resource.
The positive results from the drilling program have
been previously reported in three ASX announcements,
8 February 2016, 9 March 2016 and 1 August 2016.
The locations of the drill intersections are shown on the
longitudinal section of the Syama orebody in the figure
below. All of the new intersections are located outside
of the currently identified ore reserve and significantly
extend the known mineralisation. Of particular
relevance is the exceptional intercept in SYDD432
(62m @ 6.7g/t Au) underlining the future high grade
potential of the Syama deposit at depth.
SYDD428
32m
13m
@ 2.7g/t Au from 323m and
@ 3.1g/t Au from 377m
SYRD429
28m @ 5.1g/t Au from 708m
SYDD431
23m
46m
@ 3.56g/t Au from 717m and
@ 3.11g/t Au from 749m
SYDD432
62m @ 6.71g/t Au from 651m
SYRD434
31m @ 2.55g/t Au from 781m
SYDD436
7m @ 5.00g/t Au from 570m
32
Longitudinal section of the Syama deposit
Resolute Mining Limited | Annual Report 2016
Finkolo (Resolute 85%)
Exploration continued within the Finkolo permit on a
highly prospective area north of the Tabakoroni gold
deposit.
A large aircore drilling program on an area of
greenstones where previous wide spaced drilling
identified significant gold anomalism. Results from
drilling returned encouraging gold assays which has
extended the identified gold anomalies in the T-ramp
area.
A 2,000m program of reverse circulation (RC) drilling
was completed at the Zekere prospect during the
year. Results from this RC program were encouraging
and the prospect remains a high priority for oxide
resources. The current low drilling density on the
2.5km strike length of the Zekere anomaly allows for
significant potential to add oxide resources at this
prospect.
Follow up RC drilling is planned at T-ramp and the
Zekere prospects at the conclusion of the wet season.
Resolute is one of the largest holders of Birimian
age greenstone tenure in West Africa
Pitiangoma East JV (Resolute earning 70%)
An incorporated joint venture agreement on the
Pitiangoma East permit was signed with TSX-V listed
Legend Gold in May 2015. Pitiangoma East is located
30km south east of the Tabakoroni deposit and covers
the southern extensions of the Syama formation
greenstones. This permit provides Resolute access to
the only section of the Syama Greenstone Belt which it
did not previously control. The permit contains the BHP
identified gold prospect Misséni and a number of drill
targets, and is a valuable addition to the exploration
portfolio.
Work commenced this year with aircore drilling and
an IP survey. A gradient array IP survey was completed
over the Misséni prospect area with the resistivity
data providing a number of anomalies which will be
followed up by drill testing.
In FY16 two aircore drilling programs targeting the
entire width of the Misséni volcanic stratigraphy
were conducted. Drilling intersected the expected
intermediate volcanic package, intercalated with fine
to medium grained sediments. This aircore drilling has
defined a low grade gold anomalous envelope 200m
wide within the Misséni volcanics over a 3km strike
length. The identified anomaly is coincident with an IP
resistivity low which is bounded by shear zones.
This gold anomaly will be followed up by RC drilling
after the conclusion of the wet season in late 2016.
Mali exploration tenements, deposits and simplified geology
33
Resolute Mining Limited | Annual Report 2016 Resolute Mining Limited | Annual Report 2016
Resolute Mining Limited | Annual Report 2016
Australia
Regional exploration in the Ravenswood area
is focused on locating breccia hosted gold
deposits similar to Mt Wright and Kidston
Buck Reef West
Diamond drilling to extend the Buck Reef West
resources and for metallurgical testwork was
undertaken during FY16. Drilling to test the possible
mineralised extension of the Buck Reef structure
between the Sarsfield and Buck Reef West pits
intersected promising zones of quartz-sulphide
veining and “Buck Reef style” chlorite breccia
mineralisation.
A 3D geological model of the Buck Reef West
deposit area, constructed this year, highlighted the
underground potential and in particular identified
high grade drill results which are open along strike
and down dip. This model was used to plan a
diamond drillhole program to test underground
potential at Buck Reef West in the coming months.
Ravenswood locations and prospects map
34
34
Resolute Mining Limited | Annual Report 2016
Three Sisters
Testing of the Three Sisters breccias complex and
adjacent Town Creek Dam area commenced this
year.
An IP survey identified a strong chargeability high
and coincident resistivity low in the south west
corner of the survey area adjacent to Three Sisters
breccia complex.
An RC drilling program was undertaken however
the assay results show scattered low level gold
results with no reportable intersections.
Surface mapping and geochemical sampling during
the calendar year have highlighted widespread
gold mineralisation at the Igloo prospect located
30km south west of Ravenswood. Work over the
past few months has built an interesting picture of
high grade gold (up to 116g/t) in numerous rock chip
samples from brecciated and veined sediments and
volcanics.
An IP survey was completed over the prospect in
April 2016. The results show a distinct resistivity low
coincident with outcropping veined and brecciated
fine grained sediments. The resistivity low is very
similar to that observed at Mt Wright and could
represent a buried breccia pipe with interconnected
sulphides in the matrix, and a halo of disseminated
pyrite responsible for the annular chargeability
response.
A drill program to test both the resistivity anomaly
and the chargeability anomaly associated with
the best outcropping mineralisation is planned to
commence in the second half of 2016.
Elphinstone Creek
The Elphinstone Creek prospect is located
immediately west of the Buck Reef West resource
and therefore is a high priority target to increase the
open pit resource base at Ravenswood.
Work during the year included an IP survey and an
initial phase of RC drilling. The results from the first
round of RC drilling were very encouraging and
follow up drilling is planned for late 2016.
Mount Glenroy
Diamond drilling of the breccia targets at Mt
Glenroy was completed in late 2015. Three deep
diamond drillholes into the breccia complex
intersected brecciated rhyolite including a
hydrothermal breccia with quartz-sulphide
mineralisation. Although the geology of the system
was typical of the gold mineralised breccia pipes in
the region, assay results from the three drillholes
were low order.
Ravenswood open pit resources
35
Resolute Mining Limited | Annual Report 2016 Côte d’Ivoire
Resolute, a first mover into Côte d’Ivoire
Takikro
and granitic soils.
Aircore drilling on identified gold and multi-element
anomalies commenced on the Takikro research permit
in December 2015. This regional spaced drilling has
confirmed the mapping of sheared intermediate and
felsic volcanics and sediments. Results to date have
been low level, however exploration will continue on
the research permit in the coming year.
Taruga Joint Venture (Resolute earning 75%)
Resolute entered into a joint venture with ASX listed
Taruga Gold (Taruga) on two granted research permits
and one research permit application.
The Tiebissou research permit was granted to Taruga
in late 2014 and lies adjacent to the south and west
of Resolute’s Takikro Permit. Tiebissou covers a 15km
strike length of the prospective Birimian lithological
sequence, which hosts the Bonikro and Agbaou
gold deposits. Combined with Takikro, Resolute will
control a strike length of 50km of highly prospective
greenstones.
The second granted permit, Nielle, is located within
granite and greenstone terrain adjacent to the Tongon
gold mine operated by Randgold Resources Limited
(Rangold).
A soil sampling program on a 500 x 250m grid was
completed over the prospective units on the research
permit. The soil samples were analysed for gold and
pathfinder elements. The results confirmed that the
strong Au-As-Sb anomaly identified on the Takikro
permit continues south onto the Tiebissou permit.
Aircore drilling of the identified soil anomaly was
completed during the year. The geology of the
Tiebissou permit is largely mafic volcanics with variable
shearing. The drilling intersected some zones of silica-
sericite-pyrite altered and intense shearing which look
interesting however the gold results were poor.
Programs of stream sediment, soil sampling and rock
chip sampling were undertaken on the Nielle research
permit during the year. The surface geology seen
in traverses confirmed the regional mapping which
Resolute carried out last year and most of the soil
samples occurred in residual to thinly lateritic terrains,
Results from the stream sediment sampling show
a cluster of weakly anomalous values in the south
east corner of the permit, spatially related to the
outcropping gabbro intrusive and an ultramafic
package. The soil sampling has defined a low level
north east trending gold anomaly on the south east
side of the permit coinciding with the interpreted
contact between the ultramafic package and the
granite.
Follow up infill sampling has been planned and
completed over the three anomalies identified by
regional soil and stream sediments sampling.
New Projects
A total of ten new research permit applications
have been submitted and seven have been formally
accepted by the Department of Industry and Mining.
The Pongala research permit application has been
granted by the Côte d’Ivoire Government. Pongala
is one of the three contiguous applications over the
northern extensions of the greenstone belt which hosts
Randgold's Tongon operation. It is anticipated to take a
further one to two months to obtain the official decree
from government to enable work to commence.
Côte d’Ivoire geology and project locations
36
Resolute Mining Limited | Annual Report 2016 Corporate
Responsibility
We are safe and ethical operators, achieving sound community, environmental, and
financial outcomes for our stakeholders.
Resolute is committed to maintaining a social licence, to discover, develop, operate and close
gold mining projects.
Resolute is committed and proud to be a partner
of choice for stakeholders by building relationships
through well-targeted social, safety and environmental
programs. Resolute aims for zero harm to the
communities in which we operate, our employees and
the local environment. The Company is committed to
supporting our local communities by assisting with
meaningful programs and projects that deliver lasting
benefits.
The taxes that Resolute pays as a company, those it
collects from employees on behalf of government
and those of suppliers dependent on the Company’s
presence, are important in creating positive
community benefits in host countries.
A significant contributor through taxes paid
in the countries in which we operate.
Over $73M (last year $55M) was paid directly to
governments in taxes in FY16. These taxes include
company taxes, employer taxes, royalties and other
licencing and statutory levies as follows:
Royalties
Employer Taxes
Company Taxes
Licencing & Statutory Taxes
Patente Tax/Custom Duties
Australia
A$M
Tanzania
A$M
9.0
12.4
0.0
0.9
-
22.3
0.0
0.3
0.0
0.0
-
0.3
Mali
A$M
22.3
13.2
7.0
0.1
5.9
48.5
Ghana
A$M
-
1.4
0.9
0.2
-
2.5
Total
A$M
31.3
27.3
7.9
1.2
5.9
73.6
Resolute willingly operates under a strict Code of
Conduct (Code) that underpins, guides and enhances
the conduct and behaviour of directors, employees
and contractors in performing their everyday roles. The
Code specifically emphasises integrity and honesty
and recognises that Resolute will not make any bribes
or corrupt payments to government officials to obtain
any improper or illegitimate benefit or advantage. The
Code encourages and fosters a culture of integrity
and responsibility with the focus of augmenting our
reputation as a valued employer, business partner and
corporate citizen in all our relationships.
37
37
Resolute Mining Limited | Annual Report 2016 Resolute Mining Limited | Annual Report 2016
Environment
Resolute strives to balance environmental
protection in a financially sound manner over
the phases of exploration, operation and mine
closure activities.
The Resolute Environmental Policy provides for an environmental management program as it undertakes to:
•
•
•
•
•
•
•
•
comply with and, where appropriate, exceed the requirements of applicable legislation, regulations and
other policies, codes and standards to which we subscribe
progressively develop and maintain environmental management systems that are consistent with
internationally recognised standards
integrate environmental processes throughout all aspects of our activities
identify and assess the potential environmental effects of our activities and manage environmental risk
accordingly
continually improve and regularly monitor, audit and review our environmental performance, including the
reduction and prevention of impacts and more efficient use of resources
promote environmental awareness among our personnel and contractors to increase understanding of their
roles and responsibilities in environmental management
develop our people and provide resources to meet our environmental objectives
promote our environmental progress and performance through liaison with, and public reporting to,
governments and communities.
38
38
Resolute Mining Limited | Annual Report 2016 Resolute Mining Limited | Annual Report 2016
Golden Pride Mine, Tanzania
Commercial sale and amicable exit from Tanzania completed
Following the closure of the Golden Pride Mine
(Golden Pride) and handover of this site in the previous
reporting cycle, the commercial sale of Resolute assets
and interests in Tanzania lead to the amicable exit from
the country in FY16. This followed a review in FY15 of the
effectiveness in the closure process at Golden Pride.
The review found strong performance by Resolute in
its commitments to:
•
•
progressive rehabilitation
environmental monitoring
• management systems
•
development and use of a mine closure plan.
Golden Pride - 1996 to 2014
Purchased exploration portfolio
Defined a mineable resource
Completed feasibility study
Constructed the first modern gold mine in Tanzania
Produced 2.2Moz gold over a 15 year mine-life
Generated net cash flows of US$211M
Completed award winning environmental rehabilitation program
Delivered land back to our partners, the Tanzanian Government
39
39
Resolute Mining Limited | Annual Report 2016 Syama, Mali
Resolute is committed to actively managing and
working in partnership with the Mali Government on
a wide range of environmental activities including
rehabilitation, water and air quality, waste and tailings
management, compliance and risk management.
A significant commitment this year included
the fabrication and transport to Syama of a high
temperature incinerator. Once commissioned in the
coming months the incinerator will safely dispose of
industrial wastes that are otherwise buried on site. In
addition, it will benefit the community by providing
safe disposal of medical waste from the site clinic.
Other achievements and activities included:
Rehabilitation
The rehabilitation of over 22ha of waste rock dumps
during FY16 following completion of mining the Syama
open pit. More than 42,000 tree seedlings across 29
local species were planted in this area. Further sections
of the southern and western waste rock dumps will
be rehabilitated this year in line with our progressive
rehabilitation policy.
Water Management
Regular and consistent monitoring of the surface
water and groundwater is ongoing. Thematic mapping
of water quality using the Geographical Information
System (GIS) enables Resolute’s environmental team to
proactively manage activities within acceptable values.
Enhanced water balance modelling continues to guide
efficient use of this important resource.
During transition from open pit to underground mining
at Syama, rainfall runoff in the pit is being used to
supply the demand of the processing plant. This has
provided a storage buffer and greatly reduced the
amount of water to be pumped from the Bagoe River
during FY16.
An offtake line from the Bagoe supply was taken to
the town of Fourou during the period. At present the
system is in the commissioning stage to filter and
chlorinate the supply; it will provide a secure and
hygienic supply of water to the town.
Tailings Management
Tailings from the processing of oxide ore are routinely
placed in a compartment of the storage landform
whereby the decant water can be reused in the
processing plant to optimal benefit.
Cyanide levels in the oxide tails storage facility (TSF) are
very low in the wet season, allowing this water to be
reused in the flotation process at a maximum rate. This
demonstrates the ability of each of the tailings streams
to be blended with minimal additional treatment or
cyanide destruction, to reduce operating costs and risk
to the environment.
Upstream raising of embankments around the
external perimeter calcine TSF with insitu material
was completed and the decant return reconfigured to
improve pumping and reduce the area of decant water.
Air Quality
A network of air quality monitors located at Syama
and at nearby villages transmits data to Resolute’s
site office in real time, enabling an early management
response. Reliability improved during the year with
protection against lightning strikes for the monitors
and their data telemetry.
A study of soil and plant growth near Syama was
completed and showed soil types and nutrients
available for crops are in the normal range for the area.
Compliance and Risk Management
Findings from the compliance audit by the Mali
Government for environmental management and social
development have been provided. Only maintenance
works at the fuel farm are required to be completed by
the Company.
Resolute welcomes and encourages regular site
inspections by Mali environmental authorities to
enhance collaboration.
40
Resolute Mining Limited | Annual Report 2016 Ravenswood, Queensland
At Ravenswood the Company continued to dedicate
resources to its Safety, Health and Environmental
Management System with a focus on:
•
detailed monthly environmental monitoring and
reporting
•
compliance monitoring and investigations
Aquatic environments, water quality data and
sampling methods were appraised under a Receiving
Environment Monitoring Program. The aim of the
appraisal is to establish a site specific fit of water
quality limits, rather than arbitrary values from the
literature, for approval by the Queensland Government.
• monthly inspections for safety, health,
Emissions
environment and training.
Significant activities this year included:
Future Mine Development Assessments
Closure strategies to accommodate the potential for
extensions to mine-life were implemented with a focus
on assessments and approval of new environmental
protection measures and social dispensations
proposed for the recommencement of mining at the
Sarsfield Open Pit.
Water Management
In accordance with a Transitional Environmental
Program issued by the Queensland Government,
Ravenswood continued to operate and adapt the
groundwater recovery system near the Nolans TSF.
Ambient and continuous measure of very fine dust
levels (PM10) were established as a contingency for
mining at the Nolans East end of the open pit. The
measurements demonstrate levels comply with the
model mining condition for Queensland.
Compliance and Risk Management
Proactive monitoring and response to water quality
issues continued during the period with the Company’s
commitment to ongoing groundwater recovery and
environmental impact investigations.
Bibiani, Ghana
Environmental monitoring programs at Bibiani were
maintained and actively managed according to the
current status of the project.
Specific activities included:
•
removal of scrap materials for reuse and
dilapidated equipment for repair or reuse, that if
left unattended might otherwise impact on the
environment.
• monitoring of surface and groundwater quality
Compliance and Risk Management
•
the regular inspection of tailings embankment
integrity and water levels
Monitoring at surface and groundwater points found
levels to be in compliance with limits.
• measurement of ambient dust levels
•
•
checking the growth of revegetated areas on the
mine site
timely response and control of unauthorised
clearing by farmers or disturbance by artisanal
miners
Maintaining facilities and infrastructure to minimise
environmental impact from the potential restart of the
project in the future.
41
Resolute Mining Limited | Annual Report 2016 Resolute Mining Limited | Annual Report 2016
42
42
Resolute Mining Limited | Annual Report 2016 Community
Relations
Resolute is a proud and responsible member of the communities in which we operate.
Fostering long term relationships and partnerships with local communities is a pillar
of our values and key to develop mutual understanding, cooperation, and respect. Our
social investment initiatives aim to deliver significant and lasting benefits to employees,
communities and key stakeholders.
Resolute’s Community Policy commits the Company to:
•
•
•
recognise and respect the value of cultural heritage and cultural diversity
establish enduring relationships with communities based on honesty and mutual trust
support the development and implementation of sustainable social and economic initiatives within the
communities through co-operation and participation
•
provide management systems to identify, assess, monitor and control potential impacts on communities
• maintain an ‘open door’ policy whereby the local traditional leaders and community leaders have access at
reasonable times to the Company’s management
•
ensure that employees are aware of and understand the requirements of this policy.
Syama
The Syama Mine Community Consultative Committee
(SMCCC) held regular meetings in FY16 to address local
community and environmental issues. The Company
briefed community representatives on the progress of
mine development, including the newly developed A21
satellite open pit.
A five year plan is being developed to support the
Fourou Commune with a priority effort in the town
of Fourou. SOMISY provided support for sociologists
and local expert consultants to develop the plan
in consultation with the stakeholders across the
community.
Support of Community Roles and Functions
Resolute made the following contributions in FY16:
•
•
•
land compensation to the village of Syama for
“Friday” work
assistance to the Fourou Mayoral Office for the role
of Community Liaison Agent
support for the annual traditional feast
celebrations in Fourou and village of Bananso
•
pump repair in the old health centre at Fourou
•
•
•
donation of an air conditioner to Circle of Kadiolo
and participation of SOMISY during the visit of the
President of the Republic of Mali for the laying
down the first stone of a cotton factory at Kadiolo
support of International Youth Day and
participation of SOMISY in its Organisation
Commission for the region
ongoing supply of water to the sacred fish ponds
in Fourou.
Community Health
In January 2016 the Ebola outbreak in West Africa
was officially declared over by the World Health
Organisation. As a result, a number of the prescribed
precautions are thought to be unwarranted. Resolute
supports the ongoing vigilance of health authorities in
relation to Ebola and therefore the Company takes care
and responsibility with any cases of severe illness in
unusual circumstances at site.
Travel restrictions have eased between the previously
affected countries of Guinea, Liberia and Sierra Leone.
43
Resolute Mining Limited | Annual Report 2016 SOMISY has retained some of the hygiene measures,
notably handwashing and checking of body
temperatures. This is helping to reduce gastrointestinal
complaints and provide an early diagnosis of malaria
infection.
Resolute’s Malian subsidiary SOMISY combats the
threat of malaria by the distribution of mosquito nets,
spraying of walls in living areas with residual insecticide
and dosing of stagnant water bodies with larvicide.
Whilst it is difficult to obtain reliable statistics for the
incidence of malaria in communities receiving this
support and near the mine, an improvement trend is
inferred by the health of site employees. The incidence
of malaria amongst employees at Syama from these
same communities has shown marked improvement
during FY16.
SOMISY continued to support community health as
follows:
•
•
•
•
providing training, consumables and equipment to
maternity clinics within the Fourou Commune
conducting education programs and regular
radio broadcasts on issues ranging from lightning
awareness, malnutrition, healthy diet with local
cereals, HIV, worms, sanitation and skin diseases
provision of medical supplies for HIV diagnosis to
five community medical centres and collaborating
with government to establish an HIV medical unit
in Fourou
conducting regular testing of potable water from
community wells and bores.
Education
SOMISY expatriate employees through their Child
Education Sponsorship program provided learning
materials, shoes and soccer balls to the primary
school of Glambéré village. Further funding for the
organisation of year end exams at schools in Bananso,
Fourou, Gouéné, Torokoro and Watiali villages was
provided.
