ASX:RSG | www.rml.com.au
Mine Gold.
Create Value.
2018 Annual Report
for the period 1 July 2018 to 31 December 2018
Contents
About Resolute
FY18 Highlights
Managing Director’s Review
Health and Safety
Operations Overview
Syama Gold Mine
Ravenswood Gold Mine
Bibiani Gold Mine
Ore Reserves and Mineral Resources
1
3
4
6
7
8
14
16
17
Financial Overview
People
Sustainability
Community Development
Environment
Governance
Risk Management
Financial Report
Shareholder Information
21
23
25
26
28
30
33
37
124
Scope of this Report
The Resolute 2018 Annual Report presents the
operating and financial results for the six-month
period from 1 July 2018 to 31 December 2018 and has
been prepared for Resolute’s stakeholders in line
with Resolute’s statutory and regulatory obligations.
As part of the process of seeking a listing on the
London Stock Exchange (LSE), and to synchronise
the consolidation of Resolute’s African subsidiary
companies’ accounts, Resolute has chosen
to move from a 30 June year end for financial
reporting purposes to the more conventional
calendar reporting period for LSE companies of a
31 December year end. This change has resulted in
this Annual Report covering a transitional six-month
reporting period.
Resolute is committed to the ambition of being an
innovative, multi-mine, low cost, African-focused
gold producer. The information contained within this
report outlines Resolute’s financial performance and
provides details on our efforts to deliver enduring
value to all our stakeholders in a manner that
reflects the Company’s values.
All references to Resolute, the Company, we, us
and our refer to Resolute Mining Limited (ABN
097 088 689) and its subsidiaries. All dollar figures
are in Australian dollar currency unless otherwise
stated. All references to FY18 are for the six-month
period from 1 July 2018 to 31 December 2018 while
all references to FY19 are for the 12-month period
from 1 January 2019 to 31 December 2019 unless
otherwise stated.
Resolute Mining Limited | 2018 Annual Report
About Resolute
Resolute is a successful gold miner with more than 30 years of experience as an explorer,
developer, and operator of gold mines in Australia and Africa which have produced more
than 8 million ounces of gold.
Resolute currently owns three gold mines, the
Syama Gold Mine in Mali (Syama), the Ravenswood
Gold Mine in Australia (Ravenswood) and the
Bibiani Gold Mine in Ghana (Bibiani). Resolute has
a pathway to annual gold production in excess of
500,000 ounces (oz) from a Global Mineral Resource
base of 16.6 million ounces (Moz) of gold.
Ravenswood has been consistent performer and
an integral part of Resolute’s business for more
than a decade. The highly successful Mt Wright
Underground Mine continues to produce as the
Company transitions back to a large scale, low cost
open pit mining operation which will extend the
mine life to at least 2032.
Syama is a world class, robust, long-life asset
capable of producing more than 300,000oz of gold
per annum from existing processing infrastructure.
Resolute is currently commissioning the world’s first
fully automated underground gold mine at Syama
which will deliver a low cost, large scale operation
with a mine life beyond 2032.
Bibiani is a potential long life, high margin operation
and represents a growth opportunity for Resolute.
A portfolio of strategic investments in highly
prospective, well managed African-focused gold
exploration companies has been established
to provide a pipeline of future development
opportunities.
Syama
Gold Mine
Mali
Ghana
Bibiani
Gold Mine
Ravenswood
Gold Mine
Australia
Resolute’s Vision
To be an innovative, multi-mine, low cost, African-focused gold producer
Resolute’s Values
BOLD We are determined and unwavering in character, ideas and action
AGILE We adopt new methods, systems and technology to improve performance
COURAGEOUS We take smart risks and make tough decisions
UNITED We work together to achieve what is best for Resolute and our communities
1
1
Resolute Mining Limited | 2018 Annual Report Resolute Mining Limited | 2018 Annual Report
Investing for Growth
2
2
Resolute Mining Limited | Annual Report 2018 FY18 Highlights
Gold Production:
129,199oz
Revenue:
$223 million
Investing Cash Flows:
$181 million
Cash, Bullion and
Listed Investments:
$117 million
All-In Sustaining Cost:
A$1,449/oz
(US$1,050/oz)
Gross Profit from Operations:
$24 million
Total Economic Contributions:
$187 million
Gold in Circuit Inventory:
73,835oz
valued at $134 million
Total Recordable Injury
Frequency Rate:
down to 1.98
Syama Underground –
Commencement of Sublevel Caving:
on time and
on budget
Investing for Growth
3
3
Resolute Mining Limited | 2018 Annual Report Resolute Mining Limited | 2018 Annual Report
Managing
Director’s Review
Over the last 30 years, Resolute has mined more than
8 million ounces of gold from 9 mines in Australia and
Africa. The operational expertise we have developed
over this time provides a strong foundation for our
future success. Resolute is proud to be commissioning
the world’s first fully automated underground mine
which will be powered by the world’s largest site-based
hybrid power plant at Syama in Mali. The successful
delivery of our Syama Underground Mine will allow
us to spread our wings and capitalise on exciting
opportunities to develop and operate large scale, low
cost, long life Resolute gold mines. Our ambitions are
founded in our strong commitment to deliver enduring
value to shareholders and to the communities in which
we operate.
Dear Fellow Shareholders,
It gives me great pleasure to present Resolute’s 2018 Annual Report,
a pivotal six-month period which saw the Company achieve a major
milestone with the commencement of sublevel caving at Syama
on time and on budget. Investing for growth was the theme of
Resolute’s 2018 Financial Year. The Company continues to generate
positive operating cash flows while making significant investments
across our portfolio. We have a clear pathway to annual production
of more than 500,000 ounces of gold from long-life, low cost
operations at the Syama Gold Mine in Mali, the Ravenswood Gold
Mine in Australia and the Bibiani Gold Mine in Ghana.
During the six-month financial period covered by this report, our
operations at Syama and Ravenswood produced 129,199 ounces of
gold at an All-In Sustaining Cost of A$1,449 per ounce (equivalent
to US$1,050 per ounce). Revenue of $223 million generated a gross
profit from operations of $24 million. The Company’s strong balance
sheet and ongoing positive operational cash flows allowed us to
make major investments during the period of $181 million. These
investments in the business are transforming Resolute. Our Syama
Underground Mine is now in an advanced stage of commissioning,
the Ravenswood Expansion Project is undergoing optimisation
to enhance returns, operational readiness planning continues at
Bibiani, and our investment in junior explorers continues to deliver
promising results. We have continued to improve the Company’s
systems and processes with a strong focus on innovation and
adopting best practice technologies. Importantly, our safety
performance strengthened with a material reduction in Total
Recordable Injury Frequency Rate from the prior 12-month period.
Safe work practices are at the core of our business and we will
continue to focus on delivering positive safety outcomes.
4
4
Resolute Mining Limited | 2018 Annual Report At our flagship operation, the Syama Gold Mine in Mali,
we commenced sublevel caving at the new Syama
Underground Mine on time and on budget during
December 2018. Syama is a world class, long life, low
cost asset that will deliver long term benefits to our
shareholders, stakeholders, and local Mali communities.
The team is now focused on the implementation of
our fully automated mining system and ramping up
production. The performance of our new open-pit
satellite mine at Tabakoroni, 35km south of Syama,
has been particularly positive with high grade oxide
ore enabling us to achieve record production from our
oxide processing circuit.
Resolute seeks to be a leader in sustainable and
responsible economic growth in Africa. In November,
we announced plans to build the world’s largest fully
integrated solar hybrid power plant to power Syama.
The new 50 megawatt hybrid power plant, which
includes the latest in solar and battery technologies will
deliver a substantial saving on power costs at Syama.
At our Ravenswood Gold Mine in Queensland,
Australia, we received an extension of the Queensland
Government’s support for the project with the
extension of Prescribed Project status to November
2020. The prolonged life of the Mt Wright Underground
Mine, and the collaborative and proactive approach
to receiving regulatory approvals for our expansion
plans, is allowing further enhancement opportunities
to be identified and progressed. A strategic review
of the Ravenswood Expansion Project commenced
shortly after the conclusion of the 2018 Financial Year
and is focused on optimisation to maximise value for
shareholders.
At our Bibiani Gold Mine in Ghana, we commenced
operational readiness planning during the 2018 Financial
Year in preparation for a re-start of a potential ~100,000
ounce per annum gold mine at All-In Sustaining Costs
of ~US$750 per ounce over a ~10-year mine life.
EExploration continued to create value with
tremendous success from drilling campaigns
undertaken across the Company’s Mali tenement
package. We continued to grow our gold inventory (net
of depletion) which now stands at 16.6Moz of Global
Mineral Resources (including 5.8Moz of Ore Reserves).
Exceptional drilling results from Tabakoroni are building
confidence in the potential for a future stand-alone
underground mining operation at this Syama satellite.
Multi-rig exploration drilling programs will continue
at Syama, Nafolo, and Tabakoroni during the 2019
Financial Year with a view to further extending existing
regional oxide and sulphide resources.
an expanded revolving credit facility. I thank Investec,
BNP Paribas, Nedbank and Citibank for their ongoing
confidence in Resolute as we deliver on our growth
agenda. We continue to actively and responsibly
manage our gold sales and undertake modest hedging
activity at gold prices above our budgeted gold price.
Our active gold sales and hedging activity allows us
to take advantage of gold price volatility, maximise
revenues and protect Resolute’s balance sheet
and near-term cash flows. We are also progressing
workstreams to enable us to list the Company on the
London Stock Exchange during the first half of 2019.
The London Stock Exchange is a natural home for large
mining companies with African exposure and I am
pleased that LSE-focused investors will soon have the
opportunity to invest in Resolute.
Resolute recognises that our ability to operate is
dependent on the support of national governments
and the local communities surrounding our mines. We
are committed to partnering with host governments
and local communities to deliver sustainable economic
and social value. The ongoing success of our business
requires us to ensure the health, safety, and security of
our employees, minimise harm to the environment, and
leave a positive legacy in the communities in which we
work. We look forward to building on the US$2 billion
of economic contributions we have made in Africa and
Australia to date and delivering programs that provide
meaningful long-term benefits to the communities in
which we operate.
We have made significant progress during the 6 months
covered in this report and have a strong platform to
deliver sustainable returns for our shareholders from
our long life mines. I take this opportunity to recognise
the efforts of the entire Resolute team, led by our
Board, my colleagues in the senior executive group,
and our site-based general managers. The efforts of our
employees and contractors has enabled Resolute to
generate positive operating cash flows while investing
for growth.
I am proud of Resolute’s progress and am optimistic
for our future as we progress the ramp-up the Syama
Underground Mine to full production, complete the
strategic review of our Ravenswood operation, increase
our profile in global capital markets through listing
on the London Stock Exchange and deliver on our
growth agenda to generate long-term returns for our
shareholders. I hope you enjoy reading the 2018 Annual
Report.
Strong support from our bankers has allowed the
Company to maximise our financial flexibility through
John Welborn
Managing Director and Chief Executive Officer
5
Resolute Mining Limited | 2018 Annual Report Resolute Mining Limited | 2018 Annual Report
Health and Safety
Resolute is committed to ensuring
the highest health and safety
standards across the business. Our
R-CARE program embodies an
emotive and personal set of beliefs
and behaviours to ensure everyone
contributes in a positive manner to
health and safety.
Resolute’s commitment to the highest health and safety
standards is embodied in its R-CARE program which is based on
the four key principles/actions for all employees and contractors
being Committed, Accountable, Responsible and Empowered.
Committed
• To working safely, all of the
Responsible
• To our families.
time.
• To taking pride, in
everything we do.
• To improving the way we
work.
Accountable
• To the people we work
• To the way we treat others.
• For learning from our
mistakes.
Empowered
• To speak up and share our
with.
ideas.
• For the quality of our work.
• To stop anything we believe
• To the expectations of our
is unsafe.
business.
• To challenge the things, we
could do better.
In FY18, we improved our safety performance achieving a
significant reduction in our total recordable injury frequency
rate to 1.98 (as at 31 December 2018) from 3.23 as at 30 June
2018. A key driver of this has been a targeted program focused
on reducing recordable injuries associated with Resolute’s
contractors. The company-wide focus on effective management
of sub-contractors will continue during 2019 along with
management of key operational risks across the Company’s
operations.
Whilst we are proud of our improved safety performance in FY18,
we recognise that a relentless focus on improvement is required
to achieve an injury free workplace. We continue to work on
continual improvement in safety practices. Key components of
this is a more focused effort on regular inspections of workplaces,
safety interactions and ongoing contractor management.
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6
Resolute Mining Limited | 2018 Annual Report Operations Overview
Resolute Mining Limited | 2018 Annual Report
Units
Syama
Sulphide
Syama
Oxide
Syama
Total
Ravenswood
Total
Total Ore Mined
Total Ore Processed
Grade Processed
Recovery
Gold Recovered
Gold in Circuit
Drawdown/(Addition)
Gold Produced (Poured)
Cash Cost
AISC
t
t
g/t
%
oz
oz
oz
A$/oz
US$/oz
A$/oz
US$/oz
256,009
608,519
864,528
615,855
1,480,383
867,348
720,603
1,587,951
1,178,817
2,766,768
1.94
70.2
37,935
(679)
3.36
84.1
65,379
(9,326)
2.58
78.4
103,314
(10,005)
1.01
92.7
1.91
83.4
35,594
138,908
296
(9,709)
37,256
56,053
93,309
35,890
129,199
1,454
1,052
1,627
1,178
845
611
992
718
1,088
787
1,244
901
1,677
1,215
1,853
1,341
1,252
910
1,449
1,050
In FY18, a total of 129,199 ounces of gold were produced
(poured) at an All-In Sustaining Cost (AISC) of A$1,449/
oz (US$1,050/oz). 128,275 ounces of gold were sold at
an average realised price of A$1,734/oz (US$1,253/oz).
Syama Underground Mine is now in an advanced
commissioning phase as the fully autonomous mining
system is introduced and the mine ramps up to its full
production rate of 2.4Mtpa.
During FY18, 2.8 million tonnes (Mt) of ore was milled at
an average grade of 1.91 g/t of gold for 138,908 ounces
of gold recovered. An additional 9,709 ounces was held
in circuit at the end of FY18 relative to 30 June 2018,
taking the Company’s gold in circuit balance to 73,835
ounces valued at $134 million.
At Syama, FY18 production was 93,309oz at an AISC of
A$1,244/oz (US$901/oz). The highlight of FY18 was the
successful commencement of long hole open stoping
and sublevel caving at the Syama Underground Mine.
First ore was delivered on time and on budget from
the sublevel cave in December 2018 and marked a
pivotal moment in the history of the Company. The
During FY18, a satellite oxide mining operation was
established at Tabakoroni, 35km south of Syama.
Tabakoroni is now providing 100% of oxide mill feed
and has performed extremely strongly since processing
of this material commenced in November 2018.
Gold production from Ravenswood for FY18 was
35,890oz at an AISC of A$1,853/oz (US$1,341/oz).
Underground ore production from Mt Wright was
supplemented by processing of low-grade open pit
stockpiles. Mining at Mt Wright will continue into late
2019 as preparations for the commencement of open
pit mining at Buck Reef West accelerate.
7
7
Resolute Mining Limited | 2018 Annual Report Resolute Mining Limited | 2018 Annual Report
Syama Gold Mine
Syama Underground: the world’s first purpose
built fully automated underground gold mine
to be powered by the world’s largest site-based
hybrid power station.
Syama is located in the south of Mali, West Africa approximately 30km from the Côte
d’Ivoire border and 300km southeast of the capital Bamako. Syama is owned by Société
des Mines de Syama S.A. (SOMISY). Resolute has a 80% interest in SOMISY and the
Government of Mali has a 20% interest in SOMISY.
Syama is a large-scale operation which comprises two separate processing plants:
a 2.4Mtpa sulphide processing circuit and a 1.5Mtpa oxide processing circuit. Ore for
the sulphide circuit in FY18 was sourced from low grade stockpiled material and from
the Syama Underground Mine. Ore for the oxide circuit in FY18 was provided by open
pit mining at a series of satellite orebodies, including Tabakoroni which is owned by
Société des Mines de Finkolo SA (SOMIFI) of which Resolute currently owns 100%
through its wholly owned subsidiary, Resolute (Finkolo) Pty Ltd. The Government of
Mali is entitled to a 10% free carried interest in SOMIFI.
Once the Syama Underground Mine is commissioned, Syama will be capable of
producing over 300,000oz of gold annually.
Overview
In FY18, Syama produced 93,309oz at an AISC of A$1,244/oz (US$901/oz). The highlight
of the reporting period was the successful commencement of long hole open stoping
and sublevel caving at the Syama Underground Mine. First ore was delivered on
time and on budget from the sublevel cave in December 2018 and marked a pivotal
moment in the history of the Company. Resolute also announced the signing of a Joint
Development Agreement with Ignite Energy Projects Pty Ltd (Ignite Energy) for the
development of a 50MW hybrid power plant comprising solar, battery and heavy fuel oil
technologies. Further excellent drilling results also continued to be reported in FY18.
