Republic Services
Annual Report 2017

Plain-text annual report

Mine gold. Create value. Annual Report 2017 R e s o l u t e | A n n u a l R e p o r t 2 0 1 7 ASX:RSG | www.rml.com.au Contents Contents FY17 Highlights Managing Director’s Review Board and Executives Review of Operations Ore Reserves Mineral Resources Sustainability Governance Risk Management Fiscal Responsibility Financial Report 2 5 8 12 22 24 27 38 41 44 45 Corporate Directory Directors Non-Executive Chairman Managing Director and CEO Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director MJ Botha JP Welborn HTS Price PR Sullivan M Potts Y Broughton Company Secretary A Stanton Registered Office and Business Address Level 2, Australia Place 15-17 William Street Perth, Western Australia 6000 Postal PO Box 7232 Cloisters Square Perth, Western Australia 6850 Telephone: + 61 8 9261 6100 Facsimile: + 61 8 9322 7597 Email: contact@rml.com.au ABN 39 097 088 689 Website Resolute Mining Limited maintains a website where all major announcements to the ASX are available: www.rml.com.au Share Registry Computershare Investor Services Pty Limited GPO Box 2975 Melbourne, Victoria 3001 Telephone: 1300 850 505 (within Australia) Telephone: +61 3 9415 4000 (outside Australia) Facsimile: + 61 3 9473 2500 Email: www.investorcentre.com/contact Web: www.computershare.com Home Exchange Australian Securities Exchange Limited Level 40, Central Park 152 St Georges Terrace Perth, Western Australia 6000 Quoted on the official list of the Australian Securities Exchange: ASX Ordinary Share Code: “RSG” Securities on Issue (17/10/2017) 741,477,595 Ordinary Shares 1,926,629 Performance Rights Auditor Ernst & Young Ernst & Young Building 11 Mounts Bay Road Perth, Western Australia 6000 Bankers BDM-SA Avenue Modibo-Keita BP 94 Bamako, Mali Africa Citibank Limited Level 23, Citigroup Centre 2 Park Street Sydney, New South Wales 2000 Mine Gold. Create Value. Resolute is a successful gold miner focused on ore body, where operations are expected to creating long term value for shareholders. The cease in late FY18. The Company’s next stage of Company is an experienced explorer, developer and development in Queensland is the return to large operator having run nine gold mines across Australia scale open pit mining at the Ravenswood Expansion and Africa which have produced 8 million ounces Project which will extend the Company’s local (Moz) of gold over the past 28 years. Resolute operations for a further 13 years to at least 2029. currently operates two mines, the Syama Gold The transition to open pit mining has commenced Mine in Africa and the Ravenswood Gold Mine in at Ravenswood with current mining activity at the Australia, and is one of the largest gold producers Nolans East open pit. listed on the Australian Securities Exchange with FY18 guidance of 300,000 ounces (oz) of gold production at an All-In Sustaining Cost (AISC) of A$1,280 per ounce (US$960/oz). In Ghana, the Company has completed a feasibility study on the Bibiani Gold Mine focused on the development of an underground operation requiring modest capital and using existing plant Resolute’s flagship Syama Gold Mine in Mali infrastructure. is a robust long life asset comprising parallel sulphide and oxide processing plants. The Syama Underground mine development commenced in September 2016 and is expected to extend the mine life beyond 2028. Processing of sulphide open pit stocks will continue in financial year 2018 (FY18) while development of the large scale underground mine accelerates and underground development ore production increases. Resolute is focused on growth through exploration and development and is active in reviewing new opportunities to build shareholder value. The Company is currently exploring over 6,600km2 of potentially gold mineralised tenure in West Africa and Australia. In Mali, Resolute controls an extensive exploration footprint along the highly prospective Syama Shear. An increased budget of $38 million (M) in FY18 will allow accelerated drilling of key The Ravenswood Gold Mine in Queensland targets across active drilling programs in Mali, demonstrates Resolute’s significant underground Ghana, Côte d’Ivoire and Australia. expertise in successfully mining the Mt Wright 1 Resolute Mining Limited | Annual Report 2017Resolute Mining Limited | Annual Report 2017 FY17 Highlights Operations Gold produced 329,834oz original guidance of 300,000oz All-In Sustaining Cost A$1,132/oz original guidance of A$1,280/oz • Production at the Syama Gold Mine in Mali was sourced from the processing of stockpiled sulphide ore and the mining of oxide ore from satellite open pits. • Maintained steady production from Ravenswood Gold Mine in Queensland, Australia as the operation transitioned to open pit mining at Nolans East while the Mt Wright underground mine continues to extend mine life beyond expectations Gold Production (oz) 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 Jun-14 Jun-15 Jun-16 Jun-17 All-In Sustaining Cost & Average Price Received (A$/oz) 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Jun-14 Jun-15 Jun-16 Jun-17 All-In Sustaining Cost (A$/oz) Average Price Received (A$/oz) Development • Syama Underground mine commenced development in September 2016 and is currently on schedule for completion of the sublevel cave development project in December 2018 • Ravenswood Expansion Project (REP) declared as a ‘Prescribed Project’ by the Queensland Government • Regulatory approvals for recommencement of mining at Sarsfield obtained in March 2017 Exploration • Positive exploration results received from Nafolo, Tabakoroni and BA-01 highlighted underground mining opportunities that have potential to complement the existing Syama mine plan 2 2 Resolute Mining Limited | Annual Report 2017Financials Cash, bullion and listed investments 184% A$290M (US$223M) Gross profit from operations A$177M (FY16: A$155M) 14% • FY17 Net profit after tax of A$166M (FY16: A$201M) • Revenue from gold and silver sales of A$541M (FY16: A$555M) • Return on equity of 49% • Diluted earnings per share of 18.61 cents • Net cash flows from operations of A$186M (FY16: A$193M) • Net investing cash outflows of A$128M (FY16: A$43M) • Net financing cash inflows of A$136M (FY16: -A$79M) 300 250 200 150 100 50 0 -50 -100 250 200 150 100 50 0 Cash & bullion net of debt (A$M) Jun-14 Jun-15 Jun-16 Jun-17 Operating Cash Flow (A$M) Jun-14 Jun-15 Jun-16 Jun-17 Corporate • Appointment of Mr Martin Botha as Chairman replacing longstanding Chairman Mr Peter Huston • Appointment of Ms Lee-Anne de Bruin as Chief Financial Officer (CFO) • Appointment of Ms Yasmin Broughton and Mr Mark Potts as Non-Executive Directors • Successful institutional share placement raising A$150M in September 2016 • Gold sale linked dividend policy established, featuring innovative option for shareholders to receive dividends in gold 3 Resolute Mining Limited | Annual Report 2017Resolute Mining Limited | Annual Report 2017 Resolute’s ambition is to be a technology-driven, multi-mine, low cost global gold producer Low cost producer: Targeting the lower quartile of the global AISC curve (~US$750/oz) Long mine life: Long term returns from >10 years mine life Multiple assets: Diverse portfolio to spread production risk and allow portfolio optimisation Technology early-adopter: Technology-driven cost savings and improved safety outcomes Be a ‘must have’ gold investment: Establish a base of high conviction investors | Bold | Agile | Courageous | United | Resolute is a pioneer of modern gold mining in Australia and Africa and has produced 8 million ounces of gold to date. Resolute seeks to combine this entrepreneurship with the financial discipline and rigour required to deliver consistent growing returns to shareholders and a genuine commitment to health, security and communities. This ambition is embodied in our values. BOLD - ambitious and entrepreneurial AGILE – innovative and adaptive COURAGEOUS – genuine care for employees, environment, community and assets UNITED – share, collaborate and learn from each other 4 4 Resolute Mining Limited | Annual Report 2017Managing Director’s Review Resolute is building a great gold mining company. The foundations of our future success are based on 25 years of hard work and consist of the operational expertise gained from over 8 million ounces of gold production from nine separate operations. Resolute has been operating in Africa for 20 years. The Company was a pioneer of modern gold mining in West Africa (Ghana) and Tanzania where we built, operated, closed and rehabilitated the Obotan and Golden Pride mines. Converting this operating expertise into consistent value creation is the single focus of the business. Dear fellow shareholders, It gives me great pleasure to present the results of FY17 at Resolute. In 2016 we embarked on the process of transforming the Company to become not only a successful miner of gold, but a creator of sustained value for our shareholders. I am pleased to report we continue to make substantial progress in the pursuit of that goal. During FY17, our operations at Syama in Mali and at Ravenswood in Queensland produced 329,834oz of gold. Revenue from gold and silver sales of A$541M (FY16: A$555M) generated a net profit after tax of A$166M (FY16: A$201M). Gross profit from operations increased from A$155M to A$177M and a return on equity of 49% was achieved. The continuing strong cash flows from our operations have been used to strengthen the Company’s balance sheet and provide flexibility to pursue new investment opportunities and capacity to accelerate exploration expenditure. Having repaid all senior and secured debt, we successfully raised A$150M in new equity in September 2016. This placement, which was achieved at a price of $1.96 per share, ensures Resolute is well funded to complete its planned capital investments and growth projects. As at 30 June 2017, the Company held cash, bullion and listed investments of A$290M. 5 5 Resolute Mining Limited | Annual Report 2017Resolute Mining Limited | Annual Report 2017 Having strengthened the balance sheet our focus has shifted to ensuring our gold assets consistently provide exceptional rewards to our shareholders. Resolute’s flagship project is the Syama Gold Mine in Mali. Production during the financial year was provided from stockpiled open pit ore processed through the sulphide plant, and the mining of satellite open pits providing ore feed for the oxide circuit. During the course of the financial year we commenced development of the Syama Underground mine. The underground mine, when fully commissioned during FY19, will provide a low cost 12 year mine life and increase total annual site production to 250,000oz of gold. This is an exciting development project for Resolute with opportunity for further enhancement from ongoing exploration success and operational refinements. We are investigating the potential to implement a fully automated loading and haulage system, which we believe will create a new standard for underground safety and productivity. In Queensland at the Ravenswood Gold Mine, our expansion plans are progressing and we now operate with the confidence of a long mine life future ahead. Mining commenced at the Nolans East open pit, supplementing production from the Mt Wright Underground mine. Mt Wright has significantly exceeded its original forecast closure date and is now expected to cease operations in the final quarter of FY18. The extension of the Mt Wright mine life has been achieved by careful and conservative management of stope draw over several years. This successful sub-level cave management has resulted in a substantial overdraw from the current production levels. Nolans East open pit mining is expected to be completed by the end of calendar year 2017. We are continuing to refine the Ravenswood Expansion Project which entails a staged expansion of the Nolans Process plant back to its former capacity of 5 million tonnes per annum to secure a 13 year operating life for this asset. 6 6 Resolute Mining Limited | Annual Report 2017In Ghana, Resolute embarked on a program of drilling to follow up the highly encouraging feasibility study for the Bibiani Gold Mine, published in June 2016. A number of highly promising intersections were returned from this program which was focused on increasing the size, grade, and confidence in the current resource, improving project economics, and extending the mine life beyond five years. An updated resource will underpin further project studies and ultimately, a future decision to mine. These studies will be completed by the end of calendar year 2017 and support our ambition to recommission Bibiani as a long life, low cost gold mine. During the course of the financial year, Resolute substantially increased its exploration effort and investment. This investment was driven by a strong belief in the capacity of well targeted exploration to create value. This view has been vindicated by the Nafolo discovery, adjacent to Syama, which is emerging as a major new deposit. Similarly drilling at the Tabakoroni and BA-01 satellites may create the opportunity to mine high grade underground orebodies to supplement and increase future production from Syama. We are committed to creating value through exploration and in the coming financial year Resolute will maintain a high level of activity. Resolute has operated gold mines in numerous locations in Africa and Australia. For the past 20 years the bulk of our production has come from developing countries in Africa. Building co-operative and mutually beneficial relationships with our host governments and communities has always been a priority for Resolute. As community expectations grow it is even more important that our operations make positive contributions and that these contributions are understood and acknowledged by host governments. Equally important to the maintenance of our licence to operate is the careful management of the safety, health and environmental impacts of our activities. During the year Resolute continued to reduce its Total Injury Frequency Rates, taking us closer to the ultimate goal of operating a workplace that inflicts zero harm on its employees and on the surrounding environment. I congratulate all of our workers across the Company on their efforts to build a safe and environmentally responsible business. Last year Resolute adopted an innovative dividend policy whereby the Company will seek to pay shareholders an annual dividend of at least 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. For FY16, where the Company earned revenue of A$555M, a final dividend of 1.7c per share was declared. For 2017, we have chosen to increase the dividend to 2.0c per share, which represents 2.7% of annual gold sales revenue. The payment of a regular and material dividend is a key element of Resolute’s confidence and commitment to the delivery of value to shareholders. While the results over the past year have been positive, behind the scenes an equally far-reaching cultural and organisational change has been taking place. A new organisational model has been implemented, a restructure of our senior executive team completed, and a process of Board renewal undertaken. These changes seek to transform Resolute into an organisation that consistently delivers cash flow, profits and dividends across the business cycle. Achieving this has become the motivator for all of the Company’s activities, priorities and decisions and a number of important steps have been taken along this path. I welcome the appointments of Mr Martin Botha as Chairman of our Company and Ms Yasmin Broughton and Mr Mark Potts as new Non-Executive Directors. During the financial year Mr Peter Huston stepped down as Chairman after 15 years of service. I acknowledge and appreciate Mr Huston’s key role over a significant period in Resolute’s history. At an asset level we have embarked on a major program of redevelopment providing opportunities and challenges for the organisation and for our employees. The Company is meeting these challenges, and delivering excellent cost and production performance. This success has been achieved, through the efforts of the entire Resolute team, led by my colleagues in the senior executive group and our site based general managers. I thank the Board, shareholders, and the wider Resolute team, for their hard work and dedication. I look forward to further success in the years to come. I am proud of the results we are achieving and remain excited about the future opportunities for value creation at Resolute. This report presents our financial results and also seeks to inform shareholders on our strategic ambitions and activity. We have incorporated a new section on sustainability to highlight our objectives and performance with regard to corporate social responsibility. I hope you enjoy reading the 2017 Annual Report. John Welborn Managing Director & CEO 7 Resolute Mining Limited | Annual Report 2017Resolute Mining Limited | Annual Report 2017 Board and Executives 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. Martin Botha (Non-Executive Chairman) BScEng Mr Martin Botha was appointed Chairman in June 2017 after being 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 Chairman of the Nomination Committee, a member of the Audit and Risk Committee and a member of the Remuneration Committee. John Welborn (Managing Director and Chief Executive Officer) BCom, 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. Prior to joining Resolute Mining Limited in 2015 Mr Welborn was the Managing Director of Equatorial Resources Limited and 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 Prairie Mining Limited (February 2009 - September 2015) and is currently a Non-Executive Director of Equatorial Resources Limited (appointed 2010) and Kilo Gold Mines (appointed 2017), and is Chairman of Orbital Corporation Limited (appointed 2014). In September 2017 Mr Welborn was appointed a director of the World Gold Council. Mr Welborn is the Chair of the Environment and Community Development Committee and the Safety, Security and Occupational Health Committee. 8 8 Resolute Mining Limited | Annual Report 2017Resolute Mining Limited | Annual Report 2017 Peter Sullivan (Non-Executive Director) BEng, 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 25 years. Mr Sullivan is also a Director of GME Resources Limited (appointed 1996), Zeta Resources Limited (appointed 2013), Pan Pacific Petroleum NL (appointed 2014), Panoramic Resources Limited (appointed 2015) and Bligh Resources Limited (appointed 2017). Mr Sullivan is Chair of the Remuneration Committee and a member of the Audit and Risk Committee. Bill Price (Non-Executive Director) BCom, FCA, MAICD Mr Bill Price is a Non-Executive Director and was appointed to the Board in 2003. Mr Price is a Fellow of Chartered Accountants Australia and New Zealand 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 a member of the Audit and Risk Committee, Remuneration Committee and Nomination Committee. Mark Potts (Non-Executive Director) BSc (Hons) Mr Mark Potts is a Non-Executive Director and was appointed to the Board in 2017. Mr Potts has held senior executive and Board positions, in start-ups and large corporate environments, over a 30-year career. Most recently Mr Potts was the worldwide CTO and VP for Corporate strategy at Hewlett Packard, driving technology and business strategy successfully for over 5 years. Prior to Hewlett Packard Mark was the founder of several successful, venture backed start-ups, that have driven technology disruption and business innovation in varied industries. Mr Potts is the Chair of Decimal Software Limited (appointed 2016), a Director of VGW (appointed 2017) and Board adviser to Advara (appointed 2014) and Adecco Australia (appointed 2010) Mr Potts is a member of the Audit and Risk Committee, Remuneration Committee and Nomination Committee. Yasmin Broughton (Non-Executive Director) BCom PG Law GAICD Ms Yasmin Broughton is a Non-Executive Director and was appointed to the Board on 29 June 2017. Ms Broughton is a highly credentialed lawyer with significant experience working as both a director and an executive reporting to Boards in a diverse range of industries. Ms Broughton has over 13 years’ experience working with ASX listed companies as an officer and has a deep understanding of corporate governance, including compliance with the ASX Listing Rules, and managing complex legal issues. Ms Broughton’s legal and commercial qualifications together with her national mediator credentials, define her fact based and solution orientated approach to corporate management. Ms Broughton is also a Non-Executive Director of the Insurance Commission of Western Australia (appointed 2015), Edge Employment Solutions Inc (appointed 2012) and CyberGym Global Limited (appointed 2017). Ms Broughton is Chair of the Audit and Risk Committee and a member of the Remuneration Committee and Nomination Committee. 9 9 Resolute Mining Limited | Annual Report 2017General Counsel / Company Secretary Amber Stanton LL.B. Ms Amber Stanton is a corporate lawyer and was appointed as General Counsel / Company Secretary in 2017. Prior to joining Resolute, Ms Stanton was a partner at two international law firms, specialising in mergers and acquisitions, capital markets, energy and resources and general corporate and commercial matters. Ms Stanton was the WA winner of the 2011 Telstra Business Women's award (Corporate and Private Sector) and is also a director of the Liver Foundation of Western Australia. Executives Lee-Anne de Bruin, Chief Financial Officer BCom, BAcc (Hons), CA Ms Lee-Anne de Bruin joined Resolute as Chief Financial Officer (CFO) in 2017 and is responsible for the entire accounting, financial, taxation, treasury and technology functions of the Company. Ms de Bruin has over 15 years of financial, operational and strategic management experience across multiple industry sectors, including ten years in the mining industry in both Africa and Australia, where she has held both CFO and Managing Director positions. Ms de Bruin has lead teams at some of the world’s most prominent mining organizations with notable positions including Regional CFO Newmont Asia Pacific, Head of Project Functions BHP Iron Ore and Managing Director Kimberley Diamond Company. Peter Beilby, Chief Operating Officer BSc (Mining Engineering) Mr Peter Beilby joined Resolute as Chief Operating Officer (COO) in 2010 and is responsible for the operations and production of the Company’s gold mines. A qualified mining engineer with over 25 years of operational and project experience in gold, base metals and mineral sands, Mr Beilby is a highly regarded COO in the industry. Mr Beilby has a strong background in operations management of open cut and underground gold mining as well as greenfields and brownfields development in both fields. Prior to joining Resolute, Mr Beilby was General Manager Murray Basin at Iluka Resources Limited. Paul Henharen, General Manager – Project Delivery BSc, MSc, MBA, MAusIMM Mr Paul Henharen joined Resolute in 2016 as General Manager – Projects, and is responsible for the Company’s mining development projects. With over 20 years’ experience in the design, commissioning and management of a wide range of mineral processing operations, Mr Henharen has held senior management roles within a number of international engineering companies. Mr Henharen provides extensive experience in the management of feasibility studies and development of mineral processing projects in Africa and Australia. 10 10 Resolute Mining Limited | Annual Report 2017Vanessa Hughes, General Manager – People, Culture and Information BBus Ms Vanessa Hughes joined Resolute in 2016 as General Manager - People, Culture and Information, and is responsible for the Company’s human resources function. Ms Hughes has over 20 years’ experience across the full range of her field from strategic organisational development and human resources including business strategy, optimising organisational culture, employee engagement and retention, talent and leadership development and succession to more generalist HR including recruitment and employee relations. Prior to joining Resolute Ms Hughes was Manager People and Culture at Poseidon Nickel and previously Manager People and Culture at Millennium Minerals. David Kelly, General Manager – Corporate Strategy BSc (Hons.) Mr David Kelly joined Resolute in 2016 as General Manager – Corporate Strategy and is responsible for corporate strategy, business development and investor relations. An experienced geologist and Company Director, Mr Kelly has served in various senior executive roles in the resources sector for the last 30 years including as an investment banker and corporate advisor. Currently a Non-Executive Director of ASX listed Predictive Discovery Limited and Manas Resources Limited, Mr Kelly has previously served as a director of Ridge Resources Limited, Renaissance Minerals Limited and Pacific Ore Limited. Bruce Mowat, General Manager – Exploration BSc (Geology) Mr Bruce Mowat joined Resolute in 2011 and is currently General Manager - Exploration, responsible for the Company’s exploration and development programs in Australia, Africa and other jurisdictions. Mr Mowat has spent 30 years exploring for and finding gold and base metal deposits in Australia, PNG, Indonesia and West Africa and has held senior positions in a number of companies. Prior to joining Resolute Mr Mowat was Chief Geologist for Straits Resources. 11 11 Resolute Mining Limited | Annual Report 2017Resolute Mining Limited | Annual Report 2017 Review of Operations Syama “The Syama Underground has potential to be one of the world’s first fully automated underground truck haulage mines” The Syama Gold Mine (Syama) is located in the south of Mali, West Africa approximately 30km from the Côte d’Ivoire border and 300km southeast of the capital city, Bamako. Resolute has an 80% interest in Syama 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 2.4 million tonnes per annum (Mtpa) sulphide processing circuit and a 1.5Mtpa oxide processing circuit. Mining at the main Syama open pit was completed in May 2015 with ore for the sulphide circuit currently being sourced from the previously stockpiled sulphide ore, underground development ore and satellite operations. Ore for the oxide circuit is currently sourced from a series of satellite deposits, including BA-01, Beta, Alpha and Tabakaroni. 