Small Business Projects
SOMISY proudly supports women’s groups and their
various projects in villages near Syama. Projects
include:
•
•
•
•
•
•
•
collection of honey from bee keeping
growing of vegetables
batik fabric dying
embroidery
production of shea butter and soap from tree nut
oil
construction of a goat/sheep keeping structure
and the supply of sheep
construction of a cattle spray yard to benefit all
parts of the rural commune.
SOMISY supports people across the rural commune of
Fourou to develop self-sufficiency in food production.
Training in each of these projects is a critical element,
particularly on the running of cooperative associations
and in leadership. The mine site-catering provider at
Syama supports these projects by sourcing this local
produce.
Community Water Supplies
In FY16 SOMISY supported the local community in its
application and justification for assistance from the
Australian High Commission in Ghana’s Direct Aid
Program. SOMISY provided supervision and support for
the drilling of two water bores equipped with pumps
at primary schools in the villages of Baala and Bananso,
to ensure the funding from the High Commission had
maximum effect.
In direct response to the need and request from local
Fourou women SOMISY initiated a project to provide
water to the town of Fourou from the Bagoe River.
Equipment to filter and chlorinate the water supply is
being prepared for distribution into Fourou.
44
Resolute Mining Limited | Annual Report 2016 Ravenswood, Queensland
Resolute’s Queensland operations are situated near the
historic gold mining town of Ravenswood and as such,
the Company is committed to maintaining ongoing
positive relationships with the local community and
stakeholders.
Resolute and its local subsidiary Carpentaria Gold
Pty Ltd support the local community through various
projects and initiatives:
• maintain direct and transparent communications
with the community through production
and distribution of monthly newsletters and
conducting regular social events and meetings
with government representatives to keep
stakeholders fully informed about company activity
at Ravenswood
•
•
•
•
support the Ravenswood Restoration and
Preservation Association in management of
heritage listed buildings within the town, and
maintenance of the community garden
provide educational support to the Ravenswood
State School by supplying new learning materials,
computers, provision of art lessons with visiting
artists and assistance with swimming lessons
support the first of the Young Australian,
Indigenous Art, and Writers workshops held in
several Charters Towers schools, Homestead and
Ravenswood State Schools
sponsorship of a mosaic artwork welcoming
people to Ravenswood’s Community Garden with
a sign created by local artist Shelley Burt and
Ravenswood students
•
•
•
•
•
•
assistance with coordinating sporting carnivals
and educational events, such as National Tree Day,
National Science Week and National Water Week
support the Ravenswood Rural Fire Brigade as a
major sponsor of its annual fundraiser
provide 24-hour support to the community for
medical emergencies from nurses at the mine
site clinic (In FY16 approximately 350 community
consultations were conducted and monthly visits
from the Royal Flying Doctor Service were hosted
by the Company)
sponsorship of monthly morning tea events for
local seniors with a Queensland Health nurse in
attendance to provide consultations
provision of trained staff to supervise swimming
lessons in the community pool
provide access to gym facilities and personal
training sessions for staff and community members
including those who are rehabilitating from health
problems. Ravenswood is now running two “gym
circuit” classes per week at its facilities due to
demand
• maintain on-call community support in snake
handling by company personnel trained to safely
catch and relocate snakes to the bush from town
or homes.
Bibiani, Ghana
Community relations, support and consultation
continued at Bibiani in FY16 through:
•
•
•
funding primary and junior high school education for
children of employees and 80% community intake
outreach from the Bibiani site clinic inviting the
community and school children to attend monthly
health checks to screen and treat patients with
Hepatitis B, diabetes, malaria and worms
providing a community bus service for farmers to
and from Bibiani
• maintaining the commitment as sole sponsor of the
Gold Stars football team
•
drilling a second potable-water bore in the village of
Lineso to meet the demand of population growth
•
•
grading of roads and maintenance of drainage
structures
direct and open communication with village chiefs,
community leaders and politicians.
The Company’s community development team at
Bibiani is preparing a needs analysis to seek views and
perceptions from the local community and nearby
villages in relation to its needs and Resolute’s support
of water, health, education and agriculture programs.
The analysis will also focus on local social issues, identify
community leaders and elders and community assets
such as boreholes, agricultural practices, schools and
accessibility to clinics.
45
Resolute Mining Limited | Annual Report 2016 Resolute Mining Limited | Annual Report 2016
Fourou Livestock Treatment Initiative
This project, the Municipal Cattle Meat of Fourou
(Fédération Communale de la Filière Bétail Viande de
Fourou (FLBV- Fourou)) will run for three years having
started in March 2015. It is centred on the village
of Baloulou in the sector of Watiali within the Rural
Commune of Fourou.
low health coverage for their livestock.
Mindful of being able to support the development
of the industry by way of a community development
initiative, SOMISY informed the SMCCC of its
willingness to provide the commune with livestock
treatment infrastructure in February 2015.
Like the rest of the Region of Sikasso, the rural
economy of the Circle of Kadiolo is based on the
exploitation of natural resources (fish farming and
cattle breeding). The regional and local socio-economic
development strategies and policies recognise that the
pastoral industries are flourishing and constitute the
driver for other initiatives. This tallied with the findings
of the PRA - Participatory Rural Appraisal (MARP
- Méthode Accélérée de Recherche Participative)
sponsored by SOMISY in 2012. It highlighted two issues
for the people in the area in relation to their livestock
industry, namely, the lack of pastoral planning and the
The resulting initiative called “Cattle Spray Project in
the Rural Commune of Fourou” includes two phases,
being the installation of the infrastructure in the Sector
of Watiali and livestock health service delivery for more
than 100,000 cattle.
Many consultations have occurred between the cattle
breeders in collaboration with the municipal authorities
and Syama management. The project is in line with
the promotion policy of the industries of the Regional
Council of Sikasso, its strategic framework for the
development and the decrease of poverty in Mali.
Allocation by SOMISY
Estimated Budget in US$
Estimated Budget in FCFA
Equipment
Water Supply Bore
Total Amount
60,820
20,145
80,965
35,481,414
11,752,800
47,234,214
The idea for this project came through the organisation
of the livestock industry following the initiative of
opening cattle roads within the Circle of Kadiolo in
2002 and with the support of the JEKASY Program
(Swiss Cooperation).
A key objective is to develop mutual aid and solidarity
between the cattle breeders of the region by putting
in place a collective project of development actions for
the cattle market and pastoral lands.
The livestock industry representatives are completing
sensitisation campaigns with the pastoralists
throughout the villages of the commune.
SOMISY is cooperating in this project with the:
•
•
SMCCC
Fourou Chamber of Agriculture
•
•
•
Fourou Cattle Breeders Cooperative
Kadiolo Inter-municipality
Local Federation of the Livestock-Meat Industry
• Cattle Breeding Services.
The funds generated by pastoralists using the service of
this project will be saved in an account at the Banque
de Développement du Mali. The funds will be managed
by the respect of the good practices in a collective for
resources management. It applies management tools
such as bank account records, registration and stock
books which are subject to audit.
Committee meetings for the cattle project and those
of the SMCCC will overwatch the involvement of
more than 1,000 cattle breeders. All participants are
non-salaried volunteers and including cattle breeders
residing in the Circle of Kadiolo.
Syama Gold Mine Community Development Team – directions of cattle herder journeys
46
46
Resolute Mining Limited | Annual Report 2016 People and
Culture
In line with the overarching transformation of
Resolute, a cultural transformation program was
initiated during FY16. This included a major revision
of the organisational structure at the executive level
designed to deliver key aspects of the corporate
strategy. Resolute’s cultural foundations are focused
on accountability and performance, innovation and
agility, community and teams.
Individually and collectively, the Resolute team
contribute their technical expertise and leadership
capability to deliver on Company strategy. The
commitment to excellence by the Resolute team
underpins the goal of achieving prosperity for all
stakeholders and creating enduring shareholder
value.
Key People Priorities
•
•
•
•
•
To place safety, health and security at the
centre of our people practice
To build and encourage a diverse and inclusive
workplace
To develop individual, team and leadership
capability across our entire workforce including
the development of our in-country national
employees
To ensure that our business architecture
and communication platforms facilitate
collaboration and achievement of work
outcomes
To be united in our efforts to serve our teams
and communities
•
To review and enhance our people systems
47
47
Resolute Mining Limited | Annual Report 2016 Workforce Profile
Resolutes's workforce consists of approximately
2,000 personnel including both direct employees,
and contractors. In Mali and Ghana, 89% of our
direct employees are in-country nationals.
Resolute respects and encourages workplace
diversity and strives to create a flexible and inclusive
workplace environment.
Pursuant to the Company’s Diversity Policy, the
Remuneration and Nomination Committee is
responsible for reviewing the progress towards
achieving a number of measurable objectives and
overall effectiveness of the policy. These include
the proportion of women and men in the Resolute
workforce at three levels in the organisation
(board level, senior management and the whole
organisation), including benchmarking this data
against relevant industry standards where possible;
and remuneration by gender.
48
48
48
Resolute Mining Limited | Annual Report 2016 Health, Safety
and Security
The Resolute Occupational Health, Safety and Security
Policy commits the Company to manage programs that:
•
•
•
•
•
•
seek continuous improvement in its Occupational
Health, Safety and Security performance taking
into account evolving scientific knowledge and
technology, management practices and community
expectations
comply with the applicable laws, regulations
and standards of the countries in which it has
workplaces
train and ensure individual employees and
contractors understand their obligations and are
held accountable for their area of responsibility
improve and regularly monitor, audit and review
our Occupational Health, Safety and Security
performance
communicate and consult openly with employees,
contractors, government and the community on
Occupational Health, Safety and Security issues
develop risk management systems to identify,
assess, monitor and control hazards in the
workplace.
During the year the Resolute Integrated Management
System (RIMS) was applied across the Company. The
RIMS Standards has updated the pre-existing Standards
for Safety, Health and Environmental Management
to reflect the synergies of Security, Safety, Health,
Community and Environment management practices
related to:
•
•
•
commitment and policy
planning
implementation
• measurement and evaluation
• management review and improvement.
The RIMS Standards also address the management of
cyanide in alignment with the International Code for the
Management of Cyanide (ICMC). The RIMS Standard
acknowledges that any variation in practice to the ICMC
is risk based and to be approved at executive level.
The RIMS Standards now address the management of
security in recognition of:
•
•
the Resolute Code of Conduct
the intent of Voluntary Principles on Security and
Human Rights (VPSHR)
•
•
•
the preparedness needed in light of dynamic
country and location security ratings
the importance and timeliness of advisories of
security threat and vulnerability assessments
the need for co-operative arrangements with
external parties for evacuation, contingency
planning and provision of security.
The RIMS Standards apply to:
•
•
•
•
•
personnel security
physical security
information communication and IT
business resilience and recovery
investigations and business intelligence.
Resolute’s operations report against key performance
indicators.
Syama, Mali
During FY16 Resolute enhanced the profile of its security
initiatives in West Africa. The Company continues
to prioritise security infrastructure, co-operative
and diligent liaison with public security forces and
the development of management plans that can be
universally applied to existing or new projects.
During the review period a major focus of the
Occupational Health and Safety program was directed
towards:
•
completion of a risk register across all departments
to ensure controls are set for high risks
•
implementation audit of for the RIMS Standards;
-
completion of training in the “Incident Cause
Analysis Method” accident-investigation
technique
training of remote site staff in accordance with
National Examination Board in Occupational Safety
and Health (NEBOSH) certification
tracking the supervisor and manager participation
in task observations
ensuring the routine monitoring of occupational
health and hygiene exposures
advanced studies and further training offsite for
clinic medical professionals.
•
•
•
•
49
Resolute Mining Limited | Annual Report 2016 The Operations team at Syama includes all personnel
and departments involved in sustaining the production
of gold at the site. During FY16 the total recordable
injury frequency rate of this team rose slightly from 1.32
to 2.68. Total recordable injuries in the reporting period
also contributed to changes within the following injury
frequency rates:
•
Lost Time Injury Frequency Rate (LTIFR) was
maintained at nil throughout the year
-
it is noteworthy that the last LTI was recorded
in April 2014
• Restricted Work Injury Frequency Rate (RWIFR)
increased slightly from 0.00 to 0.3
-
only one RWI occurred
• Medical Treatment Injury Frequency Rate (MTIFR)
increasing noticeably from 1.32 to 2.38
-
Eight MTI cases were recorded in the year,
whereas five MTI cases were recorded in the
previous year
•
at year end all injury cases had fully recovered and
employees were working towards normal duties.
The Construction team includes all personnel
predominantly contractors, typically working on a
campaign basis to build new plant and equipment
or to modify existing infrastructure on site. The total
recordable injury frequency rate for this team improved
commendably from 2.62 to 0. There were no recordable
injuries in the reporting period and this contributed to
the following injury frequency rates:
•
LTIFR remained at 0
• RWIFR remained at 0
• MTIFR reducing substantially from 2.62 to 0.
Ravenswood Mine,
Australia
During the FY16 key drivers of Resolute’s continual
improvement in safety and training included:
Overall the total recordable injury frequency rate
at Ravenswood increased from 19.62 to 24.34. Total
recordable injuries in the reporting period also
contributed to changes within the following injury
frequency rates:
•
LTIFR rose substantially from 1.51 to 8.11
• RWIFR decreased noticeably from 12.07 to 9.74
• MTIFR increased from 6.04 to 6.49.
15 total recordable injuries occurred during the year. All
injured employees have returned to work. However, two
remain on restricted duties, one following a laceration
and the other in follow up to a strain/sprain.
Five work related LTIs occurred in FY16, whereas only
one LTI occurred in FY15.
Prompt reporting and management of all injuries
assisted the effective recovery of employee patients.
Safety initiatives at Ravenswood focus on:
•
•
safe work behaviour and effective systems to
address underlying causes of incidents and injuries
change management for the transition to open pit
mining
•
complete actions from reviews and audits.
Bibiani, Ghana
During FY16 the occupational health and safety program
at Bibiani targeted:
•
•
•
•
review and update of standards and procedures
inspections and integrity checks of equipment
emergency response training
health surveillance of employees and nearby
communities.
During FY16 Bibiani remained in care and maintenance
whilst development drilling for resource definition
occurred in the underground mine. As a result of
this level of activity relatively few staff were on site.
The total recordable injury frequency rate at Bibiani
decreased from 3.81 to 0.00.
updating site standards to reflect changes and align
with the RIMS Standards
Only one recordable injury occurred leading to the
following injury frequency trends for the year:
progress in completion of actions arising from
audits and findings from High Potential Incidents or
injuries
tracking and prompting of supervisors and
managers to lead and be present in the field
participation of the Emergency Response Team in
a mines rescue challenge along with teams from
other mines
review and updating of procedures for equipment
isolation and work permits.
•
LTIFR was maintained at nil throughout the year
• RWIFR was maintained at nil
• MTIFR decreasing markedly from 3.81 to 0.00.
At the end of FY16 no employees were absent due to
workplace injury.
•
•
•
•
•
50
Resolute Mining Limited | Annual Report 2016 Financial
Report
Contents
Directors’ Report
Auditor’s Independence Declaration
52
75
Consolidated Statement of Comprehensive Income
77
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the Financial Statements
Directors' Declaration
Independent Auditor’s Report
Shareholder Information
79
80
81
85
129
130
132
Resolute Mining Limited | Annual Report 2016
51
51
Resolute Mining Limited | Annual Report 2016 Directors’ Report
Your directors present their report on the consolidated entity (referred to hereafter as the “Group” or “Resolute”)
consisting of Resolute Mining Limited and the entities it controlled at the end of or during the year ended 30
June 2016.
Corporate Information
Resolute Mining Limited ("RML" or “the Company”) is a company limited by shares that is incorporated and
domiciled in Australia.
Directors
The names and details of the directors of Resolute Mining Limited in office during the financial year and until
the date of this report are as follows. Directors were in office for the entire period unless otherwise stated.
Names, qualifications, experience and special responsibilities
Peter Ernest Huston (Non-Executive Chairman)
B. Juris, LLB (Hons), B.Com., LLM
Mr Peter Huston was appointed Chairman in 2000. After gaining admission in Western Australia as a Barrister
and Solicitor, Mr Huston initially practised in the area of corporate and revenue law. Subsequently, he moved
into the area of public listings, reconstructions, equity raisings, mergers and acquisitions and advised on a
number of major public company floats, takeovers and reconstructions. Mr Huston is admitted to appear before
the Supreme Court, Federal Court and High Court of Australia. Mr Huston was a partner of the international
law firm now known as "Deacons" until 1993 when he retired to establish the boutique investment bank and
corporate advisory firm known as "Troika Securities Limited".
Mr Huston is a member of the Audit Committee and the Remuneration and Nomination Committee.
John Paul Welborn (Managing Director and Chief Executive Officer)
B.Com., FCA, FAIM, MAICD, MAusIMM, SAFin, JP
Mr John Welborn was appointed to the board on 27 February 2015 as a non
executive director and became the
Managing Director and Chief Executive Officer on 1 July 2015. Mr Welborn is a Chartered Accountant with a
Bachelor of Commerce degree from the University of Western Australia and is a Fellow of the Institute of
Chartered Accountants in Australia, a Fellow of the Australian Institute of Management and is a member of the
Australian Institute of Mining and Metallurgy, the Financial Services Institute of Australasia, and the Australian
Institute of Company Directors.
‐
Mr Welborn has extensive experience in the resources sector as a senior executive and in corporate
management, finance and investment banking. He was most recently the Managing Director of Equatorial
Resources Limited and was previously the Head of Specialised Lending in Western Australia for Investec Bank
(Australia) Ltd. Mr Welborn was a non-executive director of Noble Mineral Resources Limited (March 2013 to
December 2013) and is currently a non-executive director of Equatorial Resources Limited (since 2010), Prairie
Mining Limited (since 2009), and Orbital Corporation Limited (since 2014).
Mr Welborn is a member of the Environment and Community Development Committee, the Safety, Security
and Occupational Health Committee and the Financial Risk Management Committee.
52
Resolute Mining Limited | Annual Report 2016 Directors’ Report
Directors (continued)
Peter Ross Sullivan (Non-Executive Director)
B.E., MBA
Mr Peter Sullivan was appointed Managing Director and Chief Executive Officer of the Company in 2001 and
retired as Chief Executive Officer on 30 June 2015. Mr Sullivan is an engineer and has been involved in the
management and strategic development of resource companies and projects for over 20 years. Mr Sullivan is
also a director of GME Resources Limited (appointed 1996), Zeta Resources Limited (appointed 2013), Pan
Pacific Petroleum NL (appointed 2014) and Panoramic Resources Limited (appointed 2015).
Mr Sullivan is a member of the Financial Risk Management Committee.
Marthinus (Martin) Johan Botha (Non-Executive Director)
BScEng
Mr Martin Botha is a non-executive director and was appointed to the board in February 2014. Mr Botha is an
Engineering Surveyor by training who has 30 years experience in banking, with 24 years spent in leadership
roles building Standard Bank Plc’s international operations. Mr Botha’s primary responsibilities at Standard
Bank included establishing and leading the development of the core global natural resources trading and
financing franchises, as well as various geographic strategies, including those in the Russian Commonwealth
of Independent States, Turkey and the Middle East. Mr Botha is currently non-executive Chairman of Sberbank
CIB (UK) Ltd, a securities broker regulated by the UK Financial Services Authority, and is a non-executive
director of Zeta Resources Limited (appointed 2013). Mr Botha graduated with first class honours from the
University of Cape Town and is based in London.
Mr Botha is a member of the Audit Committee and the Chairman of the Remuneration and Nomination
Committee.
Henry Thomas Stuart (Bill) Price (Non-Executive Director)
B.Com., FCA, MAICD
Mr Bill Price is a non-executive director and was appointed to the board in 2003. Mr Price is a Fellow
Chartered Accountant with over 35 years of experience in the accounting profession. Mr Price has extensive
taxation and accounting experience in the corporate and mining sector. In addition to his professional
qualifications, Mr Price is a member of the Australian Institute of Company Directors, a registered tax agent and
registered company auditor. Mr Price is also a director of Tennis West.
Mr Price is the Chairman of the Audit Committee and a member of the Remuneration and Nomination
Committee.
Company Secretary
Greg William Fitzgerald
B.Bus., C.A.
Mr Greg Fitzgerald is a Chartered Accountant with over 25 years of resources related financial experience and
has extensive commercial experience in managing finance and administrative matters for listed companies. Mr
Fitzgerald is also the Chief Financial Officer and has been Company Secretary since 1996. Prior to his
involvement with the Group, Mr Fitzgerald worked with an international accounting firm in Australia.
Mr Fitzgerald is a member of the Financial Risk Management Committee.
53
Resolute Mining Limited | Annual Report 2016 Directors’ Report
Interests in the shares and options of Resolute and related bodies corporate
As at the date of this report, the interests of the directors in shares, options and performance rights of
Resolute Mining Limited and related bodies corporate were:
P. Huston
J. Welborn
M. Botha
H. Price
P. Sullivan
Fully Paid Ordinary
Shares
Performance
Rights
428,182
1,600,000
-
194,745
2,643,142
4,866,069
-
1,515,000
-
-
1,168,267
2,683,267
Nature of Operations and Principal Activities
The principal activities of entities within the consolidated entity during the year were:
Gold mining; and,
prospecting and exploration for minerals.