Target Production
300
a
p
z
o
k
LOM AISC
US$
746
/oz
Mine Life
14years
7.9Moz
Mineral Resource
3.4Moz
Ore Reserve
Ore Mined
Ore Milled Head Grade
Recovery
Production
Cash Cost
AISC
(t)
(t)
FY18
864,528
1,587,951
(g/t)
2.58
(%)
78.4
(oz Gold)
(A$/oz)
(A$/oz)
93,309
1,088
1,244
Syama Production and Cost Summary
8
8
Resolute Mining Limited | 2018 Annual Report Sulphide Operations
During FY18, production from the Syama sulphide circuit was 37,256oz at an AISC of A$1,627/oz (US$1,178/oz). Gold
recovery for the period was in line with expectations as the Company treated mixed ore sources; underground ore
was blended with low-grade ore stockpiles which had a direct impact on recovery. AISC is forecast to decline in FY19
as increasing tonnages of higher grade material from the Syama Underground replaces low grade stockpile feed to
the mill.
Ore Mined
Ore Milled Head Grade
Recovery
Production
Cash Cost
AISC
(t)
(t)
FY18
256,009
867,348
(g/t)
1.94
(%)
70.2
(oz Gold)
(A$/oz)
(A$/oz)
37,256
1,454
1,627
Syama Sulphide Production and Cost Summary
All elements of Resolute’s sulphide processing improvement project, Project 85, have been commissioned and are
operating effectively. Significantly, during periods when 100% underground sulphide ore was treated at the back end
of FY18, the Syama processing plant delivered recoveries greater than 85% which provides confidence in Resolute’s
ability to achieve targeted recoveries from Syama.
The ramp-up of the Syama Underground Mine will enable an increasing of higher grade underground ore to be fed
into the mill which will drive greater gold production.
Oxide Operations
During FY18, production from the oxide circuit was 56,053oz at an AISC of A$992/oz (US$718/oz). Oxide production
was initially sourced from stockpiled ore from the northern satellite pits (A21, Alpha, Beta and BA01), located
between 4km and 8km north of the Syama processing plant. Processing of ore sourced from the new Namakan
satellite open pit at Tabakoroni, located 35km south of Syama, commenced in November 2018.
Ore Mined
Ore Milled Head Grade
Recovery
Production
Cash Cost
AISC
(t)
(t)
FY18
608,519
720,603
(g/t)
3.36
(%)
84.1
(oz Gold)
(A$/oz)
(A$/oz)
56,053
845
992
Syama Oxide Production and Cost Summary
Milling characteristics of ore from Tabakoroni were better than anticipated with higher throughput achieved. This
performance was further enhanced by higher processing recoveries, assisted by improved head grades of delivered
ore. Gold produced (poured) improved markedly with the introduction of this higher grade oxide material from
Tabakoroni. Commissioning of the gravity gold circuit was also successfully completed in conjunction with the
commencement of treatment of the Tabakoroni material with an immediate positive impact. Tabakoroni will provide
100% of oxide mill feed at Syama in 2019.
Namakan Open Pit at Tabakoroni
9
Resolute Mining Limited | 2018 Annual Report Resolute Mining Limited | 2018 Annual Report
Start-Up and Commissioning of the Syama Underground
Development of the Syama Underground Mine began in October 2016 and in December 2018, the Company
achieved a major milestone with the extraction of first ore from the southern end of the 1105 level of the sublevel
cave which marked the commencement of the main sublevel caving operation.
Completed Development
1105 Level
Start of
Sublevel Caving
December 2018
3D model of Syama Sublevel Cave showing location of first blast on level 1105
With sublevel caving having commenced, the Company’s
focus is on the ramp-up of mining rates to 200,000
tonnes per month and completion of the remaining key
infrastructure, including the primary ventilation fans and
pump stations.
Commissioning of the new automated fleet is also
progressing. When fully commissioned the autonomous
mining operation will comprise automated long hole
production drilling, loading and haulage from the
underground loading station to the Run of Mine pad
above ground. In addition to lowering costs, automation
will increase safety and productivity at Syama and create
numerous highly skilled jobs in Mali for the life of the mine.
Syama Underground crew
Autonomous primary loader hauling
ore from the 1105 level
10
10
Resolute Mining Limited | 2018 Annual Report Hybrid Power Plant
In November 2018, Resolute announced the signing of a Joint Development Agreement with Ignite Energy for the
development of a new 50 megawatt (MW) hybrid power plant at Syama which will combine solar, battery, and heavy
fuel oil technologies. This innovative project is expected, when constructed, to be the world’s largest fully integrated
hybrid power plant for a standalone mining operation. The new power plant will replace the existing 28MW diesel
fired power station at Syama and is expected to be fully operational by the end of 2020.
Proposed
Solar Hybrid
Power Plant
Syama
Plant
Proposed location of the new Syama Hybrid Power Plant
The new Syama power solution will be funded and
constructed under an Independent Power Producer
model whereby Ignite Energy, under the terms of
an exclusive Power Purchase Agreement, will be
responsible for the design, construction, ownership,
funding, and operation of the new Solar Hybrid Power
Facility on an exclusive basis and will supply power to
Resolute on a guaranteed basis subject to a maximum
tariff over a term of between 12 and 20 years.
The new solar hybrid power solution is expected to
generate savings of up to 40% on the current operating
costs of power at Syama. In addition to the higher
efficiencies of the solar hybrid solution, the replacement
of Resolute’s existing diesel generated power plant
will reduce reliance on, and exposure to, diesel prices.
The new power facility will also provide significant
environmental benefits including lower carbon
emissions as a result of solar power generation and the
greater efficiencies of integrated battery storage hybrid
technology and improved engine technologies.
Syama 50MW Hybrid Power Plant illustration
11
Resolute Mining Limited | 2018 Annual Report Resolute Mining Limited | 2018 Annual Report
12
12
Resolute Mining Limited | 2018 Annual Report Exploration
Tabakoroni
In December 2018, Resolute announced further
exceptional drilling results from the ongoing exploration
program at Tabakoroni. The potential for high grade
sulphide mineralisation was initially identified during the
drill out of Resolute’s existing Ore Reserves of surface
oxide mineralisation at Tabakoroni. Drilling undertaken
during FY18 returned wide zones of gold mineralisation
at grades suitable for underground mining operations.
High grade gold mineralisation has now been
intersected at Tabakoroni over a strike length of more
than 1.5km. Mineralisation remains open at depth and
along strike to the north. Drilling to date has outlined
two zones of coherent high-grade mineralisation each
with a strike length of 500m with widths averaging 10
metres.
Resolute sees excellent upside at Tabakoroni due to
the combination of high grades, a large strike length of
over 1.5km and relatively shallow drilling to a maximum
depth of just 250 vertical metres. Exploration drilling at
Tabakoroni will continue throughout 2019 to fully define
the resource envelope.
Tabakoroni Main Zone Long Section
Syama Deeps and Nafolo
Diamond drilling at Syama Deeps and Nafolo continued
throughout FY18. Results have extended the Nafolo
alteration and mineralisation footprint over a strike
length of 700m and remain open downdip and to the
south.
Drilling results from Nafolo demonstrate potential
expansions to the existing Syama mine plan from
underground mining. Exploration is now focussed
on identifying repetitions of the Nafolo zone to the
south and north along the Syama shear. There is a 6km
strike extent of major shear structure with favourable
mineralisation positions to the south of Syama. Drilling
along strike to the south has identified low grade zones
of similar alteration and mineralisation to Syama. This
program will continue throughout FY19. The upper lens
of Nafolo mineralisation is contiguous with the southern
extensions of the main Syama mineralisation envelope.
As such, the Nafolo mineralisation can potentially
be accessed from existing Syama Underground
infrastructure and may form part of a future expanded
mining operation.
13
Resolute Mining Limited | 2018 Annual Report Resolute Mining Limited | 2018 Annual Report
Ravenswood
Gold Mine
Ravenswood is a proven producing asset with
multiple open pits to support large scale, low
cost, long term production.
Ravenswood is located approximately 95km south-west of Townsville and 65km
east of Charters Towers in north-east Queensland, Australia. Resolute owns 100% of
Ravenswood through its wholly owned subsidiary, Carpentaria Gold Pty Ltd.
Production from Ravenswood in FY18 was 35,890oz at an AISC of A$1,853/oz
(US$1,341/oz). Underground ore production from Mt Wright was supplemented by
processing stockpiled ore from the Nolans East open pit (where mining concluded in
the September Quarter) and other low-grade stockpiles. Overall, production from Mt
Wright was steady, with the majority of ore provided by overdraw from earlier stoping.
The continued success of the overdraw indicates the contribution from Mt Wright
underground will continue into late 2019 as preparations for the commencement of
open pit mining at Buck Reef West accelerate.
Production
115
a
p
z
o
k
LOM AISC
US$
823
/oz
Mine Life
14years
4.8Moz
Mineral Resource
1.7Moz
Ore Reserve
Ore Mined
Ore Milled Head Grade
Recovery
Production
Cash Cost
AISC
(t)
(t)
FY18
615,855
1,178,817
(g/t)
1.01
(%)
92.7
(oz Gold)
(A$/oz)
(A$/oz)
35,890
1,677
1,853
Ravenswood Production and Cost Summary
14
14
Resolute Mining Limited | 2018 Annual Report Exploration
Updated Mineral Resource estimation was undertaken
at Buck Reef West early in FY18. The new estimate
produced a 7% increase in Mineral Resources to 1.54Moz
of gold. The drilling converted a significant quantity of
the Inferred Mineral Resources to the Indicated category
resulting in a 21% increase in open pit Ore Reserves to
636,000oz.
A structural study was carried out on the Buck Reef
West mineralisation which led to the construction of
a 3D geological model. This model identified coherent
and continuous high-grade gold mineralised structures
which will be drill tested in 2019.
Ravenswood Expansion
Project
At the beginning of FY18, Resolute announced an
updated study for its Ravenswood Expansion Project
(REP) comprising of the development of two large open
pits at Buck Reef West and Sarsfield. The updated REP
study outlined the Company’s plans to deliver 1.5Moz
of gold production over 14 years at a Life of Mine (LOM)
AISC of US$823/oz (A$1,097/oz) from US$880/oz
(A$1,166/oz).
Following the end of FY18, Resolute announced that
it has commenced a strategic review of the REP with
an initial focus on enhancing project economics by
pursuing reductions in capital and operating costs. The
review will also assess the potential for further growth
through processing expansions, mine life extensions,
and increased production capacity. Ongoing work at
Ravenswood has identified new exploration targets
along with opportunities for plant expansions and
improved environmental outcomes. Resolute intends for
the strategic review to capture these enhancements and
incorporate them into an updated LOM plan expected to
be finalised during FY19.
Prescribed Project Status
Extension
In December 2018, the Queensland Government
extended the Prescribed Project status of the REP
to 30 November 2020. The assistance provided by
the streamlined administrative process provided by
Prescribed Project status has been essential in ensuring
Resolute receives the regulatory approvals required for
the REP and in providing opportunity for further project
enhancements.
Under relevant Queensland state legislation, a
Prescribed Project declaration is designed to facilitate
the approval process for projects deemed to be of
particular economic or social significance to Queensland
or a region within the state. This is achieved by
empowering the Coordinator General to actively assist
in the planning, delivery and coordination of all required
government and regulatory approvals to ensure there
are no unnecessary delays, while ensuring the project’s
environmental impacts are properly managed.
The extension of the Prescribed Project status will assist
the Company in finalising a small number of additional
regulatory approvals that are required to allow project
works on an enhanced REP program to commence.
Resolute to build New State
School at Ravenswood
Following the end of FY18, the Company announced
that it had signed an agreement with the Queensland
Department of Education whereby it will fund the
relocation and construction of a new State School at
Ravenswood. The cost to Resolute is slightly less than
the capital budget allocated within the REP Study.
The new learning centre will enable better separation
of age-groups and provide local students with an
enhanced learning experience. Students at the new
school will have access to the latest technology in
education which will better prepare them with the
essential skills to participate in the fast-developing
world of information and communications technology.
Nolans Processing Plant at Ravenswood
15
Resolute Mining Limited | 2018 Annual Report Target Production
100
a
p
z
o
k
LOM AISC
US$
764
/oz
Target Mine Life
10years
2.5Moz
Mineral Resource
Resolute Mining Limited | 2018 Annual Report
Bibiani
Gold Mine
Potential for a high margin, long life
underground mining operation.
Bibiani is situated in the western region of Ghana in West Africa. It is bordered by
Burkina Faso to the north, Cote d’Ivoire to the west and Togo to the east. The Bibiani
mineral concessions lie approximately 80km south west of the Ashanti capital,
Kumasi. Bibiani is owned by Mensin Gold Bibiani Limited, a wholly owned subsidiary
of Resolute. Resolute currently owns 100% of Mensin Gold Bibiani Limited through
its wholly owned subsidiary, Resolute (Bibiani) Pty Ltd. The Government of Ghana is
entitled to a 10% free carried interest in Mensin Gold Bibiani Limited.
Since assuming ownership in 2014 Resolute has embarked on two surface and
underground resource drilling programs to re-assess the underground mine potential
and in June 2018 released an update to its June 2016 feasibility study. This update
demonstrated the potential for Bibiani to produce ~100,000oz per annum at a LOM
AISC of US$764/oz over a 10-year mine life.
Work in FY18 focused on project execution planning and further refinement of the
mining and processing strategies.
16
16
Resolute Mining Limited | 2018 Annual Report Ore Reserves and
Mineral Resources
Resolute’s class-leading 16.6Moz gold inventory underpins
Resolute’s focus on long-life mines and supports its production
ambition of +500,000oz annually.
Governance and Controls
Resolute reports its Mineral Resources and Ore Reserves on an annual basis, with Mineral Resources inclusive of
Ore Reserves. Reporting is in accordance with the 2012 Edition of the Australasian Code for Report of Exploration
Results, Mineral Resources and Ore Reserves and the ASX Listing Rules. All Competent Persons named by Resolute
are suitably qualified and experienced as defined in the JORC Code 2012 Edition.
Competent Persons Statement
The information in this report that relates to the Mineral Resources and Ore Reserves listed in the table below is
based on, and fairly represents, information and supporting documentation prepared by the Competent Person
whose name appears in the same row. Each person named in the table below has sufficient experience which is
relevant to the style of mineralisation and types of deposits under consideration and to the activity which he/she has
undertaken to qualify as a Competent Person as defined in the JORC Code 2012. Each person identified in the list
below consents to the inclusion in this announcement of the material compiled by them in the form and context in
which it appears.
Activity
Competent Person
Employer
Membership Institution
Syama Resource
Susan Havlin
Optiro Pty Ltd
Australasian Institute of Mining and Metallurgy
Syama Reserve
Ian Bignell
Resolute Corporate Services Pty Ltd
Institute of Materials, Minerals and Mining
Syama Satellites Resource
Nic Johnson
MPR Geological Consultants Pty Ltd
Australian Institute of Geoscientists
Syama Tailings Facility
Susan Havlin
Optiro Pty Ltd
Australasian Institute of Mining and Metallurgy
Mt Wright Resource
Nic Johnson
MPR Geological Consultants Pty Ltd
Australian Institute of Geoscientists
Mt Wright Reserve
Stuart Long
Carpentaria Gold Pty Ltd
Australasian Institute of Mining and Metallurgy
Welcome Resource
Nic Johnson
MPR Geological Consultants Pty Ltd
Australian Institute of Geoscientists
Buck Reef West Resource
Susan Havlin
Optiro Pty Ltd
Australian Institute of Geoscientists
Buck Reef West Reserve
John Millbank
Proactive Mining Solutions Pty Ltd
Australasian Institute of Mining and Metallurgy
Sarsfield Reserve
David Mackay
Carpentaria Gold Pty Ltd
Australasian Institute of Mining and Metallurgy
Sarsfield Resource
Nic Johnson
MPR Geological Consultants Pty Ltd
Australian Institute of Geoscientists
Nolans East Reserve
John Millbank
Proactive Mining Solutions Pty Ltd
Australasian Institute of Mining and Metallurgy
Bibiani Resource
Kahan Cervoj
Optiro Pty Ltd
Australasian Institute of Mining and Metallurgy
Bibiani Reserve
David Lee
AMC Consultants Pty Ltd
Australasian Institute of Mining and Metallurgy
Tabakoroni Resource
Nic Johnson
MPR Geological Consultants Pty Ltd
Australian Institute of Geoscientists
Tabakoroni Reserve
Ian Bignell
Resolute Corporate Services Pty Ltd
Institute of Materials, Minerals and Mining
Sarsfield Mineralised Waste
Susan Havlin
Optiro Pty Ltd
Australasian Institute of Mining and Metallurgy
17
Resolute Mining Limited | 2018 Annual Report Ore Reserves Statement
ORE RESERVES
PROVED
PROBABLE
TOTAL RESERVES
Group
Share
As at 31 December 2018
Tonnes
Grade
oz
Tonnes
Grade
oz
Tonnes
Grade
oz
oz
(000s)
g/t
(000s)
(000s)
g/t
(000s)
(000s)
g/t
(000s)
(000s)
Australia
Sarsfield
Buck Reef West
Stockpiles (OP)
Sub Total OP
Mt Wright
Stockpiles (UG)
Sub Total UG
Australia Total
Mali – Sulphide
Syama Underground
Syama Stockpiles
Sub Total (Sulphides)
Stockpiles (satellite
deposits)
Sub Total Satellite
Deposits
Mali – Oxide
Tabakoroni
Tabakoroni
Stockpiles
Sub Total Tabakoroni
Mali Total
Ghana
Bibiani
Ghana Total
31,530
970
360
32,860
160
0
160
33,030
0
100
100
970
970
1,450
320
1,770
2,830
0
0
Total Ore Reserves
35,860
0.7
1.3
0.6
0.7
2.2
0.0
2.2
0.7
0.0
2.5
2.5
1.4
1.4
3.2
2.1
3.0
2.4
0.0
0.0
0.9
720
40
10
18,250
18,590
10
760
36,850
10
0
10
0
0
0
780
36,850
0
10
10
40
40
150
20
170
220
0
0
35,040
2,270
37,310
1,630
1,630
640
0
640
39,580
6,400
6,400
1,000
82,830
0.7
1.0
1.6
0.8
0.0
0.0
0.0
0.8
2.7
1.3
2.6
1.1
1.1
2.4
0.0
2.4
2.5
3.3
3.3
1.8
360
600
0
49,780
19,570
370
960
69,720
0
0
0
160
0
160
960
69,880
2,980
35,040
100
3,080
60
60
50
0
50
2,360
37,410
2,600
2,600
2,090
320
2410
3,180
42,410
660
660
6,400
6,400
4,800
118,690
1,080
640
10
100%
1,080
640
10
1,720
1,720
10
0
10
1,730
2,980
100
10
0
10
1,730
80%
2,390
80
3,090
2,470
100
100
200
20
220
3,410
660
660
80
80
90%
180
20
200
2,750
90%
590
590
5,800
5,070
0.7
1.0
0.6
0.8
2.2
0.0
2.2
0.8
2.6
1.4
2.6
1.2
1.2
3.0
2.1
2.8
2.5
3.3
3.3
1.5
Notes:
1. Ore Reserves are as at 31 December 2018 and differences may occur due to rounding.
2. Reserves at Buck Reef West and Sarsfield are reported above 0.4 g/t cut off.
3. Mt Wright Reserves are reported above 2.3 g/t cut off.
4. Bibiani Reserves are reported above 2.75 g/t cut off.
5. Syama Underground Reserves are reported above 1.9 g/t cut off.
6. Tabakoroni Reserves are reported above 1.1g/t.
7. Syama Reserves are based on August 2017 Resource model.
18
Resolute Mining Limited | 2018 Annual Report
Mineral Resource Statement
MINERAL RESOURCES
MEASURED
INDICATED
INFERRED
TOTAL RESOURCES
Group
Share
As at 31 December 2018
Tonnes Grade
oz
Tonnes Grade
oz
Tonnes Grade
oz Tonnes Grade
oz
oz
(000s)
g/t
(000s)
(000s)
g/t
(000s)
(000s)
g/t
(000s)
(000s)
g/t
(000s) (000s)
Projects where Resolute has a controlling interest
Australia
Sarsfield
Buck Reef West
43,250
830
0.8
1.5
Sarsfield Mineralised Waste
0 0.0
Sub Total OP
Mt Wright
Welcome Breccia
Stockpiles (UG)
Sub Total UG
Australia Total
Mali – Sulphide
Syama Underground
Stockpiles (sulphide)
Sub Total (Sulphides)
Satellite Deposits
Stockpiles (satellite deposits)
Sub Total Satellite Deposits
Old Tailings
Mali – Oxide
Tabakoroni
Tabakoroni Stockpiles
Sub Total Tabakoroni
Mali Total
Ghana
Bibiani
Ghana Total
44,090
290
0
0
290
44,380
8,740
100
8,840
0.8
3.6
0.0
0.0
3.6
0.8
3.3
2.5
3.3
0
0.0
970
970
1.4
1.4
0 0.0
2,800
320
3,120
12,920
0
0
2.9
2.1
2.8
3.0
0.0
0.0
1.3
Controling Interest Total
57,300
Projects where Resolute has an equity interest
Sudan (Orca Gold)
Galat Sufar South
Wadi Doum
Sudan Total
DRC (Loncor Resources)
Makapela
DRC (Kilo Goldmines)
Adumbi
DRC Total
Equity Interest Total
0
0
0
0.0
0.0
0.0
0
0.0
0 0.0
0
0
0.0
0.0
1.3
0
0
0
0
0
0
0
Total Mineral Resources
57,300
2,450 160,430
0.7
1.0
0.4
0.6
3.6
3.2
0.0
3.3
0.7
2.8
0.0
2.8
2.2
1.1
2.1
1,120
38,500
40
0
36,550
0
1,160
75,040
30
0
0
30
0
0
10
10
0.7
1.0
0.0
0.9
0.0
0.0
1.6
1.6
880
22,080
1,220
8,660
0
33,700
2,110
64,440
0
0
0
0
470
2,040
0
2,510
1,190
75,050
0.9
2,110
66,950
930
44,390
3.2
4,580
5,650
100%
520 103,830
0.8
2,520 2,520
280 46,040
400 33,700
1,200 183,570
60
210
0
770
2,040
10
260
2,810
1.0
0.4
0.8
3.7
3.2
1.6
3.3
1,540 1,540
400
400
4,460 4,460
90
210
0
90
210
0
300
300
1,460 186,380
0.8
4,760 4,760
500 58,780
3.2
6,010 4,810
80%
10
2,270
930
46,660
0
40
40
0
260
20
280
6,840
1,630
8,470
0
3,770
1,250
58,900
0
0
13,260
13,260
2,450
147,210
11,940
680
12,620
1.3
3.1
2.1
1.1
1.9
100
0
4,680
5,650
460
60
520
1,450
50
1,500
0
2,360
500
61,140
100
8,290
0
2,650
100 10,940
1.4
3.1
2.1
1.2
1.9
0
0.0
0
17,000
0.7
370 17,000
0.7
100
80
6,110 4,890
560
100
660
370
450
80
530
290
90%
3,770
2.2
280
3,180
2.0
200
9,740
0
2.2
2.9
3.5
3.5
1.9
1.3
2.1
1.3
0
0
280
3,180
5,480
27,320
1,490
1,490
8,440
8,440
9,080
102,710
490
40
530
2,670
250
2,920
0
2.0
1.3
3.7
3.7
1.1
1.2
1.3
1.2
0
320
200 10,060
1,170 99,140
1,010 21,690
1,010 21,690
2.4
2.1
2.3
2.5
3.6
3.6
740
660
20
20
760
680
7,900 6,400
90%
2,500 2,250
2,500 2,250
3,640 307,210
1.5
15,170 13,410
100 14,620
10
930
110
15,550
1.3
1.7
1.3
590
50
640
590
8.7
170
860
5.3
150
1,460
6.7
310
0
590
13,210
0.0
8.7
1.6
1.9
0
170
700
5,620
6,480
9,400
9,770
112,110
2.5
2.9
2.4
1.2
450
5,620
600
7,080
710 22,630
2.5
3.4
1.9
450
760
1,400 1,400
4,360 329,830
1.6 16,570 14,820
16%
590
50
640
27%
310
27%
450
760
Notes:
1. Mineral Resources include Ore Reserves and differences may
occur due to rounding.
2. Resources are reported above 0.4 g/t cut-off for Sarsfield and
Buck Reef West.
3. Mt Wright Resources are reported above 1.8 g/t cut off.
4. Syama Underground Resources quoted above 1.5g/t cut off.
5. Resources for Satellite deposits are reported above a cut off of
1.5g/t.
6. Resources for the Tabakoroni Open Pit are reported above a cut
off of 1.0g/t.
7. Bibiani Resources are reported above 2.0 g/t cut off.
8. Galat Sufar South Resources reported above a 0.6g/t cut-off.
9. Wadi Doum Resources reported above a 0.6g/t cut-off.
10. Makapela Resources reported above a 2.75g/t cut-off.
11. Adumbi Resources reported above a 0.9g/t cut-off.
12. Mineral Resources held by Orca Gold, Loncor Resources and
Kilo Goldmines are reported as NI43-101 compliant estimates.
19
Resolute Mining Limited | 2018 Annual Report
Resolute Mining Limited | 2018 Annual Report
20
20
Resolute Mining Limited | 2018 Annual Report Financial Overview
FY18 was a period of ongoing investment in growth and mine
life for Resolute
Revenue
Gross Profit from Operations
Net Loss After Tax
Cash Flow from Operating Activities
Cash Flow used in Investing Activities
Gold Sold
$’000
$’000
$’000
$’000
$’000
oz
FY18
222,774
24,449
(5,324)
33,849
(181,035)
128,275
Average Realised Gold Price
A$/oz / US$/oz
1,734 / 1,253
Cash, Bullion and Listed Investments
Borrowings (net of in-country receivables)
Gold in Circuit Inventory
$’000
$’000
$’000
116,584
173,449
133,892
Financial Performance
Revenue for FY18 was $223 million from gold sales of 128,275 ounces at an average realised price of A$1,734/oz
(US$1,253/oz) which compares favourably to the average spot price over the period of A$1,690/oz (US$1,220/oz).
Gross Profit from Operations was $24 million after depreciation and amortisation of $10 million. Resolute reported
a Net Loss After Tax of $5 million which was inclusive of an adverse movement in the valuation of net realisable
inventory of $29 million offset by $15.5m of unrealised foreign exchange gain on intercompany loans.
Resolute continued to invest heavily in the business in FY18 with capital expenditures on development, property,
plant and equipment totalling $175 million and exploration and evaluation expenditure of $10 million.
Financial Position
As at 31 December 2018, Resolute’s cash, bullion and listed investment position was $117m, comprised of $39 million
held in cash, 22,786 ounces of gold valued at $40 million and investments valued at $38 million.
Resolute has made strategic investments in multiple African-focused gold explorers with a view to extending the
Company’s project pipeline and providing a source of medium-term potential growth opportunities. At 31 December
2018, the Company was invested in Orca Gold Limited (16%), Loncor Resources Inc (27%), Kilo Goldmines Limited
(27%), Manas Resources Limited (23%), Mako Gold Limited (19%) and Oklo Resources Limited (10%).
During FY18, Resolute entered into a US$100 million revolving credit facility (Facility) with Investec. As part of the
process of the Facility was successfully syndicated with Investec, BNP Paribas, Nedbank and Citibank and the limit
expanded to US$150m. The Facility has an initial three-year term, with rates, fees and terms which are extremely
flexible and highly competitive. Resolute can draw on the Facility as required for any corporate funding purposes
and both the credit limit and tenor remains capable of further extension. The new Facility provides Resolute with
flexible access to low cost funding for new growth initiatives. The Company’s borrowings inclusive of the Facility and
its Bank du Mali facility, net of in-country receivables was $173 million as at 31 December 2018.
Hedging
The Company continued to actively and responsibly manage its gold sales and undertake hedging above its
budgeted gold price to take advantage of gold price volatility, maximise revenues and protect the Company’s
balance sheet and cash flows. Resolute’s hedge book at 31 December 2018 totalled at 115,000oz committed to
monthly deliveries out to December 2019 made up of 85,000oz forward sold at prices between A$1,715/oz and
A$1,760/oz, and 30,000oz forward sold at US$1,250/oz. Following year end the Company forward sold an additional
60,000oz in monthly deliveries out to June 2020 made up of 30,000oz forward sold at an average price of US$1,335/
oz and 30,000oz forward sold at an average price of A$1,887/oz. Resolute’s total hedging commitments represent
less than 3% of the Company’s Ore Reserves.
21
Resolute Mining Limited | 2018 Annual Report Resolute Mining Limited | 2018 Annual Report
2222
Resolute Mining Limited | 2018 Annual Report People
Our people are central to the success of our business. Resolute
strives to attract, train and retain talented individuals who live
our values and are committed to the delivery of our vision.
Our Workforce
As at 31 December 2018, Resolute had 854 direct employees and 2,151 contractors,
taking our total workforce to 3,005. Resolute’s strong commitment to providing
opportunities for local Malians and Ghanaians is evidenced by is strong national
workforce representation at Syama and Bibiani.
Diversity
Resolute respects and encourages workplace diversity and strives to create a flexible
and inclusive work environment. Resolute endeavours to treat all employees equally
and fairly, regardless of gender, age, culture, religion or disability.
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 to, 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 diverse field of
candidates.
Resolute’s overall representation of women has increased in FY18 relative to 30
June 2018 and now stands at 21.3% relative to the Workplace Gender Equality
Agency (WGEA) 2016-2017 average of 16%. Women comprise 50% of Resolute’s Key
Management Personnel relative to the WGEA average of 15%.
Developing our People
Our Malian Talent Development Program aims to advance the capabilities of Malian
employees by building leadership and technical capability to position them to
advance into more senior positions at Syama. In FY18, an additional 8 employees
were selected participate in to the program bringing the total participant numbers
to 15. Over the last 2 years that the program has been running we have seen a
pleasing increase in the promotion of Malian Nationals at Syama taking the Manager
roles at Syama from 27% to 31% over this period.
In Australia, Resolute provided internships across maintenance, exploration and
environment to six university students in FY18 and remained focused on attracting
and developing indigenous students. The interns gained invaluable hands on
experience at both our Ravenswood and Syama operations and in the Perth
corporate office in a range of engineering and corporate functions, with one student
commencing in a graduate position. The period also saw three graduates, three
trainees and three apprentices appointed at Ravenswood.
Composition
of Employees
in Africa
Nationals
86.7%
Mali
13.3%
Expatriates
Nationals
97.9%
Ghana
2.1%
Expatriates
Resolute Managing Director and CEO, John Welborn, addresses Syama workforce
23
Resolute Mining Limited | 2018 Annual Report
Resolute Mining Limited | 2018 Annual Report
2424
Resolute Mining Limited | 2018 Annual Report Sustainability
Dear Fellow Shareholders,
The principle of sustainability has always underpinned
the way we do business at Resolute. Our community
partnerships, environmental stewardship, balance sheet
strength and key strategic decisions are all based on
the principles of sustainable development. Effectively
managing sustainability directly impacts our reputation
and our ability to create value for all stakeholders.
Resolute is proud of the contributions it makes to the
economies of our host countries. We have been operating
in Africa for more than 20 years and over this time have
made economic contributions of c.$2 billion. Our license
to operate carries a responsibility to contribute to local
and national development and to ensure that we create a
positive economic, social and environmental legacy.
The core business of our operations creates jobs,
purchases goods and services from local providers and
builds infrastructure, enabling us to make a significant
and long-term contribution to our host economies in
three ways:
1. Value creation supply chain covering the direct
contribution of our exploration projects and
operating assets;
2. Payments of taxes, license and approval fees, and
royalties; and
3. Local community and environment programs.
John Welborn
Managing Director and Chief Executive Officer
Resolute Mining Limited | 2018 Annual Report
25
25
Resolute Mining Limited | 2018 Annual Report Community Development
Resolute is committed to ensuring that it manages its business
in a manner which enables it to contribute to sustainable
development in the local communities and host countries
where it operates.
The Resolute Foundation
The Resolute Foundation will become the vehicle through which Resolute delivers sustainable development
initiatives globally and, in doing so creates a legacy in the countries and communities in which it operates,
transforming a non-renewable resource (gold in the ground) into economic growth, basic services, human
development and environmental offsets.
To realise its ambition, the Resolute Foundation will focus its efforts where it can make a difference and is able to
make use of the inherent strengths, skills and capacities of the Company, partner organisations, host governments
and local people.
The Resolute Foundation will deliver significant benefits to Resolute including consistently capturing and reporting
expenditure, leveraging expertise and funding from partners and enhancing its reputation as a bold, innovative and
most importantly, responsible company.
More
Mine Gold. Create Value. Leave a Legacy
The
FOUNDATION
The Resolute Foundation will be the vehicle through which Resolute
will deliver future sustainable development initiatives at scale on a
global basis.
The Resolute Foundation will leverage the strengths, skills and
capacities of the Company, our partners, host governments and local
people to create sustainable value.
The Resolute Foundation will create an enduring legacy in the countries
and communities in which Resolute operates by transforming a non-
renewable resource into meaningful and scalable economic growth,
basic services, human development and environmental offsets.
2018
Prepare
2019
Initiate
2020-22
Consolidate
2024
Transition
2025+
Grow
Community Contributions
Supporting community needs and sustainable
development is a Resolute priority. Resolute conducts
its business activities in a manner that adds value to
local communities and is committed to:
•
•
Regularly communicating and engaging with local
communities so that its relationship with them and
the support is provided aligns with the respective
community’s culture and values;
Focusing community activities on health and well-
being, water and sanitation, income generating
activities and education;
• Continuing to have direct involvement in
community projects rather than just providing
funding;
•
•
Ensuring that there are robust processes of
assessment in place to identify all potential impacts
its operations may have on the communities the
Company works in;
Regularly reviewing assessment processes to
ensure that all controls that are put in place are
relevant and effective; and
• Maintaining accurate records of community
activities programs undertaken.
26
Resolute Mining Limited | 2018 Annual Report Syama
In addition to ongoing community engagement,
community development and community health
activities, FY18 saw a move towards a risk-based
approach to managing relationships with local
communities, with an increased emphasis on
maintaining our social license to operate. Resolute aims
to achieve this by minimising the negative impacts of
our activities and maximising the economic and social
benefits that the business can deliver locally, regionally
and nationally.
Recognising that building capacity within the Syama
team is a key to future success, Resolute has recruited
several experienced Malian Community Development
Specialists. This has been supplemented with training
and mentoring that will continue through 2019.
With respect to other ongoing activities, the malaria
prevention program was extended to include
Tabakoroni Hamlet. The integrated approach, combining
bio-larviciding, indoor residual spraying, bed nets
and sensitisation have proven to be very effective at
reducing the number of cases of malaria everywhere
it has been used and similar results are anticipated for
Tabakoroni.
Additionally, existing medical facilities have been
supplemented at Torokoro (ablutions and medical
incinerator) and N’Golopene (incinerator, supplies and
training), while in Fourou, a survey of community water
sources completed during December will be used to
design a repair-rehabilitation-addition program which
will be implemented during 2019.