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. Development of the Syama Underground mine commenced in September 2016 and will extend the mine life to beyond 2028. Sulphide During FY17 the sulphide processing plant treated 2.11 million tonnes (Mt) (2016: 1.50Mt) of ore at an overall head grade of 2.59 grams per tonne (g/t) Au (2016: 3.53g/t Au) to produce 136,000oz (2016: 129,585oz) of gold at an AISC of A$1,001/oz (2016: A$917/oz). The lower grade was in line with an expected reduction in head grade as the ore stockpiles remaining from the Syama open pit operations continue to be depleted. In FY17 ore supply for the sulphide processing plant was primarily sourced from the existing sulphide ore stockpiles with some additional sulphide ore sourced from the A21 satellite open pit operations. Gold production from the sulphide processing plant 12 Resolute Mining Limited | Annual Report 2017FY17 FY16 Cash Cost Per Ounce was affected by lower flotation recoveries associated with the ore mined from the A21 satellite open pit operations. Overall plant recoveries of 69.8% (2016 76.3%) were also affected by the reduced head grade and associated lower sulphide content from the ore stockpiles. Overall recoveries are expected to increase as the proportion of higher grade underground development ore increases in FY18. Sulphide ore stockpiles at year-end were approximately 149,000oz (3.39Mt at 1.4g/t Au). These ore stockpiles will continue to be blended with sulphide ore from the satellite open pits and increasingly from underground development ore while the sublevel cave is being established over the next 18 months. Development ore production has recently commenced with pre-production underground ore of ~1.3Mt expected to be mined prior to the commencement of the main sublevel cave operation in December 2018. On completion of the sublevel cave development the Syama Underground will be the primary source of sulphide ore for the sulphide processing plant. Operating Performance at a glance - Sulphide Ore Mined Ore Milled Head Grade Recovery Rate Gold Produced Cash Cost Per Ounce CashCost Per Ounce AISC AISC Mt Mt g/t Au % oz A$ US$ A$ US$ 1.22 2.11 2.59 69.8 0.41 1.50 3.53 76.3 136,000 129,585 857 646 1,001 755 710 517 917 669 Syama – Sulphide Ore Reserves as at 30 June 2017 Deposit Tonnes Grade Ounces Syama Underground 23,855,000 2.8 2,171,000 Syama Stockpiles 3,394,000 1.4 149,000 Total 27,249,000 2.6 2,320,000 Oxide The oxide processing circuit treated 1.34Mt (2016: 1.26Mt) at an overall head grade of 2.84g/t Au (2016: 2.30g/t Au) to produce 101,830oz (2016: 80,032oz) at an AISC of A$960/oz (2016: A$1,561/oz). A number of improvements were made to the oxide processing plant during FY17 including modifications to the process water circuit. Milled tonnes increased with better availability and utilisation than the previous year. Oxide circuit recoveries of 83.2% (2016: 86.2%) were affected by transitional material from the A21 satellite operations and lower recoveries associated with an old BHP/Randgold stockpile processed during the year. During FY17 mining of the A21 satellite pits was completed and mining of the BA-01 satellite pit commenced. The BA-01 satellite pit is located approximately 6km north of Syama and forms part of a series of northern satellite deposits, including Beta and Alpha. Total waste material mined from the satellite pits for the financial year was 4.20M bank cubic metres (BCM) of material (2016: 4.53M BCM). Total ore mined was 1.13M BCM at a grade of 2.35g/t Au (2016: 0.75M BCM at 2.23g/t Au) and a (waste:ore) strip ratio of 3.71:1 (2016: 6.04:1) Operating Performance at a glance - Oxide Ore Mined Ore Milled Mt Mt Head Grade g/t Au Recovery Rate Gold Produced Cash Cost Per Ounce AISC AISC % oz A$ US$ A$ US$ FY17 FY16 1.32 1.34 2.84 83.2 1.13 1.26 2.30 86.2 101,830 80,032 948 714 960 725 1,026 747 1,561 1,137 Syama – Satellite Ore Reserves as at 30 June 2017 Deposit Tonnes Grade Ounces Syama Satellite Deposits (incl. stockpiles) 4,141,000 2.1 285,000 Tabakoroni Total 3,156,000 2.9 296,000 7,297,000 2.5 581,000 Outlook Sulphide ore stockpiles will continue to be managed to maintain an average feed grade of greater than 2g/t Au to the sulphide plant. Open pit mining will continue at the BA-01 pit with ore supply increasing as the pit deepens. Mill feed grades are expected to increase from the current levels as an increasing amount of the sulphide feed is delivered from underground development ore. The underground development ore is expected to grade in a range of 2.5-3.0g/t Au. Higher sulphide feed grades will result in increases in recoveries. 13 Resolute Mining Limited | Annual Report 2017Resolute Mining Limited | Annual Report 2017 Review of Operations Ravenswood “Mt Wright is one of Australia’s most successful underground mines, having mined a ~2.5g/t Au orebody at an average cash cost of A$850/oz over the last 5 years, down to a depth of ~900m below surface” 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 and the Nolans East open pit. The Nolans process plant is currently configured for processing 2.8Mtpa of ore using three stage crushing, SAG and ball milling and carbon- in-pulp processing with a gravity circuit for recovery of free gold. During FY17 the operations produced 92,004oz (2016: 105,552oz) of gold at an AISC of A$1,406/oz (2016: A$1,225/oz). The reduction in ounces produced is the result of lower production from the Mt Wright underground operation and the reduced head grade associated with the return to open pit mining at Nolans East. Ore production from the Mt Wright Underground Mine was 1.00Mt (2016: 1.31Mt) at 2.51g/t Au (2016: 2.38g/t Au). The lower production was due to a reduced number of draw-points being available for production as the size of the ore body decreases near the bottom of the mine. The Mt Wright Underground mine has continued to extend mine life well beyond expectations and is currently estimated to continue operations until late FY18. The processing plant treated 2.00Mt (2016: 1.70Mt) at an average head grade of 1.54g/t Au (2016: 2.05g/t Au). During the year the Stage 1 crusher expansion (2.8Mtpa) was completed with the installation of a secondary crusher into the circuit and converting the existing secondary crusher into a tertiary role. The decrease in head grade was directly attributable to the addition of the lower grade open pit mining at Nolans East. Overall recoveries decreased in line with expectations to 93.1% (2016: 94.3%) due to the addition of the low grade ore. 14 Resolute Mining Limited | Annual Report 2017Operating Performance at a glance Outlook Ore Mined Ore Milled Head Grade Recovery Rate Gold Produced Cash Cost Per Ounce Cash Cost Per Ounce AISC AISC Mt Mt g/t % oz A$ US$ A$ US$ FY17 2.37 2.00 1.54 93.1 FY16 1.31 1.70 2.05 94.3 92,004 105,552 1,252 943 1,406 1,059 1,033 752 1,225 892 Ravenswood - Ore Reserves as at 30 June 2017 Tonnes Grade Ounces Deposit Sarsfield 47,090,000 Nolans East 2,155,000 Buck Reef West 18,321,000 Stockpiles (O/C) 801,000 Mt Wright 258,000 Stockpiles (U/G) 11,000 Total 68,636,000 0.8 0.7 0.9 0.6 2.7 2.6 0.8 1,170,000 51,000 524,000 16,000 22,000 1,000 1,784,000 Mined ore tonnes from Mt Wright are expected to reduce as the number of available drawpoints decreases over the remaining life of the underground mine. Mine production and processing from Nolans East is expected to continue at current levels until the Nolans East open pit is completed in late-2017. Production levels at Ravenswood are expected to temporarily reduce as the Mt Wright Underground mine is completed and the Ravenswood operation transitions to open pit mining. Ravenswood FY18 production is estimated to be 80,000oz and will be generated from a combination of Mt Wright Underground ore, open pit mining at Nolans East, and existing open pit stockpiles. Mt Wright has significantly exceeded its original forecast closure date and is expected to cease operations in the final quarter of FY18. During the second half of FY18 ore feed will be sourced from Nolans East stockpiles, existing Sarsfield stockpiles, and any remaining production ore from Mt Wright. 15 Resolute Mining Limited | Annual Report 2017Resolute Mining Limited | Annual Report 2017 Review of Operations Development Project 85 At Syama, Resolute is implementing a series of process upgrades with the main objective of increasing the sulphide gold recovery to 85% (Project 85). The process upgrades will consist of the following units: 1. Flotation Tails CIL: the current calcine CIL circuit will be repurposed to treat the flotation tails. 2. New Calcine CIL: a new dedicated calcine CIL circuit will be designed and installed. 3. Regrind: the coarse calcine product will now be reground prior to CIL. 4. Upgrade of current flotation circuit: the current flotation circuit will have a series of minor upgrades to improve the operational performance. The project design, procurement and construction are on schedule and the staged commissioning of Project 85 remains on track for the end of March 2018. Low Carbon Roaster At Syama, Resolute has been working closely with Outotec, the manufacturer of the roaster, in developing a new roaster technology that will produce a low carbon calcine to improve CIL recovery. This new technology will allow Resolute to modify the current single stage Circulating Fluidized Bed roaster into a Low Carbon Roaster (LCR). By significantly reducing the carbon in the calcine being fed to the calcine CIL circuit, the LCR will contribute to an increase in the overall sulphide gold recovery above the benefits of Project 85 towards an overall recovery of 89%. The LCR technology will deliver a significant reduction in the organic carbon (COrg) value of the calcine, with a commensurate increase in calcine leach recovery due to a reduction in preg-robbing. Project Reprise involves reclaiming carbon enriched concentrate (CEC) from a dedicated storage facility and processing this material through the roaster and the sulphide treatment plant. Project Reprise requires the LCR technology to increase the recovery of the CEC from circa 60% to 90%. Project Phoenix Project Phoenix involves the assessment of economically recovering residual gold from the reclamation and treatment of stored flotation tailings at Syama. One sector of the Flotation Tailings Storage Facility (FTSF) was drilled during the year using aircore drilling. Assay results from the drillholes provided sufficient confidence for the Resolute Board to approve additional funds to conduct a specialised drilling program to further test the grades and tonnages within the FTSF. The specialised drilling program will provide samples for metallurgical testing of the tailings material and delineate a maiden resource estimate for Project Phoenix. Syama Underground Project The Syama Underground Project commenced in September 2016 and is currently on schedule for sublevel cave ore production to commence in December 2018. During the underground development phase a significant amount of development ore will be mined and is expected to augment the stockpiled sulphide material that is providing mill feed and gold production. During the year underground development commenced on the first and second production levels (the 1130 and 1105 levels) and the incline and decline. Underground development rates have exceeded expectations with automated drilling allowing longer rounds, rapid lateral development and less overbreak. Underground ore development has commenced and will form a significant proportion of processed sulphide ore while the sublevel cave is being developed. 16 Resolute Mining Limited | Annual Report 2017Syama Underground MineR of the Future Throughout the year Resolute investigated a number of significant technology and innovation enhancements that have potential to increase efficiency and productivity of the Syama Underground mine. Equipment manufacturers are engaged and mine design improvements have been implemented to capture the latest underground mining technology with a focus on automation. In collaboration with equipment manufacturers the Company is confident that subject to Board approval, the Syama Underground has potential to be one of the world’s first fully automated underground truck haulage mines. Ravenswood Expansion Project The Ravenswood Expansion Project (REP) was announced in September 2016 with the aim of maintaining continuity of production at Ravenswood as the Mt Wright Underground mine prepares for closure. Resolute has commenced the 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 outlined the following development sequence: • Mt Wright Underground operations continuing until eventual closure in late FY18; • Open pit mining recommenced from Nolans East and continuing during 2017; • • • Processing capacity increased to 2.8Mtpa; Regulatory approvals for recommencement of mining at Sarsfield obtained in March 2017; Regulatory approvals for open pit mining of Buck Reef West expected in mid-2018; and • Expansion of the mill to 5.0Mtpa. The feasibility study into the REP confirmed a long life, low risk, low cost development plan with robust economics. Under the REP, average annual production is expected to increase to greater than 120,000oz of gold. Mine life will be extended by 13 years with operations continuing until at least 2029. The operation will generate Life of Mine AISC of A$1,166/oz (US$880/oz). The staged development plan requires no immediate additional capital expenditure and start-up capital comprises only A$134M for pre-stripping and staged processing plant expansion to 5.0Mtpa. Significant potential remains for economic upside and further extensions. During the year the Stage 1 crusher expansion to 2.8Mtpa was completed with the installation of a secondary crusher into the circuit and converting the existing secondary crusher into a tertiary role. A one megalitre per day (ML/d) reverse osmosis (RO) plant was also installed on site to treat supernatant from the Sarsfield pit. This unit will act as a test bed for the final design of the RO system. In December 2016, the REP was declared a ‘Prescribed Project’ under State Development and Public Works Organisation Act 1971 by the Queensland Government. The Prescribed Project status has streamlined administrative decisions and ensured essential project regulatory approvals are received on a timely basis. Resolute continues to work 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. In March 2017 the Queensland Department of Environment and Heritage Protection issued the final approved Amended Environmental Authority for the recommencement of mining at the Sarsfield open pit. The Environmental Authority is a major milestone in the governmental approval process required to progress the REP and includes all provisions required to recommence mining at the Sarsfield open pit. Resolute continues to work collaboratively with the Queensland Government on the required regulatory approvals for the REP. Baseline environmental studies for the Buck Reef West Project are ongoing with the final approvals expected in mid-2018. 17 Resolute Mining Limited | Annual Report 2017Review of Operations Exploration Nafolo During the year Resolute announced a major discovery at Syama called Nafolo which is a new zone of mineralisation located immediately south of the Syama deposit and separate to the main orebody. Discovered in October 2016, follow up drilling confirmed Nafolo as having similar characteristics, size and tenor to the 8Moz Syama orebody. Nafolo is situated in an area where historic exploration drilling by BHP was limited to 500m wide spaced lines of shallow (30m) sterilisation reverse circulation (RC) drilling. A number of these holes intersected anomalous gold near the surface indicating significant untested space to potentially host another large gold deposit along the extensions of the Syama Shear. Despite this a large waste dump was constructed immediately south of the Syama open pit. Nafolo can potentially be accessed in the early years of the Syama Underground mine due to its location just 250m south of the current mine design. Drilling is continuing with two diamond drill rigs currently situated on the waste dump. An understanding of the full potential of the Nafolo discovery is a high priority in order to assess its potential to enhance the mine plan at Syama. Drilling has defined an initial strike length of greater than 300m and is continuing to deliver consistent, broad intersections with similar characteristics to Syama. All holes drilled to date at Nafolo have intersected alteration and gold mineralisation and the discovery remains open at depth and to the south. A significant area under the southern waste dump is still to be tested and has the potential to host a large ore system similar to the Syama orebody. A maiden resource for the Nafolo discovery will be estimated during the course of FY18. Significant drill results from the Nafolo discovery are listed below: • SYDD442 19m @ 2.6 g/t Au from 273m; and 18m @ 3.0 g/t Au from 372m. • SYDD446 41m @ 4.9 g/t Au from 281m; and 37m @ 3.1 g/t Au from 372m • SYDD447 13m @ 6.9 g/t Au from 434m; and 11m @ 2.4 g/t Au from 472m • SYDD448 10m @ 3.6 g/t Au from 385m; and 29m @ 4.7 g/t Au from 446m • • • • • SYDD450 14m @ 3.5 g/t Au from 251m SYDD451 19m @ 3.7 g/t Au from 407m SYDD454 33m @ 3.0 g/t Au from 405m SYRD456 10m @ 8.3 g/t Au from 394m SYDD462 25m @ 3.3 g/t Au from 287m Longitudinal projection showing location of new diamond drillhole pierce points, results and designed underground development 18 Resolute Mining Limited | Annual Report 2017 Resolute Mining Limited | Annual Report 2017 19 19 Resolute Mining Limited | Annual Report 2017Tabakoroni Tabakoroni is located approximately 40km south of Syama. Mineralisation at Tabakoroni comprises a steep dipping, north-south striking zone of shearing and quartz veins, hosted by shale and basalt of the Syama Formation. An initial 15-hole deep RC drill program undertaken at Tabakoroni during the year focused on extending the high grade sulphide shoots at depth. Results suggest the potential exists for a future underground mine or an extension of the open pit mine life at Tabakoroni and confirm the excellent long term sulphide potential of the system. Better results from the Tabakoroni drilling program included: • • TARC532 20m @ 18.28g/t Au from 117m TARC541 11m @ 5.08g/t Au from 157m • • • • • • TARC542 23m @ 9.61g/t Au from 140m TARC543 25m @ 8.06g/t Au from 160m TARC547 10m @ 5.01g/t Au from 194m (EOH) TARC549 12m @ 8.41g/t Au from 203m TARC551 14m @ 16.65g/t Au from 89m TARC551 12m @ 3.52g/t Au from 111m See below a longitudinal projection of the Tabakoroni deposit with grade-tonnage contours indicating high grade extensions to mineralisation below the current open pit design. The deposit comprises high grade mineralisation delineated over a total strike length of greater than 1km and a number of discreet high grade shoots which remain open at depth. Tabakoroni longitudinal projection showing location of new drillhole pierce points, results and planned open pit outline BA-01 BA-01 is located approximately 6km north of Syama and forms part of a series of satellite deposits, including Beta and Alpha. Resolute commenced an oxide open pit operation at BA-01 in early 2017. Previous drilling had identified potentially high grade sulphide zones at the BA-01, Beta and Alpha deposits. A program of RC drilling was completed at BA-01 during the year to test the interpreted high grade sulphide shoots. The initial program returned excellent grades in many of the drillholes and has reinforced the potential for delineating additional high grade mineable sulphide resources in the northern satellite pits. Better results from the BA-01 drilling program included: • • • • • • • • • • • BARC118 11m @ 7.35g/t Au from 24m BARC120 6m @ 14.88g/t Au from 36m BARC122 5m @ 14.87g/t Au from 72m BARC124 7m @ 13.13g/t Au from 85m BARC126 9m @ 11.1g/t Au from 70m BARC129 13m @ 4.04g/t Au from 161m BARC132 8m @ 6.77g/t Au from 21m BARC134 6m @ 12.27g/t Au from 94m BARC136 10m @ 9.19g/t Au from 115m BARC138 11m @ 14.91g/t Au from 43m BARC139 6m @ 11.98g/t Au from 19m 20 Resolute Mining Limited | Annual Report 2017Bibiani Resolute’s June 2016 feasibility study for Bibiani was based on an underground mine requiring low start-up capital of US$72M and a short lead time to production of only nine months. The feasibility study proposed a successful underground mine that would produce in excess of 100,000oz of gold per annum at a Life of Mine AISC of US$851/oz. The subsequent FY17 drilling program was focused on increasing the size, grade, and confidence in the resource, improving project economics, and extending the mine life beyond five years. Resolute commenced the second phase of resource drilling at Bibiani in December 2016. Results received from the completed holes were very encouraging with particularly impressive results from the Central Lode between 5150N and 5600N suggesting the mineralisation in this area is better than predicted by the inferred resource estimate. Better results from the Bibiani Phase 2 drilling program included: • • • • • • • • • BSDD035 14m @ 4.4 g/t Au from 454m; BSDD040 30.3m @ 8.9 g/t Au from 499m; BSDD042 23.7m @ 3.2 g/t Au from 426m; BUDD072 48m @ 3.6 g/t Au from 171m; BUDD072 5.9m @ 16.5 g/t Au from 227m; BUDD074 47m @ 2.3 g/t Au from 130m; BUDD074 17m @ 3.5 g/t Au from 182m; BUDD077 51m @ 4.3 g/t Au from 117m; BUDD078 37m @ 3.9 g/t Au from 152m. Bibiani Phase 2 drilling results long section 21 Resolute Mining Limited | Annual Report 2017Ore Reserves 2017 ORE RESERVES Australia Mt Wright Sarsfield Nolans East Stockpiles (O/C) Buck Reef West Mali Syama Stockpiles (sulphide) Satellite Deposits Stockpiles (satellite deposits) Tabakoroni Total Proved Australia Mt Wright Mt Wright Stockpiles Sarsfield Nolans East Stockpiles (O/C) Buck Reef West Mali Syama Underground Syama Stockpiles (sulphide) Satellite Deposits Stockpiles (satellite deposits) Tabakoroni Ghana Bibiani Total Probable Total Reserves Tonnes Gold grade Ounces Group Share Group Share Tonnes Gold grade Ounces Group Share Group Share (000s) (g/t) (000s) % Ounces (000s) (g/t) (000s) % Ounces Comment on Changes Proved 22 747 37 9 400 3 68 51 133 1,470 Probable 0 1 423 7 14 124 2,171 146 112 54 163 644 3,859 5,329 2.6 0.8 0.8 0.6 0.9 1.7 2.4 1.9 3.1 1.0 0.0 2.6 0.7 0.6 0.7 0.8 2.8 1.4 2.4 1.8 2.8 3.7 2.0 1.5 100% 100% 100% 100% 100% 80% 80% 80% 85% 100% 100% 100% 100% 100% 100% 80% 80% 80% 80% 85% 90% 22 747 37 9 400 2 54 41 113 1,426 0 1 423 7 14 124 1,737 117 90 43 139 580 3,274 4,699 258 28,450 1,543 482 13,652 55 896 824 1,335 47,495 0 11 18,640 319 612 4,669 23,855 3,339 1,459 962 1,821 5,480 61,167 108,662 2016 Proved 60 747 46 0 0 38 107 15 133 1,146 21 1 423 0 25 0 2,173 206 209 49 163 644 3,914 5,060 2.7 0.8 0.8 0.0 0.0 2.9 2.3 1.8 3.1 1.0 2.7 3.0 0.7 0.0 0.9 0.0 2.8 1.5 2.3 1.8 2.8 3.7 2.1 1.7 682 28,450 1,818 0 0 413 1,455 263 1,335 34,416 18,640 248 8 0 0 846 23,863 4,150 2,857 846 1,821 5,480 58,759 93,175 Probable Comment on Changes 100% 100% 100% 100% 100% 80% 80% 80% 85% 100% 100% 100% 100% 100% 100% 80% 80% 80% 80% 85% 90% 60 747 46 0 0 30 86 12 113 21 1 0 25 0 165 167 39 139 Depletion due to mining No change Depletion due to mining No previous stockpile New open pit ore reserve Movement in operating stockpiles Depletion due to mining Movement in operating stockpiles No change 1,094 Depletion due to mining Movement in operating stockpiles 423 No change No previous stockpile Depletion due to mining New open pit ore reserve 1,738 Depletion due to mining Movement in operating stockpiles Depletion due to mining Movement in operating stockpiles No change 580 No change 3,298 4,392 Notes: 1. Mineral Resources are reported inclusive of Ore Reserves. Differences may occur due to rounding. 2. Resources and Reserves at Buck Reef West, Nolans East and Sarsfield are reported above 0.4 g/t cut off. 3. Mt Wright Reserves are reported above 2.3 g/t cut off and Resources above 1.8 g/t cut off. 4. Bibiani Resources and Reserves are reported above 2.0 g/t cut off. 5. Syama Underground Resources are reported above 1.5 g/t cut off and Reserves above 1.9 g/t cut off. 22 Resolute Mining Limited | Annual Report 2017  ORE RESERVES Australia Mt Wright Sarsfield Nolans East Stockpiles (O/C) Buck Reef West Mali Syama Stockpiles (sulphide) Satellite Deposits Stockpiles (satellite deposits) Tabakoroni Total Proved Australia Mt Wright Mt Wright Stockpiles Sarsfield Nolans East Stockpiles (O/C) Buck Reef West Mali Syama Underground Syama Stockpiles (sulphide) Satellite Deposits Stockpiles (satellite deposits) Tabakoroni Ghana Bibiani Total Probable Total Reserves 2017 Proved Probable 22 747 37 9 400 3 68 51 133 1,470 0 1 423 7 14 124 2,171 146 112 54 163 644 3,859 5,329 2.6 0.8 0.8 0.6 0.9 1.7 2.4 1.9 3.1 1.0 0.0 2.6 0.7 0.6 0.7 0.8 2.8 1.4 2.4 1.8 2.8 3.7 2.0 1.5 258 28,450 1,543 482 13,652 55 896 824 1,335 47,495 0 11 18,640 319 612 4,669 23,855 3,339 1,459 962 1,821 5,480 61,167 108,662 100% 100% 100% 100% 100% 80% 80% 80% 85% 100% 100% 100% 100% 100% 100% 80% 80% 80% 80% 85% 90% 22 747 37 9 400 2 54 41 113 1,426 0 1 423 7 14 124 1,737 117 90 43 139 580 3,274 4,699 Tonnes Gold grade Ounces Group Share Group Share Tonnes Gold grade Ounces Group Share Group Share (000s) (g/t) (000s) % Ounces (000s) (g/t) (000s) % Ounces Comment on Changes 2016 Proved 60 747 46 0 0 38 107 15 133 1,146 100% 100% 100% 100% 100% 80% 80% 80% 85% Depletion due to mining No change Depletion due to mining No previous stockpile New open pit ore reserve Movement in operating stockpiles Depletion due to mining Movement in operating stockpiles No change 60 747 46 0 0 30 86 12 113 1,094 Probable Comment on Changes 21 1 423 0 25 0 2,173 206 209 49 163 644 3,914 5,060 100% 100% 100% 100% 100% 100% 80% 80% 80% 80% 85% 90% 21 1 Depletion due to mining Movement in operating stockpiles 423 No change 0 25 0 No previous stockpile Depletion due to mining New open pit ore reserve 1,738 Depletion due to mining 165 167 39 139 Movement in operating stockpiles Depletion due to mining Movement in operating stockpiles No change 580 No change 3,298 4,392 2.7 0.8 0.8 0.0 0.0 2.9 2.3 1.8 3.1 1.0 2.7 3.0 0.7 0.0 0.9 0.0 2.8 1.5 2.3 1.8 2.8 3.7 2.1 1.7 682 28,450 1,818 0 0 413 1,455 263 1,335 34,416 248 8 18,640 0 846 0 23,863 4,150 2,857 846 1,821 5,480 58,759 93,175 23 Resolute Mining Limited | Annual Report 2017 Mineral Resources MINERAL RESOURCES Tonnes Gold grade 2017 Ounces Group Share Group Share Tonnes Gold grade Group Share Group Share (000s) (g/t) (000s) % Ounces (000s) (g/t) (000s) % Ounces Comment on Changes Australia Mt Wright Sarsfield Buck Reef West Mali Syama stockpiles (sulphide) Satellite Deposits Stockpiles (satellite deposits) Tabakoroni Total Measured Australia Mt Wright Stockpiles (sulphide) Sarsfield Buck Reef West Mali Syama Underground Syama stockpiles (sulphide) Satellite Deposits Stockpiles (satellite deposits) Tellem & Paysans Tabakoroni Ghana Bibiani Total Indicated Australia Mt Wright Sarsfield Buck Reef West Welcome Breccia Mali Syama Underground Satellite Deposits Stockpiles (satellite deposits) Tellem & Paysans Tabakoroni Ghana Bibiani Total Inferred Total Resources 311 45,522 18,400 55 2,337 824 3,210 70,659 0 11 38,497 20,400 37,396 3,339 3,566 962 2,965 4,010 11,180 122,326 1,079 22,079 17,000 2,036 8,095 1,397 64 945 3,000 4,485 60,180 253,165 Measured 35 1,168 532 3 159 51 296 2,244 Indicated 0 1 882 525 3,373 146 243 54 166 289 1,184 6,863 Inferred 107 518 383 208 767 97 3 58 193 591 2,925 12,032 3.5 0.8 0.9 1.7 2.1 1.9 2.9 1.0 0.0 2.6 0.7 0.8 2.8 1.4 2.1 1.8 1.7 2.2 3.3 1.7 3.1 0.7 0.7 3.2 2.9 2.2 1.4 1.9 2.0 4.1 1.5 1.5 100% 100% 100% 80% 80% 80% 85% 100% 100% 100% 100% 80% 80% 80% 80% 80% 85% 90% 100% 100% 100% 100% 80% 80% 80% 80% 85% 90% 35 1,168 532 2 127 41 252 2,157 0 1 882 525 2,698 117 194 43 133 246 1,066 5,905 107 518 383 208 614 78 2 46 164 532 2,652 10,714 Notes: 1. Mineral Resources are reported inclusive of Ore Reserves. Differences may occur due to rounding. 