There has been no significant change in the nature of those activities during the year.
Significant Changes in the State of Affairs
There have been no significant changes in the state of affairs of the Company other than those listed above.
Significant Events after Reporting Date
On 30 August 2016, the Company announced a final dividend on ordinary shares in respect of the 2016
financial year of 1.7 cents per share. The dividend has not been provided for in the 30 June 2016 financial
statements.
Environmental Regulation performance
The consolidated entity holds licences and abides by Acts and Regulations issued by the relevant mining and
environmental protection authorities of the various countries in which the Group operates. These licences, Acts
and Regulations specify limits and regulate the management of discharges to the air, surface waters and
groundwater associated with the mining operations as well as the storage and use of hazardous materials.
There have been no significant known breaches of the consolidated entity's licence conditions or of the relevant
Acts and Regulations.
54
Resolute Mining Limited | Annual Report 2016
Directors’ Report
Financial Position and Performance
Cash and bullion at market value increased to a total of A$102m (FY15: A$54m).
FY16 net profit after tax of $213m (FY15: loss of $569m).
Revenue from gold and silver sales up 20% to $555m (FY15: $462m).
Gross profit from operations up 135% to a record $167m (FY15: $71m).
Return on equity of 129%.
Diluted earnings per share of 27.6 cents.
Debt reduced by $91m during the year:
o No secured debt as at 30 June 2016;
o US$20m Gold Prepay Loan Facility settled in full with final gold instalment delivery in October 2015;
o US$50m Senior Secured Cash Advance Facility fully repaid in June 2016; and,
o A$15m of Convertible Notes converted and redeemed in June 2016.
Net operating cash inflows for the year were $193m (FY15: $62m).
Net investing cash outflows of $43m (FY15: $73m).
Net financing outflows of $79m (FY15: $2m).
Profit from discontinued operations of $45m includes the extinguishment of the net liabilities of the
Tanzanian group of companies divested during the period ($4m), that group’s accumulated foreign
exchange gain recognised in equity up to the date of the sale ($42m), and other expenses of $1m.
Review of Operations
Resolute has achieved a number of crucial milestones in 2016 on our journey to establishing a long life, low
cost future for our business. Operations performed strongly, and continue to do so, and this is providing a
platform to strengthen the Company’s balance sheet. This impressive and important turnaround in the
Company’s position and performance in 2016 allows us to develop key organic growth projects with funding
confidence. Our decision to immediately commence underground development at Syama, based on the
successful Syama Underground Definitive Feasibility Study (“DFS”), will secure our production and cash flow
generating base for more than a decade. The recommencement of open pit mining at Ravenswood in FY17 will
assist in maintaining continuity of production as we develop a mine life beyond Mt. Wright. FY17 will continue
to be exciting for shareholders as we develop the flagship Syama underground mine, deliver the Ravenswood
Extension Project study, and continue to work towards a production future for Bibiani.
55
Resolute Mining Limited | Annual Report 2016 Directors’ Report
Review of Operations
Production
Strong operating performance has bolstered cash and bullion, allowing for the repayment of debt and
strengthening of the Company’s financial position.
Key operating
performance indicators
Units
Syama
Sulphide
Syama
Oxide
2016
Syama
Total
Ravenswood
GROUP
total
2015
GROUP
total
UG lateral development -
capital
UG lateral development -
operating
Total UG lateral
development
UG ore mined
UG grade mined
OP operating waste
OP ore mined
OP grade mined
Total ore mined
Total tonnes processed
Grade processed
Recovery
Gold Produced
Gold in circuit
drawdown/(addition)
Gold shipped
Gold bullion in metal
account movement
Gold sold
Achieved price
Cash Cost
m
m
m
t
g/t
BCM
BCM
g/t
t
t
g/t
%
oz
oz
oz
oz
oz
A$/oz
US$/oz
A$/oz
US$/oz
All-in Sustaining Cost
A$/oz
US$/oz
-
-
-
-
-
-
-
-
-
-
-
-
456
456
958
1,351
1,351
2,020
1,807
1,807
2,978
1,305,585
1,305,585
1,481,435
2.38
2.38
2.40
235,621
4,272,758
4,508,379
150,322
599,345
749,667
2.29
2.21
2.22
-
-
-
4,508,379
5,524,558
749,667
1,680,036
2.22
3.17
413,038
1,132,468
1,545,506
1,305,585
2,851,091
5,568,162
1,497,103
1,257,948
2,755,051
1,700,386
4,455,437
3,965,662
3.53
76.3
2.30
86.2
2.97
79.8
2.05
94.3
2.61
84.1
3.11
82.9
129,585
80,032
209,617
105,552
315,169
328,684
8,795
(1,275)
7,520
1,644
9,164
(5,176)
138,380
78,757
217,137
107,196
324,333
323,508
4,847
6,666
11,513
4,695
16,208
(10,408)
143,227
85,423
228,650
111,890
340,540
313,100
1,632
1,190
710
517
917
669
1,632
1,190
1,026
747
1,561
1,137
1,632
1,190
830
605
1,163
848
1,608
1,172
1,033
752
1,225
892
1,624
1,184
898
654
1,200
874
1,467
1,228
845
707
1,094
915
1 – Cash cost per ounce of gold produced is calculated as costs of production relating to gold sales excluding gold in circuit inventory
movements divided by gold ounces produced.
2 – All in Sustaining Costs (“AISC”) per ounce of gold produced is calculated in accordance with World Gold Council guidelines.
These measures are included to assist investors to better understand the performance of the business. Cash cost per ounce of gold produced
and AISC are non
International Financial Reporting Standards financial information and where included in this Directors’ Report have not been
subject to review by the Group’s external auditors.
‐
56
Resolute Mining Limited | Annual Report 2016 Directors’ Report
Review of Operations
Exploration and Development
Detailed information about Resolute’s exploration and development highlights is available on the
Company’s website.
During the June 2016 quarter the Company completed the Syama Underground Definitive Feasibility
Study which confirmed a positive outcome. The Syama Underground will be a long life and low cost
mine that will deliver a strong operating margin over the next decade. On 30 June 2016 the Resolute
Board of Directors approved the immediate development of Syama Underground with excavation of
the decline due to commence in the September 2016 quarter following the mobilisation of a mining
contractor to site. The first development ore is expected to be delivered in December 2016, with
stoping commencing in December 2017. During this period there will be continuous production from
Syama through current stockpiled sulphide material and ongoing satellite open pit deposits. Key
details of the DFS are as follows:
o Life of Mine All-in-Sustaining-Costs of US$881 per ounce and strong Life of Mine margins;
o initial operating life of more than 12 years;
o total Syama Gold Mine production will grow to 250,000 ounces per annum;
o pre-production capital of US$95 million which will be fully funded from the current balance
sheet and future operating cash flows;
o processing innovation will continue to enhance project economics;
o underground development to commence immediately with first ore expected to be delivered to
the mill in December 2016 which allows for continuous production from Syama to be
maintained;
o Resolute’s successful Mt Wright underground experience to deliver efficiency and productivity
gains at Syama underground mine; and,
o substantial upside with opportunities to extend mine life, increase mining recovery and further
reduce All-In-Sustaining Costs.
Also at Syama, high grade intercepts returned from the ongoing deep drilling program have identified
a major extension to the Syama orebody. The infill results extend the mineralised footprint and
provide confidence that the Syama underground reserve estimate can be enhanced in the upper
levels of the proposed development. The results confirm the consistency and continuity of
mineralisation below the current Syama Underground Reserve and emphasise the possibility of
future expansion and extension to the Syama Gold Mine. The deep extension drilling program is
planned to continue throughout 2016 and is expected to enhance the existing resource model and
deliver further mine life extension opportunities beyond the current 12-year mine life of the Syama
Underground Project.
In June 2016, Resolute completed a positive Feasibility Study (“Study”) for its 90% owned Bibiani
project. The Study was lodged with the Government of Ghana, which owns a 10% free carried
interest in Bibiani. Delivery of the Study to the Ghanaian Minerals Commission was a key
commitment made by Resolute as part of the government’s approval of the Company’s acquisition of
the asset in 2014. Key highlights of the Study include:
o Initial Ore Reserve of 5.4 million tonnes @ 3.7 grams per tonne containing 640,000 ounces of
gold;
o mine plan to produce up to 1.2 million tonnes per annum of underground ore;
o initial operating life of 5 years with production of approximately 100,000 ounces per annum;
o start-up capital of US$72M including US$29M of underground mining equipment;
o short timeline to production expected with only a 9-month development and refurbishment
period;
o life of Mine All-in-Sustaining-Costs of US$858/oz;
o the location and characteristics of Bibiani are well matched to the technical capabilities of the
Company; and,
o substantial upside remains with ongoing work scheduled to focus on upgrading and expanding
the orebody to extend mine life and reduce operating costs.
57
Resolute Mining Limited | Annual Report 2016 Directors’ Report
Review of Operations
Exploration and Development (continued)
During the year the Company continued to refine the Ravenswood Expansion Project (“REP”) with the
Resolute Board of Directors approving the development of the Nolans East deposit. Work continued
during the June quarter on finalising the Environmental Application (EA) amendment for the Sarsfield
Expansion Project. The EA amendment is scheduled to be submitted in the September 2016 quarter.
The decision to commence production from Nolans East has allowed the Company to implement a
disciplined hedging program to manage gold price risk during the transition from underground to large
scale open pit operations. Resolute has sold forward 36,000oz of gold at an average price of A$1,800/oz.
These forward gold sales of 3,000oz per month cover the period from November 2016 to October 2017
to match approximately 50% of the production from Nolans East.
Likely Developments and Expected Results
Gold production for FY17 forecast to be a minimum of 300,000oz at All-In-Sustaining-Costs of A$1,280/oz
(US$934/oz).
Gold sales forecast to be 325,000oz as increased processing efficiency continues to allow a reduction of
gold in circuit inventory.
o At Syama, sulphide stockpiles are being managed to provide a consistent feed to the sulphide plant
until the underground is developed and reaches full production. A key project underway over the first
half of FY17 is to increase throughput in the sulphide circuit to an annualised 2.2Mtpa rate with work
to achieve this having commenced. Mobilisation of the underground mining contractor will be largely
completed during the September 2016 quarter.
o At Ravenswood, preparation is well underway for the re-commencement of open pit mining
operations at the Nolans East open pit. Initial mining will be from the Nolans East cutback following
the mobilisation of a mining contractor to site. The Nolans process plant will be upgraded to 2.8Mtpa
capacity by the addition of tertiary crushing and various minor changes in the milling circuit. Mining is
expected to commence during the first quarter of FY17 with the process plant upgrade completed
during the second quarter of FY17.
Capital expenditure for major growth projects is expected to be A$170M (US$124M), fully funded from
existing cash reserves and operating cash flows.
Exploration budget increased to A$19M (US$14M) focused on resource and reserve expansion at Syama,
Ravenswood and Bibiani.
Remuneration Report
The following information has been audited.
This remuneration report outlines the director and executive remuneration arrangements of the Company and
the Group in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the
purposes of this report, key management personnel of the Group are defined as those persons having authority
and responsibility for planning, directing and controlling the major activities of the Company and the Group,
including any director (whether executive or otherwise) of the parent company.
58
Resolute Mining Limited | Annual Report 2016 Directors’ Report
Remuneration Report (continued)
a)
(i)
Key management personnel
Directors
Name
P. Huston
J. Welborn
M. Botha
H. Price
P. Sullivan
Position held during the financial year
Non-Executive Chairman
Managing Director and Chief Executive Officer
Non-Executive Director
Non-Executive Director
Non-Executive Director
(ii)
Executives
Name
P. Beilby
G. Fitzgerald
P. Henharen
V. Hughes
D. Kelly
B. Mowat
P. Venn
Position held during the financial year
Chief Operating Officer
Chief Financial Officer and Company Secretary
General Manager – Project Delivery (appointed 4 April 2016)
General Manager – People, Culture and Information (appointed 27 June 2016)
General Manager – Corporate Strategy (appointed 4 April 2016)
General Manager - Exploration (appointed 4 April 2016)
Chief Business Development Officer (up until 29 April 2016)
b)
Compensation of key management personnel
RML Remuneration Policy
The Board recognises that the performance of the Company depends upon the quality of its directors and
executives. To achieve its financial and operating objectives, the Company must attract, motivate and retain
highly skilled directors and executives.
The Company embodies the following principles in its remuneration framework:
• Provides competitive rewards to attract high calibre executives;
•
structures remuneration at a level that reflects the executive’s duties and accountabilities and is
competitive within Australia;
benchmarks remuneration against appropriate groups; and,
aligns executive incentive rewards with the creation of value for shareholders.
•
•
Remuneration and Nomination Committee
The Remuneration and Nomination Committee is responsible for determining and reviewing the compensation
arrangements for the directors themselves, the Chief Executive Officer and the executive team.
Executive remuneration is reviewed annually having regard to individual and business performance, relevant
comparative information and internal and independent external information.
In accordance with best practice governance the Remuneration and Nomination Committee is comprised solely
of non-executive directors.
Remuneration Structure
In accordance with best practice governance, the structure of non-executive director and senior executive
remuneration is separate and distinct.
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Resolute Mining Limited | Annual Report 2016 Directors’ Report
Remuneration Report (continued)
Non-Executive Director Remuneration
Objective
The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to
attract and retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.
Structure
The Company’s constitution and the ASX Listing Rules specify that the aggregate remuneration of non-
executive directors shall be determined from time to time by a general meeting. An amount not exceeding the
amount determined is then divided between the directors as agreed. The latest determination was at the
Annual General Meeting held on 30 November 2010 when the shareholders approved an aggregate
remuneration of $600,000 per year.
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is
apportioned amongst directors is reviewed annually. The board considers fees paid to non-executive directors
of comparable companies when undertaking the annual review process. Each non-executive director receives
a fee for being a director of the Company and for sitting on relevant board committees. The fee size is
commensurate with the workload and responsibilities undertaken.
Chief Executive Officer and Executive Remuneration
Objective
The Company aims to reward executives with a level and mix of remuneration commensurate with their
position and responsibilities within the Company and so as to ensure total remuneration is competitive by
market standards.
Structure
In determining the level and make up of executive remuneration, the Remuneration and Nomination Committee
uses an external consultant’s Remuneration Report to determine market levels of remuneration for comparable
executive roles in the mining industry. An external advisor has been used to assist in the design and
implementation of a Remuneration Framework that is in line with industry practice.
It is the Remuneration and Nomination Committee’s policy that employment contracts are entered into with the
Chief Executive Officer and the executive employees. Details of these contracts are outlined later in this report.
Remuneration consists of the following key elements:
• Fixed remuneration
• Variable remuneration
o
o
Short term incentives (STI); and,
Long term incentives (LTI).
The proportion of fixed remuneration and variable remuneration (potential short term and long term incentives)
is established for each executive by the Remuneration and Nomination Committee and for the year ended 30
June 2016 was as follows:
60
Resolute Mining Limited | Annual Report 2016 Directors’ Report
Remuneration Report (continued)
Fixed Remuneration
Objective
The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to
the position and is competitive in the market.
Fixed remuneration is reviewed annually by the Remuneration and Nomination Committee. The process
consists of a review of individual performance, relevant experience, and relevant comparable remuneration in
the mining industry.
Structure
Executives are given the opportunity to receive their fixed remuneration in a variety of forms including cash and
fringe benefits such as motor vehicles and expense payment plans. It is intended that the manner of payment
chosen will be optimal for the recipient without creating undue cost to the Company.
Variable Remuneration – Short Term Incentive (“STI”)
Objective
The objective of the STI is to provide a greater alignment between performance and remuneration levels.
Structure
The STI is an annual “at risk” component of remuneration for executives. It is payable based on performance
against key performance indicators (KPIs) set at the beginning of the financial year. STI’s are structured to
remunerate executives for achieving annual Company targets and their own individual performance targets.
The net amount of any STI after allowing for applicable taxation, is payable in cash.
KPIs require the achievement of strategic, operational or financial measures and in most cases are linked to
the drivers of business performance. For each KPI there are defined “threshold”, “target” and “stretch”
measures which are capable of objective assessment. For the executives, a below “threshold” performance
delivers a nil STI, a “threshold” performance delivers a STI equal to 12.5% of fixed remuneration, a “target”
performance delivers a STI equal to 50% of fixed remuneration, and a “stretch” performance delivers a STI
equal to 65% of fixed remuneration. Pro-rata vesting applies on a straight line basis between “threshold” and
“target” and from “target” to “stretch” Performance.
Target performance represents challenging but achievable levels of performance. Stretch performance
requires significant performance above and beyond normal expectations and if achieved is anticipated to result
in a substantial improvement in key strategic outcomes, operational or financial results, and/or the business
performance of the Company.
The Remuneration Committee is responsible for recommending to the Board KPIs for each executive and then
later assessing the extent to which the KPIs of the executive have been achieved, and the amount to be paid to
each executive. To assist in making this assessment, the Committee receives detailed reports and
presentations on the performance of the business from the CEO, Company Secretary and independent
remuneration consultants as required.
61
Resolute Mining Limited | Annual Report 2016 Directors’ Report
Remuneration Report (continued)
The STI measures comprise:
Improved safety performance – measured by:
o a lag indicator in the form of a specified reduction in the Total Recordable Injury Frequency Rate
in comparison to prior years; and
o specified lead indicators designed to be proactive and influence future events with measures
being put in place to prevent incidents and injury. As part of this process, a Safety Action
Performance list is prepared each year outlining a set of actions and deliverables.
The achievement of defined targets relative to budget relating to:
o operating cash flow;
o gold production; and,
o cost per tonne milled.
A personal performance metric.
These measures have been selected as they can be reliably measured, are key drivers of value for
shareholders and encourage behaviours in line with the Company’s core values.
Changes to the STI Plan from 1 July 2016
A recently conducted independent review of the Company’s incentive plans has led to some changes that will
be implemented from 1 July 2016. The intention of the proposed changes to the STI and LTI plans is to support
current strategies and business objectives and to ensure both programs are correctly aligned with the creation
of shareholder value.
With effect from 1 July 2016, amendments have been made to:
the threshold, target, and stretch performance levels to make them more difficult to achieve. This has been
balanced by increasing the reward for executive for a stretch performance to 75% (from 65%) of fixed
remuneration; and
introduce Board discretion, on Managing Director and Chief Executive Officer recommendation, to modify
the payment to an individual or to group participants based on performance factors, safety factors, or to
recognise extraordinary occurrences which have had a positive or negative impact on results and
shareholder value
The individual performance measures vary according to the individual executive’s position, and reflect value
accretive and/or risk mitigation achievements for the benefit of the Company within each executive’s respective
areas of responsibility. They also include a discretionary factor determined by the Board designed to take into
account unexpected events and achievements during the year.
The aggregate of annual STI payments available for executives across the Company is subject to the approval
of the Remuneration and Nomination Committee. Payments are delivered as a cash bonus and/or in the form
of superannuation.
Performance in the 2015/16 Year
The STI payments to executives during the year under review were on average just below the target level. Gold
production, operating cash flow and cost per tonne milled performance were all around the target level, but an
increase in the Total Reportable Injury Frequency Rate during the year resulted in a below threshold outcome
on the safety metric. It is important to note that corrective actions have been taken to improve overall safety
performance.
62
Resolute Mining Limited | Annual Report 2016 Directors’ Report
Remuneration Report (continued)
Variable Remuneration – Long Term Incentive (“LTI”)
Objective
The objective of the LTI plan is to reward executives in a manner, which aligns this element of remuneration
with the creation of shareholder wealth.
As such LTIs are provided to executives who are able to influence the generation of shareholder wealth and
thus have an impact on the Company’s performance against the relevant long-term performance hurdles.
Overview of the Company’s approach to Long Term Incentives
a) Selecting the right plan vehicle
To provide an effective tool to reward, retain and motivate executives, following receipt of advice from a
remuneration consultant in 2012, the Board decided that the most appropriate LTI plan is a Performance Rights
Plan. Under a Performance Rights Plan, executives are granted a right to be issued a share in the future
subject to performance based vesting conditions being met.
In June 2016, the Remuneration & Nomination Committee approved the engagement of Egan Associates Pty
Ltd to provide the Company with CEO Remuneration benchmarking data and to conduct a review of the
Company’s Incentive Plan. The engagement was directly instigated by the Committee Chairman and reports
provided by Egan Associates Pty Ltd were submitted to the Chairman to ensure KMP with a vested interest
were removed from this process.
The Committee is satisfied the advice received from Egan Associates Pty Ltd is free from undue influence from
the KMP to whom the remuneration information applies. The recommendations and background information
provided on the Company’s incentive plans were provided to Resolute as an input into the decision making
only. The Committee considered the recommendations, along with other factors, in making remuneration
decisions.
The fees paid to Egan Associates Pty Ltd for their report on CEO remuneration benchmarking and
recommendations for the structuring of the Company’s incentive plans were $21,000.
b) Grant Frequency and LTI quantum
Executives receive a new grant of performance rights every year and the LTI forms a key component of the
executive’s Total Annual Remuneration.