Ravenswood
In October, the sesquicentenary of gold mining
at Ravenswood was celebrated, with a number
of community events and the unveiling of a
commemorative mosaic chair capturing the span
of mining activities across the years. The Resolute
community team made a significant effort to co-
fund initiatives, applying for funding on behalf of the
Ravenswood Restoration and Preservation Association
and was awarded $87,000 in grants.
Planning for the relocation of the Ravenswood State
School which is required for the REP continued
through FY18. Extensive consultation occurred with
the Ravenswood community and the Queensland
Government regarding the design of the new school.
The new school will comprise the relocation of the
existing heritage-listed school residence and school
buildings in addition to the construction of a new
state-of-the-art learning centre and administration
building, separate undercover playgrounds for junior
and senior students, a new covered multi-purpose
court and amenities building, a large sports field and
nature reserve and a new Principal’s Residence. The
existing heritage-listed school residence and school
buildings will be renovated and reinforced as part of the
relocation. The new learning centre will enable better
separation of age-groups and provide local students
with an enhanced learning experience. Students at the
new school will have access to the latest technology
in education which will better prepare them with the
essential skills to participate in the fast-developing
world of information and communications technology.
Resolute’s commitment to install the latest technology
at the new school builds on the previous work of The
Resolute Foundation in supplying tablet computers and
coding robots to the Ravenswood State School.
Bibiani
African Environmental Research and Consulting
Company, a well-regarded Ghanaian consultancy
has been engaged to undertake a Health Impact
Assessment (HIA) in the communities within the mine
catchment. The HIA will provide a demographic and
health baseline against which changes resulting from
future Resolute activities can be measured and will also
identify potential health initiatives that Resolute can
support.
In addition to initiating the HIA, the Company, through
the Resolute Foundation Advisory Panel (RFAP),
completed two initiatives benefiting communities
within the mine catchment. Firstly, the Education
Financial Assistance Sub-committee (EFAS) of RFAP
received over 80 applications for financial assistance in
their pursuit of various degree and diploma programs
in the 2018/19 academic year. Through the selection
and vetting process, EFAS shortlisted, interviewed and
selected 22 students for financial support comprising
of 9 continuing students from 2017 program and 13 new
applicants. Secondly, the cultivation of citronella and
production of citronella oil started in 2017 as an RFAP
income generation activity aimed at increasing the self-
funding ability of the local football team. Citronella oil
is used primarily as a mosquito repellent and Citronella
grass is ideally suited to the environment surrounding
Bibiani. During an upgrade to security fencing along
the boundary between the mine lands and the Bibiani
Township the opportunity was recognised to use the
land between the fence and the mine laboratory for
citronella cultivation adding seven hectares to the
2.8 hectares already under cultivation. The new area
is adjacent to a citronella distillation plant currently
under construction which will enable RFAP to further
value-add, with the first harvest through the new plant
anticipated during May 2019.
27
Resolute Mining Limited | 2018 Annual Report Environment
Resolute is committed to applying environmental controls
and procedures to minimise and mitigate its impact on land,
water, air quality, climate and biodiversity and comply with the
requirements of applicable legislation, regulation and rules.
Approach
Resolute consistently incorporates environmental considerations into all aspects of its operations. We identify
and assess the potential environmental effects of our activities and manage associated risks accordingly. We
regularly monitor, audit and review our environmental performance across our business and have an Environmental
Management Policy that we expect our employees and contractors to adhere to.
Syama
Resolute’s ongoing land rehabilitation program resulted in planting activities across 17 hectares of the waste rock
dump in A21 with 35 indigenous plant species. Over 10,000 trees were also produced in Fourou Community Nursery.
In addition to this, 100 trees were planted by Syama Village School students to celebrate the World Environment Day
event.
Routine monitoring of water quality and quantity upstream and downstream of Syama and of the ambient air quality
in the five villages in closest proximity was supplemented with periodic audits undertaken by the Government’s
Mining and Geological Technical Service.
The permitting of 5 new boreholes for the Syama camp to improve the supply of water supply was completed with
the Regional Hydraulic Service.
In late FY18, Resolute announced its plans for the development of a new hybrid power plant at Syama which will
be operational by the end of 2020. This hybrid plant which includes solar and battery technologies will reduce
Resolute’s reliance on diesel and thereby reduce its emissions.
Ravenswood
Routine air and water quality monitoring occurred throughout FY18 in accordance with and in addition to regulatory
requirements, in order to identify any potential impacts of the operation on the surrounding environment. A two-
year, in-depth investigation into surface water and groundwater quality in the receiving environment was completed
in FY18 with a final report submitted to the environmental regulatory authority as part of ongoing consultation to
secure relevant and effective water quality conditioning.
In a commitment to continuous improvement, works commenced to optimise the site’s recycled water management
system. The site’s first major sediment dam required by Ravenswood Expansion Project approvals was constructed
and commissioned during FY18. Optimisation of the recycled water management system will provide additional
capacity to manage water captured in the new sediment management system, as well as see improved pumping
efficiency of groundwater recovery systems that work to minimise any potential impacts of the operation.
In FY18, over 500 native trees were planted in Ravenswood as part of Golden Trees, a collaborative project between
Resolute and the traditional owners of the land surrounding Ravenswood, the Birriah People. The new plantings will
form an environmental buffer zone between the town cemetery and some of the future mining operations when
work begins on the Ravenswood Expansion Project around Buck Reef West.
Resolute continued to run its Environmental Graduate Program in FY18. The Graduate Environmental Officers learn
environment management skills and monitoring tasks as well as conduct environmental awareness presentations.
The new roles assist existing staff with the increased monitoring responsibilities of the Ravenswood Expansion
Project while providing the Graduates with the opportunity to develop the skills necessary for successful careers in
the environment field.
Bibiani
At Bibiani, a pilot irrigation farming project at Nzema Nkwanta was initiated through RFAP involving the training of
10 farmers in the district in dry season cropping.
28
Resolute Mining Limited | 2018 Annual Report Resolute Mining Limited | 2018 Annual Report
29
29
Resolute Mining Limited | 2018 Annual Report 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 core 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 achieve best practice, creating
opportunities for its business partners to assist both
stakeholders and communities, while operating
openly, honestly, and with integrity and responsibility
and maintaining a strong sense of corporate social
responsibility. In maintaining its social corporate
responsibility, Resolute will conduct its business
ethically, adhering to the core principles stated in the
Code, 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 that all Directors and employees (Personnel)
must, wherever possible, avoid any conflict of interest,
must disclose any potential for a conflict of interest,
and where a conflict cannot be avoided, must manage
that conflict of interest. The duty to avoid, disclose,
and manage conflicts of interest does not prohibit all
conflicts of interest – rather it requires that conflicts are
adequately disclosed and managed when they arise.
The Company’s Conflicts of Interest Policy provides
specific detail and is available to view online at www.
rml.com.au/corporate-governance.
Insider Trading
It is Resolute’s policy that directors and 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 Whistleblower Policy provide
specific detail and are available to view online at
www.rml.com.au/corporate-governance.
Additional Policies
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
•
Safety, Security and Environment Committee
Charter
• Continuous Disclosure Policy
• Communication Strategy
• Diversity and Inclusion Policy
•
•
•
Performance Evaluation Process
Privacy Policy
Procedure for Appointment of New Directors
30
Resolute Mining Limited | 2018 Annual Report 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 31 December 2018.
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
Yasmin Broughton
Non-Executive Director
Mark Potts
Non-Executive Director
June 2017
June 2017
Sabina Shugg
Non-Executive Director
September 2018
BCom, FCA, FAIM, SAFin,
MAICD, MAusIMM, JP
BCom, PG Law, GAICD
BSc (Hons)
MBA and BSc (Mining
Engineering)
Peter Sullivan
Non-Executive Director
June 2001
BEng, MBA
The table below sets out the detail of the independence of each Director as at 31 December 2018.
Director
Martin Botha
John Welborn
Yasmin Broughton
Mark Potts
Sabina Shugg
Peter Sullivan
Non-Executive
Independent
Yes
No
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
No
Gender
Male
Male
Female
Male
Female
Male
The Board considered the independence of Mr Sullivan in February 2019 and determined that it considers Mr
Sullivan to be an independent Director.
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.
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
•
Safety, Security and Environment Committee
Audit and Risk Committee
As at 31 December 2018, the Audit and Risk Committee
consisted of the following Non-Executive Directors:
• Ms Y. Broughton (Chair)
• Mr M. Botha
• Mr M. Potts
• Ms S. Shugg
• Mr P. Sullivan
As at 31 December 2018 all of the above listed members
of the Audit and Risk Committee other than Mr Sullivan
were independent. As at the date of release of this
Annual Report, all of the above listed members of the
Audit and Risk Committee 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.
31
Resolute Mining Limited | 2018 Annual Report Remuneration Committee
As at 31 December 2018, the Remuneration Committee
consisted of the following Non-Executive Directors:
• Mr P. Sullivan (Chair)
• Mr M. Botha
• Ms Y. Broughton
• Mr M. Potts
• Ms S. Shugg
As at 31 December 2018 all of the above listed members
of the Remuneration Committee other than Mr Sullivan
were independent. As at the date of release of this
Annual Report, all of the above listed members of the
Remuneration Committee are independent.
The Remuneration Committee is responsible
for recommending, monitoring and reviewing
compensation arrangements for Resolute’s 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
As at 31 December 2018, the Nomination Committee
consisted of the following Non-Executive Directors:
• Mr M. Botha (Chair)
• Ms Y. Broughton
• Mr M. Potts
• Ms S. Shugg
• Mr P. Sullivan
As at 31 December 2018 all of the above listed members
of the Nomination Committee other than Mr Sullivan
were independent. As at the date of release of this
Annual Report, all of the above listed members of the
Nomination Committee are independent.
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.
Safety, Security and
Environment Committee
As at 31 December 2018, the Safety, Security and
Environment Committee consisted of the following
members:
• Mr J. Welborn (Chair)
• Ms S. Shugg (Non-Executive Director)
• Ms L. de Bruin (Chief Financial Officer)
• Mr P. Beilby (Chief Operating Officer)
• Mr C. Kruger (Group Manager – Health, Safety and
Environment)
As at 31 December 2018 and as at the date of release
of this Annual Report, Ms S. Shugg is the sole Non-
Executive Director on the Safety, Security and
Environment Committee and is independent.
As at the date of release of this Annual Report, Mr
P. Beilby has retired and Mr D. Kelly, Acting Chief
Operating Officer, has been appointed to the Safety,
Security and Environment Committee.
The Safety, Security and Environment Committee acts
as a forum for presentation of the safety performance
and environmental impact management of Resolute
operations and is responsible for monitoring, and
advising on the implementation and management of
programs, relating to key health, safety, security and
environmental risks.
The Safety, Security and Environment 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.
32
Resolute Mining Limited | 2018 Annual Report
Risk Management
Resolute has a consistent, proactive approach to
risk management across operations and projects
globally based on the Group’s articulated risk appetite
and aligned with ISO 31000:2009 as well as the ASX
Principles and Recommendations. The Board has
ultimate responsibility for ensuring material risks
faced by the Company are identified and ensuring
appropriate control and monitoring systems are
in place to manage the impact of these risks in
accordance with the articulated risk appetite.
The Audit and Risk Committee has the mandate from
the Board to provide risk management oversight across
material risks in accordance with the Risk Management
Policy and Standard. The Audit and Risk Committee
continues to work closely with management in
relation to the assessment, monitoring and ongoing
management of business risk with short, medium and
longer term horizons and to carry out assessments
of internal controls and processes for improvement
opportunities supported by assurance gained through,
for example, the risk based Internal Audit Plan. In
support of this, the Committee receives reports from
management on new and emerging sources of risk
and related controls and mitigation measures that
management have implemented.
Resolute’s commitment to continuous improvement
and innovation extends through to the approach taken
to risk management systems and controls. KPMG is
engaged to support the ongoing optimisation of the
Company’s risk management and assurance framework
which includes regular identification and assessment
of key risks and controls (financial and non-financial) as
well as strategies to appropriately manage risk across
corporate activities, operations and projects.
A summary of the material business risks is set out
below.
Risk
Strategic Risks
Asset Portfolio
Mitigation / Comment
Resolute's revenue is derived from the Syama Gold
Mine in Mali and the Ravenswood Gold Mine in
Queensland.
Resolute assesses a range of growth opportunities to
build on its existing portfolio as well as ensuring that
efficient production from existing assets is maximised.
Reliance on two assets in two different geographical
locations requires continual focus to enable efficient
operations.
Whilst geographical diversity is an advantage, there
is currently limited overall diversification in Resolute’s
portfolio.
For example, exploration activities are ongoing in
Cote d'Ivoire and Egypt and a feasibility study for the
re-start of the Bibiani Gold Mine in Ghana has been
completed showing a viable development pathway.
Further, Resolute continues to initiate and deliver
projects to enhance asset reliability and effectiveness
to ensure ongoing success.
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, interest rate changes or
where there is an inability to secure adequate funding.
Resolute utilises financial and treasury planning
and control procedures to monitor and manage its
exposure to commodity price fluctuations and foreign
exchange rates.
Gold hedging may be implemented in certain defined
scenarios to ensure long-term funding for new growth
opportunities, support existing projects and significant
capital expenditure programs.
Resolute continues to maintain excellent relationships
with a syndicate of international banking counterparts.
33
Resolute Mining Limited | 2018 Annual Report Risk
Fraud and Corruption
Resolute is aware of the risk of internal fraud and
corruption, and the various ways that such risk may
transpire.
Resolute is aware that the geographical diversity of
its exploration and operational activities increases this
risk.
Operational Performance
Mitigation / Comment
Resolute conducts fraud risk assessments and
has internal controls in place to manage the risk
of fraudulent or corrupt activities including an
independently operated whistle blower hotline.
Resolute is aware of the importance of delivering
required and/or planned operational performance,
in order to meet return on investment targets and
shareholder expectations.
Resolute maintains its commitment to a culture
of good governance and disclosure, with a priority
on providing up-to-date information on activities
impacting shareholders and other key stakeholders.
Project Delivery
Resolute understands the importance of safe and
effective project delivery in enabling its growth
strategy and operational performance. There is
also awareness of the risks faced in delivering
projects across diverse jurisdictions, and operating
environments.
Resolute has embedded a range of project
management tools to manage and monitor pro-ject
delivery. Further, the corporate governance structures
provide rigour and oversight from investment
commitment to project status moni-toring and
strategic direction.
Operational Risks
Social Licence
Resolute acknowledges its social responsibility to
support local communities and the importance of
proactive engagement in enabling ongoing success
across all its current and future mining activities.
Resolute is also aware of the challenges in supporting
a diverse range of communities and needs.
Resolute is committed to operating in a manner
that allows us to approach and sustain our activities
harmoniously within the community.
Resolute is proactive in its engagement with local
communities and stakeholders and places a high
importance on its social responsibility.
Environmental / Sustainability
Mining activity creates environmental responsibility
and Resolute understands and respects its cross
jurisdictional mining obligations.
Our Corporate Social Responsibility plan outlines our
engagement strategy in supporting local communities.
Resolute progressively develop and maintain
environmental management systems that are
consistent with internationally recognised standards
wherever we operate.
Resolute acknowledges the need to adopt new
technologies to seek to mitigate the effects of climate
change, for example the planned solar hybrid power
plant at Syama.
Resolute's Environmental Policy provides the
corporate framework for managing environmental risk
and monitoring and reporting against environmental
obligations.
34
Resolute Mining Limited | 2018 Annual Report Risk
Safety
The nature of Resolute’s activities and the
environments in which mines are located, presents
inherent hazards, including the risk of serious injury or
fatality while working on site.
The physical remoteness of operations 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.
Mitigation / Comment
Resolute's detailed Safety, Health and Environmental
Management System is consistent across all our
operations and development groups.
Resolute employs a wide range of industry standard
safety management systems in order to ensure the
safety of our workers.
Resolute supports a safety conscious culture and
provide appropriate training and supervision on safety
management, which promotes and embeds safe
operating practices.
In recognition of the physical remoteness of Syama, a
well-equipped medical centre has been established
on site. In addition, Resolute provides health insurance
coverage for not only our local workers but also for
their immediate families.
Security and Conflict Risk
Resolute appreciates the security risk associated with
gold mining and 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 range of physical, process and
cyber security measures to mitigate the risk of harm to
our workers and damage to our assets.
Country-level information, and global trends are
continuously monitored to assess the risk of terrorism.
Security plans are in place to mitigate identified risks.
Technology
Resolute understands that innovation in mining
technology is key to future competitiveness and
recognises that a failure to identify and adopt more
efficient techniques and technologies represents
a risk to improving business processes and gaining
efficiencies.
Resolute continues to actively monitor technological
and digital advancements that could be adopted or
incorporated into our operations, particularly where
new technologies offer the potential to improve safety
and efficiency outcomes.
Resolute continues to optimise current technology
solutions to deliver efficiency across our mining and
corporate processes.
For example, the Syama Underground utilises
leading edge technology and global specialists in
designing and building the heavily automated, highly
mechanised mine of the future while allowing the local
workforce to be upskilled in the latest technologies in
underground mining.
External Risks
Geopolitical, Legal and Regulatory Developments
Exploring and operating in multiple jurisdictions
brings greater complexity and inherent risk. Resolute's
operational and exploration activities are subject to
extensive regulation in the relevant jurisdictions.
Resolute monitors legal and geopolitical risks as part
of centralised risk management processes. These risks
are carefully considered when assessing changes to
operations or pursuing new growth opportunities .