2. Resources and Reserves at Buck Reef West, Nolans East and Sarsfield are reported above 0.4 g/t cut off. 3. Mt Wright Reserves are reported above 2.3 g/t cut off and Resources above 1.8 g/t cut off. 4. Bibiani Resources and Reserves are reported above 2.0 g/t cut off. 5. Syama Underground Resources are reported above 1.5 g/t cut off and Reserves above 1.9 g/t cut off. 24 2016 Ounces Measured Indicated 78 1,186 598 38 257 15 220 2,392 38 1 892 323 3,736 206 420 59 0 387 1,184 7,246 107 521 356 208 211 219 0 0 219 591 2,432 12,070 Inferred 2.9 0.8 1.0 2.9 2.1 1.8 2.9 1.0 3.3 3.0 0.7 0.9 2.8 1.5 2.1 1.4 0.0 2.7 3.3 1.9 3.1 0.7 0.9 3.2 2.2 2.2 0.0 0.0 2.2 4.1 1.5 1.5 826 46,453 17,857 413 3,778 263 2,331 71,921 354 8 39,024 11,582 40,857 4,150 6,222 1,353 0 4,495 11,180 119,225 1,079 22,192 12,360 2,036 3,048 3,072 0 0 3,132 4,485 51,404 242,550 100% 100% 100% 80% 80% 80% 85% 100% 100% 100% 100% 80% 80% 80% 80% 80% 85% 90% 100% 100% 100% 100% 80% 80% 80% 80% 85% 90% 78 Depletion due to mining 1,186 Depletion due to mining Nolans East 598 Resource adjusted by further drilling 30 Movement in operating stockpiles 206 Resource adjusted by mine depletion 12 Movement in operating stockpiles 187 Resource reviewed with additional drilling 2,297 38 Depletion due to mining 1 Movement in operating stockpiles 892 323 Depletion due to mining Resource adjusted by further drilling 2,989 Change in cut off grade to 1.5g/t 165 Movement in operating stockpiles 336 Resource adjusted by mine depletion 47 Movement in operating stockpiles 0 Resource reviewed with additional drilling 329 Resource reviewed with additional drilling No Change 1,066 6,185 107 521 356 208 169 175 0 0 No change Depletion due to mining Resource adjusted by updated drilling No change Resource reviewed with additional drilling Resource adjusted by mine depletion Assessment of historic stockpiles Resource reviewed with additional drilling 186 Resource reviewed with additional drilling 532 No Change 2,254 10,737 Resolute Mining Limited | Annual Report 2017 Australia Mt Wright Sarsfield Buck Reef West Mali Syama stockpiles (sulphide) Satellite Deposits Stockpiles (satellite deposits) Tabakoroni Total Measured Australia Mt Wright Stockpiles (sulphide) Sarsfield Buck Reef West Mali Syama Underground Syama stockpiles (sulphide) Satellite Deposits Stockpiles (satellite deposits) Tellem & Paysans Tabakoroni Ghana Bibiani Total Indicated Australia Mt Wright Sarsfield Buck Reef West Welcome Breccia Mali Syama Underground Satellite Deposits Stockpiles (satellite deposits) Tellem & Paysans Tabakoroni Ghana Bibiani Total Inferred Total Resources 2017 Ounces Measured Indicated 35 1,168 532 3 159 51 296 2,244 0 1 882 525 3,373 146 243 54 166 289 1,184 6,863 107 518 383 208 767 97 3 58 193 591 2,925 12,032 Inferred 3.5 0.8 0.9 1.7 2.1 1.9 2.9 1.0 0.0 2.6 0.7 0.8 2.8 1.4 2.1 1.8 1.7 2.2 3.3 1.7 3.1 0.7 0.7 3.2 2.9 2.2 1.4 1.9 2.0 4.1 1.5 1.5 100% 100% 100% 80% 80% 80% 85% 100% 100% 100% 100% 80% 80% 80% 80% 80% 85% 90% 100% 100% 100% 100% 80% 80% 80% 80% 85% 90% 35 1,168 532 2 127 41 252 2,157 2,698 0 1 882 525 117 194 43 133 246 1,066 5,905 107 518 383 208 614 78 2 46 164 532 2,652 10,714 311 45,522 18,400 55 2,337 824 3,210 70,659 0 11 38,497 20,400 37,396 3,339 3,566 962 2,965 4,010 11,180 122,326 1,079 22,079 17,000 2,036 8,095 1,397 64 945 3,000 4,485 60,180 253,165 MINERAL RESOURCES Tonnes Gold grade Group Share Group Share Tonnes Gold grade 2016 Ounces Group Share Group Share (000s) (g/t) (000s) % Ounces (000s) (g/t) (000s) % Ounces Comment on Changes 826 46,453 17,857 413 3,778 263 2,331 71,921 354 8 39,024 11,582 40,857 4,150 6,222 1,353 0 4,495 11,180 119,225 1,079 22,192 12,360 2,036 3,048 3,072 0 0 3,132 4,485 51,404 242,550 Measured 78 1,186 598 38 257 15 220 2,392 Indicated 38 1 892 323 3,736 206 420 59 0 387 1,184 7,246 Inferred 107 521 356 208 211 219 0 0 219 591 2,432 12,070 2.9 0.8 1.0 2.9 2.1 1.8 2.9 1.0 3.3 3.0 0.7 0.9 2.8 1.5 2.1 1.4 0.0 2.7 3.3 1.9 3.1 0.7 0.9 3.2 2.2 2.2 0.0 0.0 2.2 4.1 1.5 1.5 100% 100% 100% 80% 80% 80% 85% 100% 100% 100% 100% 80% 80% 80% 80% 80% 85% 90% 100% 100% 100% 100% 80% 80% 80% 80% 85% 90% 78 Depletion due to mining 1,186 Depletion due to mining Nolans East 598 Resource adjusted by further drilling 30 Movement in operating stockpiles 206 Resource adjusted by mine depletion 12 Movement in operating stockpiles 187 Resource reviewed with additional drilling 2,297 38 Depletion due to mining 1 Movement in operating stockpiles 892 323 Depletion due to mining Resource adjusted by further drilling 2,989 Change in cut off grade to 1.5g/t 165 Movement in operating stockpiles 336 Resource adjusted by mine depletion 47 Movement in operating stockpiles 0 Resource reviewed with additional drilling 329 Resource reviewed with additional drilling No Change 1,066 6,185 107 521 356 208 169 175 0 0 No change Depletion due to mining Resource adjusted by updated drilling No change Resource reviewed with additional drilling Resource adjusted by mine depletion Assessment of historic stockpiles Resource reviewed with additional drilling 186 Resource reviewed with additional drilling 532 No Change 2,254 10,737 25 Resolute Mining Limited | Annual Report 2017 Resolute Mining Limited | Annual Report 2017 26 26 Resolute Mining Limited | Annual Report 2017Resolute Mining Limited | Annual Report 2017 Sustainability Dear fellow shareholders, The principle of sustainability has always underpinned the way we do business at Resolute. Whether in the context of our community partnerships, environmental stewardship or the strength of our balance sheet our business has always been built on the principles of sustainable development. While we have been sharing our commitment to sustainability through our annual reporting for many years now, this year we have focused on a more complete account of our sustainability objectives and performance. We have dedicated a chapter of this annual report to sustainability reporting and will aim to produce a stand-alone document in the coming years to provide an in-depth account of our sustainability performance and plans for the future. At Resolute, we are pleased to see the capital markets increasing interest in environmental, social and governance information as this offers an opportunity for Resolute to reinforce our values and highlight the great work we are doing with respect to our corporate social responsibility. This year is Resolute’s 21st year of operating and investing in Africa and we are proud to announce that during our time in Africa we have made total economic contributions of over A$2 Billion dollars. As well as our economic contributions we continue to pass on long term sustainable value to our stakeholders through training and mentoring of our local workforce and local community initiatives. In FY17 we made significant progress on our commitment to diversity while acknowledging we are still in the early phases of a transformation of our workforce diversity. I am proud of the significant improvement in our group- wide safety performance but acknowledge the need to reinforce a culture of reporting and hazard awareness to ensure that these results are reflective of actual performance. In advancing our sustainability reporting, we heed the advice of our investors not to report for reporting’s sake. We will focus on what is material and welcome the advice of our stakeholders if ever this is incomplete. I hope the following chapter provides a clear account of the importance we place on managing sustainability risks and maximising sustainability value, I look forward to expanding this dialogue with you in the years ahead. John Welborn Managing Director & CEO 27 Resolute Mining Limited | Annual Report 2017Resolute Mining Limited | Annual Report 2017 Our People Resolute respects and encourages workplace diversity and strives to create a flexible and inclusive work environment. We endeavour to treat all employees equally and fairly, regardless of gender, age, culture, religion or disability. Resolute is an equal opportunity employer with a commitment to improving gender diversity and balance within our workforce. This commitment stands acknowledging the fact that local traditions and customs in our countries of operation can mean that realising this commitment requires innovative thinking and practices. Who we are Our employees Excluding contractors Including contractors 741 Diversity 2416 Our Diversity and Inclusion Policy outlines the Company’s commitment to having a high performing workforce that is representative of the communities in which we operate. This includes, but is not limited by, representation of gender, indigenous and national workforce diversity. The policy also applies to the recruitment process, where we are committed to selecting the best candidates from a balanced pool of suitably qualified applicants. Our Directors have set measurable diversity objectives and the Nomination Committee is responsible for reviewing our progress towards achieving these objectives, as well as the overall effectiveness of the policy. Key metrics assessed include the gender balance of the workforce across three levels of the organisation (board level, senior management and the total workforce) and remuneration by gender. According to the Chief Executive Women’s 2017 ASX200 Senior Executive Census, women represent around 20% of ASX200 executive leadership teams. During the reporting period, Resolute’s executive leadership team was comprised of six males and two females, placing us above the ASX200 average. The Company will continue to focus on fostering female talent, and providing equal opportunities to improve this representation in the future. The gender balance within Resolute's Australian workforce is detailed in the next table, along with benchmarking data specific to mining from the Workplace Gender Equality Agency (WGEA Benchmark data 2015-2016). The overall representation of women Employees by location (headcount) Australia Ghana Mali 219 57 465 of 20.3% was above industry average suggesting positive progress towards our diversity objectives. Resolute Women WGEA Benchmark Women KMP Senior Managers Other Managers FY17 28.6% 0.0% 8.3% FY16 0.0% 0.0% 0.0% Overall 20.3% 19.2% FY17 13.3% 15.6% 16.1% 15.8% The submission of the Resolute Workplace Gender Equality Agency report in 2017 demonstrated our public commitment to transparency and accountability in this area. This report is available on our website at www.rml.com.au/corporate-governance. Talent attraction and retention At Resolute, our employees are key to our success and we have various programs in place to attract, retain and develop talented individuals. The Malian Talent Development Program commenced in FY17 and aims to advance the capabilities of Malian employees in order for them to attain senior positions at Syama. The program will select up to ten high performing employees per year, and provides training and mentoring to enable them to gain success in leadership and technical positions. It is expected that inaugural participants will complete their development pathways by 2020. 28 Resolute Mining Limited | Annual Report 2017Case Study Syama’s partnership with Jean Bosco College Since early 2016 Syama has been working with Mr Georges Koevi (Managing Director) and his team to develop the affiliation with Jean Bosco College, the largest Vocational Education Centre in the Sikasso region of Mali which provides training for over 400 students. The partnership is important to creating prospects for Jean Bosco trainees to gain work-life experience and exposure to potential employers whilst also allowing Syama employees to receive technical skills training in a well-equipped training environment. Through continued consultation with Mr Georges Koevi and Syama maintenance leaders, an apprenticeship scheme has been developed and approved for commencement in October 2017. This is believed to be a first in Mali for a scholarship program to be offered for entry-level roles. Four apprenticeships have been created in the following disciplines; electrical, metal fabrication, automotive mechanic and automotive mechanic specialised in auto electrical. The scheme is offered to males and females, aged 18 to 21 years old from surrounding villages and involves a formal recruitment approach including interview and selection process, technical skills training with Jean Bosco College and the potential for continued employment with Syama at the end of the apprenticeship. The successful candidates selected for the inaugural intake are; Harouna Coulibaly, Karim Coulibaly, Amadou T Diabate and Assetou Diabate. Through Resolute’s partnership with the Jean Bosco College in Sikasso, 24 trainees completed three month work placements onsite, with one participant subsequently securing a permanent role with a mining contractor. Recognising cultural differences and traditions around diversity in Mali, 25% of trainees attending this program in FY17 were female. In Australia, Resolute provided internships to 12 university students and one electrical apprentice in FY17. The interns gained invaluable hands on experience at both our Ravenswood mine and corporate office. Three students went on to take up casual work, with one joining our corporate team in Perth. The number of local residents employed at Ravenswood, including contractors, remained steady at approximately 35 people, 15 of which were female. As part of our community relations management plan in Ghana, Resolute has committed to fill a majority of unskilled positions with members of the local community. Human Rights Resolute acknowledges and respects the human rights of all people who are involved with, or impacted by our operations. Our key human rights impacts lie in the areas of security, labour, land access and environmental impact. In the upcoming period, we will be formalising our Human Rights Policy, which will include direct reference to the United Nations Guiding Principles on Business and Human Rights. Resolute’s security measures are aligned with the Voluntary Principles on Security and Human Rights (VPSHR). We strive to ensure security measures at our operations are robust, auditable, ethical and able to withstand independent scrutiny, to maintain the trust of neighbours, governments and employees. In some parts of West Africa, artisanal mining or ‘Galamsey’ is a traditional practice acknowledged by existing mining codes. Illegal mining differs in that it is not sanctioned by government, and is often influenced by people outside local communities. Resolute works closely with public security forces to protect its operations and the community from the effects of illegal mining, in line with the principles of the VPSHR. Community members can raise concerns about illegal mining to the Syama Mine Community Consultation Committee (SMCCC) for Syama, or Resolute Foundation Advisory Panel (RFAP) for Bibiani. During FY17 no such concerns were raised. The five day national mine workers strike in Mali in 2017 represented a potential challenge for Resolute. However due to careful and regular communication, and the recognition of the rights of workers to engage in collective bargaining, operations in Syama were not significantly affected. In some areas, Resolute has reached agreements with traditional land users to enable exploration and protect resources for ongoing or future use. The protection of ancient and cultural places in respect of indigenous rights is a key awareness matter for employees at all operations. In Mali and Ghana, we have compensation processes in place that are agreed with government and stakeholders. The SMCCC at Syama and RFAP at Bibiani oversee any issues with compensation for affected parties. The Ravenswood operation strives to ensure compliance with native title and cultural heritage requirements in Australia. The majority of the Ravenswood permits for exploration or mining overlap with the local Birriah community. 29 Resolute Mining Limited | Annual Report 2017Community Relations Resolute recognises we must contribute to the communities in which we operate to demonstrate our commitment to sustainable development. Our focus on fostering long-term partnerships with the local community to develop a mutual understanding, cooperation, and respect, is key to reinforcing our social licence to explore, develop, operate and close mines. Our approach Resolute’s approach to community relations is guided by our community relations policy. Our activities focus on community health and wellbeing, water and sanitation, income generating activities, and education. Holding these four pillars together is accountability, or the need to rigorously assess, track progress and measure the success of programs and projects. The Company takes a hands on approach to community support, preferring to have direct involvement in projects rather than simply providing funding. We are proud and willing to help communities to reach their development goals, but caution is needed not to substitute the help of Resolute at the expense of government development initiatives. Water & Sanitation Income Generation Accountability Accountability Community Health Education Community engagement Resolute engages with community leaders, local governments, and non-government organisations (NGOs) to identify areas where our support is most needed. We maintain open and transparent communication channels, including an ‘open door’ policy where community representatives have reasonable access to the Company’s management. Our grievance mechanism enables community members to raise issues and concerns. The SMCCC was established in 1999, and provides a forum in which all community issues relating to the mine can be discussed. It comprises of government officials, elected representatives, and local community leaders. Monthly meetings take place to assess ongoing community needs and priorities of the community. Resolute is then able to determine the level and urgency of support required in the community and prioritise accordingly with the stakeholders concerned. The constant support to the district health system has been recognised and highlighted by the participants. In Ghana, community consultation has been vital to attain public support for the Bibiani project. The RFAP was established in FY17 as a formal mechanism for local community leaders to consult and engage with the management of the mine. The local villages and communities are represented on the advisory panel, with their role being to present the views of their residents, and in turn provide open and honest feedback on Company's operations. Within the Ravenswood community in Queensland, a monthly community newsletter, the Ravenswood Roundup provides details of local community initiatives. The newsletter is compiled based on input from the state school principal, the Flying Doctors service, Ravenswood Police and the Ravenswood Restoration and Preservation Association. A regional council meeting was held during FY17 to enable the community to raise questions about the Ravenswood Expansion Project. Community initiatives Community health and wellbeing Supporting community health and wellbeing programs has always been a key focus for Resolute. In addition to providing outreach clinics and medical assistance (see case study on page 34), Resolute is proud to support the Bibiani Gold Stars Football Club, a Ghanaian 30 Resolute Mining Limited | Annual Report 2017Case Study Community support at Ravenswood In FY17, Resolute engaged tourism consultancy Earthcheck to produce a Tourism Directions Paper for the Ravenswood community. The aim of this study is to identify opportunities to increase tourism to the area and assist the town in becoming self- sustaining following the eventual mine closure at the end of the Ravenswood Expansion Project. A Tourism Advisory Committee was formed and meetings are run by Ravenswood’s Community Relations Advisor. The committee, with assistance from Charters Towers Regional Council, Ravenswood Mine and local businesses, will begin work on a five- year plan to promote Ravenswood and its surrounds. Resolute is a long standing and principal supporter of the Ravenswood Restoration and Preservation Association (RRPA), contributing $24,000 annually. RRPA works to conserve and protect the remaining seven heritage listed buildings, and maintain the community garden within the Shire of Ravenswood. professional football team. Construction of a club house and changing rooms for the team began in FY17. At Bibiani, Resolute continued to provide a free community bus service in FY17. This daily service enables community members to undertake their work and education commitments using a safe and reliable service. Water and sanitation In Mali, 3.7 million people do not have access to clean water and over 4,000 children under the age of five die every year from diseases caused by poor sanitation. To complement the support of organisations such as Wateraid, SOMISY has installed and maintained approximately 100 potable water boreholes to communities surrounding Syama and provided over 40,000 people with access to clean water. Income generating activities Resolute is committed to boosting the local economies in which it operates by supporting small scale income generating activities. With the support of Resolute providing training and materials, the N’Golopene Women’s Group produce shea butter soap to sell to the local market. Soap sales are also supported by Resolute’s African and Australian operations. In addition Resolute provided training to the Dieou and Tembleni villages Women’s Group to propagate seedlings and sold them back to Syama. Resolute also provides training in animal husbandry, including sheep, chicken and cattle rearing, beekeeping and vegetable production. Education Education is key to lifting people out of poverty, and recognising this Resolute has formed partnerships with several local schools in the areas in which we operate. Resolute maintains a close relationship with the Ravenswood State School in support of its teachers and pupils. From sponsoring social events to annual tree planting initiatives for World Environment Day, Resolute is committed to providing equitable learning opportunities to local students. Students have been exposed to many different aspects of the mining industry with field trips led by the mining, exploration and environmental departments. Case Study Resolute Foundation Advisory Panel supports local schools In January 2017, Resolute's Ghanaian subsidiary Mensin Gold Bibiani Limited (MGBL) worked with communities of interest, in and near the town of Bibiani, to establish the RFAP. A charter was created for representatives of communities to liaise with the management of MGBL in a formal and regular manner. The mission of the RFAP is ‘to engage and work together with stakeholders to assess, prioritise and recommend community development projects to MGBL management’. Through their RFAP representative, the local Donkoto-Lineso community requested Resolute’s assistance to construct six brand new classrooms and a storeroom for their local school, which accommodates nearly 150 students. The existing school consisted of four classrooms which were in a poor condition, with no doors and windows and subject to frequent water leaks. Resolute provided funding for the restoration of the existing facilities and the addition of new classrooms. A fire at Babda School in the Bibiani Estate in FY17 resulted in the destruction of an entire classroom block. Students and teachers were exposed to roof leakages, congested classrooms and the risk of possible collapse from the weakened building structures with over 30 pupils removed from the school due to safety concerns. Resolute provided funding for the restoration of three classrooms, re-roofing and rewiring. 31 Resolute Mining Limited | Annual Report 2017Resolute Mining Limited | Annual Report 2017 Health and Safety Our approach Resolute recognises that prioritising the health and safety of all employees, contractors and visitors is vital to the success and sustainability of our operations. Our approach is guided by the Resolute Occupational Health, Safety and Security Policy which commits all areas of the business to continually monitor, review and improve procedures and performance. Performance To monitor our safety performance, Resolute tracks total recordable injury frequency rate (TRIFR) and lost time injury frequency rate (LTIFR), which show total injuries and injuries resulting in lost time per million hours worked for both employees and contractors. Across the Resolute group our TRIFR for FY17 was 2.56, a 50% improvement on FY16. This result was largely driven by our ongoing improvements to health and safety systems at Ravenswood, where total recordable injuries decreased by 60% from FY16. The Resolute group LTIFR improved by 18% compared to the previous year, as a result of improved performance at Ravenswood. However the number of Lost Time Injuries (LTIs) increased from 0 to 3 at Syama. Resolute is pleased to report zero work-related fatalities at any of our sites during the period. FY17 TRIFR FY16 GROUP [2.56] GROUP [5.11] • Australia [7.35] • Australia [23.27] • Mali [1.58] • Ghana [3.41] LTIFR • Mali [2.80] • Ghana [1.28] GROUP [0.98] GROUP [0.80] • Australia [7.76] • Australia [2.45] • Mali [0.00] • Ghana [0.00] • Mali [0.68] • Ghana [0.00] Initiatives Following the application of the Resolute Integrated Management System (RIMS) across the business in FY16, Resolute has continued to refine its systems and further invest in health, safety, and security expertise. 