The LTI dollar value that executives are entitled to receive is set at a fixed percentage of their fixed
remuneration and has equated to 75% of fixed remuneration for the Chief Executive Officer and 50% of fixed
remuneration for the other executives. This level of LTI is in line with current market practice.
The number of performance rights granted up until 30 June 2016 has been determined by dividing the LTI
dollar value of the award by the fair value of a Performance Right on the grant date.
c) Performance Conditions
Performance conditions have been selected that reward executives for creating shareholder value as
determined via the change in the Company’s share price and via reserves/resources growth over a 3 year
period.
63
Resolute Mining Limited | Annual Report 2016 Directors’ Report
Remuneration Report (continued)
d) Changes to the LTI Plan from 1 July 2016
Following the receipt of feedback from a remuneration consultant and subject to shareholder approval where
relevant, the following key changes have been made to the LTI plan with effect from 1 July 2016:
• A cap equal to 1% of Resolute shares on issue has been placed on annual performance rights grants. The
total number of performance rights on issue at any point in time is capped at 5% of Resolute shares on issue.
• An increase in the threshold for the Total Shareholder Return (“TSR”) metric from P50 to P60 to make it
harder for participants to meet the minimum requirement for vesting.
• The methodology of valuing performance rights by reference to the fair value has been changed and future
performance rights to be granted will be valued at their face value for the purposes of calculating how many
performance rights are to be granted.
• Inclusion in the terms of the LTI Plan the ability to adjust the number of performance rights at vesting to allow
for any capital returns and dividends during the vesting period.
• Inclusion in the terms of the LTI Plan a clause to allow the tax beneficial deferral of exercise of Rights
following vesting conditions being met. This change is a result of tax law changes in 2015 and has been made
to encourage participants to retain shares received upon vesting of performance rights as opposed to
immediately selling shares to meet tax liabilities.
• An increase in participation rates which will see the CEO’s LTI opportunity increased from 75% of fixed
remuneration to 100% of fixed remuneration and the Executives’ LTI opportunity increased from 50% to 65%.
This is designed to provide stronger alignment of executive behaviour and the creation of enduring shareholder
value.
The LTI performance is structured as follows:
Performance Rights will vest subject to meeting service and performance conditions as defined below:
75% of the Rights will be performance tested against the relative total shareholder return (“TSR”)
measure over a 3 year period; and,
25% of the Rights will be performance tested against the reserve/resource growth over a 3 year period.
Reflecting on market practice the Board has decided that the most appropriate performance measure to track
share price performance is via a relative TSR measure.
The Company’s TSR is updated each year and is measured against a customised peer group comprising the
following companies:
Alacer Gold Corporation
Beadell Resources Ltd
Endeavour Mining Corporation
Evolution Mining Ltd
Kingsgate Consolidated Ltd
Medusa Mining Ltd
Northern Star Resources Limited
OceanaGold Corporation
Perseus Mining Ltd
Ramelius Resources Ltd
Regis Resources Ltd
Saracen Mining Ltd
Silver Lake Resources Ltd
St Barbara Ltd
Teranga Gold Corporation
Troy Resources Limited
No performance rights (relating to TSR) will vest unless the percentile ranking of the Company’s TSR for the
relevant performance year, as compared to the TSR’s for the peer group companies for that year, is at or
above the 50th percentile (which has increased to the 60th percentile for grants made after 30 June 2016).
64
Resolute Mining Limited | Annual Report 2016 Directors’ Report
Remuneration Report (continued)
The following table sets out the vesting outcome based on the company’s relative TSR performance for the
year ended 30 June 2016:
Relative TSR performance
Less than 50th percentile
At the 50th percentile
Between 50th and 75th percentile
Performance Vesting Outcomes
0% vesting
50% vesting
For each percentile over the 50th, an additional
2% of the performance rights will vest
At or above 75th percentile
100% vesting
The second performance condition is reserve/resource growth net of depletion over a 3 year period. Broadly,
the quantum of the increase in reserves/resources will determine the number of performance rights to vest.
The following table sets out the vesting outcome based on the company’s reserve/resource growth
performance:
Reserves and Resource Growth Performance Performance Vesting Outcomes
R&R depleted
R&R maintained
R&R grown by up to 30%
0% vesting
50% vesting
For each 1% growth in R&R, an additional 1.67%
of the performance rights will vest
100% vesting
R&R grown by 30% or more
e) Performance period
Grants under the LTI need to serve a number of different purposes:
i) Act as a key retention tool; and,
ii) focus on future shareholder value generation.
Therefore, the awards under the LTI relate to a 3 year period and provide a structure that is focused on long
term sustainable shareholder value generation.
f) LTI Vesting Outcomes for the 3 Years Ended 30 June 2016
On 1 July 2013, 3,585,228 performance rights were granted to Level 1 employees (Executives and Operations
General Managers). Up until 30 June 2016, 431,632 performance rights had lapsed leaving 3,153,596
performance rights on issue. These performance rights related to the 3 year period ended 30 June 2016, and
have recently been performance tested. Resolute’s TSR performance over the 3 years ended 30 June 2016
was at the 60th percentile of its peer group, resulting in a vesting outcome of 70% of the performance rights
under this metric (which accounts for 75% of the performance rights issued). Resolute’s R&R growth (which
accounts for 25% of the performance rights issued) over the 3 years ended 30 June 2016 was less than 0%,
resulting in a nil vesting outcome for this metric. As a result of the above test results, 1,655,638 of the
performance rights met the performance measures and vested whilst 1,929,590 of the performance rights did
not meet the performance measures and lapsed. This equates to a vesting rate of 46% and a lapsing rate of
54%.
65
Resolute Mining Limited | Annual Report 2016 Directors’ Report
Remuneration Report (continued)
g) Change of Control Provisions
On the occurrence of a Change of Control Event, the Board will determine, in its sole and absolute discretion,
the manner in which all unvested and vested Awards will be dealt with.
Up until January 2012, LTI grants to executives were delivered in the form of employee share options. These
options were previously issued with an exercise price at a 10% premium to the RML ordinary share price at the
date the Remuneration and Nomination Committee decided to invite the eligible persons to apply for the option.
These employee share options vest over a 30 month period. This option plan has been replaced by the new
Performance Rights Plan. All existing options issued under the employee share option plan will continue to
vest, however it is the current intention that no further options will be issued in the future.
Options granted in prior periods are vested in accordance with the Resolute Mining Limited Employee Share
Option Plan following a review by the relevant supervisor of the executive’s performance. If a satisfactory
performance level is achieved, the relevant portions of the options vests to the executive. In order for the
executive’s options to vest, the executive must successfully meet the deliverables set out in their employment
contract specific to their role. The assessment of whether the executive’s role has been successfully
performed (therefore allowing the options to vest) is done by way of a formal annual appraisal of the
executive’s individual performance. Assessments of performance generally exclude factors external to the
Company.
The performance of the Chief Executive Officer is assessed by the Chairman, and the performance of the other
executives is assessed by the Chief Executive Officer. The annual performance appraisal assesses each
executive’s performance against the previously identified key performance indicators and also assesses
progress on their development priorities and actions.
The Company prohibits directors or executives from entering into arrangements to protect the value of
unvested Resolute Mining Limited shares, options or performance rights that the director or executive may
become entitled to as part of his/her remuneration package. This includes entering into contracts to hedge
their exposure to RML rights, options or shares that may vest to him/her in the future.
66
Resolute Mining Limited | Annual Report 2016 D
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Resolute Mining Limited | Annual Report 2016
Directors’ Report
Details of shareholdings of key management personnel are as follows:
2016
Directors
P. Huston
P. Sullivan
M. Botha
H. Price
J. Welborn (i)
Officers
P. Beilby
G. Fitzgerald
P. Venn
Balance at the
start of the
year
Received during
the year on
vesting of
performance
rights
Received during
the year on
conversion of
convertible notes
Purchased on
market during
the year
Other changes
during the
year (ii)
Balance at the
end of the year
428,182
3,007,448
-
194,745
350,000
20,000
-
85,000
-
135,694
-
-
-
56,862
49,754
43,293
-
-
-
-
200,000
-
-
-
-
1,000,000
-
-
-
-
-
428,182
3,143,142
-
194,745
1,550,000
500
-
-
-
-
-
-
-
(128,293)
77,362
49,754
-
(i)
(ii)
Mr Welborn acquired 650,000 fully paid ordinary shares in July 2015 and 350,000 fully paid ordinary
shares in March 2016.
These were the number of shares held by Mr Venn when he ceased employment effective April 2016.
Details of convertible note holdings of key management personnel are as follows:
2016
Directors
J. Welborn
Officers
P. Beilby
P. Venn
Balance at the
start of the
year
Converted into
shares during the
year
Other changes
during the year
Balance at the
end of the
year
200,000
(200,000)
-
500
500
(500)
-
-
(500)
-
-
-
71
Resolute Mining Limited | Annual Report 2016 Directors’ Report
Executive Employment Contracts
Name
Title
John Welborn Managing Director and Chief
Executive Officer
Chief Operating Officer
Peter Beilby
Term of
Agreement
Open
Notice
Period by
Executive
6 months
Open
3 months
Chief Financial Officer
Open
3 months
Greg
Fitzgerald
David Kelly
General Manager – Corporate
Strategy
General Manager – Project
Delivery
Paul
Henharen
Bruce Mowat General Manager – Exploration
Vanessa
Hughes
General Manager – People,
Culture & Information
¹ NES is the National Employment Standards.
Loans to Key Management Personnel
Open
3 months
Open
3 months
Open
1 month
Open
3 months
6 months
6 months
Termination
Benefit¹
Notice
Period by
Company
12 months Redundancy
as per NES
Redundancy
as per NES
Redundancy
as per NES
Redundancy
as per NES
Redundancy
as per NES
Redundancy
as per NES
Redundancy
as per NES
3 months
3 months
3 months
1 month
There were no loans to key management personnel during the years ended 30 June 2016 and 30 June 2015.
Company Performance
The table below shows the performance of the Consolidated Entity over the last 5 years:
Net profit/(loss) after tax
Basic earnings/(loss) per share cents/share
$'000
This is the end of the audited information.
Shares under Options
30 June 2016 30 June 2015 30 June 2014 30 June 2013 30 June 2012
101,859
18.62
(568,760)
(78.39)
105,443
13.29
212,927
28.31
29,156
5.20
Unissued ordinary shares of Resolute Mining Limited under option at the date of this report are as follows:
Grant date Expiry date
4/01/2012
26/01/2017
Exercise
price
$1.85
Number on
issue
500,400
500,400
Shares issued as a result of the exercise of options:
From 1 July 2015 up until the date of this report, 130,000 shares were issued following the exercise of options
on 1 August 2016. The remaining 45,000 options lapsed.
72
Resolute Mining Limited | Annual Report 2016
Directors’ Report
Shares under Options (continued)
Performance rights at the date of this report are as follows:
Grant date
Vesting date
1/07/2014
1/07/2015
28/08/2015
30/06/2017
30/06/2018
30/06/2017
Exercise price
-
-
-
Number on
issue
2,250,597
5,083,995
4,883,803
12,218,395
Indemnification and Insurance of Directors and Officers
RML maintains an insurance policy for its directors and officers against certain liabilities arising as a result of
work performed in the capacity as directors and officers. The company has paid an insurance premium for the
policy. The contract of insurance prohibits disclosure of the amount of the premium and the nature of the
liabilities insured.
Indemnification of Auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of
the terms of its audit engagement agreement against claims by third parties arising from the audit (for an
unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial
year.
Auditor Independence
Refer to page 75 for the Auditor’s Independence Declaration to the Directors of Resolute Mining Limited.
Directors’ Meetings
The number of meetings and resolutions of directors (including meetings of committees of directors) held
during the year and the number of meetings (or resolutions) attended by each director were as follows:
Full
Board
Audit
Environment
& Community
Development
Remuneration
& Nomination
Safety,
Security &
Occupational
Health
Financial Risk
Management
P. Huston
P. Sullivan
M. Botha
J. Welborn
H. Price
Number of meetings
(or resolutions) held
24
24
24
24
24
24
5
n/a
5
n/a
5
5
n/a
n/a
n/a
4
n/a
4
5
n/a
5
n/a
5
5
n/a
n/a
n/a
4
n/a
4
n/a
17
n/a
17
n/a
17
The details of the functions of the other committees of the Board are presented in the Corporate Governance
Statement.
73
Resolute Mining Limited | Annual Report 2016
Directors’ Report
Corporate Governance Statement
RML provides disclosure of the Company’s Corporate Governance Statement on the Company’s website at
https://www.rml.com.au/corporate-governance.html.
Rounding
RML is a Company of the kind specified in Australian Securities and Investments Commission Corporations
(Rounding in Financial Directors’ Reports) Instrument 2016/191. In accordance with that class order, amounts
in the financial report and the Directors' Report have been rounded to the nearest thousand dollars unless
specifically stated to be otherwise.
Non-Audit Services
Non-audit services were provided by the entity’s auditor, Ernst & Young. The directors are satisfied that the
provision of non-audit services is compatible with the general standard of independence for auditors imposed
by the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that
auditor independence was not compromised.
Ernst & Young Australia received or are due to receive $21,950 for the provision of taxation planning advice
and other review services in the year ended 30 June 2016 (2015: $89,800).
Signed in accordance with a resolution of the directors.
J.P. Welborn
Director
Perth, Western Australia
30 August 2016
74
Resolute Mining Limited | Annual Report 2016 75
Resolute Mining Limited | Annual Report 2016 Table of Contents
Financial
Statements
Notes to the
Financial
Statements
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
About this Report
A Earnings for the Year
A.1 Segment revenue and expenses
A.2 Dividends paid or proposed
A.3 Earnings/(loss) per share
A.4 Taxes
B Production and Growth Assets
B.1 Mine properties and property, plant and equipment
B.2 Exploration and evaluation assets
B.3 Impairment of non-current assets
B.4 Segment expenditure, assets and liabilities
Debts and Capital
C
C.1 Cash
C.2 Interest bearing liabilities
C.3 Financing facilities
C.4 Contributed equity
C.5 Other reserves
D Other Assets and Liabilities
D.1 Receivables
D.2 Inventories
D.3 Financial assets and liabilities
D.4 Payables
D.5 Unearned revenue
D.6 Provisions
E Other Items
E.1 Contingent liabilities
E.2 Leases and other commitments
E.3 Auditor remuneration
E.4 Subsidiaries and non-controlling interests
E.5 Joint operations
E.6 Discontinued operations
E.7 Subsequent events
E.8 Related party disclosures
E.9 Parent entity information
E.10 Employee benefits and share based payments
E.11 Other accounting policies
Other
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
76
Resolute Mining Limited | Annual Report 2016 Consolidated Statement of Comprehensive Income
Note
2016
$'000
2015
$'000
Continuing Operations
Revenue from gold and silver sales
Costs of production relating to gold sales
Gross profit before depreciation, amortisation and other operating costs
Depreciation and amortisation relating to gold sales
Other operating costs relating to gold sales
Gross profit from operations
Other income
Other expenses
Exploration and business development expenditure
Administration and other corporate expenses
Treasury - realised losses
Fair value movements and unrealised treasury transactions
Asset impairment expenses
Depreciation of non mine site assets
Finance costs
Profit/(loss) before tax from continuing operations
Tax expense
A.1
A.1
A.1
A.1
A.1
A.1
A.1
A.1
A.1
A.1
A.1
A.1
A.1
A.4
554,624
(313,217)
241,407
(39,121)
(35,585)
459,147
(256,935)
202,212
(101,493)
(29,800)
166,701
70,919
512
(7,741)
(7,626)
(5,970)
(22,846)
54,303
-
(94)
(9,082)
12,135
(1,084)
(7,327)
(6,820)
(579)
(47,860)
(571,601)
(102)
(11,063)
168,157
(563,382)
-
(105)
Profit/(loss) for the year from continuing operations
168,157
(563,487)
Discontinued Operation
Profit/(loss) after tax for the discontinued operation
E.6
44,770
(5,273)
Profit/(loss) for the year
Profit/(loss) attributable to:
Members of the parent
Non-controlling interest
212,927
(568,760)
E.4
181,713
31,214
212,927
(502,637)
(66,123)
(568,760)
77
Resolute Mining Limited | Annual Report 2016 Consolidated Statement of Comprehensive Income
(continued)
Note
2016
$'000
2015
$'000
Profit/(loss) for the year (brought forward)
212,927
(568,760)
Other comprehensive (loss)/income
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations:
- Members of the parent
- Transferred to profit and loss - disposed subsidiaries
Changes in the fair value/realisation of available for sale financial assets,
net of tax
Items that may not be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations:
- Non-controlling interest
Other comprehensive (loss)/income for the period, net of tax
(2,005)
(39,402)
41,361
-
59
(11,615)
(2,879)
(44,227)
1,739
31,485
Total comprehensive income/(loss) for the period
168,700
(537,275)
Total comprehensive income/(loss) attributable to:
Members of the parent
Non-controlling interest
Earnings/(loss) per share for net profit/(loss) attributable to the
ordinary equity holders of the parent:
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
Earnings/(loss) per share for net profit/(loss) from continuing
operations attributable to the ordinary equity holders of the
parent:
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
140,365
28,335
168,700
(469,413)
(67,862)
(537,275)
A.3
A.3
28.31 cents
27.59 cents
(78.39) cents
(78.39) cents
21.34 cents
20.79 cents
(77.57) cents
(77.57) cents
The above consolidated statement of comprehensive income should be read in conjunction with the
accompanying notes.
78
Resolute Mining Limited | Annual Report 2016 Consolidated Statement of Financial Position
Note
2016
$'000
2015
$'000
Current assets
Cash
Receivables
Inventories
Available for sale financial assets
Other current assets
Total current assets
Non current assets
Receivables
Other financial assets
Exploration and evaluation
Development
Property, plant and equipment
Total non current assets
Total assets
Current liabilities
Payables
Interest bearing liabilities
Provisions
Financial derivative liabilities
Unearned revenue
Total current liabilities
Non current liabilities
Financial derivative liabilities
Interest bearing liabilities
Provisions
Total non current liabilities
Total liabilities
Net assets
Equity attributable to equity holders
of the parent
Contributed equity
Reserves
Accumulated losses
Total equity attributable to equity
holders of the parent
Non-controlling interest
Total equity
C.1
D.1
D.2
D.3
D.1
D.3
B.2
B.1
B.1
D.4
C.2
D.6
D.3
D.5
D.3
C.2
D.6
C.4
C.5
E.4
79,873
7,005
186,012
427
2,177
275,494
-
3,699
46,292
117,190
61,656
228,837
504,331
33,367
26,678
28,328
151
-
88,524
264
-
65,139
65,403
153,927
350,404
395,198
33,263
(32,080)
396,381
(45,977)
350,404
9,885
11,451
194,606
114
3,535
219,591
558
3,584
33,951
90,469
66,318
194,880
414,471
36,485
99,430
32,151
-
3,307
171,373
-
14,286
63,586
77,872
249,245
165,226
380,305
73,026
(213,793)
239,538
(74,312)
165,226
The above consolidated statement of financial position should be read in conjunction with the accompanying
notes.
79
Resolute Mining Limited | Annual Report 2016 A
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Resolute Mining Limited | Annual Report 2016
Consolidated Cash Flow Statement
Note
2016
$'000
2015
$'000
Cash flows from operating activities
Receipts from customers
Payments to suppliers, employees and others
Exploration expenditure
Interest paid
Interest received
Income tax paid
Net cash flows from operating activities
Cash flows used in investing activities
Payments for property, plant & equipment
Proceeds from sale of available for sale financial assets
Payments for development activities
Payments for evaluation activities
Proceeds from sale of property, plant & equipment
Proceeds from sale of other assets
Payments for other financial assets
Other investing activities
Net cash flows used in investing activities
Cash flows from financing activities
Repayment of borrowings
Repayment of lease liability
Proceeds from finance facilities
Net cash flows used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Exchange rate adjustment
Cash and cash equivalents at the end of the period
Cash and cash equivalents comprise the following:
Cash at bank and on hand
Bank overdraft
C.1
554,624
(347,715)
(8,115)
(6,043)
46
-
192,797
(13,709)
-
(18,339)
(12,669)
4,078
-
(254)
(2,407)
(43,300)
(74,171)
(4,688)
-
(78,859)
70,638
(19,735)
2,514
53,417
C.1
C.2
79,873
(26,456)
53,417
462,232
(384,817)
(8,998)
(6,252)
27
(331)
61,861
(6,690)
23,252
(59,507)
(33,200)
2,258
3,087
-
(1,899)
(72,699)
(11,228)
(5,461)
14,411
(2,278)
(13,116)
(7,344)
725
(19,735)
9,885
(29,620)
(19,735)
The above consolidated cash flow statement should be read in conjunction with the accompanying notes.
81
Resolute Mining Limited | Annual Report 2016
About this Report
The financial report of Resolute Mining Limited and its controlled entities (“Resolute”, “consolidated entity” or
the “Group”) for the year ended 30 June 2016 was authorised for issue in accordance with a resolution of
the Directors on 25 August 2016.
Resolute Mining Limited (the parent entity) is a for profit company limited by shares incorporated and
domiciled in Australia whose shares are publicly traded on the Australian Securities Exchange. The nature
of the operations and principal activities of the Group are described in the directors’ report and in the
segment information in Note A.1. There has been no significant change in the nature of those activities
during the year.