Changes to government, 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.
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.
35
Resolute Mining Limited | 2018 Annual Report Resolute Mining Limited | 2018 Annual Report
36
36
Resolute Mining Limited | 2018 Annual Report Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Financial Report
Contents
Corporate Directory
Directors’ Report
Auditor’s Independence Declaration
Financial Report for the six month period to 31 December 2018
Directors’ Declaration
Independent Auditor’s Report
38
39
61
62
115
116
37
Corporate Directory
Directors
Non-Executive Chairman
Managing Director and CEO
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Company Secretary
Amber Stanton
Martin Botha
John Welborn
Yasmin Broughton
Mark Potts
Sabina Shugg
Peter Sullivan
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 maintains a website where all major
announcements to the ASX are available: www.rml.com.au
Share Registry
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace
Perth, Western Australia 6000
Home Exchange
Australian Securities Exchange
Level 40, Central Park
152-158 St Georges Terrace
Perth, Western Australia 6000
Quoted on the official lists of the
Australian Securities Exchange:
ASX Ordinary Share Code: “RSG”
Securities on Issue (31/12/2018)
Ordinary Shares
Performance Rights
757,512,088
7,338,476
Auditor
Ernst & Young
Ernst & Young Building
11 Mounts Bay Rd
Perth, Western Australia 6000
Shareholders wishing to receive copies of Resolute’s ASX
announcements by e-mail should register their interest by
contacting the Company at contact@rml.com.au
38
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
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 for the six months ended 31 December 2018.
As part of the process of seeking a listing on the London Stock Exchange (LSE), and to synchronise the consolidation of Resolute’s
African subsidiary companies’ accounts, Resolute’s Board of Directors resolved to change from a 30 June year end to the more
conventional calendar reporting period for LSE companies of a 31 December year end for financial reporting purposes. This
change means that the current reporting period is a six month transitional financial period beginning on 1 July 2018 and ending
on 31 December 2018. The financial period will then revert to a 12 month financial year, commencing on 1 January and ending
on 31 December.
Corporate Information
Resolute Mining Limited (Resolute 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 in office during the six months ended 31 December 2018, 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
Marthinus (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 with 30 years’ experience in international investment banking. A founding director in Standard
Bank Plc’s London-centred international operations, Mr Botha established and led the development of the core global natural
resources trading and financing franchises, as well as various geographic operations, 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 Chair of the Nomination Committee, and a member of the Audit and Risk Committee and the Remuneration
Committee.
John Welborn (Managing Director and Chief Executive Officer)
BCom, FCA, FAIM, MAICD, MAusIMM, SAFin, JP
Mr John Welborn was appointed 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 is a Director of the World Gold Council (appointed 2017) and is a non-executive director of Equatorial Resources
Limited (appointed 2010), Kilo Goldmines Limited (appointed 2017), and is Chairman of Orbital Corporation Limited (appointed
2014).
Mr Welborn is Chair of the Safety and Environment Committee.
39
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Directors’ Report
Directors (continued)
Yasmin Broughton (Non-Executive Director)
BComm, PG Law, GAICD
Ms Yasmin Broughton is a Non-Executive Director and was appointed to the board in 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 15 years’ experience working with ASX-listed companies as an officer and has a deep understanding of corporate
governance, including compliance and managing complex legal issues. Ms Broughton is also a non-executive director of Synergy,
the Insurance Commission of Western Australia and Edge Employment Solutions Inc.
Ms Broughton is Chair of the Audit and Risk Committee, and a member of the Remuneration Committee and the Nomination
Committee.
Mark Potts (Non-Executive Director)
BSc (Hons)
Mr Mark Potts is a Non-Executive Director and was appointed to the board in June 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 Enterprise. Prior to Hewlett Packard, Mr Potts was the founder of several
successful, venture backed start-ups, that have driven technology disruption and business innovation in varied industries. Mr Potts
was a non-executive Chairman of Decimal Software Limited (2016 to December 2018) and is currently is a non-executive director
of Virtual Gaming World (appointed 2017), a non-executive director of iCetana (appointed 2018), and a board adviser to Modis
Australia (appointed 2010).
Mr Potts is a member of the Remuneration Committee, the Audit and Risk Committee and the Nomination Committee.
Sabina Shugg (Non-Executive Director)
BSc (Mining Engineering), MBA
Ms Sabina Shugg was appointed to the Board as a Non-Executive Director on 7 September 2018. Ms Shugg is a mining engineer
with over 30 years’ experience involving senior operational roles with leading mining and consulting organisations. Ms Shugg
holds a Master of Business Administration from the University of Western Australia, a Mining Engineering degree from the Western
Australian School of Mines, and a Western Australian First Class Mine Manager’s Certificate of Competency. Ms Shugg currently
serves on the Minerals Council of Australia Gender Diversity Working Group, the Curtin University Foundation Board, the Minerals
Research Institute of Western Australia’s Productivity Committee, and is the Director of the Kalgoorlie-Boulder Mining Innovation
Hub. In 2015 Ms Shugg was awarded a Member of the General Division of the Order of Australia for significant service to the
mining industry through executive roles in the resources sector and as a role model and mentor to women.
Ms Shugg is a member of the Remuneration Committee, the Safety and Environment Committee, the Audit and Risk Committee
and the Nomination Committee.
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 at which point he became a Non-Executive Director of the Company. 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), 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 and the Nomination
Committee.
40
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Directors’ Report
General Counsel / Company Secretary
Amber Stanton
LLB
Ms Amber Stanton is a corporate lawyer and was appointed as General Counsel / Company Secretary in 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).
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 and related bodies
corporate were:
M. Botha
J. Welborn
Y. Broughton
M. Potts
S. Shugg
P. Sullivan
Fully Paid Ordinary
Shares
Performance
Rights
-
-
4,525,000
3,029,059
-
26,825
-
2,340,674
6,892,499
-
-
-
-
3,029,059
Nature of Operations and Principal Activities
The principal activities of entities within the consolidated entity during the period were:
• Gold mining; and,
•
•
development of the Syama Underground Mine; and
prospecting and exploration for minerals.
There has been no significant change in the nature of those activities during the period.
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.
Significant Events after Reporting Date
On 31 January 2019, Resolute forward sold 30,000 ounces (oz) of gold at an average price of US$1,335/oz in scheduled
monthly deliveries of 5,000oz between July 2019 and December 2019. Additionally, on 11 February 2019, Resolute forward sold
30,000oz of gold at an average price of A$1,887/oz in scheduled monthly deliveries of 5,000oz between January 2020 and June
2020.
As part of the process of syndication of the US$100m Syndicated Facility Agreement, the facility limit was expanded to US$150m
with the participation of Investec, BNP Paribas, Citibank N.A. and Nedbank. The expanded facility was signed on 21 December
2018, all Conditions Precedent were satisfied as of 31 December 2018 and the expanded facility was fully available to Resolute
to draw from 3 January 2019.
Financial Position and Performance
• Cash, bullion and listed investments of A$117m (12 months ended 30 June 2018: A$112m)
• Revenue from gold and silver sales of A$223m (12 months ended 30 June 2018: A$446m)
• Net cash flows from operations of A$34m (12 months ended 30 June 2018: A$28m)
• Gross profit from operations of A$24m (12 months ended 30 June 2018: A$69m)
• Net loss after tax of A$5m (12 months ended 30 June 2018: profit of A$78m)
• Net cash flows from operations of A$34m (12 months ended 30 June 2018: A$28m)
• Net investing cash outflows of A$181m (12 months ended 30 June 2018: A$269m)
• Net financing cash inflows of A$122m (12 months ended 30 June 2018: A$15m outflow)
41
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Directors’ Report
Project Update
Gold production for the six month period from 1 July 2018 to 31 December 2018 was 129,199oz at an All-In Sustaining Cost
(AISC) of A$1,449/oz (US$1,050/oz).
Units
Syama
Sulphide
Syama
Oxide
Syama Total Ravenswood
Summary for 1 July to 31
December 2018
UG Lateral Development
UG Vertical Development
Total UG Lateral Development
UG Ore Mined
UG Grade Mined
OP Operating Waste
OP Ore Mined
OP Grade Mined
Total Ore Mined
Total Tonnes Processed
Grade Processed
Recovery
Gold Recovered
Gold in Circuit
Drawdown/(addition)
Gold Produced (Poured)
Gold Bullion in Metal account
movement (increase)/decrease
Gold Sold
Achieved Gold Price
Cost Summary
Mining
Processing
Administration
Stockpile Adjustments
Gold in Circuit Movement
Cash Cost
Royalties
By-product Credits
Sustaining Capital + Others
Overhead Costs
Administration Costs
All-In Sustaining Cost (AISC)
AISC is calculated on gold
produced (poured)
Depreciation and Amortisation
m
m
m
t
g/t
BCM
BCM
g/t
t
t
g/t
%
oz
oz
o
oz
oz
A$/oz
US$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
US$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
A$/oz
US$/oz
A$/oz
-
-
-
-
-
4,609
113
4,722
-
-
-
GROUP
Total
4,609
113
4,722
256,009
280,407
536,416
2.71
1.87
2.27
2,457,516
2,457,516
59,894
2,517,410
287,028
287,028
117,802
404,830
2.26
2.26
0.59
1.66
608,519
864,528
615,855
1,480,383
720,603
1,587,951
1,178,817
2,766,768
3.36
84.1
2.58
78.4
1.01
92.7
1.91
83.4
4,609
113
4,722
256,009
2.71
-
-
-
256,009
867,348
1.94
70.2
37,935
65,379
103,314
35,594
138,908
(679)
(9,326)
(10,005)
296
(9,709)
37,256
56,053
8,279
(13,684)
45,535
1,732
1,252
42,369
1,732
1,252
-
920
471
91
(28)
1,454
1,052
119
(1)
28
27
-
1,627
1,178
172
355
360
208
35
(113)
845
611
84
(1)
15
49
-
992
718
55
93,309
(5,405)
87,904
1,732
1,252
211
585
314
57
(79)
1,088
787
98
(1)
19
40
-
1,244
901
98
35,890
129,199
4,481
(924)
40,371
128,275
1,737
1,257
556
694
266
154
7
1,677
1,215
98
(10)
30
58
-
1,853
1,341
17
1,734
1,253
307
614
301
85
(55)
1,252
910
101
(3)
21
53
25
1,449
1,050
78
Table: Six months ended December 2018 Production and Costs
42
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Directors’ Report
Project Update (continued)
Syama Gold Mine
At the Syama Gold Mine in Mali (Syama) production in the six month period was 93,309oz at an AISC of A$1,244/oz (US$901/oz).
The highlight of the reporting period was the successful commencement of long hole open stoping and sublevel caving at the
Syama Underground Mine. First ore was delivered on time and on budget from the sublevel cave in December 2018 and marked
a pivotal moment in the history of the Company.
Sulphide Operations
During the six month period ending December 2018, production from the Syama sulphide circuit was 37,256oz at an AISC of
A$1,627/oz (US$1,178/oz). Gold recovery for the period was in line with expectations as the Company treated mixed ore sources;
underground ore was blended with low-grade ore stockpiles which had a direct impact on the recovery.
All elements of Resolute’s sulphide processing improvement project, Project 85, have been commissioned and are operating
effectively. Significantly, during periods when 100% underground sulphide ore was treated, the Syama processing plant delivered
recoveries greater than 85% which provides confidence in Resolute’s ability to achieve targeted recoveries from Syama.
The proportion of underground ore through the mill will increase over the first half of 2019 which will reduce the level of blending
of underground ore with low grade stockpiles. The ramp-up of the Syama Underground Mine will enable an increasing proportion
of mill feed to be higher grade underground ore which will drive greater gold production. From June 2019 onwards, underground
sulphide ore will be treated exclusively through the sulphide plant.
Oxide Operations
During the six month period ending 31 December 2018, production was 56,053oz at an AISC of A$992/oz (US$718/oz). Oxide
production was initially sourced from stockpiled ore from the northern satellite pits (A21, Alpha, Beta and BA01), located between
4km and 8km north of the Syama processing plant. Processing of ore sourced from the new Namakan satellite open pit at
Tabakoroni, located 35km south of Syama, commenced in November 2018.
Milling characteristics of ore from Tabakoroni were better than anticipated with larger quantities of fully oxidised ore resulting in
higher throughput, while improved grades contributed to higher processing recoveries. Gold produced (poured) improved
markedly with the introduction of higher grade oxide material from Tabakoroni. Commissioning of the gravity gold circuit was also
successfully completed in conjunction with the commencement of treatment of the Tabakoroni material with an immediate positive
impact. Tabakoroni will provide 100% of oxide mill feed at Syama in 2019.
Ongoing Development at Syama Underground
Having commenced production from the sublevel cave in December 2018, work is now focused on commissioning of the new
automated fleet. When fully commissioned the autonomous mining operation will comprise automated long hole production drilling,
automated loading and automated haulage from the underground loading station to the Run of Mine (ROM) pad above ground.
In addition to lowering costs, automation will increase safety and productivity at Syama and create numerous highly skilled jobs
in Mali for the life of the mine.
Solar Hybrid Power Plant Development
In November 2018, Resolute announced the signing of a Joint Development Agreement with Ignite Energy Projects Pty Ltd (Ignite
Energy) for the development of a new 50 megawatt (MW) independent hybrid power plant at Syama which will combine solar,
battery, and heavy fuel oil technologies. This innovative project is expected, when constructed, to be the world’s largest fully
integrated hybrid power plant for a standalone mining operation. The new power plant will replace the existing historic 28MW
diesel fired power station at Syama and is expected to be fully operational by the end of 2020.
The new Syama power solution will be funded and constructed under an Independent Power Producer model whereby Ignite
Energy, under the terms of an exclusive Power Purchase Agreement, will be responsible for the design, construction, ownership,
funding, and operation of the new Solar Hybrid Power Facility on an exclusive basis and will supply power to Resolute on a
guaranteed basis subject to a maximum tariff over a term of between 12 and 20 years.
43
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Directors’ Report
Project Update (continued)
Solar Hybrid Power Plant Development (continued)
The new solar hybrid power solution is expected to generate savings of up to 40% on the current operating costs of power at
Syama. In addition to higher efficiencies of the solar hybrid solution, the replacement of Resolute’s existing diesel generated
power plant will reduce reliance on, and exposure to, diesel prices. The new power facility will also provide significant
environmental benefits including lower carbon emissions as a result of solar power generation and the greater efficiencies of
integrated battery storage hybrid technology and improved engine technologies.
Exploration
In December 2018, Resolute announced further exceptional drilling results from the ongoing exploration program at Tabakoroni.
The potential for high grade sulphide mineralisation was initially identified during the drill out of Resolute’s existing Ore Reserves
of surface oxide mineralisation at Tabakoroni. Drilling undertaken during 2018 returned wide zones of gold mineralisation at grades
suitable for underground mining operations. High grade gold mineralisation has now been intersected at Tabakoroni over a strike
length of more than 1.5km. Mineralisation remains open at depth and along strike to the north. Drilling to date has outlined two
zones of coherent high-grade mineralisation each with a strike length of 500m with widths averaging 10 metres. The combination
of a strike length of over 1.5km and the fact that drilling to date has only tested the mineralised system to a depth of 250m below
surface leads Resolute to see excellent upside at Tabakoroni. Exploration drilling at Tabakoroni will continue throughout 2019 to
fully define the resource envelope. Resource estimation work will be undertaken early in 2019 with the expectation a maiden
underground resource at Tabakoroni being defined and announced in Q1 FY19. The maiden resource will then form the basis for
initial studies of a future underground mine.
Diamond drilling at Syama Deeps and Nafolo continued throughout the six month period ending 31 December 2018. Results
have extended the Nafolo alteration and mineralisation footprint over a strike length of 700m and remain open downdip and to the
south. Drilling results from Nafolo demonstrate potential expansions to the existing Syama mine plan from underground mining.
Exploration is now focussed on looking for repetitions of the Nafolo zone to the south and north along the Syama shear. There is
a 6km strike extent of major shear structure with favourable mineralisation positions to the south of Syama. Drilling along strike to
the south has identified low grade zones of similar alteration and mineralisation to Syama. This program will continue throughout
FY19. The upper lens of Nafolo mineralisation is contiguous with the southern extensions of the main Syama mineralisation
envelope. As such the Nafolo mineralisation can potentially be accessed from existing Syama Underground infrastructure and
may form part of a future expanded mining operation.
Ravenswood Gold Mine
Gold production from the Ravenswood Gold Mine in Australia (Ravenswood) in the six month period ending 31 December 2018
was 35,890oz at an AISC of A$1,853/oz (US$1,341/oz). Underground ore production from Mt Wright was supplemented by
processing of low-grade open pit stockpiles. Mining at Mt Wright will continue into late 2019 as preparations for the commencement
of open pit mining at Buck Reef West accelerate.
Ravenswood Expansion Project
Following the end of the six month period, Resolute announced that it has commenced a strategic review of the Ravenswood
Expansion Project (REP). The initial focus of the review is to enhance project economics by pursuing reductions in capital and
operating costs. The review will also assess the potential for further growth through processing expansions, mine life extensions,
and increased production capacity. Ongoing work at Ravenswood has identified new exploration targets along with opportunities
for plant expansions and improved environmental outcomes. Resolute intends for the strategic review to capture these
enhancements and incorporate them into an updated Life-of-Mine plan expected to be finalised during 2019.