32 Resolute Mining Limited | Annual Report 2017To address its TRIFR being above the industry average, Resolute engaged an independent party to conduct a review of safe-working behaviour at Ravenswood. The resulting change management plan focused on developing sustainable leadership philosophies whereby workplace leaders are taught and encouraged to set standards, coach team members, and recognise safe and efficient working practices. Since the program’s inception, TRIFR has decreased from 24.99 to 6.83; nearly half the industry average of 11.7. Resolute extends this duty of care to all business travel arrangements. In FY17, we partnered with International SOS, the world’s largest medical and travel security services firm. This partnership allows Resolute to provide all employees with access to 24/7 worldwide medical, security, travel and emergency assistance should the need arise. Resolute is committed to providing ongoing support to all employees who have been injured in the course of work. Resolute’s Injury Recovery Tracking Tool ensures that all affected individuals are provided with effective and timely support and highlights opportunities to improve practices and procedures. Community Safety At Resolute, we strive to support safety improvement in all communities in which we operate. At Syama, we have extended the Golden Safety Rules into the local community including “SLAM- Stop, Look, Assess, and Manage”. This has successfully raised safety awareness both in and outside the workplace. Members of Resolute’s Emergency Response Teams and site nurses at Ravenswood are on call 24 hours a day, seven days a week, to assist police and emergency services with incidents in the area. The remoteness of Ravenswood means that an ambulance can take over an hour to reach the community from the nearest town of Townsville. Site nurses provide invaluable support and perform a range of first aid treatments for community members. Case Study Improved bus safety at Syama In line with Resolute’s focus on improving the quality and safety standards of its contractors, a Syama site Risk Analysis conducted by an external third party highlighted the need for a number of changes to the management of our bus contractors. Our site-based Continuous Improvement Teams are in the process of developing new contracts for service providers which will stipulate health, safety and training KPI’s. We have also increased the frequency of bus safety inspections, using a checklist to identify specific ‘class A’ faults which deem the bus unfit to carry staff. We are working directly with bus contractor mechanics to ensure that they fully understand Resolute’s safety requirements, and the reasons why buses were frequently failing safety inspections. This has resulted in safer and better maintained buses. A training program tailored specifically to the contractor bus drivers was delivered in FY17. It outlines the expected behaviour of both bus drivers and passengers, with drivers being empowered to report any misbehaviour or threats from passengers. Training At Resolute, we believe a positive health and safety culture is underpinned by the delivery of timely and relevant training. We endeavour to communicate and consult openly with employees and contractors, ensuring all parties understand their obligations and are held accountable for their actions and responsibilities. A key finding of Ravenswood’s independent safety review was around the level of incident investigation. To address this, Safety Wise Australia facilitated Incident Cause Analysis Method (ICAM) Lead Investigation Training for nine managers and senior leaders, and Basic Investigator Courses for 60 supervisors, safety representatives, permanent contractors and other team members. At all of our sites, training in first aid, mine rescue and emergency response is provided to selected employees and Emergency Response Team members on a regular basis. At our Bibiani site in FY17, training focused on maintaining the core skills of Emergency Responders with over 50 team members completing fire defence and first aid management training. 33 Resolute Mining Limited | Annual Report 2017Resolute Mining Limited | Annual Report 2017 Occupational health Occupational hygiene At Resolute, we strive to create and maintain a safe, healthy working environment through the prevention and treatment of occupational diseases. Employee awareness of alcohol and drug consumption was maintained in FY17 through the continuation of random testing in the workplace. All sites maintain strict fitness for work programs, whereby any employee who tests positive for illicit drugs or alcohol in their workplace is sent home immediately and is monitored in a tailored program. Infectious diseases Resolute’s Infectious Disease Policy guides our approach to preventing and controlling the spread of infectious diseases. Preventative measures have been reinforced through training and awareness, and medical surveillance of workers increased. At Syama, a malaria control program extends to a radius of 12 kilometres around the mine site. The combination of indoor residual spraying, training of medical staff and provision of mosquito nets has contributed to a decline in malaria cases in the program area. Other precautionary activities in place include maintaining hand-washing facilities across all mine sites, advising community medical centres on disease control initiatives, and engaging in ongoing dialogue and partnerships with health agencies and NGOs. Rates of HIV transmission in Mali continue to be high by global standards. In FY17, Resolute assisted the Regional Health Agency to establish three medical centres in nearby communities. The medical centres focus on supporting the prevention of HIV transmission from mother to child. We are also working in partnership with Soutura, an NGO that helps promote HIV testing, distribution of condoms, and awareness for prevention of sexually transmitted diseases. Case Study Mensin Gold Community Medical Outreach Program During FY17 Resolute ran several medical outreach programs in the communities surrounding the Bibiani Gold Mine. The program focused on communities where access to health care is poor. The program covered health education and prevention as well as screening for ailments such as hypertension, diabetes, and chronic skin diseases. This program embarked on a mass deworming/preventive chemotherapy program for children with the risk of soil helminths and schistosomiasis within those communities where the prevalence for infection is high. Since its inception, the program has screened and treated thousands of people in rural areas who lack access to proper medical care. We have also educated people on the availability of continuous medical care through the National Health Insurance Scheme. 34 Resolute Mining Limited | Annual Report 2017Resolute Mining Limited | Annual Report 2017 Security As a global mining company, Resolute explores, develops and operates in countries and locations with a complex range of security issues. Our operations in Mali and Ghana are supported by public security groups overseen by expert security advisors. These advisors work closely with Resolute executive management to maintain awareness and drive security initiatives. In FY17, International Alert reviewed the management of security at Resolute. Specific training on human rights was given to security providers in Mali for interaction with neighbouring communities, artisanal and illegal miners. In Ghana, the Chamber of Mines conducts regular meetings, and provides training for members on security issues aligned with the VPSHR. Resolute has continued to be an active member of the Australia-Africa Minerals & Energy Group (AAMEG) with specific participation in the Security working group. Support has been provided through the assessment and endorsement of a commercial software product to provide security situational awareness to mining companies operating in West Africa and discounted to AAMEG membership. 35 Resolute Mining Limited | Annual Report 2017Resolute Mining Limited | Annual Report 2017 Environmental Management Resolute is committed to safeguarding the environment and finding the optimal balance between minimising environmental impact and economic development. Our approach The Resolute Environmental Policy outlines our commitment to integrate environmental measures into all operations, and comply with or exceed the requirements of applicable legislation, regulation, and other codes and standards to which we subscribe. We identify and assess the potential environmental effects of our activities and manage associated risk accordingly. We also aim to continually improve and regularly monitor, audit and review our environmental performance. Implementation of the policy is supported by RIMS, which includes standards to enable the identification, assessment, management and control of risks specific to the business including environmental risks and cyanide management. Our Performance GHG emissions and energy Scope 1 (tCO2e) Scope 2 (tCO2e) Energy Consumption (PJ) Syama Bibiani 131,829 - 482 3469 Australia 23,172 55,702 1.88 0.01 0.33 Waste Syama Bibiani Australia Landfill (t) Recycled (t) 2,500 36 564 1,011 0 444 Greenhouse gas and energy Resolute acknowledges the link between energy use and climate change. We continuously work to use energy more efficiently throughout all of our operations. In FY17 Resolute emitted a total of 214,654 tCO2e. We are planning to implement more robust methods of data collection from our African operations, to better track and manage our environmental impacts. Resolute reports on greenhouse gas emissions from its Australian activities as part of the Australian Government’s National Greenhouse and Energy Reporting System (NGERS). Our Australian scope 1 emissions rose by 33% from the prior period, from 17,430 tCO2e in FY16 to 23,172 tCO2e in FY17. This rise was driven by a substantial increase in diesel consumption due to the commencement of Nolans East open pit mining operations in FY17. Water Consumption (ML) Syama Bibiani Australia 1,567 952 1,954 36 Resolute Mining Limited | Annual Report 2017Cyanide management Cyanide management is an integral part of the gold production process. Our approach to cyanide management is aligned with the International Cyanide Management Code (ICMC), and performance subjected to external audit. We make risk based variations to the ICMC in implementation plans with respect to the Resolute Cyanide Management Standard. We only purchase cyanide from manufacturers certified against the ICMC. The risk from the transportation of cyanide is managed by only using transport companies that have established adequate emergency response plans and capabilities through ICMC certification. Manufacturers provide training to Resolute personnel in the storage, use and control of cyanide. Audits and improvement plans are shared between the operations and transporters. All Resolute operations have in place plans for the decommissioning of cyanide facilities that will protect stakeholders and the environment, and ensure the costs are included in mine closure provisions. Air quality Air quality is a key concern for our employees and local community stakeholders. At Syama, a network of air quality monitors transmit real-time data to the operations centre allowing a prompt management response. During dry periods, Resolute uses dust suppression at its mining operations and in the local community. The process of roasting pyrite “concentrate” that is rich in gold generates sulphur dioxide fumes which are emitted to the atmosphere by tall-stack dispersion. Resolute maintains a strict Air Quality Management System (AQMS) to control roaster operation and throughput rates. The AQMS continuously monitors sulphur dioxide levels in the villages surrounding the operation. Monitoring of ambient air quality at Bibiani and Ravenswood was carried out during the year for both operational and non-operational areas. Monitoring showed that air quality was within acceptable limits for both sites. Water Resolute monitors water quality across all sites through a network of boreholes. In FY17 no adverse results were identified. During the reporting period a cocoa farmer near the Bibiani operation was affected by sediment laden runoff from a drill pad. Under the direction of the RFAP, the Bibiani management team is seeking to responsibly compensate the farmer in a fair and transparent manner. At Ravenswood, Resolute is working in cooperation with the Queensland Department for Environment and Heritage Protection to monitor the sulphate levels in surface and groundwater near its waste rock dumps and tailings storage facilities. Typically the water quality is near neutral pH and has low or benign levels of trace elements. A grievance with a neighbouring pastoralist over groundwater quality was resolved after extensive studies showed no adverse impacts were evident on livestock or pastures. Waste At Syama, waste collection and segregation continued throughout the year. Waste oil and scrap steel continued to be sent off-site for recycling. During the year, Resolute held a series of ‘‘Clean-Up’’ days and “Toolbox Talks” across the sites to raise awareness and improve waste management practices. The Company also completed the commissioning of the high temperature incinerator. At Bibiani, continued improvement was made on waste collection, treatment and disposal and ongoing training campaigns were delivered on waste handling and disposal. Biodiversity and rehabilitation At Resolute, we understand the importance of structured mine closure plans and the importance of effective rehabilitation to leave behind land capable of future productive use. Where possible, we aim to support community development through our rehabilitation activities. In FY17 our community development team at Syama worked closely with women from the Dieou and Tembleni villages, training them to propagate and nurture seedlings for mine rehabilitation. Over 6000 seedlings from native tree species were successfully germinated and sold back to Syama for planting. The Bibiani Land Reclamation Plan aims to stabilise the most disturbed areas and restore the habitat to allow beneficial use of the land by local inhabitants. As part of the Ravenswood Expansion Project (REP), possible mine layouts have been amended in order to reduce the impact on terrestrial flora and fauna surrounding the Ravenswood mine. This approach has seen a reduction in the potential impact on the surrounding Squatter Pigeon habitat, which is listed as ‘vulnerable’ under both the Commonwealth Environment Protection and Biodiversity Conservation Act 1999 and Nature Conservation Act (Qld) 1992. Regulation approvals and compliance No financial penalties were imposed on any of Resolute's operations during the reporting period. 37 Resolute Mining Limited | Annual Report 2017Resolute Mining Limited | Annual Report 2017 Governance Code of conduct 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 provides that the following principles guide employee behaviour: • • • to act with integrity and professionalism in the performance of their duties and in the proper use of company information, funds, equipment and facilities; to exercise fairness, proper courtesy and consideration in all their dealings in the course of carrying out their duties; and to avoid real, apparent or perceived conflicts of interest. Resolute aspires to pioneer and achieve best practice, creating opportunities for the Company’s business partners to assist both stakeholders and communities, while operating openly, honestly and with integrity while maintaining a strong sense of corporate social responsibility. In maintaining its social corporate responsibility, Resolute will conduct its business ethically and according to its values, encourage community initiatives, consider the environment and ensure a safe, equal and supportive workplace. Conflicts of Interest Resolute recognises that proper disclosure and management of conflicts of interests is integral to its reputation and business objectives. It is Resolute’s policy to impose a duty on all Directors, employees and consultants (Personnel) to wherever possible avoid 38 any conflict of interest, to disclose any potential for a conflict of interest, and where a conflict cannot be avoided, to manage that conflict of interest. The duty to avoid, disclose, and manage conflicts of interests does not prohibit all conflicts of interests – rather it requires that conflicts are adequately disclosed and managed when they arise. Insider trading It is Resolute’s policy that company employees must ensure all trading of company securities they undertake complies with the Australian Corporations Act and Regulations (particularly the prohibitions on insider trading). The Company’s Securities Trading Policy provides specific detail and is available to view online at www.rml.com.au/corporate-governance. Conducting business overseas It is Resolute's policy that its business affairs and operations should at all times be conducted legally, ethically, and in accordance with community standards of integrity and propriety. The Code requires business dealings must be conducted in accordance with Australian and other applicable jurisdictions’ anti-bribery laws. The Company’s Anti-Bribery and Corruption Policy and policy for Reporting and Investigating Unethical Practices provide specific detail and are available to view online at www.rml.com.au/ corporate-governance. Resolute Mining Limited | Annual Report 2017Health and safety Additional policies Resolute is committed to the security, safety and health of its people and pursues a zero accident philosophy to provide a safe and healthy working environment for its employees. The emphasis of this commitment is the identification of potentially unsafe practices and the prevention of incidents and injury. Resolute has a very strict safety culture; all of the Company's policies and procedures relating to safety are mandatory. Environmental responsibility Resolute will conduct its business activities with proper regard to the care and protection of the environment. Resolute will use best practice and endeavours to conduct its operations in a manner that is environmentally responsible and sustainable. In addition to those mentioned above, Resolute has implemented the following charters and additional policies all of which are available to view online at www.rml.com.au/corporate-governance: • Board Charter • Audit and Risk Committee Charter • Remuneration Committee Charter • Nomination Committee Charter • Continuous Disclosure Policy • Communication Strategy • CFO Code of Conduct • Diversity and Inclusion Policy Board The Board of Directors is responsible for the corporate governance of the Company. The Board guides and monitors the Company’s business and affairs on behalf of Resolute shareholders by whom they are elected and to whom they are accountable. The table below sets out the detail of the tenure of each Director as at 30 June 2017. The table below sets out the detail of the tenure of each director as at 30 June 2017. Director Martin Botha Role of Director First Appointed Qualification Non-Executive director (appointed Chairman from 29 June 2017) February 2014 BScEng John Welborn Managing Director February 2015 BCom, CA, FAIM, SA Fin, MAICD, MAusIMM Peter Sullivan Bill Price Non-Executive Director June 2001 BEng, MBA Non-Executive Director November 2003 BCom, FCA, MAICD Yasmin Broughton Non-Executive Director 29 June 2017 BCom, PG Dip Law, GAICD Mark Potts Non-Executive Director 29 June 2017 BSc(Hons) Director Martin Botha John Welborn Peter Sullivan Bill Price Yasmin Broughton Mark Potts Non-Executive Independent Gender Yes No Yes Yes Yes Yes Yes No No Yes Yes Yes Male Male Male Male Female Male The Company’s Board Charter outlines the functions reserved to the Board and those delegated to management. The Board Charter delineates the responsibilities and functions of the Board as being distinct from those of management. Resolute’s Board Charter is available to view online at www.rml.com.au/ corporate-governance. 39 Resolute Mining Limited | Annual Report 2017The Remuneration Committee is responsible for determining and reviewing compensation arrangements for Resolute’s company Directors, CEO, Executive Committee and employees, and making subsequent recommendations to the Board. The Remuneration Committee Charter is available to view online at www.rml.com.au/corporate- governance. Nomination Committee The Nomination Committee consists of the following Non-Executive Directors: • Mr M. Botha (Chairman) • Mr B. Price • Ms Y. Broughton • Mr M. Potts The Nomination Committee ensures Board members are appropriately qualified and experienced to discharge their responsibilities and implements procedures to assess the performance of the CEO and the Executive Committee. The Nomination Committee Charter is available to view online at www.rml.com.au/corporate-governance. Corporate Governance Statement The Board has adopted the "Corporate Governance Principles and Recommendations 3rd edition" established by the ASX Corporate Governance Council and published by the Australian Securities Exchange (ASX) in March 2014. Resolute’s Corporate Governance Statement is available to view online at www.rml.com.au/corporate- governance. Committees The Board has established the following sub- committees to assist with internal control and business risk management: • Audit and Risk Committee • Remuneration Committee • Nomination Committee Audit and Risk Committee The Audit and Risk Committee consists of the following Non-Executive Directors: • Ms Y. Broughton (Chairman) • Mr M. Botha • Mr P. Sullivan • Mr H. Price • Mr M. Potts All of the above listed Non-Executive Directors other than Mr. P. Sullivan, are independent. The Audit and Risk Committee provides the Board with additional assurance regarding the reliability of the financial information for inclusion in the financial reports, and is also responsible for: • • • • • ensuring compliance with statutory responsibilities relating to accounting policy and disclosure; liaising with, discussing and resolving relevant issues with the auditors; assessing the adequacy of accounting, financial and operating controls; the review of half-year and annual financial statements before submission to the Board; and the assessment, management and monitoring of business risk. The Audit and Risk Committee Charter is available to view at www.rml.com.au/corporate-governance. Remuneration Committee The Remuneration Committee consists of the following Non-Executive Directors: • Mr P. Sullivan (Chairman) • Mr M. Botha • Mr B. Price • Ms Y. Broughton 40 Resolute Mining Limited | Annual Report 2017Resolute Mining Limited | Annual Report 2017 Risk Management Resolute takes an active approach to risk management across the Company and its operations. The Board has ultimate responsibility for ensuring principal risks faced by the Company are identified, and overseeing appropriate control and monitoring systems are in place to manage the impact of these risks. As part of this identification and oversight role, the Board established the Audit and Risk Committee during FY17. Prior to the establishment of the Audit and Risk Committee, this role was performed by the Board. The Audit and Risk Committee works closely with management in relation to the assessment, monitoring and managing of business risk and to carry out assessments of internal controls and processes for improvement opportunities. Resolute is continuously seeking ways to improve its risk management systems and controls including engaging KPMG on an ongoing basis, to assist the Company with continual development of its risk management framework and supporting processes. Resolute’s existing risk framework uses a series of workshops and interviews to assist in the identification and assessment of key business risks including the associated mitigation controls and strategies to appropriately manage the material risks. A summary of the key business risks is set out below. Risk Strategic risks Asset Portfolio Mitigation / Comment Resolute's revenue is derived from two assets - the Syama Gold Mine in Mali and the Ravenswood Gold Mine in Queensland, Australia. Resolute assesses a range of growth opportunities to build on its existing portfolio as well as ensuring efficient production from existing assets is maximised. Reliance on two assets in two different geographical locations requires continual focus on managing efficient operations. Targeted projects to enhance asset reliability and effectiveness are required to ensure Resolute's ongoing success. Whilst geographical diversity is an advantage, there is currently limited overall diversification in the Company’s portfolio. For example, exploration activities are ongoing in Côte d'Ivoire and a feasibility study for the Bibiani Gold Mine in Ghana has been completed showing a viable development pathway. 41 Resolute Mining Limited | Annual Report 2017Risk Financial risks Changes to commodity prices, cash flow and credit risk Resolute's financial performance is closely linked to the market price of gold. Financial performance may also be impacted through foreign exchange movements, or where there is an inability to secure adequate funding. Fraud and corruption Resolute is aware of the risk of internal fraud and corruption activities, and the various ways that such risk may transpire. There is also awareness that the risk is increased where there are differences in financial processes, language barriers or cultural differences between stakeholders. Operational performance Mitigation / Comment Resolute monitors its exposure to commodity price fluctuations and foreign exchange rate fluctuations as part of financial and treasury planning and controls procedures. Gold hedging may be implemented in certain defined scenarios to ensure the long term funding of existing projects and significant capital expenditure programmes such as the Syama Underground project. Resolute maintains excellent relationships with a syndicate of international banking counterparts. Resolute conducts fraud risk assessments and has internal controls in place to manage the risk of fraudulent or corrupt activities. As a listed company, Resolute is aware of the importance of maintaining required and/or planned operational performance, in order to meet return on investment targets and shareholder expectations. Resolute's focus on a culture of good governance and disclosure is aimed to provide up-to-date information on activities impacting shareholders and other key stakeholders. Operational risks Safety The mining workplace environment is subject to a number of hazards, including the risk of serious injury or fatality while working on site. The physical remoteness of sites also increases the risk of commuting to site and the availability of medical assistance in the event of an incident. Resolute is also aware of the less likely risk of an outbreak of a serious illness amongst the workforce and the associated potential for large-scale disruption to operations as a consequence. Security and conflict risk Resolute understands the external physical security risks presented by artisanal mining activities, territorial conflicts and/or terrorist actions which could impact our people, our operations and our broader supply chain. Resolute employs a wide range of industry standard safety management systems in order to ensure the safety of our workers. We provide appropriate training and supervision on safety management, which promotes and embeds safe operating practices. Syama has a well-equipped medical centre on site and Resolute provides health insurance coverage for not only our local workers but also for their immediate families. Resolute employs a range of physical and cyber security measures to mitigate the risk of harm to our workers and damage to our assets. Country-level information is continuously monitored to assess the risk of terrorism and security plans are in place to mitigate identified risks. 