Statement of Compliance
This general purpose financial report has been prepared in accordance with Australian Accounting
Standards, other authoritative pronouncements of the Australian Accounting Board and the Corporations Act
2001. The financial report complies with Australian Accounting Standards as issued by the Australian
Accounting Standards Board and International Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board. The accounting policies are consistent with those disclosed in
the 30 June 2015 Financial Report, except for the impact of all new or amended Standards and
Interpretations. The adoption of these Standards and Interpretations did not result in any significant changes
to the Group’s accounting policies.
The financial report includes financial information for Resolute Mining Limited (“RML”) as an individual entity
and the consolidated entity consisting of RML and its subsidiaries. Where appropriate, comparative
information has been reclassified.
Basis of Preparation
These financial statements have been prepared under the historical cost convention, as modified by the
revaluation of certain financial assets and liabilities (including derivative instruments) at fair value through
profit and loss.
The financial report comprises the financial statements of the Group and its subsidiaries as at 30 June each
year. Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease
to be consolidated from the date at which control is transferred out of the Group. Profit or loss and each
component of other comprehensive income (“OCI”) are attributed to the equity holders of the parent of the
Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit
balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity,
income, expenses and cash flows relating to transactions between members of the Group are eliminated in
full on consolidation. Interests in associates are equity accounted and are not part of the consolidated
Group.
Rounding of Amounts
The financial report has been prepared in Australian dollars and all values are rounded to the nearest
thousand dollars ($’000) unless otherwise stated.
82
Resolute Mining Limited | Annual Report 2016 About this Report
Currency
Items in the financial statements of each of the Group’s entities are measured in their respective functional
currencies. Resolute Mining Limited’s functional and presentation currency is Australian dollars.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the
reporting date are translated at the rates of exchange ruling at that date. Exchange differences in the
consolidated financial statements are taken to the income statement, except when deferred in equity as
qualifying cash flow hedges and qualifying net investment hedges.
Translation differences on non-monetary items, such as equities held at fair value through profit or loss, are
reported as part of the fair value gain or loss. Translation differences on non-monetary items, such as
equities classified as available-for-sale financial assets, are included in the fair value reserve in equity.
The results and financial position of all the Group entities (none of which has the currency of a
hyperinflationary economy) that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
Assets and liabilities for each consolidated statement of financial position presented are translated at
the closing rate at the date of that consolidated statement of financial position;
income and expenses for each consolidated statement of comprehensive income are translated at
average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the
rates prevailing on the transaction dates, in which case income and expenses are translated at the
dates of the transactions); and,
all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities,
and of borrowings and other currency instruments designated as hedges of such investments, are taken to
shareholders’ equity. When a foreign operation is sold or borrowings repaid, a proportionate share of such
exchange differences are recognised in the consolidated statement of comprehensive income as part of the
gain or loss on sale.
Financial and Capital Risk Management
The Group's activities expose it to a variety of financial risks: market risk (including gold price risk, diesel
fuel price risk, currency risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk
management program focuses on the unpredictability of financial markets and seeks, where considered
appropriate, to minimise potential adverse effects on the financial performance of the Group. The Group
may use derivative financial instruments to manage certain risk exposures. Derivatives have been used
exclusively for managing financial risks, and not as trading or other speculative instruments.
Risk management is carried out by the Group's Financial Risk Management Committee under policies
approved by the Board of Directors. The Financial Risk Management Committee identifies, evaluates and
manages financial risks as deemed appropriate. The Board provides guidance for overall risk management,
including guidance on specific areas, such as mitigating commodity price, foreign exchange, interest rate
and credit risks, and derivative financial instrument risk.
Foreign exchange risk management
The Group receives multiple currency proceeds on the sale of its gold production and significant costs for the
Syama Gold Project and the Bibiani Project are denominated in AUD, USD and the local currencies of those
projects, and as such movements within these currencies expose the Group to exchange rate risk.
83
Resolute Mining Limited | Annual Report 2016 About this Report
Financial and Capital Risk Management (continued)
Foreign exchange risk management (continued)
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities
denominated in a currency that is not the entity’s functional currency. The risk can be measured by performing
a sensitivity analysis that quantifies the impact of different assumed exchange rates on the Group’s forecast
cash flows.
The Group's Financial Risk Management Committee continues to manage and monitor foreign exchange
currency risk. At present, the Group does not specifically hedge its exposure to foreign currency exchange rate
movements.
Diesel price risk management
The Group is exposed to movements in the diesel fuel price. The costs incurred purchasing diesel fuel for use
by the Group’s operations is significant. The Group's Financial Risk Management Committee continues to
manage and monitor diesel fuel price risk. At present, the Group does not specifically hedge its exposure to
diesel fuel price movements.
The below risks arise in the normal course of the Group’s business. Risk information can be found in the
following sections:
Section C
Section C
Section C
Section D
Capital risk
Interest rate risk
Liquidity risk
Credit risk
84
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements A: Earnings for the Year
In this section
Results and the performance of the Group, with segmental information highlighting the core areas of the Group’s
operations. It also includes details about the Group’s tax position.
A.1 Segment revenues and expenses
Operating segment information
The Group has identified three operating segments based on the internal reports that are reviewed and used by
the chief executive officer and his executive team (the chief operating decision maker) in assessing performance
and in determining the allocation of resources.
Operating segments are identified by management as being operating mine sites and are managed separately
and operate in different regulatory and economic environments.
Performance is measured based on gold sold and cost of production per ounce. The accounting policies used
by the Group in reporting segments are the same as those used in the preparation of financial statements.
Inter-entity gold sales are recognised based on the prevailing spot price. The price is aimed to reflect what the
segment would have achieved if it sold its gold to external parties at arm’s length.
Income tax expense is calculated based on the segment operating net profit using a notional charge of the
respective tax jurisdiction. No effect is given for taxable or deductible temporary differences.
The following items and associated assets and liabilities are not allocated to operating segments as they are not
considered part of the core operations of any segment:
• Realised and unrealised treasury transactions, including derivative contract transactions;
• Finance costs - including adjustments on provisions due to discounting; and,
• Net gains/losses on disposal of available-for-sale investments.
Recognition and measurement
Revenue from gold and other sales
Revenue is recognised when the risk and reward of ownership has passed from the Group to an external party
and the selling price can be determined with reasonable accuracy. Sales revenue represents gross proceeds
receivable from the customer.
Revenue from the sale of by-products such as silver is included in sales revenue.
Interest
Revenue is recognised as interest accrues using the effective interest method.
Borrowing costs
Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that
is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed
and are included in profit or loss as part of borrowing costs.
The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted
average interest rate applicable to the entity's outstanding borrowings during the period.
85
Resolute Mining Limited | Annual Report 2016 i
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Resolute Mining Limited | Annual Report 2016
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89
Resolute Mining Limited | Annual Report 2016
Notes to the Financial Statements A: Earnings for the Year
A.2 Dividends paid or proposed
Proposed dividends on ordinary shares:
Final dividend for 2016: 1.7 cents per share (2015: nil)
2016
$'000
11,148
2015
$'000
-
The dividend has not been provided for in the 30 June 2016 financial statements.
A.3 Earnings/(loss) per share
Basic earnings/(loss) per share
Profit/(loss) attributable to ordinary equity holders of the parent for basic earnings per
share ($'000)
Weighted average number of ordinary shares outstanding during the
period used in the calculation of basic EPS
181,713
(502,637)
641,788,233
641,189,223
Basic earnings/(loss) per share (cents per share)
28.31
(78.39)
Diluted earnings/(loss) per share
Profit/(loss) used in calculation of diliuted earnings per share ($'000)
Weighted average number of ordinary shares outstanding during the period used in the
calculation of basic EPS
Weighted average number of notional shares used in determining diluted EPS (i)
Weighted average number of ordinary shares outstanding during the period used in the
calculation of diluted EPS
Number of potential ordinary shares that are not dilutive and hence not included in
calculation of diluted EPS
Diluted earnings/(loss) per share (cents per share)
Measurement
181,713
(502,637)
641,788,233
16,874,755
641,189,223
n/a
658,662,988
641,189,223
675,400
18,656,733
27.59
(78.39)
Basic earnings per share (“EPS”) is calculated as net profit attributable to members, adjusted to exclude costs
of servicing equity (other than dividends) and preference share dividends, divided by the weighted average
number of ordinary shares, adjusted for any bonus element.
Diluted EPS is calculated as the net profit attributable to members, adjusted for:
•
•
•
costs of servicing equity (other than dividends) and;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that
have been recognised as expenses; and,
other non-discretionary changes in revenues or expenses during the period that would result from the
dilution of potential ordinary shares
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted
for any bonus element.
i) Dilutive instruments have not been included in the calculation of diluted earnings per share for 2015
because the result for the year was a loss.
ii) Between the reporting date and the date of completion of these financial statements there have been the
following transactions involving ordinary shares or potential ordinary shares:
a) 130,000 fully paid ordinary shares were issued to Level 2 employees as a result of two employee
option holders exercising their options by paying $1.18 per share.
90
Resolute Mining Limited | Annual Report 2016
Notes to the Financial Statements A: Earnings for the Year
A.3 Earnings/(loss) per share (continued)
Information on the classification of securities
Options and performance rights granted to employees (including Key Management Personnel) as described
in E.10 are considered to be potential ordinary shares and have been included in the determination of diluted
earnings per share to the extent they are dilutive. These securities have not been included in the
determination of basic earnings per share.
A.4 Taxes
(a) Income tax expense
Deferred tax expense from continuing operations
Current income tax benefit from discontinued operation
Total tax expense
(b) Numerical reconciliation of income tax expense to prima facie tax expense
2016
$'000
-
-
-
2015
$'000
(105)
1,057
(952)
Profit/(loss) from continuing operations before income tax expense
Profit/(loss) from discontinued operation before income tax expense
Profit/(loss) before income tax expense
168,157
44,770
212,927
(563,382)
(6,330)
(569,712)
Prima facie income tax expense/(benefit) at 30% (2015: 30%)
63,879
(170,914)
(Deduct)/add:
- (unrecognised tax losses and other temporary differences utilised) / tax losses
and other temporary differences not recognised
- difference on foreign exchange gain from divestment of discontinued operation
- effect of different rates of tax on overseas income
- effect of share based payments expense not deductible
- prior year over provision
- other
Income tax expense attributable to net profit/(loss)
Reconciled as:
Income tax expense attributable to continuing operations
Income tax benefit attributable to a discontinued operation
(c) Amounts recognised directly in equity
Amounts debited/(credited) directly to equity
(18,091)
(12,746)
(35,197)
1,054
-
1,101
-
-
-
-
-
251,432
-
(82,460)
1,502
(1,132)
620
(952)
105
(1,057)
(952)
(105)
91
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements A: Earnings for the Year
A.4 Taxes
(d) Tax losses (tax effected)
- Revenue losses
Australia
Tanzania (divested during the year)
Mali
Ghana
- Capital losses
Australia
Total tax losses not used against deferred tax liabilities for which no deferred tax
asset has been recognised (potential tax benefit at the prevailing tax rates of the
respective jurisdictions) (tax effected)
(e) Movements in the deferred tax assets balance
Balance at the beginning of the year
(Charged)/credited to equity
Credited/(charged) to the income statement
Balance as at the end of the year
The deferred tax assets balance comprises temporary differences attributable to:
Receivables
Inventories
Available for sale financial assets
Mineral exploration and development interests
Property, plant and equipment
Payables
Provisions
Interest bearing liabilities
Temporary differences not recognised
Set off of deferred tax liabilities pursuant to set off provisions
Net deferred tax assets
2016
$'000
2015
$'000
43,924
-
65,471
39,466
148,861
46,559
10,787
63,289
37,326
157,961
54,717
49,789
203,578
207,750
-
(165)
165
-
-
105
(105)
-
87,344
1,086
8,846
175,895
54,498
752
22,938
-
(340,532)
10,827
(10,827)
-
227,782
8,963
8,981
168,546
52,192
730
21,341
4,726
(486,612)
6,649
(6,649)
-
92
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements A: Earnings for the Year
A.4 Taxes (continued)
(f) Movements in the deferred tax liabilities balance
There were no movements in the deferred tax liabilities balance in the current
or prior year.
The deferred tax liabilities balance comprises temporary differences
Receivables
Inventories
Mineral exploration and development interests
Property, plant and equipment
Set off of deferred tax liabilities pursuant to set off provisions
Net deferred tax liabilities
(g) The equity balance comprises temporary differences attributable to:
Convertible notes equity reserve
Option equity reserve
Unrealised loss reserve
Net temporary differences in equity
Set-off of deferred tax liabilities pursuant to set-off provisions
Total temporary differences in equity
FRANKING CREDITS
2016
$'000
2015
$'000
1,082
2,304
7,436
5
10,827
(10,827)
-
194
2,566
(20)
2,740
20
2,760
-
-
6,644
5
6,649
(6,649)
-
194
2,566
(38)
2,722
38
2,760
The amount of franking credits available for subsequent financial years
is as follows. The amount has been determined using a tax rate of 30%.
108
103
Recognition and measurement
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income
based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying
amounts in the financial statements, and by unused tax losses (if appropriate).
The Group records its best estimate of these items based upon the latest information available and
management’s interpretation of enacted tax laws. Whilst the Group believes it has adequately provided for the
outcome of these matters, future results may include favourable or unfavourable adjustments as assessments
are made, or resolved.
Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised
for deductible temporary differences, unused tax losses and unused tax credits only if it is probable that
sufficient future taxable income will be available to utilise those temporary differences and losses.
93
Resolute Mining Limited | Annual Report 2016
Notes to the Financial Statements A: Earnings for the Year
A.4 Taxes (continued)
Recognition and measurement
Deferred tax is not recognised if the temporary difference arises from goodwill or from the initial recognition
(other than in a business combination) of assets and liabilities in a transaction that affects neither taxable profit
or loss; or the accounting profit or loss arising from taxable differences related to investment in subsidiaries,
associates and interests in joint ventures to the extent that:
• the Group is able to control the reversal of the temporary difference; and
• the temporary difference is not expected to reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in
which the liability is settled or the asset is realised, based on tax rates (and tax laws) that have been enacted
or substantially enacted by the end of the reporting period. Deferred tax assets and liabilities are offset only if
certain criteria are met. Income taxes relating to items recognised directly in equity are recognised in equity.
Tax consolidation
RML and its wholly-owned Australian controlled entities implemented the tax consolidation legislation as of 1
July 2002 and the entities in the tax consolidated group entered into a tax sharing agreement, which limits the
joint and several liability of the wholly owned entities in the case of a default by the head entity, Resolute
Mining Limited. The entities have also entered into a tax funding agreement under which the wholly owned
entities fully compensate Resolute Mining Limited for any current tax payable assumed and are compensated
by Resolute Mining Limited for any current tax receivable.
Key estimates and judgements
The recognition basis of deductible temporary differences and unused tax losses in the form of deferred
tax assets is reviewed at the end of each reporting period and de-recognised and to the extent that it is
no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered.
Pursuant to the Establishment Convention between the State of Mali and Societe des Mines de Syama
S.A. (owner of the Syama gold mine), there is an income tax holiday for 5 years post the declaration of
“first commercial production” at Syama, which commenced on 1 January 2012.
A deferred income tax asset has not been recognised for these amounts at reporting date as realisation
of the benefit is not regarded as probable. The future benefit will only be obtained if:
future assessable income is derived of a nature and an amount sufficient to enable the benefit to be
(i)
realised;
(ii)
and,
(iii) no changes in tax legislation adversely affect the consolidated entity in realising the benefit.
the conditions for deductibility imposed by tax legislation have been continued to be complied with;
Unrecognised temporary differences
As at 30 June 2016, aggregate unrecognised temporary differences of $4.460m (2015: $16.883m) are in
respect of investments in foreign controlled entities for which no deferred tax assets have been
recognised for amounts which arise upon translation of their financial statements.
94
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements B: Production and Growth Assets
In this section
Included in this section is relevant information about recognition, measurement, depreciation, amortisation and
impairment considerations of the core producing and growth (exploration and evaluation) assets of Resolute.
B.1 Mine properties and property, plant and equipment
Recognition and measurement
Stripping activity asset
The Group incurs waste removal costs (stripping costs) in the creation of improved access and mining
flexibility in relation to ore to be mined in the future. The costs are capitalised as a stripping activity asset,
where certain criteria are met. Once the Group has identified its production stripping for each surface mining
operation, it identifies the separate components for the ore bodies in each of its mining operations. An
identifiable component is a specific volume of the ore body that is made more accessible by the stripping
activity. The costs of each component are amortised on a units of production basis in applying a stripping ratio.
Development expenditure
Areas in Development
(i)
Costs incurred in preparing mines for production including the required plant infrastructure.
Areas in Production
(ii)
Represent the accumulation of all acquired exploration, evaluation and development expenditure in which
economic mining of a mineral reserve has commenced. Amortisation of costs is provided on the unit-of-
production method.
Property, plant and equipment
Property, plant and equipment are stated at cost less any accumulated depreciation and any impairment
losses. The cost of an item of property, plant and equipment comprises:
•
Its purchase price, including import duties and non-refundable purchase taxes, after deducting trade
discounts and rebates;
• Any costs directly attributable to bringing the asset to the location and condition necessary for it to be
capable of operating in the manner intended by management; and,
• The initial estimate of the costs of dismantling and removing the item and restoring the site on which it
is located.
Depreciation is provided on a straight-line basis on all property plant and equipment other than land. Major
depreciation periods are:
Motor vehicles
Office equipment
Plant and equipment
Life
3 years
3 years
Life of mine years
Method
Straight line
Straight line
Straight line
95
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements B: Production and Growth Assets
B.1 Mine properties and property, plant and equipment (continued)
Key estimates and judgements
Stripping activity assets
Judgement is required to identify a suitable production measure to be used to allocate production
stripping costs between inventory and any stripping activity asset(s) for each component. The Group
considers that the ratio of the expected volume of waste to be stripped for an expected volume of ore to
be mined for a specific component of the ore body, to be the most suitable production measure.
An identifiable component is a specific volume of the ore body that is made more accessible by the
stripping activity.
Judgement is also required to identify and define these components, and also to determine the expected
volumes (e.g. tonnes) of waste to be stripped and ore to be mined in each of these components. These
assessments are based on the information available in the mine plan which will vary between mines for
a number of reasons, including, , the geological characteristics of the ore body, the geographical location
and/or financial considerations.
Stripping ratio
The Group has adopted a policy of deferring production stage stripping costs and amortising them on a
units-of-production basis. Significant judgement is required in determining the contained ore units for
each mine. Factors that are considered include:
•
•
•
•
•
Any proposed changes in the design of the mine;
estimates of the quantities of ore reserves and mineral resources for which there is a high
degree of confidence of economic extraction;
future production levels;
future commodity prices; and,
future cash costs of production and capital expenditure.
Determining the beginning of production
The Group ceases capitalising pre-production costs and begins depreciation and amortisation of mine
assets at the point commercial production commences. This is based on the specific circumstances of
the project, and considers when the mine’s plant becomes ‘available for use’ as intended by
management which includes consideration of the following factors:
•
•
•
•
•
the level of redevelopment expenditure compared to project cost estimates;
completion of a reasonable period of testing of the mine plant and equipment;
mineral recoveries, availability and throughput levels at or near expected/feasibility study levels;
the ability to produce gold into a saleable form (where more than an insignificant amount is
produced); and,
the achievement of continuous production.
Estimation of mineral reserves and resources – refer to B3
96
Resolute Mining Limited | Annual Report 2016 -
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98
Resolute Mining Limited | Annual Report 2016
Notes to the Financial Statements B: Production and Growth Assets
B.2 Exploration and evaluation assets
Exploration and evaluation (at cost)
Balance at the beginning of the year
- Expenditure during the year
- Adjustments to rehabilitation obligations
- Impaired during the year
- Foreign currency translation
Balance at the end of the year
Recognition and measurement
2016
$'000
33,951
10,404
1,431
-
506
46,292
2015
$'000
42,665
20,142
(1,365)
(33,389)
5,898
33,951
Exploration expenditure is expensed to the consolidated statement of comprehensive income as and when it is
incurred and included as part of cash flows from operating activities. Exploration costs are only capitalised to
the consolidated statement of financial position if they result from an acquisition.
Evaluation expenditure is capitalised to the consolidated statement of financial position. Evaluation is deemed to
be activities undertaken from the beginning of the pre-feasibility study conducted to assess the technical and
commercial viability of extracting a mineral resource before moving into the Development phase. The criteria for
carrying forward the costs are:
• Such costs are expected to be recouped through successful development and exploitation of the area of
interest, or alternatively by its sale; or
• Evaluation activities in the area of interest which has not yet reached a state which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves, and active and significant
operations in, or in relation to, the area are continuing.
Costs carried forward in respect of an area of interest which is abandoned are written off in the year in which the
abandonment decision is made.