44
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Directors’ Report
Project Update (continued)
Prescribed Project Status Extension
In December 2018, the Queensland Government extended the Prescribed Project status of the REP to 30 November 2020. The
assistance provided by the streamlined administrative process provided by Prescribed Project status has been essential in
ensuring Resolute has received the regulatory approvals required for the REP and in providing opportunity for further project
enhancements. Under relevant Queensland state legislation, a Prescribed Project declaration is designed to facilitate the approval
process for projects deemed to be of particular economic or social significance to Queensland or a region within the state. This is
achieved by empowering the Coordinator General to actively assist in the planning, delivery and coordination of all required
government and regulatory approvals to ensure there are no unnecessary delays, while ensuring the project’s environmental
impacts are properly managed. The extension of the Prescribed Project status will assist the Company in finalising a small number
of additional regulatory approvals that will be requested to allow project works on an enhanced REP program to commence.
Bibiani Gold Mine
At the beginning of the six month period ending 31 December 2018, Resolute released an updated feasibility study for Bibiani
which confirmed potential for a low cost, long life operation with robust economics. During the six month period ending 31
December 2018, the Company progressed project execution planning and continued to refine mining and processing strategies.
Corporate
During the six month period ending 31 December 2018, Resolute executed a US$150 million revolving credit facility (Facility)
which was successfully syndicated with Investec, BNP Paribas, Nedbank and Citibank. The Facility has an initial three-year term,
with rates, fees and terms which are extremely flexible and highly competitive. Resolute can draw on the Facility as required for
any corporate funding purposes and both the credit limit and tenor remains capable of further extension. The new Facility provides
Resolute with flexible access to low cost funding for new growth initiatives.
The Company continued to actively and responsibly manage its gold sales and undertake hedging above its budgeted gold price
to take advantage of gold price volatility, maximise revenues and protect the Company’s balance sheet and cash flows. Including
hedging undertaken following year-end, Resolute’s hedge book as at 31 December 2018 stands at 125,000oz in monthly deliveries
out to June 2020 and represents less than 3% of the Company’s Ore Reserves.
In November 2018, the Company also announced that it had commenced preparatory work for an application for admission of its
ordinary shares to the standard listing segment of the LSE for trading on its main market for listed securities. Subject to the
required regulatory approvals from both the UK Financial Conduct Authority and the LSE, Resolute intends to seek admission
during the first half of 2019.
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 Science to evaluate and control surface and
groundwater quality.
45
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Directors’ Report
Remuneration Report
The following information has been audited.
The 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. The following information has been audited
as required by section 308(c) of the Corporations Act 2001.
The Remuneration Report is presented under the following sections:
1. Letter from the Chair of the Remuneration Committee
2.
Introduction
3. Remuneration governance
4. Resolute Remuneration Policy
5. Non-Executive director remuneration arrangements and outcomes for the period 1 July to 31 December 2018
6. Additional disclosures relating to performance rights, options and shares
7. Loans to key management personnel (KMP) and their related parties
1. Letter from the Chair of the Remuneration Committee
Dear Shareholders,
On behalf of the Board of Directors of Resolute I am pleased to present the Company’s Remuneration Report for the six month
period to 31 December 2018.
Business Outcomes
The period has seen positive outcomes in safety performance with excellent Total Recordable Injury Frequency Rate (TRIFR)
results across all locations and at Target performance in the cash operating cost per tonne milled. The mixed business outcomes
have subsequently resulted in a Short term incentive (STI) outcome that whilst above Threshold is below target at 59%
Set out in the table below is commentary on the performance outcome for each component of the STI Plan.
Performance Measure
Company Operating Cash
Flow
Cash Operating Cost Per
Tonne Milled
Production Target (Gold
Poured)
Safety: TRIFR
Discretionary Safety (Safety
Action List)
Performance Area
Weighting
Actual
Performance
Outcome
Commentary
30%
30%
30%
5%
5%
Below Threshold
Performance
Cash flows were impacted due to not achieving
production as outlined below.
At Target
Performance
Slightly below
Target
Performance
Above Stretch
Performance
Below Target
Performance
Both operations achieved Cash Operating Cost
Per Tonne Milled slightly below Target largely
due to the slightly below Target Production (Gold
Poured).
Target outcome in relation to is largely due to the
delays caused by adverse weather events in Mali
in Q1, with record rainfall recorded in the wet
season.
All sites achieved better than target results with a
reduction in the TRIFR rate by 41% from 3.30 to
1.98
Of the two key areas of focus for the 6-month
period one was achieved and the second requires
further work.
46
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Directors’ Report
Remuneration Report (continued)
1.
Letter from Chair (continued)
Remuneration Outcomes
Short term incentive plan (STIP)
Actual average performance for the six month period to 31 December 2018 for the key management personnel (KMP) STIP
outcome was 69.5% of Target performance.
Long term incentive plan (LTIP)
No LTIP grant vested at 31 December 2018. The next period in which an LTIP grant will be tested to determine the level of vesting
is 30 June 2019, for awards granted on 1 July 2016.
Executive salaries
Benchmarking of CEO and Executive salaries has been completed against peer companies. Where applicable adjustments to
annual salary conditions have been made so that the Company is providing appropriate conditions and to ensure the retention of
key staff.
Changes from 1 January 2019
Long term incentive plan (LTIP)
Long term incentives (LTI): The existing Resource & Reserve Growth measure has been replaced with Ore Reserve Replacement
(ORR) metric to focus on maintaining and growing the deposits which create value to shareholders. The LTI comparator group
used to measure relative Total Shareholder Return (TSR) has been revised to ensure relevant companies are included being gold
producers of a similar size and operational locations. Details of the performance criteria for the LTIP and the comparator group of
companies is included in the Remuneration Report in Section 4a.
Changes from 1 March 2019
Non-Executive Director Remuneration
A review of Non-Executive Director (NED) fees has been completed. From 1 March 2019, the Chairman’s fee will increase to
$180,000 from $175,000 and NED fees will increase from $90,000 to $100,000. In addition, the Chair of the Audit and Risk
Committee will receive a Committee Chair fee of $15,000 and the Chair of the Remuneration Committee will receive a Committee
Chair fee of $10,000.
Yours sincerely
Peter Sullivan
Chair – Remuneration Committee
47
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Directors’ Report
Remuneration Report (continued)
2.
Introduction
The remuneration report details the remuneration arrangements for KMP who 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.
For the purposes of this report, the term “Executive” includes the Chief Executive Officer (CEO), executive directors and other
senior executives of the Company and the Group.
Key management personnel
(i) Directors
Name
M. Botha
J. Welborn
Y. Broughton
M. Potts
H. Price
S. Shugg
P. Sullivan
(ii) Executives
Position held during the six month period to 31 December 2018
Non-Executive Director (Non-Executive Chairman)
Managing Director and Chief Executive Officer
Non-Executive Director
Non-Executive Director
Non-Executive Director (resigned 25 October 2018)
Non-Executive Director (appointed 7 September 2018)
Non-Executive Director
Name
P. Beilby
L. de Bruin
A. Stanton
Position held during the six month period to 31 December 2018
Chief Operating Officer
Chief Financial Officer
General Counsel and Company Secretary
3. Remuneration Governance
Remuneration Committee
The Remuneration Committee is responsible for determining and reviewing the compensation arrangements for directors, the
Chief Executive Officer and the executive team. Executive remuneration is reviewed annually having regard to individual and
business performance, relevant comparative information and internal and independent external information.
In accordance with best practice governance the Remuneration Committee is comprised solely of non-executive directors.
Nomination Committee
The Nomination Committee is responsible for Board and Board Committee membership, succession planning and performance
evaluation.
In accordance with best practice governance the Nomination Committee is comprised solely of non-executive directors.
Use of Remuneration Consultants
To ensure the Remuneration Committee is fully informed when making remuneration decisions, it seeks external remuneration
advice. Remuneration consultants are engaged by, and report directly to, the Committee. In selecting remuneration consultants,
the Committee considers potential conflicts of interest and requires independence from the Company’s key management
personnel and other executives as part of their terms of engagement.
During the period, the Company engaged The Reward Practice Pty Ltd as Remuneration Consultants to assist with various
remuneration matters. No remuneration recommendations, as defined by the Corporations Act, were provided by The Reward
Practice Pty Ltd during the period.
48
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Directors’ Report
Remuneration Report (continued)
3. Remuneration Governance (continued)
Remuneration Structure
In accordance with best practice governance, the structure of non-executive director and senior executive remuneration is
separate and distinct.
Remuneration Report Approval at 2018 AGM
The 30 June 2018 remuneration report received positive shareholder support at the 2018 AGM with a vote of more than 91% in
favour.
4. Resolute Remuneration Policy
The Board recognises that the performance of the Company depends upon the quality of its executives. To achieve its financial
and operating objectives, the Company embodies the following principles in its remuneration framework:
The Company aims to reward executives with a level and mix of remuneration commensurate with their position and
responsibilities to ensure total remuneration is competitive by market standards.
Business Objective
Remuneration Objectives
Competitive Remuneration
Shareholder Alignment
Provide rewards to attract, motivate and retain highly
skilled directors and executives
Align executive incentive rewards with the creation of value
for shareholders
It is the Remuneration 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 Component
Purpose
Link to Performance
Fixed remuneration
Short term incentive (STI)
Long term incentive (LTI)
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.
The objective of the annual “at risk”
STI is to generate greater
alignment between performance
and remuneration levels to drive
operational excellence.
The objective of the LTI plan is to
reward executives in a manner
which aligns a significant portion of
remuneration with the creation of
shareholder wealth.
Company and individual performance are considered
as part of the annual remuneration review.
Internal performance measures including safety,
production and costs which represent key business
drivers are considered and assessed to determine
annual incentives.
Vesting of awards is dependent upon both an external
measure (total shareholder return (TSR) performance
against a peer group) and an internal measure
(resource and reserve growth).
49
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Directors’ Report
Remuneration Report (continued)
4. Resolute Remuneration Policy (continued)
4a. Approach to setting remuneration
In the six month period ending 31 December 2018, the Executive remuneration framework consisted of fixed remuneration and
short and long-term incentives as outlined in the table below.
Overall remuneration level and mix
How is overall
remuneration and
mix determined?
Remuneration levels are considered annually through a review that considers comparative market data,
the performance of the Company and individual, and the broader economic environment.
The Company aims to reward executives with a level and mix (proportion of fixed, short term incentives
and long term incentives) of remuneration appropriate to their position, responsibilities and performance
within the Company and that which is aligned with targeted market comparators.
Comparative companies are based on the following:
Industry peers with similar market capitalisation
Gold resource companies with African assets and comparable market capitalisation
Other industry companies with which Resolute competes for talent
In 2018, remuneration benchmarking was undertaken with reference to industry peers. The Company’s
policy is to position fixed remuneration around the median of direct industry peers.
The chart below summarises the MD & CEO’s and other executives’ target remuneration mix for Fixed
remuneration (FR), STI and LTI. The Target mix is considered appropriate for Resolute based on the
Company’s current phase of growth.
Target Remuneration Mix
MD & CEO
40%
20%
40%
Other Executives
47%
23%
30%
0%
20%
40%
60%
80%
100%
FR
STI
LTI
Fixed remuneration
FR includes base salary and superannuation contributions.
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.
What is included
in fixed
remuneration
(FR)?
How is fixed
remuneration
reviewed and
approved?
50
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Directors’ Report
Remuneration Report (continued)
4. Resolute Remuneration Policy (continued)
4a. Approach to setting remuneration (continued)
Short Term Incentive
What are the
performance
criteria and
how do they
align with
business
performance?
The STI is payable based on performance against key Corporate and Individual performance indicators
(KPIs) set at the beginning of the performance period. KPIs require the achievement of strategic,
operational or financial measures and are linked to the drivers of business performance.
The STI measures comprise:
•
Improved safety performance (10%) – 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 (30%);
gold poured (30%); and
cost per tonne milled (30%).
• A set of personal performance metrics designed to drive optimum operational performance as
specifically related to each executive portfolio. Personal performance acts as a modifier to the outcome
of the above safety and budget related measures.
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.
The MD and Executives have a target STI opportunity of 50% of fixed remuneration, with a maximum
opportunity (if all the Stretch performance is met for each KPI and individual performance is achieved at a
Stretch level) of 112.5% of fixed remuneration.
The STI for the period commencing 1 July 2018 was reduced by 50% of the annual opportunity to reflect the
six month reporting period.
For each KPI there are defined “Threshold”, “Target” and “Stretch” measures which are capable of objective
assessment.
The Corporate KPIs are assessed as follows on an individual KPI basis:
What is the
value of the
STI award
opportunity?
How are STI
payouts
determined?
• Below Threshold = $nil payment
•
Threshold performance = 25% of KPI opportunity
•
Target Performance = 100% of KPI opportunity
• Stretch performance = 150% of KPI opportunity
Pro-rata payment applies on a straight-line basis between “Threshold” and “Target” and between “Target” to
“Stretch” performance.
The personal KPIs are assessed as follows:
• Below Threshold = $nil payment
•
Threshold performance = 50% of total Corporate KPI outcome
•
Target Performance = 100% of total Corporate KPI outcome
• Stretch performance = 150% of total Corporate KPI outcome
Pro-rata payment applies on a straight-line basis between “Threshold” and “Target” and between “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 overall performance of the Company.
51
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018 Directors’ Report
Remuneration Report (continued)
4. Resolute Remuneration Policy (continued)
4a. Approach to setting remuneration (continued)
Short Term Incentive (continued)
What happens to
STI Awards in the
event of a
Termination of
Employment?
Subject to overarching Board discretion, to be eligible for any payment under the STI, the participant must
be employed by the Company at the earlier of, the time of payment or three months after the performance
period in which the STI is tested.
Long Term Incentive
How often are LTI
grants made and
what is the
maximum LTI
quantum?
What are the
performance
criteria for the
LTI?
At Board discretion, executives receive a new grant of Performance Rights (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 maximum percentage of their fixed
remuneration and equates to 100% of fixed remuneration for the MD & CEO and 65% of fixed
remuneration for the other executives. For grants made for the period commencing 1 July 2018, the LTI
quantum was reduced by 50% of the annual opportunity to reflect the six month reporting period.
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.
The LTI performance is structured as follows:
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.
How is the
performance
period
determined?
Grants under the LTI need to serve a number of different purposes:
(i) act as a key retention tool; and,
(ii)
focus on future shareholder value generation.
Therefore, the awards under the LTI relate to a 3 year period and provide a structure that is focused on
long term sustainable shareholder value generation.
Which companies
does Resolute
measure their
TSR against?
The Company’s TSR is measured against a customised peer group which is reviewed each year which
represent companies with a similar commodity, cycle of operation and asset location. For LTI grants
made for the period commencing 1 July 2018 the customised peer group comprised 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
52
• 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
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Directors’ Report
Remuneration Report (continued)
4. Resolute Remuneration Policy (continued)
4a. Approach to setting remuneration (continued)
Long Term Incentive (continued)
How is vesting
determined?
For grants made for the period commencing 1 July 2018, in order for up to 75% of the Rights to vest, the
Company’s share price performance must be at or above the 60th 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 grants tested for vesting at 30 June 2021:
Relative TSR performance
Less than 60th percentile
At the 60th percentile
Performance Vesting Outcomes
0% vesting
50% vesting
Between 60th and 75th percentile
Linear vesting, between 50% and 100%
75th percentile and above
100% vesting
The second performance condition is resource and reserve growth net of depletion over a 3 year period.
Broadly, the quantum of the increase in resources and reserves will determine up to 25% of the Rights to
vest.
The following table sets out the vesting schedule based on the Company’s resource and reserve growth
performance for grants made for the period commencing July 2018 which will be tested for vesting at 30
June 2021:
Resource and Reserve (R&R) Growth
Performance
R&R depleted
R&R maintained
Performance Vesting Outcomes
0% vesting
50% vesting
R&R between maintain and 30% growth
Linear vesting, between 50% and 100%
R&R grown by 30% or more
100% vesting
Vested, but unexercised Rights remain on foot unless Board discretion is exercised in situations such as
misconduct. Unvested Rights will be forfeited unless Board discretion is exercised in circumstances such
as death, retirement due to ill health and redundancy
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 Rights will be dealt with.
What happens to
LTI Awards in the
event of a
Termination of
Employment?
What happens to
LTI Awards in the
event of a change
of control?
53
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Directors’ Report
Remuneration Report (continued)
4. Resolute Remuneration Policy (continued)
4b. Executive Remuneration arrangements and outcomes for the period 1 July to 31
December 2018
Company Performance
The table below shows the performance of the Consolidated Entity over the last 5 periods/years:
Net (loss)/profit after tax
$'000
6 months
ended 31
December
2018
(5,324)
Basic (loss)/earnings per
share
cents/share
(0.44)
Executive KMP Statutory remuneration disclosures
30 June
2018
77,837
8.85
30 June
2017
166,096
19.05
(Restated)
30 June
2016
200,732
30 June
2015
(568,760)
26.79
(78.39)
Table 1 below shows the remuneration expense recognised for each KMP for the six month period 1 July 2018 to 31 December
2018. Table 2 below shows the remuneration expense recognised for each KMP for the 12-month period 1 July 2017 to 30 June
2018.