42 Resolute Mining Limited | Annual Report 2017Risk Technology Resolute understands that innovation in mining technology is key to future competitiveness and a failure to adopt more efficient techniques and technologies represents a risk to improving business processes and gaining efficiencies. External risks Geopolitical, legal and regulatory developments Resolute's operational and exploration activities are subject to extensive regulation in the relevant jurisdictions. Operating in multiple jurisdictions naturally brings with it greater complexity and inherent risk. Changes to existing applicable laws and regulations, more stringent interpretations of existing laws or inconsistent interpretation or application of existing laws by relevant authorities have the potential to adversely impact Resolute's business activities. Mitigation / Comment Resolute monitors technological advancements that could be adopted or incorporated into our operations, particularly where new technologies offer the potential to improve safety and efficiency outcomes. For example, the Syama Underground project is investigating leading edge technology and has engaged global specialists in designing and building an automated loading and haulage system, which we believe to be a world first and which will set new standards for underground safety and productivity while allowing the local workforce to be upskilled in the latest technologies in underground mining. Resolute monitors legal and geopolitical risks as part of centralised risk management processes. These risks form a key part of the overall assessment when considering changes to operations or pursuing new growth opportunities. Resolute management actively engage in dialogue with governments and policy makers at the most senior levels to discuss regulatory developments that are applicable to Resolute's business activities. 43 Resolute Mining Limited | Annual Report 2017Resolute Mining Limited | Annual Report 2017 Fiscal Responsibility 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. Over A$54M was paid in taxes directly to governments in Mali and Ghana in FY17. These are illustrated in the table below. Syama AUD Bibiani AUD Total AUD Royalties 26,195,367 - 26,195,367 Corporate and other taxes 11,218,931 422,037 11,640,968 PAYE Tax 16,908,763 186,797 17,095,560 Local vendor payments 131,429,456 13,630,553 145,060,009 Local salaries CSR spending 8,074,589 2,329,397 10,403,986 623,387 239,145 862,532 194,450,493 16,807,929 211,258,422 The table below illustrates Resolute’s total economic contributions at our current and previous mining operations in Africa. Syama AUD Tanzania AUD Bibiani AUD Total AUD Royalties 123,472,896 62,233,249 1,736,548 187,442,692 Corporate and other taxes 23,601,062 111,517,453 1,781,160 136,899,675 PAYE Tax 107,445,137 39,045,449 1,159,982 147,650,568 Local vendor payments 925,841,457 534,817,302 34,217,051 1,494,875,810 Local salaries CSR spending 61,274,322 37,070,597 26,851,958 125,196,877 4,453,716 4,610,935 698,609 9,763,260 1,246,088,590 789,294,985 66,445,307 2,101,828,882 44 Resolute Mining Limited | Annual Report 2017Resolute Mining Limited | Annual Report 2017 Financial Report Contents Directors’ Report Auditor’s Independence Declaration Financial Statements & Notes Director’s Declaration Independent Auditor’s Report Shareholder Information 46 66 67 120 121 129 45 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 2017. 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 resigned 29 June 2017) 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 resigned as Chairman of the board in June 2017. Marthinus (Martin) John Botha (Non-Executive Chairman) BScEng Mr Martin Botha was appointed Chairman in June 2017 after being 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 Chairman of the Nomination Committee and a member of the Audit and Risk Committee and a member of the Remuneration 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. Prior to joining Resolute Mining Limited in 2015 Mr Welborn was the Managing Director of Equatorial Resources Limited and 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 Prairie Mining Limited (February 2009 - September 2015) and is currently a non-executive director of Equatorial Resources Limited (appointed 2010) and Kilo Gold Mines (appointed 2017), and is Chairman of Orbital Corporation Limited (appointed 2014). Mr Welborn is a member of the Environment and Community Development Committee and the Safety, Security and Occupational Health Committee. 46 Resolute Mining Limited | Annual Report 2017 Directors’ Report Directors (continued) Names, qualifications, experience and special responsibilities (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 25 years. Mr Sullivan is also a director of GME Resources Limited (appointed 1996), Zeta Resources Limited (appointed 2013), Pan Pacific Petroleum NL (appointed 2014), Panoramic Resources Limited (appointed 2015) and Bligh Resources Limited (appointed 2017). Mr Sullivan is Chair of the Remuneration Committee and a member of the Audit and Risk 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 of Chartered Accountants Australia and New Zealand 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 a member of the Audit and Risk Committee (Chair resigned 27 July 2017), Remuneration Committee and Nomination Committee. Mark Potts (Non-Executive Director) BSc (Hons) Mr Mark Potts is a non-executive director and was appointed to the board in 2017. Mr Potts has held senior executive and board positions, in start-ups and large corporate environments, over a 30-year career. Most recently Mr Potts was the worldwide CTO and VP for Corporate strategy at Hewlett Packard, driving technology and business strategy successfully for over 5 years. Prior to Hewlett Packard Mark was the founder of several successful, venture backed start-ups, that have driven technology disruption and business innovation in varied industries. Mr Potts is the Chair of Decimal Software Limited (appointed 2016), a director of VGW (appointed 2017) and board adviser to Advara (appointed 2014) and Adecco Australia (appointed 2010). Mr Potts is a member of the Audit and Risk Committee and Nomination Committee. Yasmin Broughton (Non-Executive Director) BComm PG Law GAICD Ms Yasmin Broughton is a non-executive director and was appointed to the board on 29 June 2017. Ms Broughton is a corporate lawyer with significant experience working as both a director and an executive in a diverse range of industries. Ms Broughton has over 13 years’ experience working with ASX listed companies as an officer and has a deep understanding of corporate governance, including compliance with the ASX Listing Rules, and managing complex legal issues. Ms Broughton’s legal and commercial qualifications together with her national mediator credentials, define her fact based and solution orientated approach to corporate management. Ms Broughton is also a non-executive director of the Insurance Commission of Western Australia (appointed 2015), Edge Employment Solutions Inc (appointed 2012) and CyberGym Global Limited (appointed 2017). Ms Broughton is Chair of the Audit and Risk Committee and a member of the Remuneration Committee and Nomination Committee. 47 Resolute Mining Limited | Annual Report 2017 Directors’ Report Company Secretary Greg William Fitzgerald (resigned 4 August 2017) 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 was also the Chief Financial Officer (resigned 27 February 2017) 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 resigned as Company Secretary on 4 August 2017. Amber Stanton LL.B. Ms Amber Stanton is a corporate lawyer and was appointed as General Counsel / Company Secretary on 4 August 2017. Prior to joining Resolute, Ms Stanton was a partner at two international law firms, specialising in mergers and acquisitions, capital markets, energy and resources and general corporate and commercial matters. Ms Stanton was the WA winner of the 2011 Telstra Business Women's award (Corporate and Private Sector) and is also a director of the Liver Foundation of Western Australia. 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. Huston¹ J. Welborn² M. Botha H. Price P. Sullivan M. Potts Y. Broughton Fully Paid Ordinary Shares Performance Rights 428,182 2,100,000 - 194,745 3,072,051 26,825 - - 4,079,000 - - 351,297 - - 5,821,803 4,430,297 ¹ Mr Peter Huston resigned on 29 June 2017. ² As disclosed in the Appendix 3Y lodged with ASX on 21 August 2017, Mr John Welborn is undertaking investigations to confirm he is the owner (beneficially or otherwise) of 1,218,522 of these shares. Refer to the Appendix 3Y for further detail. 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 stated throughout this Report. 48 Resolute Mining Limited | Annual Report 2017 Directors’ Report Significant Events after Reporting Date On 23 August 2017, the Company announced a final dividend on ordinary shares in respect of the 2017 financial year of 2.0 cents per share. The dividend has not been provided for in the 30 June 2017 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. Levels of sulphate and some trace elements have been measured above license limits at the Ravenswood operation. The operation is cooperating with the Queensland Department of Environment and Heritage Protection to evaluate and control surface and groundwater quality. Financial Position and Performance FY17 net profit after tax of $166m (FY16 (restated): $201m).  Cash and bullion at market value increased to a total of A$290m (FY16: A$102m).   Revenue from gold and silver sales of $541m (FY16: $555m).  Gross profit from operations of $177m (FY16 (restated): $155m).  Return on equity of 49%.  Diluted earnings per share of 18.61 cents.  Net operating cash inflows for the year were $186m (FY16: $193m).  Net investing cash outflows of $128m (FY16: $43m).  Net financing inflows of $136m (FY16: outflows $79m). Review of Operations Resolute delivered a strong operational performance in 2017 with total gold production of 329,834 ounces at an All-In Sustaining Cost (AISC) of A$1,132/oz, a significant improvement on the original guidance of 300,000 ounces at an AISC of $1,280/oz. This result is particularly impressive given 2017 was a transformational year at both Ravenswood and Syama. At Syama the Company commenced the Syama Underground project and continued mining satellite open pits while depleting large stockpile reserves. At Ravenswood the Company began open pit mining at Nolans East, initiating the Ravenswood Expansion Project while continuing to mine the highly successful Mt Wright Underground mine. FY18 will be another year of transition as the Syama Underground begins ramping up to full production and Ravenswood transitions to a long future of open pit mining beyond the closure of Mt Wright. The Company is in the process of building a large-scale sublevel caving operation at Syama to be one of the world’s first fully automated underground truck haulage mines. FY18 will be an exciting year for shareholders as the Company focuses on delivering the significant potential of its exploration and development pipeline. 49 Resolute Mining Limited | Annual Report 2017 Directors’ Report Review of Operations Production Strong operating performance has bolstered cash and bullion, allowing for the repayment of debt and strengthening of the Company’s financial position. Key operating performance indicators UG decline development UG lateral development UG vertical development UG ore mined UG grade mined OP operating waste OP ore mined OP grade mined Total ore mined Total tonnes processed Grade processed Recovery CEC Recovery Adjustment* Gold Produced Gold in circuit drawdown/(addition) Gold shipped Gold bullion in metal account movement (increase)/decrease Gold sold Achieved gold price Cash Cost Units m m m t g/t BCM BCM g/t t t g/t % oz oz oz oz oz oz A$/oz US$/oz A$/oz US$/oz All-in Sustaining Cost A$/oz US$/oz Syama Sulphide 3,180 - - 8,289 2.15 Syama Oxide - - - - - 2017 Syama Total 3,180 - - 8,289 2.15 Ravenswood - - - GROUP total 3,180 - - 2016 GROUP total - 1,807 - 1,001,067 1,009,356 1,305,585 2.51 2.51 2.38 431,208 3,772,861 4,204,069 989,485 5,193,554 4,508,379 441,933 689,864 1,131,797 328,325 1,460,122 749,667 2.44 2.29 2.35 0.63 1.96 2.22 1,215,153 1,319,596 2,534,749 2,366,159 4,900,908 2,851,091 2,106,371 1,340,097 3,446,468 1,995,292 5,441,760 4,455,437 2.59 69.8 2.84 83.2 2.68 75.3 1.54 93.1 2.27 79.7 13,834 - 13,834 - 13,834 2.61 84.1 - 136,000 101,830 237,830 92,004 329,834 315,169 (20,163) (4,407) (24,570) (410) (24,980) 9,164 115,837 97,423 213,260 91,594 304,854 324,333 375 10,565 10,940 1,448 12,388 16,208 116,212 107,988 224,200 93,042 317,242 340,540 1,720 1,296 857 646 1,001 755 1,720 1,296 948 714 960 725 1,720 1,296 896 675 984 742 1,708 1,291 1,252 943 1,406 1,059 1,717 1,295 995 750 1,132 853 1,624 1,184 898 654 1,200 874 *Increase in recoverable gold in carbon enriched concentrates (CEC) arising from confirmation of Project Reprise Low Carbon Roast recoveries. 50 Resolute Mining Limited | Annual Report 2017 Directors’ Report Review of Operations Exploration Detailed information about Resolute’s exploration and development highlights is available on the Company’s website.   During the year Resolute made a major new discovery at Syama. The Nafolo discovery is a new zone of mineralisation located immediately south of the Syama deposit and separate to the main orebody. Nafolo was discovered in October 2016 and follow up drilling confirmed Nafolo as a major discovery. Nafolo has similar characteristics, size and tenor to the 8 million ounce (Moz) Syama orebody and remains open in all directions. The Nafolo discovery is likely to expand the existing 6Moz resource and 3Moz reserve at Syama. An understanding of the full potential of the Nafolo discovery is a high priority in order to assess its potential to enhance the mine plan at Syama. The drilling has now defined an initial strike length of greater than 300m and is continuing to deliver consistent, broad intersections with similar characteristics to Syama. All holes drilled to date at Nafolo have intersected alteration and gold mineralisation and the discovery remains open at depth and to the south. A significant area under the southern waste dump is still to be tested and has the potential to host a large ore system similar to the 8Moz Syama orebody.  Since the discovery of Nafolo the Company has been exploring further opportunities for discoveries within the Syama region. Resolute has a large ground holding which covers approximately 80km of the Syama shear zone. Within this ground holding the majority of exploration drilling to date has focused on the discovery of shallow oxide resources. Given the Company’s strong financial position and long term commitment at Syama, Resolute has seized the opportunity to systematically test and establish the full potential of this prolific gold belt.  During the year exploration drilling at Syama delivered significant results from the Tabakaroni and BA-01 satellite operations through extensional drilling aimed at underground mining opportunities that have potential to complement the existing Syama mine plan.  Tabakoroni is a satellite operation located approximately 40km south of the Syama gold mine. The Tabakoroni open pit operations are scheduled to commence production in late FY18, significant results from extensional drilling at Tabakoroni included: TARC532 TARC542 TARC543 TARC549 TARC551 20m @ 18.3 g/t Au from 117m 23m @ 9.6 g/t Au from 140m 25m @ 8.1 g/t Au from 160m 12m @ 8.4 g/t Au from 203m 14m @ 16.7 g/t Au from 89m       BA-01 is located approximately 6km north of Syama and forms part of a series of satellite deposits, including BA-01, Beta and Alpha. Resolute commenced an oxide open pit operation at BA-01 in early 2017, significant results from extensional drilling at BA-01 included:  BARC120  BARC124  BARC126  BARC136  BARC138 6m @ 14.9 g/t Au from 36m 7m @ 13.1 g/t Au from 85m 9m @ 11.1 g/t Au from 70m 10m @ 9.2 g/t Au from 115m 11m @ 14.9 g/t Au from 43m  These results have confirmed the excellent long term sulphide potential of Tabakoroni, BA-01 and other satellite operations, follow up drilling of the sulphide targets will be undertaken later in 2017.  During the year Resolute announced initial results from the phase 2 drilling campaign at the Company’s Bibiani Gold Mine in Ghana. The drilling program was designed to upgrade existing inferred mineral resources as well as identify new mineralisation. The program aims to significantly increase the ore reserve, improve project economics, and confirm a decision to mine.  The initial drilling has intersected mineralisation better than predicted by the current inferred resource estimate. It is expected the high grade intersections from the Central Lode will lead to resource and reserve increases. The drilling program is also targeting new areas of mineralisation outside of the existing resource. Significant results from the first half of the phase 2 drilling program included:  BSDD040  BUDD072  BUDD077  BUDD078 30m @ 8.9g/t Au from 498m 48m @ 3.6g/t Au from 171m 51m @ 4.3g/t Au from 117m 37m @ 3.9g/t Au from 152m 51 Resolute Mining Limited | Annual Report 2017 Development     The development of the Syama Underground project commenced in September 2016 and the underground development is currently on schedule for first sublevel cave ore production to commence in the quarter ended December 2018. During the underground development phase a significant amount of development ore will be mined and is expected to augment the stockpiled sulphide material that is currently providing mill feed to the sulphide plant at Syama. The underground development has commenced on the first and second production levels (the 1130 and 1105 levels) and the incline and decline are advancing simultaneously. The current priority of the underground development is to establish the primary ventilation and truck haulage infrastructure. Lateral development rates are exceeding expectations with semi-automated drilling delivering improved advance rates and increased productivities than the definitive feasibility study (DFS) estimates. The Ravenswood Expansion Project (REP) study was announced in September 2016 with the aim of maintaining continuity of production at Ravenswood as the Mt Wright underground mine prepares for closure. Resolute has commenced the 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 outlined the following development sequence:  Mt Wright underground operations continuing until eventual closure in late FY18:  Open pit mining recommenced from Nolans East and continuing until late-2017;  Processing capacity increased to 2.8 million tonnes per annum (Mtpa);  Regulatory approvals for recommencement of mining at Sarsfield obtained in March 2017;  Regulatory approvals for open pit mining at Buck Reef West expected in mid-2018; and  Expansion of the mill to 5.0Mtpa. The feasibility study into the REP confirmed a long life, low risk, low cost development plan with robust economics. Under the REP, average annual production is expected to increase to approximately 120,000oz of gold. Mine life will be extended by 13 years with operations continuing until at least 2029. The operation will generate Life of Mine All-In Sustaining costs of A$1,166/oz (US$880/oz). The staged development plan requires no immediate additional capital expenditure and start-up capital comprises A$134 million for pre-stripping and staged processing plant expansion to 5.0Mtpa. Significant potential remains for economic upside and further extensions. In December 2016 the Queensland Government granted Prescribed Project status to the REP. The Prescribed Project status has streamlined administrative decisions and ensured essential project regulatory approvals are received on a timely basis. In March 2017 the Queensland Department of Environment and Heritage Protection issued the final approved Amended Environmental Authority for the recommencement of mining at the Sarsfield open pit. The Environmental Authority is a major milestone in the governmental approval process required to progress the REP and includes all provisions required to recommence mining at the Sarsfield open pit. In August 2017, Resolute executed two significant Heritage Agreements (Heritage Agreements) with the Queensland Government which support the Ravenswood Expansion Project. The agreements cover areas of the proposed Ravenswood Expansion Project mining landscape including the historic Chinese Settlement Area and the Ravenswood School and Residence. Resolute continues to work collaboratively with the Queensland government on the required regulatory approvals for the REP. Likely Developments and Expected Results  Gold production for FY18 forecast to be a minimum of 300,000oz at All-In Sustaining Costs of A$1,280/oz (US$960/oz).  At Syama, the sulphide head grade will be managed to maintain an average feed grade of greater than 2g/t Au to the sulphide plant through blending from existing sulphide stockpiles, mined ore from satellite deposits, and ore produced from the underground mine during development. Development ore production has commenced from the underground mine with pre-production underground ore of ~1.3Mt expected to be mined prior to completion of the sublevel cave development in the quarter ended December 2018. Syama sulphide gold production is forecast to be a minimum of 130,000 ounces at an AISC of A$1,050/oz and Syama oxide gold production is forecast to be a minimum of 90,000 ounces at an AISC of A$1,260/oz.  At Ravenswood, mined ore tonnes from Mt Wright are expected to reduce as the number of available drawpoints decreases over the remaining life of the underground mine. Mine production from Nolans East is expected to be completed in late-2017 and throughout the remainder of FY18 the ore feed will be sourced from Nolans East stockpiles, existing Sarsfield stockpiles, and remaining production ore from Mt Wright. Ravenswood gold production is forecast to be a minimum of 80,000 ounces at an AISC of A$1,520/oz.  At Bibiani, a new resource estimate will be undertaken which will form the basis for an updated feasibility study to be completed over the remainder of calendar 2017. An investment decision is excepted in the March quarter of 2018  Capital expenditure for major growth projects is expected to be A$162M (US$122M).  Exploration budget increased to A$38M (US$29M). 52 Resolute Mining Limited | Annual Report 2017 Directors’ Report 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 (“KMP”) 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. a) Key management personnel (i) Directors Name P. Huston J. Welborn M. Botha H. Price P. Sullivan Y Broughton M Potts (i) Executives Name P. Beilby L. de Bruin G. Fitzgerald P. Henharen V. Hughes D. Kelly B. Mowat Position held during the financial year Non-Executive Chairman (resigned 29 June 2017) Managing Director and Chief Executive Officer Non-Executive Director (Non-Executive Chairman from 29 June 2017) Non-Executive Director Non-Executive Director Non-Executive Director (appointed 29 June 2017) Non-Executive Director (appointed 29 June 2017) Position held during the financial year Chief Operating Officer Chief Financial Officer (appointed 27 February 2017) Chief Financial Officer and Company Secretary (Chief Financial Officer resigned 27 February 2017) General Manager – Project Delivery General Manager – People, Culture and Information General Manager – Corporate Strategy General Manager - Exploration 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. 53 Resolute Mining Limited | Annual Report 2017 Directors’ Report Remuneration Report (continued) Remuneration Committee and Nomination Committee On 29 June 2017 the Board resolved to split the Remuneration and Nomination Committee into two separate committees being the Remuneration Committee and Nomination Committee. The Remuneration 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. The Nomination Committee is responsible for Board and Board Committee membership, succession planning and performance evaluation. In accordance with best practice governance the Remuneration Committee and the Nomination Committee are 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. 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 29 November 2016 when the shareholders approved an aggregate remuneration of $1,000,000 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. 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 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 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  Short term incentives (STI); and,  Long term incentives (LTI). 54 Resolute Mining Limited | Annual Report 2017 Directors’ Report Remuneration Report (continued) The proportion of fixed remuneration and variable remuneration (potential short term and long term incentives) is established for each executive by the Remuneration Committee and for the year ended 30 June 2017 was as follows: CEO Fixed Remuneration (40%) Target STI (20%) Target LTI (40%) Other Executives Fixed Remuneration (47%) Target STI (23%) Target LTI (30%) Variable remuneration 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 Committee. The process consists of a review of individual performance, relevant experience, and relevant comparable remuneration in the mining industry and more broadly across other sectors. Structure Executives receive a base salary, statutory superannuation and the opportunity to receive income protection insurance as part of their Fixed Remuneration. Variable Remuneration – Short Term Incentive (“STI”) Objective The objective of the STI is to generate greater alignment between performance and remuneration levels for the purpose of driving operational excellence. 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 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 75% of fixed remuneration. Pro-rata payment applies on a straight line basis between “threshold” and “target” and from “target” to “stretch” Performance. Target performance represents challenging 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. 55 Resolute Mining Limited | Annual Report 2017 Directors’ Report Remuneration Report (continued) The STI measures comprise:  Improved safety performance – measured by:   a lag indicator in the form of a specified reduction in the Total Recordable Injury Frequency Rate in comparison to prior years; and 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:    operating cash flow; gold production; and, cost per tonne milled.  A set of personal performance metrics designed to drive optimum operational performance as specifically related to each executive portfolio. 