Exploration commitments
It is difficult to accurately forecast the nature or amount of future expenditure, although it will be necessary to
incur expenditure in order to retain present interests in mineral tenements. Expenditure commitments on
mineral tenure can be reduced by selective relinquishment of exploration tenure or by the renegotiation of
expenditure commitments. The approximate level of exploration expenditure expected in the year ending 30
June 2017 for the consolidated entity is approximately $18.720m (2016: $11.825m). This includes the minimum
amounts required to retain tenure. There are no material exploration commitments further out than one year.
99
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements B: Production and Growth Assets
B.3 Impairment of non-current assets
Recognition and measurement
Impairment testing
The carrying values of non-current assets are reviewed for impairment when indicators of impairment exist or
changes in circumstances indicate the carrying value may not be recoverable. At a minimum the Group
performs its impairment testing twice annually at 30 June and 31 December.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined
for the cash-generating unit to which the asset belongs and where the carrying values exceed the estimated
recoverable amount, the assets or cash-generating units are written down to their recoverable amount. The
recoverable amount of an asset is the greater of the fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Recognised Impairment
No impairment was recognised in 2016. Furthermore, the assessment carried out for 30 June 2016 also
concluded that a reversal of prior period impairment charges would be inappropriate.
In 2015, the Group carried out recoverable amount assessments for all of its cash generating units
(“CGUs”), and this resulted in impairment charges for Syama, Bibiani and the Nyakafuru tenement (the latter
which had been included in the Corporate/Other segment). Included in the events which triggered a review
were a lower USD gold price, significant revision of the life-of-mine plan at the Syama Gold Mine, and the
sustained difference in the carrying amount of the net assets of the group and its quoted market
capitalisation.
The key change to the life-of-mine plan at Syama over the 2014/2015 year was the cessation of the Stage 2
cutback and the decision to exploit the ore reserves beneath the Stage 1 open cut pit by way of an
underground mining operation. After reflecting the write-down of certain assets arising from the Group’s
revised operating plans, the Group conducted carrying value analysis and non-current asset impairments of
$561 million, as summarised in the table below:
2015
$'000
Exploration and evaluation expenditure
Development expenditure
Property, plant and equipment
Total impairment
Tax
Total impairment (after tax)
Syama
Bibiani
23,978
358,720
89,703
472,401
-
472,401
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25,628
53,075
78,703
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78,703
Nyakafuru
9,411
524
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9,935
-
9,935
Total
33,389
384,872
142,778
561,039
-
561,039
Key estimates and judgements
Determination of mineral resources and ore reserves
The determination of reserves impacts the accounting for asset carrying values, depreciation and
amortisation rates, deferred stripping costs and provisions for decommissioning and restoration. The
information in this report as it relates to ore reserves, mineral resources or mineralisation is reported in
accordance with the Aus.IMM “Australian Code for reporting of Identified Mineral Resources and Ore
Reserves”. The information has been prepared by or under supervision of competent persons as
identified by the Code.
100
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements B: Production and Growth Assets
B.3 Impairment of non-current assets (continued)
Key estimates and judgements
Determination of mineral resources and ore reserves
There are numerous uncertainties inherent in estimating mineral resources and ore reserves and
assumptions that are valid at the time of estimation which may change significantly when new
information becomes available. Changes in the forecast prices of commodities, exchange rates,
production costs or recovery rates may change the economic status of reserves and may, ultimately,
result in the reserves being restated. The reserves and resources for each project and area of interest is
set out in the Annual Report.
Impairment of mine properties, plant and equipment
The future recoverability of capitalised mine properties and plant and equipment is dependent on a
number of key factors including; gold price, discount rates used in determining the estimated discounted
cash flows of CGUs, foreign exchange rates, the level of proved and probable reserves and measured,
indicated and inferred mineral resources, the estimated value of unmined inferred mineral properties
included in the determination of fair value less cost to dispose (“fair value”), future technological changes
which could impact the cost of mining, and future legal changes (including changes to environmental
restoration obligations). The costs to dispose have been estimated by management based on prevailing
market conditions.
Fair value is estimated based on discounted cash flows using market based commodity price and
exchange assumptions, estimated quantities of recoverable minerals, production levels, operating costs
and capital requirements, based on CGU life
analysts’ valuations, and the market value of the Company’s securities. The fair value methodology
adopted is categorised as Level 3 in the fair value hierarchy. When LOM plans do not fully utilise existing
mineral properties for a CGU, and options exist for the future extraction and processing of all or part of
those resources, an estimate of the value of mineral properties is included in the determination of fair
value. The Group considers this valuation approach to be consistent with the approach taken by market
participants.
mine (LOM) plans. Consideration is also given to
of
‐
‐
The Group has estimated its unmined resource values based on a dollar value per gold equivalent
ounce basis individually for each CGU, taking into account a range of factors although principally the
current market rate for similar resources. However, where the value per ounce from the other
reserves/resources included in the CGU’s discounted cash flow model (if applicable) is less than this
market rate determination, the lower value per ounce from the CGU's discounted cash flow model is
used when calculating that CGU’s value of unmined ounces. The value per ounce is also discounted
accordingly for any future costs which would be required to exploit the insitu resources.
In determining the fair value of CGUs, future cash flows were discounted using rates based on the
Group’s estimated weighted average cost of capital. When it is considered appropriate to do so, an
additional premium is applied with regard to the geographic location and nature of the CGU. Life-of-mine
operating and capital cost assumptions are based on the Group’s latest budget and LOM plans.
Operating cost assumptions reflect the expectation that costs will, over the long term, have a degree of
positive correlation to the prevailing commodity price and exchange rate assumptions.
101
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements B: Production and Growth Assets
B.3 Impairment of non-current assets (continued)
Key estimates and judgements
Key Assumptions:
The table below summarises the key assumptions used in the year end carrying value assessments:
Gold price (US$
per ounce):
Discount rate %
(post tax)
Value of
unmined
resources (US$
per ounce):
Operating and
capital costs:
2016: $1,050 -
$1,280
(2015: $1,070 -
$1,310)
2016: 10% - 16%
(2015: 10% -
13%)
2016: $68 - $83
(2015: $0 - $43)
Commodity price and foreign exchange rates are estimated with
reference to external market forecasts, and updated at least twice
annually. The rates applied to the valuation have regard to
observable market data.
In determining the fair value of CGUs, the future cash flows were
discounted using rates based on the Group’s estimated real weighted
average cost of capital, with an additional premium applied having
regard to the geographic location of the CGU.
Of the individual CGUs that recognised impairments, Syama applied
a discount rate in a range of 10%-13%, whilst Bibiani and
Nyakafuru‘s recoverable amount was determined in the prior year
using the estimated value of unmined resources.
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 the expectation that
costs will, over the long term, have a degree of positive correlation to the prevailing
commodity price and exchange rate assumptions.
Sensitivity analysis
Any variation in the key assumptions used to determine fair value would result in a change of the assessed fair
value. It is estimated that changes in the key assumptions would have the following approximate impact on the
fair value of each CGU that has been subject to impairment in the accounts:
Change of:
Increase
Decrease
Increase
Decrease
Syama
$’000
Bibiani
$’000
2.5% - gold price
1.0% - discount rate
2.5% - value of unmined
resources
2016
85,343
(25,247)
N/A
2015
79,742
(11,394)
N/A
2016
(90,473)
27,473
N/A
2015
(100,636)
12,545
N/A
2016
N/A
N/A
4,716
2015
N/A
N/A
(2,430)
2016
N/A
N/A
(4,716)
2015
N/A
N/A
2,430
Changes in the specific assumptions above are assumed to move in isolation, while all other assumptions are
held constant.
102
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements B: Production and Growth Assets
B.4 Segment expenditure, assets and liabilities
For the year ended 30 June 2016
Capital expenditure
Segment assets in continuing operations
operations
RAVENSWOOD
(AUSTRALIA)
$'000
SYAMA
(MALI)
$'000
6,586
59,682
47,226
28,705
343,042
81,677
For the year ended 30 June 2015
Capital expenditure
Segment assets in continuing operations
Segment assets in discontinued operation
Total segment assets
Segment liabilities in continuing operations
Segment liabilities in discontinued operation
Total segment liabilities
RAVENSWOOD
(AUSTRALIA)
$'000
10,377
91,723
-
91,723
44,603
-
44,603
SYAMA
(MALI)
$'000
54,913
249,644
-
249,644
92,244
-
92,244
BIBIANI
(GHANA)
$'000
9,283
63,736
17,114
BIBIANI
(GHANA)
$'000
19,111
52,653
-
52,653
17,148
-
17,148
CORP/OTHER
TREASURY
$'000
675
37,871
7,910
$'000
-
-
-
CORP/OTHER
TREASURY
$'000
6
18,989
1,462
20,451
6,541
5,773
12,314
$'000
-
-
-
-
82,936
-
82,936
TOTAL
$'000
45,250
504,331
153,927
TOTAL
$'000
84,407
413,009
1,462
414,471
243,472
5,773
249,245
103
Resolute Mining Limited | Annual Report 2016
Notes to the Financial Statements C: Cash, Debt and Capital
In this section
Cash, debt and capital position of the Group at the end of the reporting period.
C.1 Cash
Cash at bank and on hand
Reconciliation to cash flow statement
For the purpose of the cash flow statement, cash and
cash equivalents comprise the following at 30 June:
Cash at bank and on hand
Bank overdraft
2016
$'000
2015
$'000
79,873
9,885
79,873
(26,456)
53,417
9,885
(29,620)
(19,735)
The credit quality of cash and cash equivalents can be assessed by reference to external credit ratings (if
available) or to historical information about counterparty default rates:
Cash at bank & short term deposits
Counterparties with external credit ratings
A
BBB
Counterparties without external credit ratings
Total cash at bank & short term deposits
Recognition and measurement
79,285
113
9,074
226
475
585
79,873
9,885
Cash and cash equivalents in the statement of financial position comprise cash at bank and short-term
deposits with an original maturity of three months or less. Cash and cash equivalents are stated at face
value in the statement of financial position.
Fair value and foreign exchange risk
The carrying amount of cash and cash equivalents approximates their fair value.
The Group held A$37.0 million of cash and cash equivalents at 30 June 2016 (2015: A$4.9 million) in
currencies other than Australian dollars or a different currency to that of the functional currency of the
company which holds the item. These exposures are predominantly US dollars (2016: A$28.1 million; 2015:
A$3.4 million equivalent) and Euro (2016: A$8.6 million; 2015: A$1.2 million equivalent).
Average interest rates earned on cash and cash equivalents during the period was 0.7% (2015: 0.8%).
104
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements C: Cash, Debt and Capital
C.1 Cash (continued)
Reconciliation of net profit/(loss) from continuing operations after income tax to
the net operating cash flows
2016
$'000
2015
$'000
Net profit/(loss) from ordinary activities after income tax
212,927
(568,760)
Add/(deduct):
Share based payments including employee long term incentive costs
Dividend income
Profit on sale of inventory
Loss/(profit) on sale of property, plant and equipment
Profit on sale of available for sale financial assets
Rehabilitation and restoration provision accretion
Rehabilitation and restoration provision adjustment from non operating
Rehabilitation and restoration cash expenditure
Depreciation and amortisation
Gain on sale of the Resolute Pty Ltd group
Foreign exchange (gains)/losses
Realised foreign exchange losses on debt repayments
Foreign exchange loss on deregistration of controlled entity
Inventory net realisable value movements
Impairment of development
(Reversal of provision)/impairment of accounts receivable
Impairment of property, plant and equipment
Impairment of gold equity investments
Non cash finance costs
Changes in operating assets and liabilities:
Decrease/(increase) in receivables
Decrease/(increase) in inventories
Decrease/(increase) in prepayments
Increase in stripping activity asset
Decrease in payables
Decrease in current tax balances
(Decrease)/increase in operating provisions
Net operating cash flows
1,040
-
-
585
(99)
1,122
-
(93)
39,215
(46,151)
(25,888)
20,795
3,086
(26,599)
-
(529)
-
-
577
5,811
43,361
1,231
(26,487)
(5,247)
-
(5,858)
192,798
1,667
(64)
(2,027)
(225)
(11,921)
1,115
(1,763)
(5,053)
101,595
-
39,538
-
-
8,389
418,262
11,042
142,777
331
2,698
(16,744)
(48,273)
(771)
(13,311)
(7,512)
(1,404)
12,275
61,861
105
Resolute Mining Limited | Annual Report 2016 M
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Resolute Mining Limited | Annual Report 2016
Notes to the Financial Statements C: Cash, Debt and Capital
C.2 Interest bearing liabilities
Current
Lease liabilities - ref C3.1
Bank overdraft - ref C3.2
Borrowings - ref C3.3
Non-Current
Lease liabilities - ref C3.1
Convertible notes - ref C3.4
2016
$'000
2015
$'000
222
26,456
-
26,678
-
-
-
4,519
29,620
65,291
99,430
222
14,064
14,286
Recognition and measurement
All loans and borrowings are initially recognised at fair value less transaction costs and subsequently at
amortised cost. Any difference between the proceeds received and the redemption amount is recognised in
the income statement over the period of the borrowings using the effective interest method.
The component of convertible notes that exhibit characteristics of a liability are recognised as a liability net
of transaction costs. On issuance of the convertible notes, the fair value of the liability component is
determined using a market rate for an equivalent non-convertible bond and that amount is carried as a long-
term liability on an amortised cost basis until extinguished on conversion or redemption. The accretion of the
liability due to the passage of time is recognised as a finance cost. The remainder of the proceeds received
from the issue of the convertible notes are allocated to the conversion option that is recognised and included
in shareholders' equity, net of transaction costs. The carrying amount of the conversion option is not re-
measured in subsequent periods.
Interest on the liability component of the instruments is recognised as an expense in the consolidated
statement of comprehensive income except for when the borrowing costs are associated with a qualifying
asset, in which case the borrowing costs are capitalised and amortised over the useful life of the qualifying
asset.
Finance leases, which effectively transfer to the consolidated entity all of the risks and benefits incidental to
ownership of the leased item, are capitalised at the present value of the minimum lease payments, disclosed
as leased property, plant and equipment, and amortised over the period the consolidated entity is expected
to benefit from the use of the leased assets. Lease payments are allocated between interest expense and
reduction in the lease liability. Lease payments are apportioned between the finance charges and reduction
of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability.
The Group’s interest bearing liabilities have a fair value of $26.816m (2015: $118.302m) compared to the
carrying value of $26.678m (2015: $113.716m). The differences between the fair value and carrying amount
are capitalised borrowing costs.
The total assets of the entities over which security exists amounts to $481.143m. $61.395m of these assets
relate to property plant and equipment.
The Group held nil interest bearing liabilities at 30 June 2016 (2015: A$65 million) in currencies other than
Australian dollars or a different currency to that of the functional currency of the company which holds the
item. The 2015 exposure was entirely US dollars. Average interest rates charged on interest bearing
liabilities at period end was 8.0% (2015: 6.1%).
107
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements C: Cash, Debt and Capital
C.2 Interest bearing liabilities (continued)
Maturity profile of interest-bearing liabilities
The maturity profile of the Group’s interest-bearing liabilities in total and for finance leases is as follows:
2016
$'000
2015
$'000
-
28,047
-
28,047
(1,369)
26,678
224
-
224
(2)
222
17,408
85,175
18,834
121,417
(7,701)
113,716
4,738
223
4,961
(220)
4,741
Borrowings
Due within 1 to 3 months
Due within 4 months to one year
Due between one and five years
Total contractual repayments
Less finance charges
Total interest bearing liabilties
Finance Leases
Due within one year
Due between one and five years
Total minimum lease payments
Less finance charges
Present value of minimum lease payments
C.3 Financing facilities
C3.1 Hire-purchase agreements
Carpentaria Gold Pty Ltd (“CGPL”), a wholly owned subsidiary of RML, entered into hire purchase
agreements with the Commonwealth Bank of Australia for the purchase of mining equipment which is being
used at Mt Wright, Ravenswood. Monthly instalments are required under the terms of the contracts which
expire in August 2016. RML has provided an unsecured parent entity guarantee to this financier in relation
to this finance facility.
C3.2 Bank overdraft
This facility is in place and is subject to an annual revision in approximately June 2017. The maximum limit
of this facility is $34.200m (AUD equivalent), and as at 30 June 2016 $7.745m (AUD equivalent) of the
facility was unused.
108
Resolute Mining Limited | Annual Report 2016
Notes to the Financial Statements C: Cash, Debt and Capital
C.3 Financing facilities (continued)
C3.3 Syndicated facilities
RML has entered into a Letter of Credit Facility Agreement with Citibank N.A. (relating to the Ravenswood
Project) and a Letter of Credit Facility Agreement with Sociêtê General Ghana Limited (relating to the Bibiani
Project). The facilities comprise A$27.828m of Environmental Performance Bond Facilities. Both of these
facilities are fully drawn and expire on 31 December 2016.
The Citibank N.A. Letter of Credit Facility Agreement and hedging facilities provided by Investec Bank Plc
and Citibank N.A. are secured by the following:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
Cross Guarantee and Indemnity given by RML (“the Borrower”), Carpentaria Gold Pty Ltd, Resolute
(Somisy) Limited, Resolute (Treasury) Pty Ltd and Resolute (Bibiani) Limited;
Share Mortgage granted by RML over all of its shares in Carpentaria Gold Pty Ltd;
Share Mortgage granted by the Borrower over all of its shares in Resolute (Bibiani) Limited and
Resolute (Somisy) Limited;
Fixed and Floating Charge granted by Resolute (Treasury) Pty Ltd over all its current and future
assets including bank accounts and an assignment of all Hedging Contracts;
Mining Mortgage and Fixed and Floating Charge granted by Carpentaria Gold Pty Ltd, including
mining mortgage over key Carpentaria Gold Pty Ltd mining tenements and charge over all the
current and future assets of Carpentaria Gold Pty Ltd including bank accounts and an assignment of
all Hedging Contracts;
Mortgage of Contractual Rights granted by Resolute Mining Limited in favour of the Security Trustee
over a loan provided to Sociêtê des Mines de Syama SA;
Mortgage of Contractual Rights granted by Resolute (Bibiani) Limited in favour of the Security
Trustee over a loan provided to Drilling and Mining Services Limited, Mensin Gold Bibiani Limited
and Noble Mining Ghana Limited; and,
(viii) Mortgage of Contractual Rights granted by Resolute (Treasury) Pty Ltd in favour of the Security
Trustee over a loan provided to Mensin Gold Bibiani Limited.
Pursuant to the Syndicated Facilities Agreement and Letter of Credit Facility Agreement with Citibank N.A,
the following ratios are required:
(i)
(ii)
(iii)
(iv)
(v)
(Interest Cover Ratio): the ratio of EBITDA to Net Interest Expense will be greater than 5.00 times;
(Net Debt to EBITDA): the ratio of Net Debt to EBITDA will be less than 2.00 times;
(Consolidated Gearing): the ratio of Net Debt to Equity will be less than 1.00 times;
(Loan Life Cover Ratio): will be equal to or greater than 1.50:1; and,
(Reserve Tail Ratio): will exceed 30%.
There have been no breaches of these ratios. The Societe General Ghana Limited Letter of Credit Facility
Agreement is supported by a guarantee provided by Resolute Mining Limited.
C3.4 Convertible Notes
On 15 December 2014, the Group issued 15,000,000 unsecured convertible notes which had a coupon rate
of 10% p.a., payable quarterly in arrears, raising $15m (less costs). The notes were convertible into ordinary
shares, one for one, at the option of the holder and were not due to be repaid until their expiry in December
2017.
In April 2016, a decision was made to approach note holders to allow for early redemption of the notes. An
Amendment Deed to the Notes Trust Deed was authorised by a special resolution passed by Holders of at
least 75% of the Notes and, following the consent received from the Company’s secured credit providers,
was executed. On the 23 June 2016, 14,050,000 note holders chose to convert into ordinary shares with the
balance redeeming for $1.06 per Note, which was comprised of the principal component and early
redemption fee.
109
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements C: Cash, Debt and Capital
C.4 Contributed Equity
Ordinary share capital:
655,632,994 ordinary fully paid shares (2015: 641,189,223)
Movements in contributed equity, net of issuing costs:
Balance at the beginning of the year
Conversion of convertible notes into 14,050,000 shares at $1.06 per share
Balance at the end of the year
2016
$'000
2015
$'000
395,198
380,305
380,305
14,893
395,198
380,305
-
380,305
Recognition and measurement
Issued and paid up capital is recognised at the fair value of the consideration received by the Company.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Terms and conditions of contributed equity
Ordinary shares have the right to receive dividends as declared and in the event of winding up the
Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of
and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by
proxy, at a meeting of the Company.
Rights of employee share based payment recipients
Refer to E.10 for details of the employee share based payment plans which includes option and
performance rights plans. Each option entitles the holder to purchase one share. The names of all persons
who currently hold employee share options or performance rights, granted at any time, are entered into the
register kept by the Company, pursuant to Section 215 of the Corporations Act 2001. Persons entitled to
exercise these options and holders of performance rights have no right, by virtue of the options, to
participate in any share issue by the parent entity or any other body corporate.
C.5 Other reserves
Reserve
Net unrealised
gain/(loss) reserve
Nature and purpose
This reserve records fair value changes on available for sale
investments.
Convertible notes
equity reserve
This reserve records the value of the equity portion (conversion
rights) of the convertible notes.
Share options
equity reserve
The equity reserve records transactions between owners as
owners.