Table 1 - Statutory Executive KMP remuneration for the six month period to 31 December 2018
SHORT TERM BENEFITS
POST
EMPLOY-
MENT
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
$
s
t
i
f
e
n
e
B
y
r
a
t
e
n
o
M
n
o
N
)
i
(
$
I
)
i
i
(
e
v
i
t
n
e
c
n
m
r
e
T
t
r
o
h
S
$
e
s
n
e
p
x
E
e
v
a
e
L
l
a
u
n
n
A
$
i
e
v
a
e
L
e
c
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
$
n
o
i
t
a
u
n
n
a
r
e
p
u
S
$
l
a
t
o
T
$
J. Welborn
340,000
5,070
121,918
27,338
12,500
8,878
525,514 1,041,218
P. Beilby
177,604
5,070
64,906
18,162
12,500
5,553
97,991
381,786
L. de Bruin
180,288
5,070
76,532
15,715
12,500
5,038
73,511
368,654
A. Stanton
128,008
7,347
57,491
11,880
10,266
3,796
33,658
252,446
Total
825,900
22,557
320,847
73,095
47,766
23,265
730,674 2,044,104
,
I
e
v
i
t
n
e
c
n
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
%
62
43
41
36
50
26
20
13
(i)
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.
(ii)
The Short Term Incentives for the six months ended 31 December 2018 will be paid in cash in March 2019.
54
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Directors’ Report
Remuneration Report (continued)
4. Resolute Remuneration Policy (continued)
4b. Executive Remuneration arrangements and outcomes for the period 1 July to 31
December 2018 (continued)
Table 2 - Statutory Executive KMP remuneration for the year ended 30 June 2018
SHORT TERM BENEFITS
s
t
i
f
e
n
e
B
y
r
a
t
e
n
o
M
n
o
N
)
i
(
$
n
o
i
t
a
r
e
n
u
m
e
R
e
s
a
B
$
I
)
i
i
(
e
v
i
t
n
e
c
n
m
r
e
T
t
r
o
h
S
$
e
s
n
e
p
x
E
e
v
a
e
L
l
a
u
n
n
A
$
POST
EMPLOY-
MENT
BENEFITS
LONG
TERM
BENEFITS
SHARE
BASED
PAYMENTS
i
e
v
a
e
L
e
c
v
r
e
S
g
n
o
L
e
s
n
e
p
x
E
$
n
o
i
t
a
u
n
n
a
r
e
p
u
S
$
i
s
t
h
g
R
e
c
n
a
m
r
o
f
r
e
P
$
l
a
t
o
T
$
J. Welborn
648,615
5,070
312,199 56,058
25,000
34,184
1,408,339 2,489,465
P. Beilby
395,438
5,070
154,608 34,397
25,000
18,495
234,761
867,769
L. de Bruin
363,462
5,070
191,895 31,096
25,000
13,582
195,286
825,391
G. Fitzgerald (iii)
19,600
5,639
-
2,818
20,012
1,082
-
49,151
A. Stanton (iv)
240,658
5,070
99,486
9,432
20,049
6,716
43,658
425,069
Total
1,667,773 25,919
758,188 133,801
115,061
74,059
1,882,044 4,656,845
PERFORMANCE
RELATED
I
,
e
v
i
t
n
e
c
n
m
r
e
T
t
r
o
h
S
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
69
45
47
-
34
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
%
57
27
24
-
10
(i)
(ii)
(iii)
(iv)
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 2018 were paid in cash on 15 September 2018.
Mr Fitzgerald resigned as Company Secretary on 4 August 2017.
Ms Stanton was appointed on 4 August 2017.
Executive KMP actual remuneration earned
STI outcomes
Actual average performance for the KMPs was 69.5% of Target performance.
LTI outcomes
No LTI grant vested at 31 December 2018. The next period in which a LTI grant will be tested to determine the level of vesting is
30 June 2019, for awards granted on 1 July 2016.
55
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Directors’ Report
Remuneration Report (continued)
4. Resolute Remuneration Policy (continued)
4b. Executive Remuneration arrangements and outcomes for the period 1 July to 31
December 2018 (continued)
Executive Employment Contracts
Remuneration arrangements for KMP are formalised in employment agreements. The following table outlines the details of
contracts with key management personnel:
Name
Title
Term of
Agreement
Notice Period
by Executive
Notice Period
by Company
Termination
Benefit¹
John Welborn
Managing Director and Chief
Executive Officer
Open
6 months
12 months
Peter Beilby
Chief Operating Officer
Open
3 months
6 months
Lee-Anne de
Bruin
Amber Stanton
Chief Financial Officer
Open
3 months
3 months
General Counsel and Company
Secretary
Open
3 months
3 months
Redundancy as
per NES
Redundancy as
per NES
Redundancy as
per NES
Redundancy as
per NES
¹ NES is the National Employment Standards.
5. Non-Executive Director Remuneration Arrangements and Outcomes for the six month
period to 31 December 2018
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. Non-executive directors do not participate in any
incentive programs.
Position
Current Annual fee
Chair of Board
Other Non-Executive Directors
$175,000
$90,000
56
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Directors’ Report
Remuneration Report (continued)
5. Non-Executive Director Remuneration Arrangements and Outcomes for the six month
period to 31 December 2018 (continued)
Non-executive director remuneration for the six month period to 31 December 2018
SHORT TERM BENEFITS
POST EMPLOYMENT
BENEFITS
Remuneration
Non-Monetary
Benefits
Superannuation
TOTAL
$
87,500
45,000
45,000
20,447
25,952
36,161
260,060
$
-
-
-
-
-
4,935
4,935
$
-
-
-
8,217
-
3,904
12,121
$
87,500
45,000
45,000
28,664
25,952
45,000
277,116
M. Botha
Y. Broughton
M. Potts
H. Price
S. Shugg
P. Sullivan
Total
Non-executive director remuneration for the twelve month period to 30 June 2018
SHORT TERM BENEFITS
POST EMPLOYMENT
BENEFITS
Remuneration
Non-Monetary
Benefits
Superannuation
TOTAL
$
175,000
118,000
90,000
65,000
68,592
516,592
$
-
-
-
-
13,600
13,600
$
-
-
-
25,000
7,808
32,808
$
175,000
118,000
90,000
90,000
90,000
563,000
M. Botha
Y. Broughton (i)
M. Potts
H. Price
P. Sullivan
Total
(i)
$28,000 included in Ms Broughton’s remuneration relates to company secretarial consultancy services provided
during the 2018 financial year.
57
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Directors’ Report
Remuneration Report (continued)
6. Additional Disclosures Relating to Performance Rights, Options and Shares
No options were held by KMP during the period.
Details of performance rights holdings of KMP are as follows:
Granted during the period as compensation
e
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u
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f
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s
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n
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p
$
d
o
i
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e
p
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t
g
n
i
r
u
d
d
e
s
p
a
L
d
o
i
r
e
p
e
h
t
g
n
i
r
u
d
d
e
t
s
e
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e
h
t
f
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Directors
J. Welborn
4,666,500 277,559
Other key management personnel
P. Beilby
1,350,223
112,857
L. de Bruin
424,667
102,362
A. Stanton
162,500
76,895
26 Oct
2018
26 Oct
2018
26 Oct
2018
26 Oct
2018
0.77
212,888
3
30 Jun
2021
1 Jul
2025
$nil
(117,412) (1,797,588)
3,029,059
0.92
104,167
0.92
94,480
0.92
70,974
30 Jun
2021
30 Jun
2021
30 Jun
2021
3
3
3
1 Jul
2025
1 Jul
2025
1 Jul
2025
$nil
(68,356)
(813,662)
581,062
$nil
$nil
-
-
-
-
527,029
239,395
i.
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 six month period to 31 December 2018 that also vested during the six month period to 31 December 2018 is
nil.
Details of shareholdings of KMP are as follows:
Received
during the
period on the
vesting of
performance
rights
Balance at
the start of
the period
Purchased on
market during
the period
Other
changes
during the
period
Shares sold
on market
during the
period
Balance at the
end of the
period
Directors
M. Botha
J. Welborn
Y. Broughton
M. Potts
H. Price (ii)
S. Shugg
P. Sullivan
-
-
-
2,500,000
1,797,588
202,412
-
26,825
194,745
-
2,840,674
-
-
-
-
-
-
-
-
-
(194,745)
-
-
-
-
-
-
-
-
-
-
-
4,500,000
-
26,825
-
-
2,840,674
(200,000)
980,229
-
-
-
-
-
-
Other key management personnel
P. Beilby
366,567
813,662
(ii) These were the number of shares held by Mr Price when he resigned on 25 October 2018.
58
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Directors’ Report
Remuneration Report (continued)
7. Loans to Key Management Personnel and their Related Parties
There were no loans to KMP during the six months ended 31 December 2018 and year ended 30 June 2018.
This is the end of the audited information.
Performance Rights
Outstanding performance rights at the date of this report are as follows:
Grant date
24/10/16
Vesting date
30/06/19
Exercise price
-
29/11/16
29/11/16
17/10/17
28/11/17
07/03/18
26/10/18
30/06/19
30/06/20
30/06/20
30/06/20
30/06/20
30/06/21
-
-
-
-
-
-
Number on
issue
2,263,300
600,000
1,000,000
1,403,379
587,500
319,571
1,164,726
7,338,476
Indemnification and Insurance of Directors and Officers
Resolute 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 period.
Auditor Independence
Refer to page 26 for the Auditor’s Independence Declaration to the Directors of Resolute Mining Limited.
Extension of Lead Audit Partner
On 5 November 2018, the Board granted approval pursuant to section 324DAC of the Corporations Act 2001 (Cth), for Mr Gavin
Buckingham of Ernst & Young to play a significant role in the audit of the Company for an additional one financial year through to
the financial year ending 31 December 2019.
The Board considered the matters set out in section 324DAB(3) of the Act and is satisfied that the approval:
is consistent with maintaining the quality of the audit provided to the Company; and
(i)
(ii) would not give rise to a conflict of interest situation.
Reasons supporting this decision include:
•
•
•
the benefits associated with the continued retention of knowledge regarding key audit matters;
the Board being satisfied with the quality of Ernst & Young and Mr Buckingham’s work as auditor; and
the Company’s on-going governance processes to ensure the independence of the auditor is maintained.
59
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Directors’ Report
Directors’ Meetings
The number of meetings and resolutions of directors (including meetings of committees of directors) held during the six months
and the number of meetings attended by each director were as follows:
M. Botha
P. Sullivan
J. Welborn
H. Price*
M. Potts
Y. Broughton
S. Shugg^
Number of meetings held
Full Board
5
5
5
2
5
3
4
5
Audit & Risk
2
2
n/a
2
2
2
n/a
2
Remuneration
2
2
n/a
1
1+
1
1+
2
Nomination
2
n/a
n/a
2
2
2
n/a
2
* Retired from the Board on 25 October 2018.
^ Appointed to the Board on 7 September 2018.
+ Appointed to the Remuneration Committee on 25 October 2018.
The details of the functions of the other committees of the Board are presented in the Corporate Governance Statement.
Rounding
Resolute is a Company of the kind specified in Australian Securities and Investments Commission Corporations (Rounding in
Financial Directors’ Reports) Instrument 2016/191. In accordance with that class order, amounts in the financial report and the
Directors' Report have been rounded to the nearest thousand dollars unless specifically stated to be otherwise.
Non-Audit Services
Non-audit services were provided by the entity’s auditor, Ernst & Young for the six months ended 31 December 2018. 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 nil for non-audit services in the six months ended 31 December 2018
(twelve months ended 30 June 2018: $20,000).
Signed in accordance with a resolution of the directors.
J.P. Welborn
Managing Director and CEO
Perth, Western Australia
22 February 2019
60
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s independence declaration to the Directors of Resolute Mining
Limited
As lead auditor for the audit of the financial report of Resolute Mining Limited for the financial period
ended 31 December 2018, I declare to the best of my knowledge and belief, there have been:
a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Resolute Mining Limited and the entities it controlled during the financial
period.
Ernst & Young
Gavin Buckingham
Partner
22 February 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
GB:EH:RESOLUTE:258
61
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
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 Period
A.1 Segment revenues and expenses
A.2 Dividends paid or proposed
A.3 (Loss)/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 Cash, Debt 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 Prepayments
D.5 Payables
D.6 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 Subsequent events
E.8 Related party disclosures
E.9 Parent entity information
E.10 Employee benefits and share based payments
E.11 Other accounting policies
Other
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
62
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Consolidated Statement of Comprehensive Income
Revenue from contracts with customers for 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
Interest income
Other income
Other expenses
Exploration and business development expenditure
Administration and other corporate expenses
Share-based payments expense
Treasury - realised gains
Fair value movements and unrealised treasury transactions
Share of associates’ losses
Depreciation of non-mine site assets
Finance costs
(Loss)/profit before tax
Tax benefit
(Loss)/profit for the period
(Loss)/profit attributable to:
Members of the parent
Non-controlling interest
6 months
to 31
December
2018
12 months to
30 June 2018
Note
$'000
$'000
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/E.4
A.1
A.1
222,774
445,555
(169,319)
(329,676)
53,455
115,879
(10,110)
(18,896)
24,449
329
13
(6)
(2,924)
(8,498)
(1,346)
213
(13,602)
(476)
(47)
(5,264)
(14,417)
(32,138)
69,324
2,595
404
(2,449)
(15,686)
(14,133)
(1,782)
2,096
43,396
(1,500)
(130)
(4,298)
(7,159)
77,837
1,835
-
(5,324)
77,837
E.5
(3,302)
(2,022)
(5,324)
65,570
12,267
77,837
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
63
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Consolidated Statement of Comprehensive Income (continued)
6 months to
31
December
2018
$'000
(5,324)
12 months
to 30 June
2018
$'000
77,837
Note
(Loss)/profit for the period (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
Changes in the fair value/realisation of available for sale financial assets, net
of tax
3,460
(1,759)
-
(989)
Items that may not be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations:
- Non-controlling interest
Changes in the fair value/realisation of financial assets at fair value through
other comprehensive income, net of tax
(246)
(1,253)
(7,061)
-
Other comprehensive loss for the period, net of tax
(3,847)
(4,001)
Total comprehensive (loss)/income for the period
(9,171)
73,836
Total comprehensive (loss)/income attributable to:
Members of the parent
Non-controlling interest
(6,903)
(2,268)
(9,171)
62,823
11,013
73,836
(Loss)/earnings per share for net (loss)/profit attributable to the
ordinary equity holders of the parent:
Basic (loss)/earnings per share
Diluted (loss)/earnings per share
A.3
A.3
(0.44) cents
8.85 cents
(0.44) cents
8.72 cents
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
64
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Consolidated Statement of Financial Position
As at 31 December
2018
As at 30 June
2018
Note
$'000
$'000
Current assets
Cash
Other financial assets – restricted cash
Receivables
Inventories
Financial assets at fair value through other comprehensive income
Available for sale financial assets
Prepayments and other assets
Current tax asset
Total current assets
Non current assets
Prepayments
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
Total current liabilities
Non current liabilities
Interest bearing liabilities
Provisions
Total non current liabilities
Total liabilities
Net assets
Equity attributable to equity holders of the parent
Contributed equity
Reserves
Retained earnings
Total equity attributable to equity holders of the parent
Non-controlling interest
Total equity
C.1
D.3
D.1
D.2
D.3
D.3
D.4
E.4
A.4
D.3
B.2
B.1
B.1
D.5
C.2
D.6
C.2
D.6
C.4
E.5
38,717
3,890
56,822
178,623
28,324
-
8,296
17,561
332,233
3,609
9,583
19,261
32
62,904
405,382
288,481
789,252
1,121,485
119,982
68,513
23,259
211,754
138,711
70,321
209,032
420,786
700,699
559,809
34,956
115,616
710,381
(9,682)
700,699
42,445
-
45,097
234,720
-
22,859
5,299
20,811
371,231
15,862
6,994
9,456
3,751
53,162
302,158
172,656
564,039
935,270
92,488
47,282
21,171
160,941
-
65,687
65,687
226,628
708,642
544,972
37,011
134,073
716,056
(7,414)
708,642
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
65
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
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
y
t
i
u
q
e
s
n
o
i
t
p
o
e
r
a
h
S
/
s
e
t
o
n
e
l
b
i
t
r
e
v
n
o
C
e
v
r
e
s
e
r
e
v
r
e
s
e
r
s
t
s
e
r
e
t
n
i
g
n
i
l
l
o
r
t
n
o
c
-
n
o
N
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 2018
544,972
(776)
6,371
(934)
16,576
15,774 134,073
(7,414) 708,642
Loss for the period
Other comprehensive
(loss)/income, net of
tax
Total comprehensive
(loss)/income for the
period, net of tax
-
-
-
(7,061)
-
(7,061)
Shares issued
14,837
Dividends paid
Share-based payments
to employees
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,546
-
(3,302)
(2,022)
(5,324)
3,460
-
(246)
(3,847)
3,460
(3,302)
(2,268)
(9,171)
-
-
-
-
(15,155)
-
-
-
-
14,837
(15,155)
1,546
At 31 December 2018
559,809
(7,837)
6,371
(934)
18,122
19,234 115,616
(9,682) 700,699
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
66
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
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
y
t
i
u
q
e
s
n
o
i
t
p
o
e
r
a
h
S
/
s
e
t
o
n
e
l
b
i
t
r
e
v
n
o
C
e
v
r
e
s
e
r
e
v
r
e
s
e
r
s
t
s
e
r
e
t
n
i
g
n
i
l
l
o
r
t
n
o
c
-
n
o
N
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 2017
544,987
213
6,371
-
14,291
17,533
83,333
(17,530) 649,198
Profit for the year
Other comprehensive
loss, net of tax
Total comprehensive
(loss)/income for the
year, net of tax
-
-
-
-
(989)
(989)
Share issue costs
(15)
Dividends paid
Non-controlling interest
arising from change in
ownership interest
Share-based payments
to employees
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(934)
-
-
-
65,570
12,267
77,837
(1,759)
-
(1,253)
(4,001)
-
(1,759)
65,570
11,014
73,836
-
-
-
-
-
-
-
-
(14,830)
-
-
(15)
(14,830)
-
-
(898)
(1,832)
-
2,285
-
2,285
At 30 June 2018
544,972
(776)
6,371
(934)
16,576
15,774 134,073
(7,414) 708,642
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
67
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Consolidated Cash Flow Statement
6 months to
31 December
2018
$'000
Note
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
Payments for other financial assets
Repayment of loan from unrelated parties
Loans to associates
Proceeds from sale of property, plant & equipment
Acquisition of a share of a non-controlling interest
Loans advanced to other parties
Other investing activities
Proceeds from sale of available for sale financial assets
Net cash flows used in investing activities
Cash flows used in financing activities
Costs of issuing ordinary shares
Dividend paid
Proceeds from finance facilities
Net cash flows used in financing activities
12 months to
30 June 2018
$'000
447,495
(391,955)
(15,686)
(2,410)
2,166
(11,251)
28,359
(88,421)
(138,565)
(11,747)
(22,878)
-
-
510
(1,832)
(5,133)
(890)
-
222,738
(181,435)
(2,924)
(4,926)
396
-
33,849
(82,444)
(92,533)
(6,898)
(848)
2,230
(750)
-
-
-
(209)
417
(181,035)
(268,956)
-
(15,155)
136,732
121,577
(15)
(14,830)
-
(14,845)
Net decrease in cash and cash equivalents
(25,609)
(255,442)
Cash and cash equivalents at the beginning of the financial period
Exchange rate adjustment
Cash and cash equivalents at the end of the period
Cash and cash equivalents comprise the following:
Cash at bank and on hand
Bank overdraft
C.1
C.1
The above consolidated cash flow statement should be read in conjunction with the accompanying notes.