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 An independent review of the Company’s incentive plans in 2016 has informed a number of changes that were implemented from 1 July 2016. The intention of the changes to the STI and LTI plans was 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 challenging to achieve. This has been balanced by increasing the reward for executives 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 Committee. Payments are delivered as a cash bonus and/or in the form of superannuation. Actual STI performance for the year ending 30 June 2017 Actual performance for the year ending 30 June 2017 was an average of 96% of target performance for KMP. 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 value and thus have an impact on the Company’s performance against the relevant long-term performance hurdles. a) Selecting the right plan vehicle 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. 56 Resolute Mining Limited | Annual Report 2017 Directors’ Report Remuneration Report (continued) Overview of the Company’s approach to Long Term Incentives a) Selecting the right plan vehicle (continued) In June 2016, the Remuneration and 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 $18,375. b) Grant Frequency and LTI quantum Upon Board instigation, 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 equates to 100% of fixed remuneration for the Chief Executive Officer and 65% of fixed remuneration for the other executives. This level of LTI is in line with current market practice. 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 (Relative Total Shareholder Return) and via reserves/resources growth over a 3 year period. d) Changes to the LTI Plan from 1 July 2016 Following the receipt of feedback from a remuneration consultant and as approved by shareholders, 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 promote further stretch    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 has seen 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 (“RTSR”) 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. 57 Resolute Mining Limited | Annual Report 2017 Directors’ Report Remuneration Report (continued) 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 For the year ending 30 June 2017, in order for performance rights to vest, the Company’s performance must be at or above the 50th percentile in relation to TSR as compared to its peer companies. The following table sets out the vesting schedule based on the Company’s relative TSR performance for the year ending 30 June 2017: Relative TSR performance Less than 50th percentile At the 50th percentile Between 50th and 75th percentile 75th percentile and above Performance Vesting Outcomes 0% vesting 50% vesting Linear vesting 100% vesting The second performance condition is resource and reserve (R&R) growth net of depletion over a 3 year period. Broadly, the quantum of the increase in resources and reserves will determine the number of performance rights to vest. The following table sets out the vesting outcome based on the Company’s resource and reserve growth performance: Resource and Reserve Growth Performance Performance Vesting Outcomes R&R depleted R&R maintained R&R between maintain and 30% growth R&R grown by up to 30% e) Performance period 0% vesting 50% vesting Linear vesting 100% vesting Grants under the LTI need to serve a number of different purposes: i. ii. act as a key retention tool; and, 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) Change of Control Provisions On the occurrence of a change of control event of Resolute Mining Limited, the Board will determine, in its sole and absolute discretion, the manner in which all unvested and vested awards will be dealt with. Actual LTI performance for the 3 year period ending 30 June 2017 For the year ending 30 June 2017 the Company’s LTI was tested against the relative TSR performance measure and the resource and reserve growth measure. The Company achieved a TSR between the 50th and 75th percentile relative to companies in the customised peer group. There was nil growth in resource and reserve performance resulting in a 0% vesting for this measure. Overall when accounting for both measures, 64% of total performance rights will vest and become exercisable. 58 Resolute Mining Limited | Annual Report 2017 Directors’ Report Details of remuneration provided to key management personnel are as follows: 2017 SHORT TERM BENEFITS POST EMPLOYMENT BENEFITS LONG TERM BENEFITS SHARE BASED PAYMENTS n o i t a r e n u m e R e s a B $ e v i t n e c n I m r e T t r o h S ) i i ( e v a e L l a u n n A e s n e p x E y r a t e n o M n o N ) i ( s t i f e n e B $ $ $ n o i t a u n n a r e p u S $ e v a e L e c i v r e S g n o L e s n e p x E $ i s t h g R e c n a m r o f r e P $ PERFORMANCE RELATED s n o i t p O , e v i t n e c n I e c n a m r o f r e P d n a m r e T t r o h S s t h g R i i s t h g R e c n a m r o f r e P d n a s n o i t p O % % l a t o T $ Directors P. Huston 192,500 - P. Sullivan (iii) 68,591 13,600 H. Price M. Botha 55,000 90,000 J. Welborn 649,037 M. Potts (iv) Y. Broughton (iv) 550 550 Officers P. Beilby 365,407 L. de Bruin (v) 145,509 - - - - - - - - - - - - - - 7,808 35,000 - - - - - - 192,500 (54,012) 35,987 - - 90,000 90,000 - - - - - - - - 394,274 54,005 30,000 12,682 864,239 2,004,237 63 43 - - - - - - - - - - 550 550 180,485 34,260 35,000 15,656 176,279 807,087 76,698 11,083 14,094 - 39,931 287,315 G. Fitzgerald 319,260 5,271 197,422 29,393 35,000 9,553 (193,475) 402,424 P. Henharen 205,689 V. Hughes 210,696 - - 125,821 18,462 20,822 3,264 129,976 504,034 116,821 18,664 21,137 3,215 52,832 423,365 D. Kelly (vi) 226,033 2,427 120,421 18,272 20,611 3,367 103,981 495,112 B. Mowat 213,455 3,639 123,421 8,846 21,386 2,352 92,529 465,628 - - 44 41 1 51 40 45 46 - - 22 14 - 26 12 21 20 59 Resolute Mining Limited | Annual Report 2017 Directors’ Report SHORT TERM BENEFITS POST EMPLOYMENT BENEFITS LONG TERM BENEFITS SHARE BASED PAYMENTS PERFORMANCE RELATED n o i t a r e n u m e R e s a B $ e v i t n e c n I m r e T t r o h S ) x i ( $ y r a t e n o M n o N ) i ( s t i f e n e B $ e v a e L l a u n n A e s n e p x E $ y c n a d n u d e R $ 175,000 - 68,591 13,600 55,000 90,000 434,384 - - - - - - - - - - - 255,047 40,589 374,246 - 216,114 34,284 311,878 4,723 185,091 29,445 51,419 3,372 - - 99,750 4,198 - 284 42,578 788 28,253 3,586 58,139 593 13,505 5,423 - - - - - - - - - - - 2016 Directors P. Huston P. Sullivan (iii) H. Price M. Botha J. Welborn Officers P. Beilby G. Fitzgerald P. Henharen (vii) V. Hughes (viii) D. Kelly (vii) B. Mowat (vii) P. Venn e v a e L e c i v r e S g n o L e s n e p x E $ i s t h g R e c n a m r o f r e P $ , e v i t n e c n I m r e T t r o h S i s t h g R e c n a m r o f r e P d n a s n o i t p O i s t h g R e c n a m r o f r e P d n a s n o i t p O % % l a t o T - - - - - 175,000 (110,291) (20,291) - - 90,000 90,000 - - - - - - - - n o i t a u n n a r e p u S $ - 7,809 35,000 - 30,000 6,014 126,250 892,284 43 14 35,000 13,357 151,276 824,277 35,000 10,299 132,751 709,187 4,885 320 4,045 6,111 683 - 541 1,756 9,228 - - - 160,935 3,976 79,791 14,996 100,523 92,933 706,958 45 45 62 - 35 28 29 18 19 - - - 15 13 198,802 3,688 108,663 20,430 248,369 24,845 i. ii. iii. iv. v. vi. vii. viii. ix. Non-monetary benefits include, where applicable, the cost to the Company of providing fringe benefits, the fringe benefits tax on those benefits and all other benefits received by the executive. The Short Term Incentives for the year ended 30 June 2017 will be paid in cash in September 2017. This negative is due to the reversal of the expense recognised in prior years relating to the Reserve & Resource growth metric. In prior years, it had been assumed that the vesting outcome for the R&R growth metric would be 100%, whist the actual result was a 0% vesting outcome for this metric. Due to this being a non-market related hurdle, the accounting expense is adjusted to reflect the outcome. Mr Potts and Ms Broughton were appointed on 29 June 2017. Ms de Bruin was appointed on 27 February 2017. $18,250 included in Mr Kelly’s base remuneration relates to director fees for Manas Resources Limited. Mr Henharen, Mr Kelly and Mr Mowat were appointed on 4 April 2016. Ms Hughes was appointed on 27 June 2016. The Short Term Incentives for the year ended 30 June 2016 were paid in cash on 15 September 2016. 60 Resolute Mining Limited | Annual Report 2017 Directors’ Report Details of option holdings of key management personnel are as follows: 2017 Options type Balance at the start of the year Lapsed during the year (i) Balance at the end of the year Vested and exercisable at the end of the year % No. Value of options exercised during the year $ Officers P. Beilby (ii) G. Fitzgerald (iii) Unlisted Unlisted 60,000 60,000 (60,000) (60,000) - - - - - - - - i. ii. iii. The value of options at the date they lapsed was $nil. The options that lapsed during the year were granted on 16 November 2010 and 25 January 2011. The options that lapsed during the year were granted on 25 January 2011. Details of performance rights holdings of key management personnel are as follows: Granted during the year as compensation t a s t h g i r e c n a m r o f r e p f o e u l a v r i a F e t a d t n a r g $ - e h t f o t r a t s e h t t a e c n a l a B r a e y r e b m u N e t a d t n a r G 1,168,267 - - 1,515,000 2,564,000 1,835,828 229,325 - - - 208,000 245,624 307,030 379,097 154,516 - 124,800 1,611,005 201,588 24 Oct 2016 24 Oct 2016 16 Jan 2017 24 Oct 2016 24 Oct 2016 24 Oct 2016 24 Oct 2016 24 Oct 2016 2017 Directors P. Sullivan J. Welborn Officers P. Beilby L. De Bruin D. Kelly P. Henharen B. Mowat V. Hughes G. Fitzgerald (i) t a s t h g i r e c n a m r o f r e p f o e u l a v r i a F l a t o T e t a d t n a r g ) s r a e y ( d o i r e p g n i t s e V $ e c n a m r o f r e p f o y r i p x E s t h g i r e t a d g n i t s e V r a e y e h t g n i r u d d e s p a L s t h g i r e c n a m r o f r e p e h t g n i r u d d e t n a r g f o e c i r p e s i c r e x E r a e y $ r a e y e h t g n i r u d d e t s e V e h t f o d n e e h t t a e c n a l a B r a e y - - - 1.27 3,256,280 3 1.27 291,243 1.51 314,080 1.27 311,942 1.27 389,928 1.27 196,235 1.27 158,496 1.27 256,017 3 3 3 3 3 3 3 30 Jun 2019 30 Jun 2019 30 Jun 2019 30 Jun 2019 30 Jun 2019 30 Jun 2019 30 Jun 2019 30 Jun 2019 - 1 Jul 2021 1 Jul 2021 1 Jul 2021 1 Jul 2021 1 Jul 2021 1 Jul 2021 1 Jul 2021 1 Jul 2021 - (388,061) (428,909) 351,297 $nil - - 4,079,000 $nil (243,580) (269,221) 1,552,352 $nil $nil $nil $nil $nil - - - - - - 208,000 245,624 307,030 - (121,647) 411,966 - - 124,800 $nil (1,576,445) (236,148) - i. ii. Mr Fitzgerald resigned as Chief Financial Officer on 27 February 2017 and as Company Secretary on 4 August 2017. Performance rights vest in accordance with the Resolute Mining Limited Remuneration Policy and Equity Incentive Plan which outline the key performance indicators that need to be satisfied. The percentage of performance rights granted during the financial year that also vested during the financial year is nil. No performance rights were forfeited during the financial year. 61 Resolute Mining Limited | Annual Report 2017 Directors’ Report Details of shareholdings of key management personnel are as follows: 2017 Directors P. Huston¹ P. Sullivan H. Price J. Welborn M. Potts Officers P. Beilby G. Fitzgerald² D. Kelly B. Mowat Received during the year on the vesting of performance rights Balance at the start of the year Purchased on market during the year Shares sold on market during the year Balance at the end of the year 428,182 3,143,142 194,745 1,550,000 - 77,362 49,754 - - - 428,909 - - - 269,221 236,148 - 121,647 - - - 440,000 26,825 8,300 - 20,000 - - (500,000) - - - - (50,000) - (121,647) 428,182 3,072,051 194,745 1,990,000 26,825 354,883 235,902 20,000 - ¹ Mr Huston resigned on 29 June 2017. ² Mr Fitzgerald resigned as Chief Financial Officer on 27 February 2017 and as Company Secretary on 4 August 2017. Executive Employment Contracts Name Title Term of Agreement Notice Period by Executive Notice Period by Company Termination Benefit¹ John Welborn Managing Director and Chief Executive Officer Peter Beilby Chief Operating Officer Lee-Anne de Bruin Greg Fitzgerald David Kelly Paul Henharen Chief Financial Officer (commenced 27 February 2017) Chief Financial Officer (resigned 27 February 2017) General Manager – Corporate Strategy General Manager – Project Delivery Open Open Open Open Open Open 6 months 12 months 3 months 6 months 3 months 3 months 3 months 6 months 3 months 3 months 3 months 3 months Bruce Mowat General Manager – Exploration Open 3 months 3 months Vanessa Hughes General Manager – People, Culture & Information Open 3 months 3 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 Redundancy as per NES ¹ NES is the National Employment Standards. 62 Resolute Mining Limited | Annual Report 2017 Directors’ Report Loans to Key Management Personnel There were no loans to key management personnel during the years ended 30 June 2017 and 30 June 2016. Company Performance The table below shows the performance of the Consolidated Entity over the last 5 years: Net profit/(loss) after tax $'000 30 June 2017 166,096 (Restated) 30 June 2016 200,732 30 June 2015 (568,760) 30 June 2014 29,156 30 June 2013 105,443 Basic earnings/(loss) per share cents/share 19.05 26.79 (78.39) 5.20 13.29 This is the end of the audited information. Shares under Options Performance rights at the date of this report are as follows: Grant date 1/07/15 Vesting date 30/06/18 Exercise price - 31/08/16 24/10/16 29/11/16 29/11/16 29/11/16 30/06/18 30/06/19 30/06/18 30/06/19 30/06/20 - - - - - Number on issue 4,309,629 470,478 2,823,734 400,000 600,000 1,000,000 9,603,841 63 Resolute Mining Limited | Annual Report 2017 Directors’ Report 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 66 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 attended by each director were as follows: P. Huston P. Sullivan M. Botha J. Welborn H. Price M. Potts Y. Broughton Number of meetings held Full Board 8 8 8 8 8 1 1 8 Audit 2 n/a 2 n/a 2 n/a n/a 2 Remuneration & Nomination 5 n/a 5 n/a 5 n/a n/a 5 Financial Risk Management n/a 8 n/a 8 n/a n/a n/a 8 The details of the functions of the other committees of the Board are presented in the Corporate Governance Statement. 64 Resolute Mining Limited | Annual Report 2017 Directors’ Report 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 have not been provided by the entity’s auditor, Ernst & Young for the year ended 30 June 2017. 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 $0 for the provision of taxation planning advice and other review services in the year ended 30 June 2017 (2016: $21,950). Signed in accordance with a resolution of the directors. J.P. Welborn Director Perth, Western Australia 23 August 2017 65 Resolute Mining Limited | Annual Report 2017 66 Resolute Mining Limited | Annual Report 2017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 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 C Debts and Capital 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 Other financial assets and liabilities D.4 Payables D.5 Provisions E Other Items E.1 Contingent liabilities E.2 Leases and other commitments E.3 Auditor remuneration E.4 Investments in associates E.5 Subsidiaries and non-controlling interests E.6 Joint operations E.7 Discontinued operations E.8 Subsequent events E.9 Related party disclosures E.10 Parent entity information E.11 Employee benefits and share based payments E.12 Other accounting policies E.13 Restatement of comparative information Other Director’s Declaration Independent Auditor’s Report Shareholder Information 67 Resolute Mining Limited | Annual Report 2017 Consolidated Statement of Comprehensive Income 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 gains (losses) Fair value movements and unrealised treasury transactions Share of associate’ losses Depreciation of non-mine site assets Finance costs 2017 $'000 (Restated) 2016 $'000 541,177 554,624 (309,323) (325,207) 231,854 229,417 (19,727) (35,222) 176,905 2,052 (202) (8,430) (12,097) 4,039 9,039 (1,799) (83) (3,328) (39,121) (35,585) 154,711 512 (7,741) (7,626) (5,970) (22,846) 54,098 - (94) (9,082) Note 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 Profit before tax from continuing operations 166,096 155,962 Tax expense A.1 - - Profit for the year from continuing operations 166,096 155,962 Discontinued Operation Profit after tax for the discontinued operation E.7 - 44,770 Profit for the year Profit attributable to: Members of the parent Non-controlling interest 166,096 200,732 E.5 136,371 29,725 166,096 171,957 28,775 200,732 68 Resolute Mining Limited | Annual Report 2017 Consolidated Statement of Comprehensive Income (continued) Profit for the year (brought forward) Other comprehensive income/(loss) Items that may be reclassified subsequently to profit or loss Exchange differences on translation of foreign operations: - Members of the parent - Restatement of comparatives - 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 - Restatement of comparatives Note 2017 $'000 (Restated) 2016 $'000 166,096 200,732 2,501 - - (2,005) 164 (39,402) 281 59 1,120 (2,879) - 41 Other comprehensive income/(loss) for the year, net of tax 3,902 (44,022) Total comprehensive income for the year 169,998 156,710 Total comprehensive income attributable to: Members of the parent Non-controlling interest 139,153 30,845 169,998 130,773 25,937 156,710 Earnings per share for net profit attributable to the ordinary equity holders of the parent: Basic earnings per share Diluted earnings per share A.3 A.3 19.05 cents 26.79 cents 18.61 cents 26.11 cents Earnings per share for net profit from continuing operations attributable to the ordinary equity holders of the parent: Basic earnings per share Diluted earnings per share 19.05 cents 19.82 cents 18.61 cents 19.31 cents 69 Resolute Mining Limited | Annual Report 2017 Consolidated Statement of Financial Position Current assets Cash Receivables Inventories Available for sale financial assets Financial derivative assets Other current assets Total current assets Non current assets Investments in associates Deferred tax assets Other financial assets Exploration and evaluation Development Property, plant and equipment Total non current assets Total assets Current liabilities Payables Interest bearing liabilities Provisions Current tax liabilities Financial derivative liabilities Total current liabilities Non current liabilities Financial derivative liabilities Provisions Total non current liabilities Total liabilities Net assets Equity attributable to equity holders of the parent Contributed equity Reserves Retained earnings/(accumulated losses) Total equity attributable to equity holders of the parent Non-controlling interest Total equity 70 Note C.1 D.1 D.2 D.3 D.3 E.4 A.4 D.3 B.2 B.1 B.1 D.4 C.2 D.5 D.3 D.3 D.5 C.4 C.5 E.5 2017 $'000 282,060 5,748 202,074 3,595 2,214 2,679 498,370 5,840 15,333 3,651 64,879 159,612 90,068 339,383 837,753 65,152 34,558 18,726 3,979 - 122,415 - 66,140 66,140 188,555 649,198 544,987 38,408 83,333 666,728 (17,530) 649,198 (Restated) 2016 $'000 79,873 7,005 174,022 427 - 2,177 263,504 - - 3,699 46,292 117,190 61,656 228,837 492,341 33,367 26,678 28,328 - 151 88,524 264 65,139 65,403 153,927 338,414 395,198 33,427 (41,836) 386,789 (48,375) 338,414 Resolute Mining Limited | Annual Report 2017 Consolidated Statement of Changes in Equity y t i u q e d e t u b i r t n o C e v r e s e r ) s s o l ( / n i a g d e s i l a e r n u t e N s e t o n e l b i t r e v n o C e v r e s e r y t i u q e y t i u q e s n o i t p o e r a h S e v r e s e r y t i u q e e e y o p m E l e v r e s e r s t i f e n e b e v r e s e r n o i t a l s n a r t y c n e r r u c n g i e r o F ) s e s s o l d e t a l u m u c c a ( i / s g n n r a e d e n i a t e R t s e r e t n i g n i l l o r t n o c - n o N Total $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 At 1 July 2016 395,198 (68) 384 5,987 12,092 14,868 (32,080) (45,977) 350,404 Restatement of comparatives (Note E.13) - - - - - 164 (9,756) (2,398) (11,990) At 1 July 2016 (restated) 395,198 (68) 384 5,987 12,092 15,032 (41,836) (48,375) 338,414 Profit for the year Other comprehensive loss, net of tax Total comprehensive (loss)/income for the year, net of tax - - - 281 - 281 Shares issued Share issue costs Dividends paid Share-based payments to employees 152,697 (2,908) - - - - - - - - - - - - - - - - - - - - - - - - - - 2,199 - 136,371 29,725 166,096 2,501 - 1,120 3,902 2,501 136,371 30,845 169,998 - - - - - - (11,202) - - - - - 152,697 (2,908) (11,202) 2,199 At 30 June 2017 544,987 213 384 5,987 14,291 17,533 83,333 (17,530) 649,198 71 Resolute Mining Limited | Annual Report 2017 Consolidated Statement of Changes in Equity (continued) y t i u q e d e t u b i r t n o C e v r e s e r ) s s o l ( / n i a g d e s i l a e r n u t e N s e t o n e l b i t r e v n o C e v r e s e r y t i u q e s n o i t p o e r a h S e v r e s e r y t i u q e y t i u q e e e y o p m E l e v r e s e r s t i f e n e b e v r e s e r n o i t a l s n a r t y c n e r r u c n g i e r o F i / s g n n r a e d e n i a t e R d e t a l u m u c c a ( ) s e s s o l g n i l l o r t n o c - n o N t s e r e t n i Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 At 1 July 2015 380,305 (127) 384 5,987 10,507 56,275 (213,793) (74,312) 165,226 Profit for the year as reported on 30 June 2016 Restatement of comparatives (Note E.13) Restated profit for the year Other comprehensive income/(loss), net of tax as reported on 30 June 2016 Restatement of comparatives (Note E.13) Restated other comprehensive loss, net of tax Total comprehensive (loss)/income for the year, net of tax - - - - - - - Shares issued 14,893 Share-based payments to employees - - - - 59 - 59 59 - - - - - - - - - - - - - - - - - - - - - - - - - - - (41,407) - 164 - (41,243) 181,713 31,214 212,927 (9,756) (2,439) (12,195) 171,957 28,775 200,732 - - - (2,879) (44,227) 41 205 (2,838) (44,022) - (41,243) 171,957 25,937 156,710 - 1,585 - - - - - - 14,893 1,585 At 30 June 2016 395,198 (68) 384 5,987 12,092 15,032 (41,836) (48,375) 338,414 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 72 Resolute Mining Limited | Annual Report 2017 Consolidated Cash Flow Statement 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 C.1 Cash flows used in investing activities Payments for property, plant & equipment Payments for development activities Payments for evaluation activities Proceeds from sale of property, plant & equipment Payments for other financial assets Other investing activities Note 2017 $'000 (Restated) 2016 $'000 545,159 554,624 (339,181) (347,715) (8,430) (1,818) 2,022 (11,368) 186,384 (37,326) (61,809) (20,602) 2,233 (7,492) (2,757) (8,115) (6,043) 46 - 192,797 (13,709) (18,339) (12,669) 4,078 (254) (2,407) Net cash flows used in investing activities (127,753) (43,300) Cash flows from/(used in) financing activities Proceeds from issuing ordinary shares Costs of issuing ordinary shares Repayment of borrowings Repayment of lease liability Dividend paid Net cash flows from/(used in) financing activities 150,000 (2,849) - - - (74,171) (234) (4,688) (11,202) 135,715 - (78,859) Net increase in cash and cash equivalents 194,346 70,638 Cash and cash equivalents at the beginning of the financial year Exchange rate adjustment Cash and cash equivalents at the end of the period 53,417 (261) 247,502 (19,735) 2,514 53,417 Cash and cash equivalents comprise the following: Cash at bank and on hand Bank overdraft C.1 C.2 282,060 (34,558) 247,502 79,873 (26,456) 53,417 The above consolidated cash flow statement should be read in conjunction with the accompanying notes. 73 Resolute Mining Limited | Annual Report 2017 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 2017 was authorised for issue in accordance with a resolution of the Directors on 23 August 2017. 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 2016 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. 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. 74 Resolute Mining Limited | Annual Report 2017 About this Report (continued) 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 Audit and Risk Committee under policies approved by the Board of Directors. The Audit and Risk 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. 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 Audit and Risk 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 Audit and Risk 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 75 Resolute Mining Limited | Annual Report 2017 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. 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;   Net gains/losses on disposal of available-for-sale investments. Finance costs - including adjustments on provisions due to discounting; and, 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 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. 