Employee equity
benefits reserve
This reserve is used to recognise the fair value of options and
performance rights granted over the vesting period of the securities
provided to employees.
Foreign currency
translation reserve
Represents exchange differences arising on translation of foreign
controlled entities.
110
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements C: Cash, Debt and Capital
Key financial and capital risks in this section
Liquidity risk management
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, or having
the availability of funding through an adequate amount of undrawn committed credit facilities.
Interest rate risk management
Borrowings issued at variable rates expose the Group to cash flow interest rate risk. The Group constantly
analyses its interest rate exposure. Within this analysis consideration is given to the potential renewals of
existing positions, alternative financing, alternative hedging positions and the mix of fixed and variable
interest rates. There is no intention at this stage to enter into any interest rate swaps.
Capital risk management
The Group’s and the parent entity’s objectives when managing capital are to safeguard their ability to
continue as a going concern, so that they can continue to provide returns for shareholders and benefits for
other stakeholders and to maintain a capital structure that is appropriate for the Group’s current and/or
projected financial position. In order to maintain or adjust the capital structure, the Group may adjust the
amount of dividends paid to shareholders (if any), return capital to shareholders, buy back its shares, issue
new shares, borrow from financiers or sell assets to reduce debt.
The Group monitors the adequacy of capital by analysing cash flow forecasts over the term of the Life of
Mine for each of its projects. To a lesser extent, gearing ratios are also used to monitor capital. Appropriate
capital levels are maintained to ensure that all approved expenditure programs are adequately funded. This
funding is derived from an appropriate combination of debt and equity. The gearing ratio at 30 June 2016 is
0% (2015: 36%). The Group is not subject to any externally imposed capital requirements.
The gearing ratio is calculated as net debt divided by total capital. Net debt is defined as interest bearing
liabilities less cash, cash equivalents and market value of bullion on hand. Total capital is calculated as
‘equity’ as shown in the Consolidated Statement of Financial Position (including non
controlling interest) plus
net debt.
‐
The following table summarises the post-tax effect of the sensitivity of the Group’s debt, cash and capital
items on profit and equity at reporting date to movements that are reasonably possible in relation to interest
rate risk and foreign exchange currency risk.
Carrying
Amount
$'000
79,873
9,885
113,716
Interest rate risk
-1%
+1%
Foreign exchange risk
+10%
-10%
Profit
$'000
Equity
$'000
Profit
$'000
Equity
$'000
Profit
$'000
Equity
$'000
Profit
$'000
Equity
$'000
(350)
(350)
(34)
-
(34)
(350)
(350)
350
350
350
350
4,218
4,218
4,218
4,218
(3,451)
(3,451)
(3,451)
(3,451)
(34)
-
(34)
34
-
34
34
-
34
578
(5,078)
(4,500)
578
(5,078)
(4,500)
(473)
4,155
3,682
(473)
4,155
3,682
30 June 2016
Cash
Total increase/(decrease)
30 June 2015
Cash
Interest bearing liabilities
Total increase/(decrease)
111
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements D: Other assets and liabilities
In this section
Other assets and liabilities position at the end of the reporting period.
D.1 Receivables
Current
Trade receivables
Non-Current
Trade receivables
Allowance for impairment loss
2016
$'000
7,005
7,005
-
-
-
2015
$'000
11,451
11,451
10,851
(10,293)
558
The credit quality of receivables can be assessed by reference to external credit ratings (if available) or to
historical information about counterparty default rates:
Trade receiv able s
Counterparties with external credit ratings
AA+
Counterparties without external credit ratings *
Group 1
Group 2
Total trade re ce ivable s
157
294
6,848
-
11,159
10,849
7,005
22,302
*Group 1 refers to existing counterparties with no defaults in the past. Group 2 refers to existing
counterparties where difficulty in recovering these debts in the past has been experienced.
Recognition and measurement
Trade receivables are initially recognised at fair value and subsequently at amortised cost less a provision
for any uncollectible debts. Trade receivables are due for settlement no more than 30 days from the date of
recognition.
Fair value and foreign exchange risk
The carrying amount of receivables approximates their fair value.
The Group held nil receivables at 30 June 2016 (2015: A$1.7 million) in currencies other than Australian
dollars or in a different currency to that of the functional currency of the company which holds the item. In
2015, the exposure was predominantly Tanzanian shillings (2016: nil; 2015: A$1 million equivalent).
112
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements D: Other assets and liabilities
D.1 Receivables (continued)
Movements in the allowance for impairment loss is as follows:
At start of year
Reversal of provision/(Charge for the year)
Recognised as a bad debt
Divestment of discontinued operation
Foreign exchange translation
At e nd of ye ar
2016
$'000
(10,293)
529
-
10,427
(663)
-
As at 30 June, the aging analysis of current and non-current sundry debtors is as follows:
0-30 days
31-60 days
61-90 days
61-90 days (Past due but not impaired)
+91 days (Past due but not impaired)
+91 days (Considered impaired)
Total
2,462
1,624
42
-
2,876
-
7,005
2015
$'000
(12,478)
(11,044)
13,167
-
62
(10,293)
6,295
2,822
1,574
101
1,217
10,293
22,302
Payment terms on amounts past due but not impaired have not been re-negotiated, however the Group
maintains direct contact with the relevant debtor and is satisfied that net receivables will be collected in full.
D.2 Inventories
Ore stockpiles
-At cost
-At net realisable value
Total ore stockpiles
Gold bullion on hand - at cost¹
Gold in circuit - at cost
Consumables at cost
30,699
14,972
45,671
16,164
73,683
50,494
186,012
18,226
13,500
31,726
29,769
75,971
57,140
194,606
¹ Resolute retains 12,632oz of gold bullion on hand at 30 June 2016 with a market value of $22m (2015:
28,840oz with a market value of $44m).
Recognition and measurement
Finished goods (bullion), gold in circuit and stockpiles of unprocessed ore are stated at the lower of cost and
estimated net realisable value. Cost comprises direct materials, direct labour and an appropriate proportion
of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating
capacity. Costs are assigned to ore stockpiles and gold in circuit items of inventory on the basis of weighted
average costs. Net realisable value is the estimated selling price in the ordinary course of business
(excluding derivatives) less the estimated costs of completion and the estimated costs necessary to make
the sale. Consumables have been valued at cost less an appropriate provision for obsolescence. Cost is
determined on a first-in-first-out basis.
113
Resolute Mining Limited | Annual Report 2016
Notes to the Financial Statements D: Other assets and liabilities
D.3 Financial assets and liabilities
Available for sale financial assets
Shares at fair value - listed
Other financial assets
Environmental bond - restricted cash
Financial derivative liabilities
Gold forwards at fair value - current
Gold forwards at fair value - non-current
2016
$'000
427
427
2015
$'000
114
114
3,699
3,584
151
264
415
-
-
-
Gold forward sales are deliverable at an average price of A$1,800 an ounce for a total of 36,000 ounces
between November 2016 and October 2017 at the rate of 3,000 ounces per month.
Recognition and measurement
Available-for-sale financial assets
Available for sale financial assets consist of investments in ordinary shares. Comprising principally of
marketable equity securities, they are classified as non-current assets unless management intends to dispose
of the investment within 12 months of the consolidated statement of financial position date. Investments are
initially recognised at fair value plus transaction costs. Unrealised gains and losses arising from changes in
the fair value of classified as available-for-sale are recognised in equity in the available-for-sale investments
revaluation reserve. A significant or prolonged decline in the fair value of a security results in the impairment
charge being removed from equity and recognised in the consolidated statement of comprehensive income.
The fair value of the listed securities are based on quoted market prices and accordingly is a level 1
measurement basis on the fair value hierarchy.
Restricted cash
The environmental bond represents a receivable carried at amortised cost using the effective interest method.
The Ghanaian Environmental Protection Authority holds $3.699m (AUD equivalent) of restricted cash as
security for the rehabilitation and restoration provision of Mensin Gold Bibiani Limited’s Bibiani project. There
is no external credit rating basis for the Ghanaian Environmental Protection Authority. The average interest
rate earned on the environmental bond during the period was 0.0% (2015: 0.4%).
Use of derivative instruments to assist in managing gold price risk
As part of the Group’s risk management practices, selected financial instruments (such as gold forward sales
contracts, gold call options and gold put options) may be used from time to time to reduce the impact a
declining gold price has on project life revenue streams. Within this context, the programs undertaken are
project specific and structured with the objective of retaining as much upside to the gold price as possible,
and in any event, limiting derivative commitments to no more than 50% of the Group’s gold reserves. The
value of these financial instruments at any given point in time, will in times of volatile market conditions, show
substantial variation over the short term. The hedging facilities provided by the Group's counterparties do not
contain margin calls. The Group does not hedge account for these instruments.
No gold was delivered into forward sales contracts during the year or in the prior year. Movements in fair
value are accounted for through the consolidated statement of comprehensive income.
114
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements D: Other assets and liabilities
D.4 Payables
Trade creditors
Accruals
2016
$'000
11,547
21,820
33,367
2015
$'000
15,742
20,743
36,485
Recognition and measurement
Liabilities for trade creditors and other amounts are carried at amortised cost which is the amount initially
recognised, minus repayments whether or not billed to the consolidated entity.
Payables to related parties are carried at the principal amount. Interest, when charged by the lender, is
recognised as an expense on an accruals basis. Payables are non-interest bearing and generally settled on
30-90 day terms. Due to the short term nature of these payables, their carrying value is assumed to
approximate their fair value.
D.5 Unearned revenue
Gold prepay loan
Recognition and measurement
2016
$'000
2015
$'000
-
3,307
In October 2013, Resolute drew down on a US$20 million extension on an existing secured loan facility
jointly provided by Barclays Bank PLC (“Barclays”) and Investec Bank Plc (“Investec”). The loan was repaid
in gold ounces in 24 equal instalments of 660 ounces per month between November 2013 and October
2015 inclusive.
The secured loan was classified as unearned revenue on the Statement of Financial Position as Barclays
and Investec prepaid Resolute for a fixed quantity of gold ounces. Resolute had a legal obligation to deliver
gold ounces, and recognised revenue as and when it made the repayments in gold ounces.
115
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements D: Other assets and liabilities
D.6 Provisions
Current
Site restoration
Employee entitlements ¹
Dividend payable
Withholding taxes
Other provisions
Non-Current
Site restoration
Employee entitlements
2016
$'000
1,503
26,111
83
240
391
28,328
63,864
1,275
65,139
2015
$'000
510
25,581
83
4,916
1,061
32,151
62,097
1,489
63,586
¹ Resolute Mining’s 80% owned subsidiary Societe des Mines de Syama SA (“SOMISY”) received
notifications from the Nationale de Prévoyance Sociale (“INPS”) alleging SOMISY owed contributions to the
INPS department on salaries paid by SOMISY to its expatriate employees between January 2005 and July
2013. Malian Legislation requires the remittance of 24% of an employee’s gross salary and a mandatory
health insurance levy to the INPS department and is a form of social tax. In accordance with the
Establishment Convention between SOMISY and the State of Mali, SOMISY is exempt from paying INPS
contributions and the mandatory health insurance levy on expatriate employees during the Syama Mine
Development Period. In accordance with the Establishment Convention, SOMISY did not remit INPS on
expatriate salaries during the Mine Development Period, and then commenced remitting INPS on expatriate
salaries after the cessation of the Mine Development Period. SOMISY has acted in accordance with the
Establishment Convention at all times. The INPS department’s claims are for the period during the Mine
Development Period only, so SOMISY has no additional or ongoing exposures related to this matter.
SOMISY unsuccessfully appealed against this INPS assessment, with a Malian Court of Appeal ruling in
favour of the INPS department on the basis that it was not a government department and hence not a party
to the Establishment Convention, so it was not obliged to follow its terms and conditions. As a result of the
Court ruling and subsequent failed attempts to negotiate an immediate settlement, the Resolute group
recorded a A$15m current liability in its June 2015 Financial Statements. Recent attempts by the INPS to
collect the assessed amounts triggered further negotiations between the INPS and SOMISY and in June
2016, a Settlement Agreement was executed by the parties to record an agreed instalment plan that will see
SOMISY fully discharge this disputed liability by paying A$11.7m to INPS in quarterly instalments between 1
July 2016 and 30 June 2018. The instalments payable are A$4.9m in the September 2016 quarter, A$1.5m
in the December 2016 quarter followed by 6 quarterly instalments of A$0.9m each. The Settlement
Agreement incorporated the waiving of some penalties included in the assessments and has reduced the
quantum of the liability recorded in the Resolute group’s accounts as at 30 June 2016 by approximately
A$3.3m to A$11.7m.
Resolute continues to strongly dispute the validity of the INPS assessments and negotiations with the State
of Mali are ongoing to recover the INPS contributions paid or to be paid to ensure the State of Mali does not
breach the terms of the Establishment Convention. Up to 30 June 2016, CFA 1.947b (A$4.357m) has been
paid to the INPS department (paid in the year ended 30 June 2013) and successful negotiations will see the
monies paid to date returned to SOMISY.
116
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements D: Other assets and liabilities
D.6 Provisions (continued)
Recognition and measurement
Provisions are recognised when the Group has a present obligation as a result of a past event, it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation, and a
reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is
material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money and, where appropriate, the risks specific to
the liability. Where discounting is used, the increase in the provision due to the passage of time is
recognised as a borrowing cost.
Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the
end of the reporting period. These benefits include wages, salaries, termination gratuity and relocation
costs, annual leave and long service leave.
Restoration obligations
The Group records the present value of the estimated cost of obligations, such as those under the
consolidated entity’s Environmental Policy, to restore operating locations in the period in which the
obligation is incurred. The nature of restoration activities includes dismantling and removing structures,
rehabilitating mines, dismantling operating facilities, closure of plant and waste sites and restoration,
reclamation and revegetation of affected areas.
Site restoration
Balance at the beginning of the year
Rehabilitation and restoration provision accretion
Change in scope of restoration provision
Utilised during the year
Foreign exchange translation
Divestment of discontinued operation
Balance at the end of the year
Reconciled as:
Current provision
Non-current provision
Total provision
Key estimates and judgements
Restoration
2016
$'000
2015
$'000
62,607
1,122
808
(93)
1,164
(241)
65,367
1,503
63,864
65,367
63,451
1,115
45
(5,053)
3,049
-
62,607
510
62,097
62,607
In determining an appropriate level of provision consideration is given to the expected future costs to be
incurred, the timing of these expected future costs (largely dependent on the life of the mine), and the
estimated future level of inflation. The discount rate used in the calculation of these provisions is consistent
with the risk free rate. The ultimate cost of decommissioning and restoration is uncertain and costs can
vary in response to many factors including changes to the relevant legal requirements, the emergence of
new restoration techniques or experience at other mine-sites. The expected timing of expenditure can also
change, for example in response to changes in reserves or to production rates. Changes to any of the
estimates could result in significant changes to the level of provisioning required, which would in turn
impact future financial results.
117
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements D: Other assets and liabilities
Key financial and capital risks in this section
Interest rate risk, diesel price risk and foreign exchange risk management
Refer to About the Report and Section C for details of how these risks are managed.
Credit risk management
The Group’s exposure to credit risk arises from potential default of the counterparty, with a maximum
exposure equal to the carrying amount of the financial assets.
Credit risk is managed on a Group basis. Credit risk predominately arises from cash, cash equivalents
(refer to C1), gold bullion held in metal accounts, derivative financial instruments, deposits with banks and
financial institutions and receivables from statutory authorities. For derivative financial instruments,
management mitigates some credit risk by using a number of different hedging counterparties. Credit risk
further arises in relation to financial guarantees given to certain parties. Such guarantees are only provided
in exceptional circumstances and are subject to Financial Risk Management Committee approval. With the
exception of those items disclosed in C3 and a Resolute Mining parent company guarantee provided to
Macquarie Bank Limited relating to their provision of a hedging facility, no guarantees have been provided to
third parties as at the reporting date. The credit quality of financial assets that are neither past due nor
impaired can be assessed by reference to external credit ratings (if available) or to historical information
about counterparty default rates.
The following table summarises the post-tax effect of the sensitivity of the Group’s other asset and liability
items not previously reported on profit and equity at reporting date to movements that are reasonably
possible in relation to commodity risk and foreign exchange currency risk:
Carrying
Amount
$'000
427
3,699
33,368
12,009
114
3,584
36,485
30 June 2016
Available for sale financial assets
Other financial assets
Payables
Total increase/(decrease)
30 June 2015
Trade and other receivables
Available for sale financial assets
Other financial assets
Payables
Total increase/(decrease)
Foreign exchange risk
-10%
+10%
Gold price risk
-10%
+10%
Profit
Equity
$'000
$'000
Profit
$'000
Equity
$'000
Profit
$'000
Equity
$'000
Profit
$'000
Equity
$'000
-
288
(339)
(51)
78
-
279
(242)
115
-
288
(339)
(51)
78
-
279
(242)
115
-
(235)
277
42
(64)
-
(228)
198
(94)
-
(235)
277
42
(64)
-
(228)
198
(94)
(30)
-
-
(30)
-
(8)
-
-
(8)
(30)
-
-
(30)
-
(8)
-
-
(8)
30
-
-
30
-
8
-
-
8
30
-
-
30
-
8
-
-
8
118
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements E: Other items
In this section
Information on items which require disclosure to comply with Australian Accounting Standards and the
Australian Corporations Act 2001.This section includes group structure information and other disclosures.
E.1 Contingent liabilities
Contingent liabilities
Amounts Potentially Payable to historical Bibiani Creditors
In June 2014, Mensin Gold Bibiani Limited, Drilling and Mining Services Limited and Noble Mining Ghana
Limited (collectively referred to as the “Companies”) entered into court approved Schemes of Arrangement
(“Scheme”) with their creditors and employees (“Scheme Creditors”). The Scheme outlines the timing and
amounts of payments to be made by the Companies to a Scheme Fund and a Future Fund who in turn are
responsible for making payments to the Scheme Creditors. The Scheme Creditors arise from transactions
that occurred prior to the Companies becoming part of the Resolute group. The Scheme Fund and the
Future Fund are administered by Ferrier Hodgson.
The implementation of the Scheme has had the effect of removing from the Companies’ balance sheets all
historical liabilities relating to amounts payable to Scheme Creditors and replacing this with an obligation to
fund the Scheme Fund and Future Fund as and when necessary. The unconditional obligations to make
payments to the Scheme Fund have been paid prior to 30 June 2016. In addition to those recorded
payments and liabilities, the following contingent liabilities to provide funding to the Scheme Fund and
Future Fund exist at year end:
•
•
Potential payment to the Scheme Fund of US$3.600m ($4.854m) if, following receipt of the Feasibility
Study, the board of Resolute, in its absolute discretion, makes a decision to proceed with the
development of Bibiani; and
Potential payment to a Future Fund of up to US$7.800m ($10.516m) conditional upon the generation of
Free Cashflow from Bibiani mine operations for the period of 5 years from the date that Commercial
Production is declared. Free Cashflow means 25% of the sum of Project Revenue for that period less
Permitted Payments for that period, which includes:
- operational expenses and capital costs paid in connection with the mining operations; and,
-
repayment of principal and interest relating to funds advanced by Resolute up to the commencement
of mining operations.
E.2 Leases and other commitments
Operating leases
Due within one year
Due between one and five years
Aggregate lease expenditure contracted for at balance date
but not provided for
2016
$'000
608
613
1,221
2015
$'000
525
1,045
1,570
119
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements E: Other items
E.2 Leases and other commitments (continued)
Commitments
Other commitments not disclosed elsewhere in this report include:
Randgold/Syama Royalty
Pursuant to the terms of the Syama Sale and Purchase agreement, Randgold Resources Limited will
receive a royalty on Syama production, where the gold price exceeds US$350 per ounce, of US$10 per
ounce on the first million ounces of gold production attributable to Resolute Mining Limited (“RML”) and
US$5 per ounce on the next three million attributable ounces of gold production. As at 30 June 2016,
Resolute’s 80% attributable share of Syama’s project to date gold production was 903,599 ounces of gold.
Other contracted expenditure commitments
Due within one year
Aggregate lease expenditure contracted for at balance date
but not provided for
E.3 Auditor remuneration
Auditing
Taxation planning advice and review and other services
2016
$'000
-
-
2015
$'000
1,155
1,155
2016
$
182,000
21,950
203,950
2015
$
320,000
89,800
409,800
Amounts received or due and receivable by a related overseas office of Ernst & Young, from entities
in the consolidated entity or related entities:
Auditing (Ernst & Young, Ghana and Tanzania)
Total amounts received or due and receivable by Ernst & Young
globally
38,800
210,375
242,750
620,175
Amounts received or due and receivable by non Ernst & Young
firms for auditing
67,130
32,055
120
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements E: Other items
E.4 Subsidiaries and non-controlling interests
Subsidiaries
The following were controlled entities during the year and have been included in the consolidated accounts.
All entities in the consolidated entity carry on business in their place of incorporation.
Name of Controlled Entity and
Country of Incorporation
Consolidated Entity
Company Holding
the Investment
Percentage of
Shares Held by
Consolidated Entity
2016
%
2015
%
Amber Gold Cote d’Ivoire SARL, Cote d'Ivoire
Carpentaria Gold Pty Ltd, Aust.