76 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements A: Earnings for the Year A.1 Segment revenues and expenses (continued) For the year ended 30 June 2017 Revenue Gold and silver sales at spot to external customers (a) Total segment gold and silver sales revenue Costs of production Gold in circuit inventories movement Costs of production relating to gold sales Royalty expense Operational support costs Other operating costs relating to gold sales Other management and administration expenses Share-based payments expense Administration and other corporate expenses Exploration and business development expenditure Earnings/(loss) before interest, tax, depreciation and amortisation Amortisation of evaluation, development and rehabilitation costs Depreciation of mine site properties, plant and equipment Depreciation and amortisation relating to gold sales Segment operating result before treasury, other income/(expenses) and tax Ravenswood (Australia) $'000 Syama (Mali) $'000 Bibiani (Ghana) $'000 Corporate/ Other $'000 Treasury $'000 Total $'000 Unallocated (b) 158,032 381,293 158,032 381,293 (115,285) (4,113) (119,398) (7,912) (196) (8,108) (213,947) 24,022 (189,925) (24,687) (2,427) (27,114) (2,561) (2,182) - (2,561) - (2,182) - - - - - - - - - - - - - - - - - - - (6,170) (1,184) (7,354) (3,993) (1,643) (1,053) (1,741) 1,852 541,177 1,852 541,177 - - - - - - - - - - (329,232) 19,909 (309,323) (32,599) (2,623) (35,222) (10,913) (1,184) (12,097) (8,430) 23,972 160,429 (1,053) (9,095) 1,852 176,105 (7,807) (3,238) (2,025) (6,657) (9,832) (9,895) - - - - - - - - - (11,045) (8,682) (19,727) 14,140 150,534 (1,053) (9,095) 1,852 156,378 77 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements A: Earnings for the Year A.1 Segment revenues and expenses (continued) For the year ended 30 June 2017 Segment operating result before treasury, other income/(expenses) and tax (brought forward) Interest income Profit on sale of available for sale financial assets Other income Total other income Interest and fees Rehabilitation and restoration provision accretion Finance costs Realised foreign exchange loss Realised gains on forward contracts Realised gain on available for sale investments Treasury - realised gains Inventories net realisable value movements and obsolete consumables Unrealised foreign exchange gain Unrealised gains on forward contracts Unrealised foreign exchange loss on intercompany balances Fair value movements and unrealised treasury transactions Gain/(loss) on sale of property, plant and equipment Withholding tax expenses Other expenses Share of associates' losses Depreciation of non mine site assets Profit/(loss) for the year Ravenswood (Australia) $'000 Syama (Mali) $'000 Bibiani (Ghana) $'000 Corporate/ Other $'000 Treasury $'000 Total $'000 Unallocated (b) 14,140 150,534 (1,053) (9,095) 1,852 156,378 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1,132 10,292 224 - - - - - - 1,132 10,292 224 (45) - (45) - - - - - - - (170) (170) - - - - - - - - - - - - - - - - - 22 (9) 13 - 1,983 1,983 - 69 - 69 2,052 2,052 (2,146) (2,146) (1,182) (1,182) (3,328) (3,328) (841) 4,016 (841) 4,016 864 864 4,039 4,039 11,648 446 446 2,629 2,629 (5,684) (5,684) (2,609) 9,039 - - - (193) (9) (202) (1,799) (1,799) (83) - (83) 15,227 160,826 (999) (9,165) 207 166,096 78 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements A: Earnings for the Year A.1 Segment revenues and expenses (continued) Ravenswood (Australia) $'000 (Restated) Syama (Mali) $'000 Bibiani (Ghana) $'000 Corporate /Other $'000 Treasury $'000 (Restated) Total $'000 Unallocated (b) For the year ended 30 June 2016 Revenue Gold and silver sales at spot to external customers (a) Total segment gold and silver sales revenue 180,425 372,938 180,425 372,938 Costs of production (109,054) (174,043) Gold in circuit inventories movement (7,980) (34,130) Costs of production relating to gold sales (117,034) (208,173) Royalty expense Operational support costs Other operating costs relating to gold sales Other management and administration expenses (9,014) (24,684) - (1,876) (9,014) (26,560) (1,722) (1,718) Share-based payments expense - - (1,722) (1,718) Administration and other corporate expenses Exploration and business development expenditure Earnings/(loss) before interest, tax, depreciation and amortisation Amortisation of evaluation, development and rehabilitation costs Depreciation of mine site properties, plant and equipment Depreciation and amortisation relating to gold sales Segment operating result before treasury, other income/(expenses) and tax - - - - - - - - - - - - - - - - - (11) (11) (1,490) (1,040) (2,530) 1,261 554,624 1,261 554,624 - - - - - - - - - - (283,097) (42,110) (325,207) (33,698) (1,887) (35,585) (4,930) (1,040) (5,970) (7,626) (2,894) (345) (1,845) (2,542) 49,761 136,142 (1,845) (5,083) 1,261 180,236 (16,908) (2,977) (11,253) (7,983) (28,161) (10,960) - - - - - - - - - (19,885) (19,236) (39,121) 21,600 125,182 (1,845) (5,083) 1,261 141,115 79 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements A: Earnings for the Year A.1 Segment revenues and expenses (continued) Ravenswood (Australia) $'000 (Restated) Syama (Mali) $'000 Unallocated (b) Bibiani (Ghana) $'000 Corporate /Other $'000 Treasury $'000 (Restated) Total $'000 21,600 125,182 (1,845) (5,083) 1,261 141,115 For the year ended 30 June 2016 Segment operating result before treasury, other income/(expenses) and tax (brought forward) Interest income Profit on sale of available for sale financial assets Other income Total other income Interest and fees Rehabilitation and restoration provision accretion Finance costs Realised foreign exchange loss Realised loss on repayment of gold prepay loan Treasury - realised losses - - 23 23 - - - - - - - - - - - - - - - - Inventories net realisable value movements and obsolete consumables 95 26,299 Other Unrealised foreign exchange gain Unrealised losses on forward contracts Unrealised foreign exchange gain on intercompany balances Fair value movements and unrealised treasury transactions Loss on sale of property, plant and equipment Withholding tax expenses Other expenses Depreciation of non mine site assets Profit after tax for the discontinued operation - - - - 2,231 - - - 95 28,530 - - - - - - (7,092) (7,092) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 47 99 343 489 47 99 366 512 (7,960) (7,960) (1,122) (1,122) (9,082) (9,082) (22,333) (22,333) (513) (513) (22,846) (22,846) - - 26,394 2,231 17,221 17,221 (415) (415) 8,667 8,667 25,473 54,098 (585) (585) (64) (64) (94) 44,770 - (585) - - (7,156) (7,741) (94) 44,770 Profit/(loss) for the year 21,718 146,620 (1,845) 39,529 (5,290) 200,732 80 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements A: Earnings for the Year A.1 Segment revenues and expenses (continued) (a) Revenue from external sales for each reportable segment is derived from several customers. (b) This information does not represent an operating segment as defined by AASB 8, however this information is analysed in this format by the Chief Operating Decision maker, and forms part of the reconciliation of the results and positions of the operating segments to the financial statements. A.2 Dividends paid or proposed Proposed dividends on ordinary shares: Final dividend for 2017: 2.0 cents per share (2016: 1.7 cents per share) 14,740 11,148 2017 $'000 2016 $'000 The dividend has not been provided for in the 30 June 2017 financial statements. A.3 Earnings per share Basic earnings per share Profit attributable to ordinary equity holders of the parent for basic earnings per share ($'000) Weighted average number of ordinary shares outstanding during the period used in the calculation of basic EPS Basic earnings per share (cents per share) 2017 (Restated) 2016 136,371 171,957 716,015,281 641,788,233 19.05 26.79 Diluted earnings per share Profit used in calculation of diluted 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 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 per share (cents per share) 136,371 171,957 716,015,281 641,788,233 16,653,016 16,874,755 732,653,297 658,662,988 - 675,400 18.61 26.11 Measurement Basic earnings per share (“EPS”) is calculated as net profit attributable to members, adjusted to exclude 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:    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. 81 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements A: Earnings for the Year A.3 Earnings per share (continued) Information on the classification of securities Options and performance rights granted to employees (including Key Management Personnel) as described in E.11 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 Current tax expense Deferred tax benefit Total tax expense b) Numerical reconciliation of income tax expense to prima facie tax expense Profit from continuing operations before income tax expense Profit from discontinued operation before income tax expense Profit before income tax expense Prima facie income tax expense at 30% (2016: 30%) (Deduct)/add: - (unrecognised tax losses and other temporary differences utilised) - 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 - other Income tax expense attributable to net profit 2017 $'000 15,333 (15,333) - 166,096 - 166,096 49,829 (35,323) - (15,705) 526 673 - (Restated) 2016 $'000 - - - 155,962 44,770 200,732 60,220 (14,432) (12,746) (35,197) 1,054 1,101 - 82 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements A: Earnings for the Year A.4 Taxes (continued) c) Tax losses (tax effected) Revenue losses Australia Mali ¹ 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) 2017 $’000 2016 $’000 12,767 - 36,676 49,443 43,924 65,471 39,466 148,861 50,084 54,717 99,527 203,578 ¹ Resolute received tax advice confirming the availability of carried forward tax losses in Mali in the form of deferred capital allowances. Subsequent analysis has indicated that these deductions may have been required to be set against the taxable profits that were realised during the tax exemption period that came to an end on 31 December 2016. Resolute is in the process of concluding this analysis and has taken the conservative position of reducing the carried forward tax losses in Mali to nil. As the deferred tax asset in respect of the carried forward losses had not been recognised, this has no impact on either the Consolidated Statement of Comprehensive Income for the year ended 30 June 2017 or the Consolidated Statement of Financial Position as at 30 June 2017. d) 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 Temporary differences not recognised Set off of deferred tax liabilities pursuant to set off provisions Net deferred tax assets - - 15,333 15,333 - (165) 165 - 84,715 87,344 1,009 9,154 1,086 8,846 150,377 175,895 54,729 54,498 11 752 21,844 22,938 (289,257) (340,532) 32,582 10,827 (17,249) (10,827) 15,333 - 83 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements A: Earnings for the Year A.4 Taxes (continued) e) 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 attributable to: 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 f) 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 The amount of franking credits available for subsequent financial years is as follows. The amount has been determined using a tax rate of 30%. Recognition and measurement 2017 $’000 2016 $’000 889 8,191 8,169 - 1,082 2,304 7,436 5 17,249 10,827 (17,249) (10,827) - - 194 2,566 64 2,824 (64) 2,760 194 2,566 (20) 2,740 20 2,760 108 108 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). 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. 84 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements A: Earnings for the Year A.4 Taxes (continued) Recognition and measurement (continued) 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 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. 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 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 was an income tax holiday for 5 years post the declaration of “first commercial production” at Syama, which commenced on 1 January 2012. The tax holiday came to an end on 31 December 2016 and taxable profits arising after that date are subject to tax in accordance with the Establishment Convention. A deferred income tax asset of $15.3 million has been recognised at 30 June 2017 in relation to deductible temporary differences. Realisation of sufficient taxable profit in future periods is regarded as probable based on the amount of taxable income generated in the six months to 30 June 2017 following the end of the tax holiday. The future benefit will only be obtained if: (i) future assessable income is derived of a nature and an amount sufficient to enable the benefit to be realised; (ii) the conditions for deductibility imposed by tax legislation have been continued to be complied with; and, (iii) no changes in tax legislation adversely affect the consolidated entity in realising the benefit. Unrecognised temporary differences As at 30 June 2017, aggregate unrecognised temporary differences of $5.260m (2016: $4.510m restated) are in respect of investments in foreign controlled entities for which no deferred tax assets have been recognised for amounts which arise upon consolidation of their financial statements. 85 Resolute Mining Limited | Annual Report 2017 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 a. Areas in Development Costs incurred in preparing mines for production including the required plant infrastructure. b. Areas in Production 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 / unit of production Method Straight line Straight line Straight line 86 Resolute Mining Limited | Annual Report 2017 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. tones) 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 specific asset 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 B.3 87 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements B: Production and Growth Assets B.1 Mine properties and property, plant and equipment (continued) Depreciation expense (160) (7,876) (125) (1,638) (9,839) Plant and Equipment s g n d i l i u B t n e m p u q E i & t n a l P s e l c i h e V r o t o M t n e m p u q E i e c i f f O s t e s s A d e s a e L l a t o T Development Expenditure In production s e i t r e p o r P e n M i t e s s A y t i v i t c A i g n p i r t S l a t o T $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 8,016 46,787 811 2,744 3,298 61,656 88,116 29,074 117,190 40,032 - 306 40,338 62,245 42,111 104,356 - - - - 419 (963) (1,638) - - - - - - - - - - - - - - - - - - - (54,818) (54,818) (9,198) 1,327 - - (9,198) 1,327 (219) (1,146) (19) (80) 596 (868) 1,151 (396) 755 7,637 77,543 750 2,845 1,293 90,068 143,641 15,971 159,612 15,582 435,206 3,319 7,216 24,813 486,136 507,011 70,789 577,800 (7,945) (357,663) (2,569) (4,371) (23,520) (396,068) (363,370) (54,818) (418,188) - - - 408 (662) - - - - - - 11 (13) (40) - - - 30 June 2017 Opening write down value Additions Reversal of impairment Disposals Amounts amortised to costs of production relating to gold sales Amortisation expense Adjustments to rehabilitation and restoration obligations Foreign currency translation At 30 June net of accumulated depreciation 30 June 2017 Cost Accumulated depreciation and impairment Net carrying amount 7,637 77,543 750 2,845 1,293 90,068 143,641 15,971 159,612 88 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements B: Production and Growth Assets B.1 Mine properties and property, plant and equipment (continued) Plant and Equipment s g n d i l i u B t n e m p u q E i & t n a l P s e l c i h e V r o t o M t n e m p u q E i e c i f f O s t e s s A d e s a e L l a t o T Development expenditure In production s e i t r e p o r P e n M i y t i v i t c A g n p i r t S i t e s s A l a t o T $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 8,481 47,930 920 2,876 6,111 66,318 87,458 3,011 90,469 - - 13,617 (114) - - 92 - 13,709 21,137 39,781 60,918 (152) (450) (716) (2,774) (713) (16,006) (128) (151) (2,375) (19,373) - - - (2,774) - - - - - - - - - - - - - - - - - - - - (13,365) (13,365) (18,470) - (18,470) (623) - (623) 248 1,360 19 79 12 1,718 1,388 (353) 1,035 8,016 46,787 811 2,744 3,298 61,656 88,116 29,074 117,190 30 June 2016 Opening write down value Additions Disposals Depreciation expense Amounts amortised to costs of production relating to gold sales Amortisation expense Adjustments to rehabilitation and restoration obligations Foreign currency translation At 30 June net of accumulated depreciation 30 June 2016 Cost 15,814 403,499 3,365 7,012 26,167 455,857 442,288 42,439 484,727 Accumulated depreciation and impairment Net carrying amount (7,798) (356,712) (2,554) (4,268) (22,869) (394,201) (354,172) (13,365) (367,537) 8,016 46,787 811 2,744 3,298 61,656 88,116 29,074 117,190 89 Resolute Mining Limited | Annual Report 2017 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 Foreign currency translation Balance at the end of the year Recognition and measurement 2017 $’000 46,292 19,835 (17) (1,231) 64,879 2016 $’000 33,951 10,404 1,431 506 46,292 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 level of exploration expenditure expected in the year ending 30 June 2018 for the consolidated entity is approximately $34.178m (2016: $18.720m). This includes the minimum amounts required to retain tenure. There are no material exploration commitments further out than one year. 90 Resolute Mining Limited | Annual Report 2017 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 or a reversal of a prior period impairment may exist or changes in circumstances indicate the carrying value may not be recoverable. At a minimum the Group makes this assessment 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 2017. Furthermore, the assessment carried out for 30 June 2017 also concluded that a reversal of prior period impairment charges would not be supported. 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. 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. 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 Cash Generating Units (“CGUs”), foreign exchange rates, the level of proved and probable reserves and measured, indicated and inferred mineral resources that may be 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 mine (LOM) plans. Consideration is also given to 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 (in accordance with Australian Accounting Standards). of ‐ ‐ 91 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements B: Production and Growth Assets B.3 Impairment of non-current assets (continued) Key estimates and judgements Impairment of mine properties, plant and equipment (continued) In determining the recoverable amount 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. LOM operating and capital cost assumptions are based on the Group’s latest budget and LOM plans. Key Assumptions: The table below summarises the key assumptions used in the year end carrying value assessments: Gold price (US$ per ounce): 2017: $1,210- $1,270 (2016: $1,050 - $1,280) 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. Discount rate % (post tax) 2017: 9% - 11% (2016: 10% - 16%) 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. Operating and capital costs: Life-of-mine operating and capital cost assumptions are based on the Group’s latest budget and life-of- mine plans. B.4 Segment expenditure, assets and liabilities For the year ended 30 June 2017 Capital expenditure Segment assets in continuing operations Segment liabilities in continuing operations Ravenswood (Australia) $’000 13,797 Syama (Mali) $’000 87,665 Bibiani (Ghana) $’000 17,731 Corp/ Other $’000 3,225 Treasury $’000 - 77,314 385,712 78,405 296,322 58,228 105,623 16,221 8,483 - - For the year ended 30 June 2016 Capital expenditure Segment assets in continuing operations (restated) Segment liabilities in continuing operations Ravenswood (Australia) $’000 6,586 Syama (Mali) $’000 28,705 Bibiani (Ghana) $’000 9,283 Corp/ Other $’000 675 Treasury $’000 - 59,682 331,052 63,736 37,871 47,226 81,677 17,114 7,910 - - Total $’000 122,418 837,753 188,555 Total $’000 45,250 492,341 153,927 92 Resolute Mining Limited | Annual Report 2017 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 2017 $'000 282,060 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 282,060 (34,558) 247,502 2016 $'000 79,873 79,873 (26,456) 53,417 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 and short term deposits Counterparties with external credit ratings A+ AA- B Counterparties without external credit ratings Total cash at bank and short term deposits Recognition and measurement 191,881 89,155 75 949 79,271 14 113 475 282,060 79,873 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$5.8 million of cash and cash equivalents at 30 June 2017 (2016: A$37 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 (2017: A$3.8 million; 2016: A$28.1 million equivalent) and Euro (2017: A$1.5 million; 2016: A$8.6 million equivalent). Average interest rates earned on cash and cash equivalents during the period was 2.2% (2016: 0.7%). 93 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements C: Cash, Debt and Capital C.1 Cash (continued) Reconciliation of net profit from continuing operations after income tax to the net operating cash flows Net profit from ordinary activities after income tax Add/(deduct): 2017 $'000 (Restated) 2016 $'000 166,096 200,732 Share based payments including employee long term incentive costs 1,184 1,040 Loss on sale of property, plant and equipment Profit on sale of available for sale financial assets Rehabilitation and restoration provision accretion 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 Realised gain on investment in associate Unrealised gain on forwards contracts Reversal of provision of accounts receivable Share of associates’ losses Non cash finance costs Changes in operating assets and liabilities: Decrease in receivables Decrease/(increase) in inventories Decrease in prepayments Decrease/(increase) in stripping activity asset (Decrease)/increase in payables Decrease in current tax balances Increase in deferred tax balances Decrease in operating provisions Net operating cash flows 94 193 (200) 1,182 (1,783) 585 (99) 1,122 (93) 19,811 39,215 - (46,151) 5,238 (25,888) - - 20,795 3,086 (11,424) (14,404) (864) (2,629) - - (529) 1,799 61 - 577 1,557 5,811 (15,610) 43,156 1,196 1,231 12,645 (26,487) 27,678 (5,044) 3,118 (15,333) - - (7,531) (5,858) 186,384 192,797 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements C: Cash, Debt and Capital C.1 Cash (continued) Cash flow by segment For the year ended 30 June 2017 Cash flow by segment, including gold bullion, and gold shipped but unsold and held in metal accounts Reconciliation of cash flow by segment to the cash flow statement: Movement in gold shipped but unsold and held in metal accounts Mark to market movement in gold unsold Movement in bank overdraft, including foreign exchange movements Exchange rate adjustment in cash on hand Movement in cash and cash equivalents per consolidated cash flow statement For the year ended 30 June 2016 Cash flow by segment, including gold bullion, and gold shipped but unsold and held in metal accounts Reconciliation of cash flow by segment to the cash flow statement: Movement in gold shipped but unsold and held in metal accounts Mark to market movement in gold unsold Movement in bank overdraft, including foreign exchange movements Exchange rate adjustment in cash on hand Cash flows from discontinued operation Movement in cash and cash equivalents per consolidated cash flow statement Ravenswood (Australia) $’000 Syama (Ghana) $’000 Bibiani (Ghana) $’000 Unallocated (b) Corp/ Other $’000 Treasury $’000 Total $’000 16,646 48,160 (16,089) (20,460) 151,903 180,160 22,071 (31) (8,102) 248 194,346 51,833 107,784 (11,994) (5,658) (95,930) 46,035 22,074 84 3,164 1,655 (2,374) 70,638 95 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements C: Cash, Debt and Capital C.2 Interest bearing liabilities Current Lease liabilities Bank overdraft - ref C3.1 Recognition and measurement 2017 $'000 - 34,558 34,558 2016 $'000 222 26,456 26,678 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. Resolute has a Security Trust Deed in place with various banks. The total assets of the entities over which security exists amounts to $805.901m (2016: $481.143m). $88.078m (2016: 61.395m) of these assets relate to property plant and equipment. Finance leases 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. Interest bearing liabilities The Group’s interest bearing liabilities have a fair value of $34.558m (2016: $26.816m) compared to the carrying value of $34.558m (2016: $26.678m). The differences between the fair value and carrying amount are capitalised borrowing costs. The Group held nil interest bearing liabilities at 30 June 2017 (2016: Nil) in currencies other than Australian dollars or a different currency to that of the functional currency of the company which holds the item. Average interest rates charged on interest bearing liabilities at period end was 8.0% (2016: 8.0%). 96 Resolute Mining Limited | Annual Report 2017 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: 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 liabilities Finance Leases Due within one year Total minimum lease payments Less finance charges Present value of minimum lease payments C.3 Financing facilities C3.1 Bank overdraft 2017 $'000 2016 $'000 - - 35,918 28,047 - 35,918 (1,360) 34,558 - 28,047 (1,369) 26,678 - - - - 224 224 (2) 222 The current facility with the Bank Du Mali SA is in place and is subject to an annual revision in approximately June 2018. As at 30 June 2017 nil of the facility was unused. C3.2 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$27.070m of Environmental Performance Bond Facilities. Both of these facilities are fully drawn and expire on 31 December 2019. 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) (viii) 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, 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. 97 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements C: Cash, Debt and Capital C.3 Financing facilities (continued) C3.2 Syndicated facilities (continued) 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. C.4 Contributed Equity Ordinary share capital: 736,982,768 ordinary fully paid shares (2016: 655,632,994) Movements in contributed equity, net of issuing costs: Balance at the beginning of the year Placement of shares to institutional investors (net of costs) Shares issued pursuant to the Osisko Share Purchase Agreement (net of costs) ¹ Exercise of 130,000 unlisted options at $1.18 per share Conversion of convertible notes into 14,050,000 shares at $1.06 per share Balance at the end of the year 2017 $'000 2016 $'000 544,987 395,198 395,198 147,092 2,544 153 - 380,305 - - - 14,893 544,987 395,198 ¹This relates to the purchase of 21,868,000 shares in Kilo Goldmines which resulted in the issue of 1,457,867 Resolute shares. 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.11 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. 98 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements C: Cash, Debt and Capital C.5 Other reserves Reserve Nature and purpose Net unrealised gain/(loss) reserve Convertible notes equity reserve Share options equity reserve Employee benefits equity reserve Foreign currency translation reserve This reserve records fair value changes on available for sale investments. This reserve records the value of the equity portion (conversion rights) of the convertible notes. The equity reserve records the fair value of share options issued. 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. Represents exchange differences arising on translation of foreign controlled entities. 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 2017 is 0% (2016: 0%). 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 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 30 June 2017 Cash 282,060 1,965 1,965 1,965 1,965 Total increase/(decrease) 1,965 1,965 1,965 1,965 560 560 560 560 (458) (458) (458) (458) 30 June 2016 Cash Total increase/(decrease) 79,873 (350) (350) (350) (350) 350 350 350 4,218 4,218 (3,451) (3,451) 350 4,218 4,218 (3,451) (3,451) 99 Resolute Mining Limited | Annual Report 2017 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 2017 $'000 5,748 5,748 2016 $'000 7,005 7,005 The credit quality of receivables can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates: Counterparties with external credit ratings AA+ Counterparties without external credit ratings * Group 1 Total trade receivables 2017 $'000 2016 $'000 511 157 5,237 6,848 5,748 7,005 *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 $5.3m receivables at 30 June 2017 (2016: Nil) in currencies other than Australian dollars or in a different currency to that of the functional currency of the company which holds the item. 100 Resolute Mining Limited | Annual Report 2017 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 end of year 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 2017 $'000 - - - - - - 3,298 270 627 1,132 376 45 2016 $'000 (10,293) 529 - 10,427 (663) - 2,462 1,624 42 - 2,877 - 5,748 7,005 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 2017 $'000 (Restated) 2016 $'000 37,411 20,829 58,240 209 90,527 53,098 30,699 14,972 45,671 11,460 66,397 50,494 202,074 174,022 ¹ Resolute retains 244oz of gold bullion on hand at 30 June 2017 with a market value of $0.4m (2016: 12,632oz with a market value of $22m). 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. 101 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements D: Other assets and liabilities D.3 Other financial assets and liabilities Available for sale financial assets Shares at fair value - listed Other financial assets Environmental bond - restricted cash (face value approximates fair value) Other Financial derivative assets Gold forwards at fair value - current Financial derivative liabilities Gold forwards at fair value - current Gold forwards at fair value - non-current 2017 $'000 2016 $'000 3,595 427 3,570 3,699 81 - 3,651 3,699 2,214 - - - - 151 264 415 Gold forward sales are deliverable at an average price of A$1,800 an ounce for a total of 12,000 ounces between July 2017 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 $3.570m (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% (2016: 0.0%). 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 did not hedge account for these instruments. Movements in fair value are accounted for through the consolidated statement of comprehensive income. 102 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements D: Other assets and liabilities D.4 Payables Trade creditors Accruals 2017 $'000 36,331 28,821 65,152 2016 $'000 11,547 21,820 33,367 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 Provisions Current Site restoration Employee entitlements ¹ Dividend payable Withholding taxes Other provisions Non-Current Site restoration Employee entitlements 2017 $'000 2016 $'000 715 1,503 16,806 26,111 135 262 808 83 240 391 18,726 28,328 64,710 1,430 66,140 63,864 1,275 65,139 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 that period. that Development Period only andSOMISY’s position for payments during is not liable is it 103 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements D: Other assets and liabilities D.5 Provisions (continued) 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 an 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$11.5m (CFA 5,157,144,561) to INPS in instalments between 1 July 2016 and 30 June 2018. The instalments paid to date under this Settlement Agreement totalled A$4.6m (CFA 2,172,023,029) as at September 2016, followed by an additional A$1.5m (CFA 672,023,029) paid in December 2016, A$0.9m (CFA 385,516,417) paid in March 2017 & $0.9m (CFA 385,516,417) in June 2017. These are to be followed by 4 more instalments of A$0.9m (CFA 385,516,417) each in September and December 2017 and then in March and June 2018. The Settlement Agreement incorporated the waiving of some penalties included in the assessments. 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 demanded by the State of Mali in breach the terms of the Establishment Convention. Up to 30 June 2017, CFA 5.424b (A$12.290m) has been paid to the INPS department (CFA 1.947b (A$4.412m) paid in March, July, August and September 2012) and CFA 3.476b (A$7.878m) as per above. Successful negotiations will see the monies paid to date in breach of the Establishment Convention returned to SOMISY. 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 104 2017 $'000 2016 $'000 65,367 1,182 1,310 (1,783) (651) - 62,607 1,122 808 (93) 1,164 (241) 65,425 65,367 715 64,710 65,425 1,503 63,864 65,367 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements D: Other assets and liabilities D.5 Provisions (continued) Key estimates and judgements Restoration 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 Key financial and capital risks in this section Interest rate risk, diesel price risk and foreign exchange risk management Refer to About this Report (page 74) and Section C (page 93) 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 Audit and Risk 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 sensitivity to a reasonably possible change in foreign exchange rates with all other variables held constant: Foreign exchange risk -10% +10% Carrying Amount $'000 Profit $'000 Equity $'000 Profit $'000 Equity $'000 3,651 65,152 3,699 33,367 288 (446) (158) 288 (339) (51) 288 (446) (158) 288 (339) (51) (227) (227) 365 138 365 138 (235) (235) 277 42 277 42 30 June 2017 Other financial assets Payables Total (decrease)/increase 30 June 2016 Other financial assets Payables Total (decrease)/increase 105 Resolute Mining Limited | Annual Report 2017 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 2017. 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 Commitments Other commitments not disclosed elsewhere in this report include: Randgold/ Syama Royalty 2017 $'000 691 12,911 13,602 2016 $'000 608 613 1,221 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 2017, Resolute’s 80% attributable share of Syama’s project to date gold production was 1,093,864 ounces of gold. 106 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements E: Other items E.2 Leases and other commitments (continued) Commitments (continued) 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 2017 $'000 2,180 2,180 2016 $'000 - - 2017 $ 2016 $ 179,360 182,000 - 21,950 179,360 203,950 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 Amounts received or due and receivable by non Ernst & Young firms for auditing 52,894 38,800 232,254 242,750 35,690 67,130 107 Resolute Mining Limited | Annual Report 2017 2017 $'000 2016 $'000 2017 $'000 2016 $'000 Kilo Goldmines Ltd Manas Resources Ltd Notes to the Financial Statements E: Other items E.4 Investments in associates Continuing Operations Listed Shares held in associates (No. of shares) CA$0.135 warrants, expiring 25 August 2018 (No. of warrants) Percentage of ownership (%) 3,986 46,568,000 24,700,000 27.44% (b) Movements in the carrying amount of the Group's investment in associates At 1 July Purchase of investment Share of loss after income tax At 30 June - 5,485 (1,499) 3,986 (c) Fair value of investment in listed associates Market value of the Group's investment as at 30 June 1,627 (d) Summarised financial information The following table illustrates summarised financial information relating to the Group's associates: Extract from the associates' statement of financial position Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets Share of associates' net assets 3,485 4,856 8,341 123 675 798 7,543 2,070 Extract from the associates' statement of comprehensive income: Revenue Loss before tax, loss for the year and total comprehensive loss - (6,781) - - - - - - - - - - 108 - - - - - - - - - 1,854 523,899,835 - 19.90% - 2,155 (301) 1,854 2,096 10,666 1,913 12,579 161 - 161 12,418 2,358 (5,498) - - - - - - - - - - - - - - - - - - - Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements E: Other items E.5 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 Amber Gold Cote d’Ivoire SARL, Cote d'Ivoire Resolute (CDI Holdings) Limited Carpentaria Gold Pty Ltd, Aust. Resolute Mining Limited Drilling and Mining Services Limited, Ghana Resolute (Bibiani) Limited Excalibur Cote d’Ivoire SARL, Cote d'Ivoire Resolute (CDI Holdings) Limited Geb and Nut Resources SARL, Cote d'Ivoire Goudhurst Pty Ltd, Aust.1 (a) Resolute Cote D’Ivoire SARL Resolute (Treasury) Pty Ltd Mensin Gold Bibiani Limited, Ghana Resolute (Bibiani) Limited Nimba Resources SARL, Cote d'Ivoire Resolute (CDI Holdings) Limited Noble Mining Ghana Limited, Ghana Resolute (Bibiani) Limited, Aust.2 (a) Resolute (CDI Holdings) Limited, Aust. 3 (a) Resolute (Bibiani) Limited Resolute Mining Limited Resolute Mining Limited Resolute Cote D’Ivoire SARL, Cote d'Ivoire Resolute (CDI Holdings) Limited Resolute Egypt (Australia) Pty Ltd, Aust. Resolute Mining Limited Resolute Egypt (Australia) 2 Pty Ltd, Aust. Resolute Egypt Pty Ltd, Egypt Resolute Mining Limited Resolute Egypt (Australia) Pty Ltd Resolute Egypt (Australia) 2 Pty Ltd Resolute Exploration SARL, Mali Resolute (Finkolo) Limited, Aust.4 (a) Resolute (Ghana) Limited, Ghana Resolute Mali S.A.,Mali Resolute (Somisy) Limited, Aust.5 (a) Resolute (Finkolo) Limited Resolute Mining Limited Resolute Mining Limited Resolute (Somisy) Limited Resolute Mining Limited Resolute (Treasury) Pty Ltd, Aust. (a) Resolute Mining Limited Societe des Mines de Finkolo SA, Mali Resolute (Finkolo) Limited Societe des Mines de Syama S.A., Mali Resolute (Somisy) Limited Percentage of Shares Held by Consolidated Entity 2017 % 2016 % 100 100 100 100 80 100 90 100 100 100 100 100 100 100 50 50 100 100 100 100 100 100 85 80 100 100 100 100 - 100 90 100 100 100 100 100 - - - - 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. 1 Name changed to Resolute Corporate Services Pty Ltd effective 4 July 2017 2 Previously Resolute (Bibiani) Limited, Jersey 3 Previously Resolute (CDI Holdings) Limited, Jersey 4 Previously Resolute (Finkolo) Limited, Jersey 5 Previously Resolute (Somisy) Limited, Jersey 109 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements E: Other items E.5 Subsidiaries and non-controlling interests (continued) 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 2017 $'000 (Restated) 2016 $'000 (18,372) (49,236) (2,203) (2,211) 3,045 3,072 (17,530) (48,375) 29,732 28,943 5 (12) (23) (145) 29,725 28,775 The summarised financial information of subsidiaries with non-controlling interests is provided below. This information is based on amounts before inter-company eliminations. 2017 $'000 (Restated) 2016 $'000 2017 $'000 2016 $'000 2017 $'000 2016 $'000 Somisy Mensin Finkolo Statement of Comprehensive Income Revenue Gain/(loss) for the period 381,293 372,938 136,740 145,180 Total comprehensive income/(loss) for the period 136,740 145,180 Summarised Statement of Financial Position - 50 50 - (236) (236) - (934) (934) - (957) (957) Current assets Non-current assets Current liabilities Non-current liabilities - External Non-current liabilities - Intra Resolute Mining Limited Group 214,194 240,457 4,030 3,341 305 42 230,255 145,946 73,569 58,856 23,218 21,897 (80,518) (59,054) (1,845) (2,203) (1,083) (32,520) (33,237) (13,984) (14,504) - (29) - (389,291) (502,507) (427,281) (424,356) (28,187) (25,542) Total (deficiency)/equity (57,880) (208,395) (365,511) (378,866) (5,747) (3,632) Summarised Statement of Cash Flow Operating 126,159 125,041 939 (2,377) (897) (1,013) Investing Net increase/(decrease) in cash and cash equivalents (77,999) (17,257) (17,028) (9,617) (1,368) (567) 48,160 107,784 (16,089) (11,994) (2,265) (1,580) 110 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements E: Other items E.6 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 Etruscan Resources Bermuda Ltd/N’Gokoli Est JV¹ Resolute Cote D’Ivoire SARL Geb and Nut Resources SARL/Geb and Nut JV Percentage of Interest Held 2017 % 60% 80% 2016 % 60% 0% ¹ Interests in joint operations greater than 50% have been accounted for as joint operations as all decision making requires unanimous agreement. E.7 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) Profit for the year from a discontinued operation Earnings per share: Basic earnings per share of discontinued operation Diluted earnings per share of discontinued operation The net cash flows of the discontinued operation are as follows: Operating cash flows Net cash outflow 2017 $'000 - - - - - - - - 2016 $'000 - (1,381) 46,151 44,770 6.97 cents 6.80 cents (2,374) (2,374) (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. 111 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements E: Other items E.8 Subsequent events On 23 August 2017, the Company announced a final dividend on ordinary shares in respect of the 2017 financial year of 2.0 cents per share. The dividend has not been provided for in the 30 June 2017 financial statements. E.9 Related party disclosures (i) RML is the ultimate Australian holding company and there is no controlling entity of RML at 30 June 2017. E.10 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 of Resolute Mining Limited Total comprehensive profit of Resolute Mining Limited 2017 $'000 152 (Restated) 2016 $'000 73 463,578 317,639 (1,214) (1,219) 462,359 545,029 (646) (651) 316,988 395,196 (94,404) (89,945) 549 5,793 5,364 28 462,359 6,743 6,743 549 5,793 5,364 31 316,988 167,552 167,552 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 2017 (2016: nil). E.11 Employee benefits and share based payments Salaries Superannuation Share based payments expense Total employee benefits charged to profit and loss 2017 55,453 3,029 2,129 2016 58,833 2,870 1,716 60,611 63,419 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. 112 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements E: Other items E.11 Employee benefits and share based payments (continued) Key management personnel Details of remuneration provided to key management personnel are as follows: Short-term employee benefits Post-employment benefits Long-term employment benefits Share-based payments 2017 $ 2016 $ 4,295,562 2,931,464 240,858 50,089 1,212,280 431,383 41,878 407,916 5,798,789 3,812,641 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. 2017 2016 Option Category Opening Number of Options Lapsed During the Year Exercised During the Year Closing Number of Options I J K L M N Weighted average exercise price - - - - 130,000 - - - - - - - - - (130,000) 545,400 (545,400) - 675,400 (545,400) (130,000) 1.52 1.52 1.18 - - - - - - - - Opening Number of Options 33,000 90,000 Lapsed During the Year Closing Number of Options (33,000) (90,000) 2,000,000 (2,000,000) 756,333 (756,333) 130,000 - 647,400 (102,000) - - - - 130,000 545,400 3,656,733 (2,981,333) 675,400 1.46 1.39 1.72 Fair value of option at grant date 0.61 0.73 0.70 0.72 0.66 0.98 The weighted average remaining contractual life for the share options outstanding as at 30 Jun 2017 is 0 years (2016:0.5 years). 113 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements E: Other items E.11 Employee benefits and share based payments (continued) Performance rights plan A new Performance Rights Plan was implemented in 2016.The performance rights plan is broken down between: Performance Rights Plan Category Type of employee Level 1 Level 2 Level 3 Level 4 Special Managing Director and CEO Executive Team reporting to MD Site General Managers Other Participants as recommended by the MD Special, one-off awards as recommended by the MD Plan category Level 1 Grant and frequency¹ Annually set at 100% of fixed remuneration for the Managing Director & CEO Level 2 Annually set at 65% of fixed remuneration Level 3 Annually set between 30% and 50% of fixed remuneration Level 4 Annually set between 10% and 20% of fixed remuneration Special Varies          Performance measures  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. Performance period 3 years 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. 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. 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. 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. 3 years 3 years 3 years 3 years ¹ Grant sizes have been changed from 1 July 2016 onwards. Refer to the Remuneration Report for further details. 114 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements E: Other items E.11 Employee benefits and share based payments (continued) Performance rights on issue Level 1 Level 1 Level 2 Level 2 Band 1 to 4 Band 1 Band 1 Band 1 As at 30 June 2017 Changes during current period Increase through issue of performance rights to eligible employees (Level 2) Increase through issue of performance rights to eligible employees (Band 1 to 4) Increase through issue of performance rights to eligible employees (Band 1 to 4) Increase through issue of performance rights to eligible employees (Band 1) Increase through issue of performance rights to eligible employees (Band 1) Increase through issue of performance rights to eligible employees (Band 1) Decrease through conversion of shares upon vesting of performance rights (Level 1) Decrease through lapsing of performance rights (Level 1) Decrease through conversion of shares upon vesting of performance rights (Level 2) Decrease through lapsing of performance rights (Level 2) 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 01/07/14 2,250,597 01/07/15 5,083,995 28/08/15 3,822,624 31/08/15 470,478 24/10/16 3,025,322 29/11/16 400,000 29/11/16 600,000 29/11/16 1,000,000 16,653,016 $0.50 $0.25 $0.25 $1.89 $1.27 $1.21 $1.20 $1.18 $0.62 Vesting Date 30/06/17 30/06/18 30/06/17 30/06/18 30/06/19 30/06/18 30/06/19 30/06/20 Date of Change Total Number Fair Value per Right at Grant Date Vesting Date 31/08/16 575,145 $1.89 30/06/18 24/10/16 2,900,389 $1.27 30/06/19 16/01/17 208,000 $1.27 30/06/19 29/11/16 400,000 $1.21 30/06/18 29/11/16 600,000 $1.20 30/06/19 29/11/16 1,000,000 $1.18 30/06/20 31/08/16 (1,655,638) 31/08/16 (1,497,958) 31/08/16 (1,502,764) 31/08/16 (163,401) 24/01/17 (512,107) 24/01/17 (60,630) Decrease through lapsing of performance rights (Band 1 to 4) 24/01/17 (47,787) Decrease through lapsing of performance rights (Level 2) Decrease through lapsing of performance rights (Level 2) 17/03/17 (212,620) 17/03/17 (24,877) Decrease through lapsing of performance rights (Band 1 to 4) 17/03/17 (19,403) Decrease through lapsing of performance rights (Level 2) Decrease through lapsing of performance rights (Level 2) 11/04/17 (173,051) 11/04/17 (19,160) Decrease through lapsing of performance rights (Band 1 to 4) 11/04/17 (15,877) $0.43 $0.43 $0.56 $0.25 $0.25 $1.89 $1.27 $0.25 $1.89 $1.27 $0.25 $1.89 $1.27 30/06/16 30/06/16 30/06/16 30/06/17 30/06/17 30/06/18 30/06/19 30/06/17 30/06/18 30/06/19 30/06/17 30/06/18 30/06/19 115 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements E: Other items E.11 Employee benefits and share based payments (continued) The following table lists the key variables used in the valuation of performance rights: 2017 2016 Hurdle Number of performance rights issued Underlying share price ($) Exercise price ($) Risk free rate Volatility factor Dividend yield Period of the rights from grant date (years) Effect of performance hurdles Value of performance right at grant date (Band 1 to 4) Value of performance right at grant date (Level 2) Reserve and resources rights TSR rights Service rights Reserve and resources Total rights TSR rights Service rights Total 777,097 2,331,292 575,145 3,683,534 1,397,193 4,191,578 5,838,967 11,427,738 1.68 1.68 1.89 0.31 0.31 0.25 - 1.85% 80% 1.10% - 1.85% 80% 1.10% - 1.44% 76% 0% - 2.08% 78% 0% - 2.08% 78% 0% - 1.79% 74% 0% 3 3 2 3 3 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 $1.63 $1.15 $1.89 Value of performance right at grant date (Level 1) $0.31 $0.23 $0.25 $1.89 n/a $1.89 $0.25 n/a $0.25 E.12 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. 116 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements E: Other items E.12 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: Title Application Date for Group Detail AASB 9 – Financial Instruments 1 January 2018 AASB 15 - Revenue from Contracts with Customers 1 January 2018 AASB 2014-10 - Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture AASB 2016-5 - Amendments to Australian Accounting Standards – Classification and Measurement of Share- based Payment Transactions 1 January 2018 1 January 2018 AASB Interpretation 22 - Foreign Currency Transactions and Advance Consideration 1 January 2018 AASB16 – Leases 1 July 2019 A finalised version of AASB 9 which contains accounting requirements for financial instruments, replacing AASB 139 Financial Instruments: Recognition and Measurement. The standard contains requirements in the areas of classification and measurement, impairment, hedge accounting and de-recognition. Based on an initial impact assessment, the new standard is not expected to significantly impact the recognition and measurement of financial instruments. 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. Based on an initial impact assessment, the new standard is not expected to significantly impact revenue recognition. The amendments clarify that a full gain or loss is recognised when a transfer to an associate or joint venture involves a business as defined in AASB 3 Business Combinations. Any gain or loss resulting from the sale or contribution of assets that does not constitute a business, however, is recognised only to the extent of unrelated investors’ interests in the associate or joint venture. This Standard amends AASB 2, clarifying how to account for certain types of share- based payment transactions such as the effect of vesting and non-vesting conditions on the measurement of cash-settled share-based payments, share-based payment transactions with a net settlement feature for withholding tax obligations and a modification to the terms and conditions of a share-based payment that changed the classification of the transaction from cash-settled to equity-settled. The Interpretation clarifies that in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognises the non- monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine a date of the transactions for each payment or receipt of advance consideration. AASB 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 includes non-cancellable lease payments (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. AASB 16 contains disclosure requirements for lessees. While in early stages of assessment, the Group has yet to fully assess the impact on the Group’s financial results when it is first adopted for the year ended 30 June 2020. 117 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements E: Other items E.13 Restatement of comparative information During the preparation of the 31 December 2016 financial report it was noted that there was a misstatement in the Gold in Circuit and Gold Bullion (“GIC”) valuation model for the Syama gold mines sulphide GIC. The financial modelling caused the book value of GIC to be overstated at 30 June 2016 by $11.990m. It should be noted that all of the restatements are non-cash in nature, and do not affect reported cash flows. Furthermore, there is no change or impact on: the contained ounces of GIC, nor its market value at those balance dates;   Resolute’s enterprise value;  banking covenant ratios;  the group’s liquidity position;  reported gold production, cash costs per ounce of production, and all-in sustaining costs per ounce of production; and,  any of the information disclosed in the group’s quarterly reports. Restatements for the affected 30 June 2016 financial statement line items for the prior periods are as follows: Consolidated Statement of Comprehensive Income Costs of production relating to gold sales Gross profit before depreciation, amortisation and other operating costs Gross profit from operations Profit for the year from continuing operations Profit for the year Profit attributable to: Members of the parent Non-controlling interest Total comprehensive income attributable to: Members of the parent Non-controlling interest Earnings per share for net profit attributable to the ordinary equity holders of the parent: Basic earnings per share Diluted earnings per share Earnings per share for net profit from continuing operations attributable to the ordinary equity holders of the parent: Basic earnings per share Diluted earnings per share Restated for the year ended 30-Jun-16 $'000 As previously stated for the year ended 30-Jun-16 $'000 (325,207) (313,217) 229,417 154,711 155,962 200,732 171,957 28,775 126,916 29,794 241,407 166,701 168,157 212,927 181,713 31,214 140,365 28,335 26.79 cents 26.11 cents 28,31 cents 27.59 cents 19.82 cents 19.31 cents 21.34 cents 20.79 cents 118 Resolute Mining Limited | Annual Report 2017 Notes to the Financial Statements E: Other items E.13 Restatement of comparative information (continued) Consolidated Statement of Financial Position Inventories Total current assets Total assets Net assets Reserves Accumulated losses Total equity attributable to equity holders of the parent Non-controlling interest Total equity Restated for the year ended As previously stated for the year ended 30-Jun-16 $'000 30-Jun-16 $'000 174,022 263,504 492,341 338,414 33,427 (41,836) 386,789 (48,375) 338,414 186,012 275,494 504,331 350,404 33,263 (32,080) 396,381 (45,977) 350,404 119 Resolute Mining Limited | Annual Report 2017 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 2017 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) c) d) the financial statements and notes also comply with International Financial Reporting Standards as disclosed throughout this report; 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, 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 2017. On behalf of the Board J.P. Welborn Director Perth, Western Australia 23 August 2017 120 Resolute Mining Limited | Annual Report 2017 121 Resolute Mining Limited | Annual Report 2017122 Resolute Mining Limited | Annual Report 2017123 Resolute Mining Limited | Annual Report 2017124 Resolute Mining Limited | Annual Report 2017125 Resolute Mining Limited | Annual Report 2017126 Resolute Mining Limited | Annual Report 2017127 Resolute Mining Limited | Annual Report 2017128 Resolute Mining Limited | Annual Report 2017Shareholder Information Substantial shareholders at 28 September 2017 Number held Percentage Ordinary shares ICM Limited Van Eck Associates Corporation Distribution of equity securities as at 28 September 2017 Size of Holding 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - and over Total equity security holders Number of equity security holders with less than a marketable parcel 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 28 September 2017 Name 1 2 3 4 5 6 ICM Limited Van Eck Associates Corporation Dimensional Fund Advisors LP L1 Capital Pty Ltd. The Vanguard Group, Inc. BlackRock, Inc. 7 Oppenheimer Funds, Inc. 8 State Street Corporation 9 Wellington Management Company, LLP 10 IFM Investors 11 Commonwealth Bank Group 12 Lemanik S.A. 13 Lazard LLC 14 Credit Suisse Group 15 LSV Asset Management 16 Investec Group 17 Baker Steel Capital Managers LLP 18 UBS AG 19 Vinva Investment Management Limited 20 Tribeca Investment Partners Pty Ltd. 148,188,154 69,377,844 19.99% 9.36% Ordinary Shares 1,571 2,639 1,322 2,090 269 7,891 788 Number of ordinary shares 148,188,154 % of Issued Capital 19.99% 69,377,844 33,384,178 23,514,033 23,106,731 16,961,103 16,620,478 15,596,311 12,592,562 12,256,595 12,219,827 11,796,233 11,356,133 10,777,798 10,556,200 10,553,525 9,847,000 8,801,097 5,033,150 4,404,015 9.36% 4.50% 3.17% 3.12% 2.29% 2.24% 2.10% 1.70% 1.65% 1.65% 1.59% 1.53% 1.45% 1.42% 1.42% 1.33% 1.19% 0.68% 0.59% 466,942,967 62.97% 129 Resolute Mining Limited | Annual Report 2017 This page is intentionally left blank 130 Resolute Mining Limited | Annual Report 2017R e s o l u t e | A n n u a l R e p o r t 2 0 1 7 ASX:RSG | www.rml.com.au 

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