Drilling and Mining Services Limited, Ghana
Excalibur Cote d’Ivoire SARL, Cote d'Ivoire
Goudhurst Pty Ltd, Aust. (a)
Mabangu Exploration Limited, Tanzania
Mabangu Mining Limited, Tanzania
Mensin Gold Bibiani Limited, Ghana
Nimba Resources SARL, Cote d'Ivoire
Noble Mining Ghana Limited, Ghana
Resolute (Bibiani) Limited, Jersey (a)
Resolute (CDI Holdings) Limited, Jersey (a)
Resolute CI SARL, Cote d'Ivoire
Resolute Exploration SARL, Mali
Resolute (Finkolo) Limited, Jersey (a)
Resolute (Ghana) Limited, Ghana
Resolute Mali S.A.,Mali
Resolute Pty Ltd, Aust.
Resolute (Somisy) Limited, Jersey (a)
Resolute (Tanzania) Limited, Tanzania
Resolute (Treasury) Pty Ltd, Aust. (a)
Societe des Mines de Finkolo SA, Mali
Societe des Mines de Syama S.A., Mali
Resolute (CDI Holdings) Limited
Resolute Mining Limited
Resolute (Bibiani) Limited
Resolute (CDI Holdings) Limited
Resolute (Treasury) Pty Ltd
Resolute (Tanzania) Limited
Resolute (Tanzania) Limited
Resolute (Bibiani) Limited
Resolute (CDI Holdings) Limited
Resolute (Bibiani) Limited
Resolute Mining Limited
Resolute Mining Limited
Resolute (CDI Holdings) Limited
Resolute (Finkolo) Limited
Resolute Mining Limited
Resolute Mining Limited
Resolute (Somisy) Limited
Resolute Mining Limited
Resolute Mining Limited
Resolute Pty Ltd
Resolute Mining Limited
Resolute (Finkolo) Limited
Resolute (Somisy) Limited
100
100
100
100
100
-
-
90
100
100
100
100
100
100
100
100
100
-
100
-
100
85
80
100
100
100
100
100
100
100
90
-
100
100
100
100
100
100
100
100
100
100
100
100
85
80
(a) Entities not separately audited. Entity’s audit scope is limited to the purpose of inclusion in the
consolidated entity's accounts.
Material partly owned subsidiaries
Accumulated share of (deficiency)/equity attributable to material
Non-Controlling Interest:
Societe des Mines de Syama SA ("Somisy")
Mensin Gold Bibiani Limited ("Mensin")
Societe des Mines de Finkolo SA ("Finkolo")
Total Non-Controlling Interest
Profit/(loss) allocated to material Non-Controlling Interest:
Somisy
Mensin
Finkolo
Total Non-Controlling Interest
2016
$'000
2015
$'000
(46,838)
(2,211)
3,072
(45,977)
31,380
(23)
(144)
31,214
(76,020)
(1,497)
3,205
(74,312)
(58,431)
(7,692)
-
(66,123)
121
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements E: Other items
E.4 Subsidiaries and non-controlling interests (continued)
The summarised financial information of subsidiaries with non-controlling interests is provided below. This
information is based on amounts before inter-company eliminations.
Summarised Statement of Comprehensive Income
2016
$'000
2015
$'000
2016
$'000
2015
$'000
2016
$'000
2015
$'000
Somisy
Mensin
Finkolo
Revenue
Gain/(loss) for the period
Total comprehensive income/(loss) for the period
372,938
156,902
156,902
310,761
(292,157)
(292,157)
-
(236)
(236)
-
(71,830)
(71,830)
-
(957)
(957)
-
-
-
Summarised Statement of Financial Position
Current assets
Non-current assets
Current liabilities
Non-current liabilities - External
Non-current liabilities - Intra Resolute Mining Limited Group
Total (deficiency)/equity
240,457
157,936
(59,054)
(33,237)
(502,507)
(196,405)
194,043
115,610
(70,333)
(32,169)
(540,643)
(333,492)
3,341
58,856
(2,203)
(14,504)
(424,356)
(378,866)
3,570
47,067
(1,514)
(12,674)
(403,406)
(366,957)
42
21,897
(29)
-
(25,542)
(3,632)
37
21,341
(9)
-
(23,961)
(2,592)
Summarised Statement of Cash Flow
Operating
Investing
Net increase/(decrease) in cash and cash equivalents
Somisy
Mensin
Finkolo
125,041
(17,257)
107,784
63,640
(49,086)
14,554
(2,377)
(9,617)
(11,994)
(2,777)
(35,362)
(38,139)
(1,013)
(567)
(1,580)
(1,380)
(496)
(1,876)
E.5 Joint operations
The consolidated entity has an interest in the following material joint operations whose principal activities are
to explore for gold.
Entity Holding Interest
Other Participant/Joint Operation
Resolute Mining Limited
Mabangu Mining Limited
Mabangu Mining Limited
Resolute (Tanzania) Limited
Etruscan Resources Bermuda Ltd/N’Gokoli Est JV¹
Sub Sahara Resources (Tanzania)
Limited/Nyakafuru JV¹
Yellowstone Limited /Mega JV
ABG Exploration Limited/GP West JV¹
Percentage of Interest Held
2016
%
60%
2015
%
60%
0%
0%
0%
66%
49%
70%
¹ Interests in joint operations greater than 50% have been accounted for as joint operations as all decision
making requires unanimous agreement.
122
Resolute Mining Limited | Annual Report 2016
Notes to the Financial Statements E: Other items
E.6 Discontinued operations
On 12 December 2014, the formal handover of the Golden Pride site and all remaining infrastructure to the
Madini Institute to set up a mining institute of learning was completed, as agreed with the Government of
Tanzania. This ended Resolute’s presence on site at Golden Pride after 15 years and production of over 2.2
million ounces of gold. This arm of the business, previously represented as the Golden Pride operating
segment, has been classified as a discontinued operation and is no longer presented as a segment.
In October 2015, Resolute completed the divestment of Resolute Pty Ltd, the company holding all of
Resolute’s subsidiaries, assets, liabilities, contingent liabilities, and mineral rights in Tanzania (the “RPL
group”). Resolute entered into an agreement with Cienega S.A.R.L. whereby Cienega S.A.R.L. acquired the
RPL group for nominal initial consideration, with a potential deferred consideration equal to 50% of the
proceeds of the sale of any mineral rights, related physical assets, and other specific legal actions.
The results for the year are presented below:
Revenue
Expenses
Gain on sale of the Resolute Pty Ltd group (i)
Accounts receivable impairment expenses and inventory net realisable value movements
Profit/(loss) before tax from a discontinued operation
Tax benefit
Profit/(loss) for the period from a discontinued operation
Earnings/(loss) per share:
Basic earnings/(loss) per share of discontinued operation
Diluted earnings/(loss) per share of discontinued operation
The net cash flows of the discontinued operation are as follows:
Operating cash flows
Financing cash flows
Net cash outflow
2016
$'000
-
(1,381)
46,151
-
44,770
-
44,770
2015
$'000
3,085
(8,606)
(809)
(6,330)
1,057
(5,273)
6.97 cents
6.80 cents
(0.82) cents
(0.82) cents
(2,374)
-
(2,374)
(17,186)
-
(17,186)
(i) The net liabilities of the RPL Group sold for nil consideration totalled $3.615 million. Additionally, the RPL
Group’s accumulated foreign exchange gain recognised in equity was $42.488 million and has now been
recycled to profit and loss.
E.7 Subsequent events
On 1 August 2016, 130,000 fully paid ordinary shares were issued to Level 2 employees as a result of two
employee option holders exercising their options by paying $1.18 per share. As at the date of this report
655,762,994 shares were on issue.
On 30 August 2016, the Company announced a final dividend on ordinary shares in respect of the 2016
financial year of 1.7 cents per share. The dividend has not been provided for in the 30 June 2016 financial
statements.
123
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements E: Other items
E.8 Related party disclosures
(i)
(ii)
(iii)
(iv)
RML is the ultimate Australian holding company and there is no controlling entity of RML at 30 June
2016.
During the year ended 30 June 2016, 200,000 ordinary fully paid shares were issued to Mr Welborn
upon conversion of his convertible notes.
During the year ended 30 June 2016, 500 ordinary fully paid shares were issued to Mr Beilby upon
conversion of his convertible notes.
During the year ended 30 June 2015, 500 convertible notes were issued at $1.00 per note to each of
Mr Beilby, Mr Fitzgerald and Mr Venn.
E.9 Parent entity information
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Accumulated losses
Convertible note equity reserve
Share option equity reserve
Employee equity benefits reserve
Reserves - unrealised gain/(loss)
Total shareholders equity
Profit/(loss) of Resolute Mining Limited
Total comprehensive profit/(loss) of Resolute Mining Limited
2016
$'000
2015
$'000
73
306,678
(646)
(651)
306,027
395,196
(100,906)
549
5,793
5,364
31
306,027
156,591
156,591
326
215,214
(66,647)
(80,716)
134,498
380,305
(257,497)
549
5,793
5,364
(16)
134,498
(382,307)
(382,307)
Refer to E1 for the contingent liabilities and commitments of Resolute Mining Limited. The parent company
guarantees provided by Resolute Mining Limited as outlined in C3 have a nil written down value as at 30
June 2016 (2015: nil).
E.10 Employee benefits and share based payments
Employee benefits charged to profit and loss
Salaries
Superannuation
Share based payments expense
58,833
2,870
1,716
63,419
65,181
3,029
2,489
70,699
Share based payments
Equity-based compensation benefits are provided to employees via the Group’s share option plan and
performance rights plan. The Group determines the fair value of securities issued as an expense in the profit
and loss over the vesting period with a corresponding increase in equity.
124
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements E: Other items
E.10 Employee benefits and share based payments (continued)
Key management personnel
Details of remuneration provided to key management personnel are as follows:
2016
$
Short-term employee benefits
Post-employment benefits
Long-term employment benefits
Share-based payments
2,931,464
431,383
41,878
407,916
3,812,641
2015
$
3,044,367
177,634
53,902
1,304,005
4,579,908
Key estimates and judgements
Share based payments
The Group measures the cost of equity settled share based payment transactions with reference to the fair
value at the grant date using a Black Scholes formula or Monte Carlo simulation. The valuations take into
account the terms and conditions upon which the instruments were granted such as the exercise price, the
term of the option or performance right, the vesting and performance criteria, the impact of dilution, the
non-tradeable nature of the option or performance right, the share price at grant date and expected price
volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of
the option or performance right.
Employee share option plan
The maximum number of options that can be issued under the Employee Share Option Plan is capped at
5% of the ordinary shares on issue. The options do not provide any dividend or voting rights. The options
are not quoted on the ASX. One third of the options issued pursuant to the Plan are able to be exercised 6
months after issue, a further one third 18 months after issue and the remaining one third 30 months after
issue.
Employees will only be able to exercise the options allocated to them if they meet certain performance
criteria.
Option Category Opening
Number of
Options
2016
Lapsed
During the
Year
Closing
Number of
Options
Opening
Number of
Options
2015
Lapsed
During the
Year
Closing
Number of
Options
Fair value
of option at
grant date
H
I
J
K
L
M
N
-
33,000
90,000
-
(33,000)
(90,000)
2,000,000 (2,000,000)
(756,333)
-
756,333
130,000
647,400
(102,000)
3,656,733 (2,981,333)
-
-
-
-
-
130,000
545,400
675,400
450,000
39,000
90,000
2,000,000
815,666
130,000
689,400
4,214,066
-
-
(450,000)
(6,000)
-
33,000
90,000
2,000,000
756,333
130,000
647,400
(557,333) 3,656,733
(42,000)
(59,333)
-
0.61
0.73
0.70
0.72
0.66
0.98
Weighted average
exercise price
1.46
1.39
1.72
1.42
1.18
1.46
The weighted average remaining contractual life for the share options outstanding as at 30 June 2016 is 0.5
years (2015: 0.57 years).
125
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements E: Other items
E.10 Employee benefits and share based payments (continued)
Performance rights plan
A Performance Rights Plan was approved by shareholders and implemented in 2012. The performance
rights plan is broken down between:
Performance rights plan category
Level 1
Level 2
Type of employee
Executives and Operations General Managers
Employees that report to a Level 1 employee
Plan category Grant and frequency¹ Performance measures
Level 1
Annually set at 75% of
fixed remuneration for
the CEO, 50% for
Executives and 30% for
Operations General
Managers
• 75% of the rights will be performance
tested against the relative total
shareholder return (“TSR”) measure
over a 3 year period; and
• 25% of the rights will be performance
tested against the reserve/ resource
growth over a 3 year period.
• Service
Performance period
3 years
3 years
Level 2
Annually set at 20% of
fixed remuneration
¹ Grant sizes have been changed from 1 July 2016 onwards. Refer to the Remuneration Report for further
details.
Performance rights on issue
Level 1
Level 1
Level 2
Level 1
Level 2
As at 30 June 2016
Changes during current period
Increase through issue of performance rights to eligible
employees (Level 1)
Increase through issue of performance rights to eligible
employees (Level 2)
Decrease through conversion of shares upon vesting of
performance rights (Level 1)
Decrease through lapsing of performance rights (Level 1)
Decrease through lapsing of performance rights (Level 1)
Decrease through lapsing of performance rights (Level 1)
Decrease through lapsing of performance rights (Level 1)
Decrease through lapsing of performance rights (Level 2)
Decrease through lapsing of performance rights (Level 2)
Issue
Date
Total
Number
Fair Value
per Right
at Grant Date
1/07/2013
1/07/2014
27/08/2014
1/07/2015
28/08/2015
3,153,596
2,250,597
1,502,764
5,083,995
4,883,803
16,874,755
$0.43
$0.50
$0.56
$0.25
$0.25
$0.35
Vesting
Date
30/06/2016
30/06/2017
30/06/2016
30/06/2018
30/06/2017
5,588,771
$0.25
30/06/2018
5,838,967
$0.25
30/06/2017
(393,771)
(1,193,207)
(23,147)
(135,237)
(504,776)
(16,518)
(955,164)
$1.46
$1.46
$0.43
$0.50
$0.25
$0.56
$0.25
30/06/2015
30/06/2015
30/06/2016
30/06/2017
30/06/2018
30/06/2016
30/06/2017
126
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements E: Other items
E.10 Employee benefits and share based payments (continued)
The following table lists the key variables used in the valuation of performance rights:
Hurdle
Number of performance rights
issued
Underlying share price ($)
Exercise price ($)
Risk free rate
Volatility factor
Dividend yield
Period of the rights from grant
date (years)
Effect of performance
hurdles
Reserve and
resources rights
1,397,193
TSR rights
For the year ended 30 June 2016
Service
rights
5,838,967
4,191,578
Total
11,427,738
Reserve and
resources rights
772,107
TSR rights
For the year ended 30 June 2015
Service
rights
1,544,023
2,316,321
Total
4,632,451
0.31
-
2.08%
78%
0%
3
0.31
-
2.08%
78%
0%
3
0.25
-
1.79%
74%
0%
2
0.62
-
2.64%
64%
0%
3
0.62
-
2.64%
64%
0%
3
0.56
-
2.53%
62%
0%
2
Not reflected in
valuation due to
non-market
condition
Reflected in
valuation
through Monte
Carlo
simulation
Weighted
average
Not reflected in
valuation due to non-
market condition
Reflected in
valuation
through Monte
Carlo simulation
Weighted
average
Value of performance right at
grant date (Level 1)
Value of performance right at
grant date (Level 2)
$0.31
$0.25
$0.23
n/a
$0.25
$0.25
$0.61
$0.56
$0.47
$0.50
n/a
$0.56
E.11 Other accounting policies
Derivatives
Derivatives are categorised as held for trading unless they are designated as hedges. Assets in this
category are classified as current assets or liabilities if they are either held for trading or are expected to be
realised within 12 months of the consolidated statement of financial position date. Items of this nature are
recorded at their fair values through profit or loss.
Investments in associates
The Group’s investment in associates is accounted for using the equity method of accounting in the
consolidated financial statements. An associate is an entity over which the Group has significant influence
and that are neither subsidiaries nor joint arrangements.
When the Group's share of losses in an associate equals or exceeds its interest in the associate, including
any unsecured long-term receivables and loans, the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the associate.
127
Resolute Mining Limited | Annual Report 2016 Notes to the Financial Statements E: Other items
E.11 Other accounting policies
New and amended Accounting Standards and Interpretations issued but not yet effective
A number of new Standards, amendment of Standards and interpretations have recently been issued but
are not yet effective and have not been adopted by the Group as at the financial reporting date. The
potential effect of these Standards is yet to be fully determined. However, it is not expected that the new or
amended Standards will significantly affect the Group’s accounting policies, financial position or
performance, except for the following:
Detail
instruments,
replacing AASB 139 Financial
A finalised version of AASB 9 which contains accounting requirements for
Instruments:
financial
Recognition and Measurement. The standard contains requirements in the
areas of classification and measurement, impairment, hedge accounting
and de-recognition.
AASB 11 Joint Arrangements now provides guidance on the accounting
for acquisitions of interests in joint operations in which the activity
constitutes a business. The impact of this change to the Group is that
such acquisitions will be accounted for as business combinations and not
asset acquisitions.
AASB 15 provides a single, principles-based five-step model to be
applied to all contracts with customers. Guidance is provided on topics
such as the point in which revenue is recognised, accounting for variable
consideration, costs of fulfilling and obtaining a contract and various
related matters. New disclosures about revenue are also introduced.
IFRS 16 provides a new lessee accounting model which requires a
lessee to recognise assets and liabilities for all leases with a term of more
than 12 months, unless the underlying asset is of low value. A lessee
measures right-of-use assets similarly to other non-financial assets and
lease liabilities similarly to other financial liabilities. Assets and liabilities
arising from a lease are initially measured on a present value basis. The
measurement
(including
inflation-linked payments), and also includes payments to be made in
optional periods if the lessee is reasonably certain to exercise an option
to extend the lease, or not to exercise an option to terminate the lease.
IFRS 16 contains disclosure requirements for lessees.
includes non-cancellable
lease payments
Title
AASB 9 –
Financial
Instruments
Application
Date for
Group
1
2018
July
AASB 2014-3 -
Accounting for
Acquisitions of
Interests in Joint
Operations (AASB1
& AASB11)
AASB 15 -
Revenue from
Contracts with
Customers
AASB16 –
Leases
1 July
2018
1 July
2018
1 July
2019
128
Resolute Mining Limited | Annual Report 2016 Directors’ Declaration
In accordance with a resolution of the directors of Resolute Mining Limited, I state that:
In the opinion of the directors:
(a) The financial statements and notes of the consolidated entity are in accordance with the Corporations Act
2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2016 and of its
performance for the year ended on that date; and,
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations)
and the Corporations Regulations 2001;
(b) the financial statements and notes also comply with International Financial Reporting Standards as
disclosed throughout this report;
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable; and,
(d) this declaration has been made after receiving the declarations required to be made to the directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2016.
On behalf of the Board
J.P. Welborn
Director
Perth, Western Australia
30 August 2016
129
Resolute Mining Limited | Annual Report 2016 130
Resolute Mining Limited | Annual Report 2016 131
Resolute Mining Limited | Annual Report 2016 Shareholder Information
Substantial shareholders as at 30 September 2016
Ordinary shares
ICM Limited
Wellington Management Group LLP
Number
held Percentage
184,236,154
103,336,772
28.0%
15.7%
Distribution of equity securities as at 30 September 2016
Size of Holding
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
Ordinary Shares
1,392
1,972
820
1,152
175
Total equity security holders
Number of equity security holders with less than a marketable parcel
5,511
532
Voting rights
(a)
Ordinary shares
Under the Company's Constitution, all ordinary shares issued by the Company carry one vote per
share without restriction.
Twenty largest shareholders as at 30 September 2016
Name
Number of % of Issued
Capital
Ordinary Shares
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
ICM Limited
Van Eck Associates Corporation
Alliance Life Common Fund Ltd.
Wellington Management Group LLP
Vinva Investment Management
Dimensional Fund Advisors LP
Zeta Resources Limited
Ruffer LLP
The Vanguard Group, Inc.
Bankinter Gestion de Activos, SGIIC
Baker Steel Capital Managers LLP
OppenheimerFunds, Inc.
ICM Investment Management Limited
Massachusetts Financial Services Company
CQS Investment Management Limited
Schroder Investment Management Limited
Peter Sullivan
Colonial First State Asset Management (Australia) Limited
Pacific Life Fund Advisors LLC
Fidelity Investments
103,807,994
103,336,772
44,373,560
38,596,543
32,254,742
29,688,907
29,434,000
22,980,500
12,569,352
11,796,233
8,408,900
7,240,478
6,620,600
4,627,635
4,000,000
3,305,663
3,072,051
2,922,895
2,745,266
2,386,108
474,168,199
15.75%
15.68%
6.73%
5.86%
4.90%
4.51%
4.47%
3.49%
1.91%
1.79%
1.28%
1.10%
1.00%
0.70%
0.61%
0.50%
0.47%
0.44%
0.42%
0.36%
71.96%
132
Resolute Mining Limited | Annual Report 2016
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ASX:RSG | www.rml.com.au