(4,837)
1,865
(28,581)
38,717
(67,298)
(28,581)
247,502
3,103
(4,837)
42,445
(47,282)
(4,837)
68
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
About this Report
The financial report of Resolute Mining Limited and its controlled entities (“Resolute”, “consolidated entity” or the “Group”) for the
six months ended 31 December 2018 was authorised for issue in accordance with a resolution of the Directors on 22 February
2019.
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 period.
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 2018 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 (“Resolute) as an individual entity and the
consolidated entity consisting of Resolute 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 at fair value.
The Group has changed its financial year end from 30 June to 31 December, which enables Resolute to align its financial reporting
period with its subsidiaries in Mali. This change means the financial report of the Group is transitional from 1 July 2018 to 31
December 2018. The comparatives for the financial performance in these financial statements are therefore for a twelve month
period ended 30 June 2018.
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.
Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot rates at
the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange
at the reporting date.
Differences arising on settlement or translation of monetary items are recognised in profit or loss with the exception of monetary
items classified as net investment in a foreign operation. These are recognised in OCI until the net investment is disposed of, at
which time, the cumulative amount is reclassified to profit or loss. Tax charges and credits attributable to exchange differences
on those monetary items are also recorded in OCI.
69
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
About this Report (continued)
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at
the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items
measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation
differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss,
respectively).
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 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 proceeds on the sale of its gold production in USD and AUD and significant costs for the Syama Gold Project
and the Bibiani Project are denominated in AUD, EUR, 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 D
Capital risk, Interest rate risk, Liquidity risk, Foreign currency risk
Credit risk, Foreign currency risk
70
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements A: Earnings for the period
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 poured and cost of production per ounce poured. 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:
Finance costs - including adjustments on provisions due to discounting;
• Realised and unrealised treasury transactions;
•
• Share of associates’ losses and,
• Net gains/losses on disposal of available-for-sale investments.
Recognition and measurement
Revenue from gold and other sales
The Group adopted AASB 15 - Revenue from contracts with customers using the modified retrospective approach from 1 July
2018. Revenue from gold and other sales represents revenue from contracts with customers and is recognised at the point in time
when the Group transfers control of products to a customer. For sales of gold bullion, control is obtained when the gold is credited
to the metals account of the customer. Revenue is recognised at the amount to which the Group expects to be entitled.
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.
Key estimates and judgements
Revenue from contracts with customers
Judgment is required to determine the point at which the customer obtains control of gold. Factors including transfer of legal
title, transfer of significant risks and rewards of ownership and the existence of a present right to payment for the gold typically
result in control transferring on delivery of the gold.
71
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements A: Earnings for the period
A.1 Segment revenues and expenses (continued)
For the six months ended 31
December 2018
Ravenswood
(Australia)
Syama
(Mali)
Bibiani
(Ghana)
Unallocated (b)
Corporate
/
Other Treasury
Total
$'000
$'000
$'000
$'000
$'000
$'000
Revenue
Gold and silver sales at spot to external
customers (a)
Total segment gold and silver sales
revenue
70,504
152,270
70,504
152,270
Costs of production
(60,193)
(101,538)
Gold in circuit inventories movement
(5,364)
(2,224)
Costs of production relating to gold sales
(65,557)
(103,762)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1)
(1)
(4,159)
(1,346)
(3,521)
(9,709)
(165)
(5,500)
(3,686)
(15,209)
(2,216)
(2,123)
-
-
(1,007)
(55)
(1,182)
(680)
(1,962)
31,121
(1,182)
(6,186)
(117)
(3,369)
(506)
(6,118)
(623)
(9,487)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
222,774
222,774
(161,731)
(7,588)
(169,319)
(13,230)
(5,666)
(18,896)
(8,498)
(1,346)
(2,924)
21,791
(3,486)
(6,624)
(10,110)
(2,585)
21,634
(1,182)
(6,186)
-
11,681
Royalty expense
Operational support costs
Other operating costs relating to gold
sales
Administration and other corporate
expenses
Share-based payments expense
Exploration and business development
expenditure
(Loss)/earnings 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 (expenses)/income
and tax
72
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements A: Earnings for the period
A.1 Segment revenues and expenses (continued)
For the six months ended 31
December 2018
Ravenswood
(Australia)
Syama
(Mali)
Bibiani
(Ghana)
Corporate/
Other
Treasury
$'000
$'000
$'000
$'000
$'000
Total
$'000
Unallocated (b)
Segment operating result before
treasury, other (expenses)/income
and tax (brought forward)
Interest income
Other income
Interest and fees
Rehabilitation and restoration provision
accretion
Finance costs
Realised foreign exchange loss
Realised gain on forward contracts
Treasury - realised gains
Inventories net realisable value
movements and obsolete consumables
Unrealised foreign exchange loss
Unrealised foreign exchange gain on
intercompany balances
Fair value movements and unrealised
treasury transactions
Other expenses
Share of associates' losses
Depreciation of non-mine site assets
Income Tax (expense)/benefit
(Loss)/profit for the six months
ended 31 December 2018
(2,585)
21,634
(1,182)
(6,186)
-
11,681
-
-
-
-
-
-
(478)
(415)
(478)
(415)
-
-
-
-
-
-
(412)
(28,745)
-
-
-
-
(412)
(28,745)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,283)
(6)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(47)
6,118
329
13
329
13
(4,371)
(4,371)
-
(893)
(4,371)
(5,264)
(139)
(139)
352
213
352
213
-
(29,157)
(1,477)
(1,477)
17,032
17,032
15,555
(13,602)
-
(476)
-
-
(6)
(476)
(47)
1,835
(3,475)
(11,809)
(1,188)
(115)
11,263
(5,324)
73
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements A: Earnings for the period
A.1 Segment revenues and expenses (continued)
For the 12 months ended 30 June
2018
Ravenswood
(Australia)
Syama
(Mali)
Bibiani
(Ghana)
Unallocated (b)
Corporate
/
Other Treasury
Total
$'000
$'000
$'000
$'000
$'000
$'000
Revenue
Gold and silver sales at spot to external
customers (a)
Total segment gold and silver sales
revenue
Costs of production
138,463
307,092
138,463
307,092
(120,011)
(237,453)
Gold in circuit inventories movement
12,478
15,310
Costs of production relating to gold sales
(107,533)
(222,143)
Royalty expense
(6,915)
(19,309)
Operational support costs
(256)
(5,651)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(7)
(7)
(6,972)
(1,782)
(7,171)
(24,960)
(4,664)
(2,497)
-
-
(7,364)
(1,044)
(2,381)
(4,897)
11,731
56,448
(2,381)
(13,658)
(1,297)
(3,498)
(1,274)
(8,348)
(2,571)
(11,846)
-
-
-
-
-
-
9,160
44,602
(2,381)
(13,658)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
445,555
445,555
(357,464)
27,788
(329,676)
(26,224)
(5,914)
(32,138)
(14,133)
(1,782)
(15,686)
52,140
(4,795)
(9,622)
(14,417)
37,723
Other operating costs relating to gold
sales
Administration and other corporate
expenses
Share-based payments expense
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
74
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements A: Earnings for the period
A.1 Segment revenues and expenses (continued)
For the 12 months ended 30 June 2018
Segment operating result before
treasury, other income/(expenses) and
tax (brought forward)
Interest income
Other income
Gain on sale of property, plant and
equipment
Total other income
Interest and fees
Rehabilitation and restoration provision
accretion
Finance costs
Realised foreign exchange gain
Realised loss on forward contracts
Treasury - realised gains
Inventories net realisable value
movements and obsolete consumables
Unrealised foreign exchange gain
Unrealised foreign exchange gain on
intercompany balances
Fair value movements and unrealised
treasury transactions
Other expenses
Share of associates' losses
Depreciation of non mine site assets
Profit/(loss) for the year
Ravenswood
(Australia)
Syama
(Mali)
Bibiani
(Ghana)
Corporate/
Other
Treasury
$'000
$'000
$'000
$'000
$'000
Total
$'000
Unallocated (b)
9,160
44,602
(2,381)
(13,658)
-
37,723
-
-
324
324
-
-
-
-
-
-
(899)
(606)
(899)
(606)
-
-
-
-
-
-
1,283
11,542
-
-
-
-
1,283
11,542
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(675)
(1,774)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3)
-
-
2,595
2,595
80
-
80
80
324
404
(2,793)
(2,793)
-
(1,505)
(2,793)
(4,298)
2,311
(215)
2,096
2,311
(215)
2,096
-
12,822
287
287
30,287
30,287
(3)
30,574
43,396
-
-
-
(2,449)
(1,500)
(1,500)
(130)
-
(130)
9,868
54,863
(4,155)
(13,791)
31,052
77,837
75
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements A: Earnings for the period
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 6 months ended 31 December 2018: 0.0 cents per share (12
months ended 30 June 2018: 2.0 cents per share)
6 months to 31
December 2018
$'000
12 months to
30 June 2018
$'000
-
14,830
A dividend has not been declared for the six month period ended 31 December 2018 (which is a transitional six month reporting
period as opposed to a full financial year). The company’s dividend policy of paying a minimum of 2% of sales as a dividend will
continue based on a 31 December financial year going forward. On this basis, a dividend for the year ended 31 December 2019,
if declared, would be paid in March 2020.
A.3 (Loss)/earnings per share
Basic (loss)/earnings per share
(Loss)/Profit attributable to ordinary equity holders of the parent for basic
(loss)/earnings per share ($'000)
Weighted average number of ordinary shares outstanding during the period used in the
calculation of basic EPS
Basic (loss)/earnings per share (cents per share)
6 months to 31
December 2018
12 months to
30 June 2018
(3,302)
65,570
755,294,647
740,664,832
(0.44)
8.85
Diluted (loss)/earnings per share
(Loss)/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 ¹
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 (loss)/earnings per share (cents per share)
(3,302)
65,570
755,294,647
740,664,832
n/a
11,307,704
755,294,647
751,972,536
7,338,476
(0.44)
-
8.72
¹ Dilutive instruments have not been included in the calculation of diluted earnings per share for 31 December 2018 because the result for the
period was a loss.
Measurement
Basic earnings per share (“EPS”) is calculated as net (loss)/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 (loss)/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.
76
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements A: Earnings for the Period
A.3 (Loss)/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.10 are
considered to be potential ordinary shares and have been included in the determination of diluted earnings per share to the extent
they are dilutive. These options and performance rights have not been included in the determination of basic earnings per share.
A.4 Taxes
a)
Income tax expense
Current tax expense/(benefit)
Deferred tax (benefit)/expense
Total tax benefit
b) Numerical reconciliation of income tax expense to prima facie tax expense
(Loss)/profit before income tax expense
Prima facie income tax (benefit)/expense at 30% (12 months ended 30 June 2018: 30%)
(Deduct)/add:
- net movement in temporary differences and tax losses not recognised/recognised
- effect of different rates of tax on overseas income
- effect of share based payments expense not deductible
- other permanent differences
Income tax (benefit)/expense attributable to net loss
6 months to
31 December
2018
$'000
12 months to
30 June 2018
$'000
7,970
(9,805)
(1,835)
(7,159)
(2,148)
(803)
2,830
447
(2,161)
(1,835)
(5,877)
5,877
-
77,837
23,351
(19,907)
-
705
(4,149)
-
77
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements A: Earnings for the Period
A.4 Taxes (continued)
c) Tax losses (tax effected)
Revenue losses
-
Australia
- Mali
- Ghana
Capital losses
-
Australia
Total tax losses
Total tax losses – recognised (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)
d) Movements in the deferred tax assets balance
Balance at the beginning of the period
Credited/(charged) to the income statement
Balance as at the end of the period
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
Carried forward tax losses – recognised (Australia)
Set off of deferred tax liabilities pursuant to set off provisions
Net deferred tax assets
6 months to
31 December
2018
$'000
12 months to
30 June 2018
$'000
15,148
23,649
21,573
60,370
52,314
112,684
(6,118)
11,997
-
23,158
35,155
52,314
87,469
-
106,566
87,469
9,456
9,805
19,261
81,866
1,008
9,320
128,373
53,731
30
174
15,333
(5,877)
9,456
82,958
1,008
9,320
137,472
53,731
30
9,504
(244,811)
(267,616)
29,691
6,118
(16,548)
19,261
26,407
-
(16,951)
9,456
78
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements A: Earnings for the period
A.4 Taxes (continued)
e) Movements in the deferred tax liabilities balance
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
6 months to
31 December
2018
$'000
12 months to
30 June 2018
$'000
1,553
8,191
6,804
-
16,548
(16,548)
-
194
2,566
64
2,824
(64)
2,760
1,553
8,191
7,207
-
16,951
(16,951)
-
194
2,566
64
2,824
(64)
2,760
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%.
108
108
Recognition and measurement
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national
income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences
between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and by unused tax losses
(if appropriate).
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.
79
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements A: Earnings for the period
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
Resolute 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 $13.1 million has been recognised at 31 December 2018 in relation to deductible temporary
differences and a further $6.1m in relation to carried forward Australian tax losses. Realisation of sufficient taxable profit in
future periods is regarded as probable.
The future benefit will only be obtained if:
future assessable income is derived of a nature and an amount sufficient to enable the benefit to be realised;
the conditions for deductibility imposed by tax legislation have been continued to be complied with; and,
(i)
(ii)
(iii) no changes in tax legislation adversely affect the consolidated entity in realising the benefit.
80
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
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 orebodies 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
Unit of production
81
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
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
82
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements B: Production and Growth Assets
B.1 Mine properties and property, plant and equipment (continued)
Plant and Equipment
Development Expenditure
t
n
e
m
p
u
q
E
&
i
t
n
a
l
P
s
g
n
d
i
l
i
u
B
s
e
l
c
i
h
e
V
r
o
t
o
M
i
t
n
e
m
p
u
q
E
e
c
i
f
f
O
s
t
e
s
s
A
d
e
s
a
e
L
l
a
t
o
T
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
7,777
160,385
1,000
2,838
656
172,656
301,389
769
302,158
-
116,758
-
-
(86)
(6,490)
(17)
(78)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
116,758
89,656
10,738
100,394
(6,671)
-
-
-
-
-
-
-
(3,520)
(3,520)
(3,516)
1,408
-
-
(3,516)
1,408
339
5,413
35
123
(172)
5,738
8,345
113
8,458
6 months to 31
December 2018
Opening write
down value
Additions
Depreciation
expense
Amounts amortised
to costs of
production relating
to gold sales
Amortisation
expense
Adjustments to
rehabilitation and
restoration
obligations
Foreign currency
translation
At 31 December
net of
accumulated
depreciation
Cost
17,629
684,573
8,030
276,066
1,018
5,819
2,883
484
288,481
397,282
8,100
405,382
9,921
22,254
740,196
768,638
12,210
780,848
Accumulated
depreciation and
impairment
Net carrying
amount
(9,599)
(408,507)
(4,801)
(7,038)
(21,770)
(451,715)
(371,356)
(4,110)
(375,466)
8,030
276,066
1,018
2,883
484
288,481
397,282
8,100
405,382
83
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements B: Production and Growth Assets
B.1 Mine properties and property, plant and equipment (continued)
Plant and Equipment
Development Expenditure
t
n
e
m
p
u
q
E
&
i
t
n
a
l
P
s
g
n
d
i
l
i
u
B
s
e
l
c
i
h
e
V
r
o
t
o
M
i
t
n
e
m
p
u
q
E
e
c
i
f
f
O
s
t
e
s
s
A
d
e
s
a
e
L
l
a
t
o
T
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
7,637
77,543
-
-
88,004
(20)
750
246
-
112
(46)
(207)
(273)
2,845
1,293
90,068
143,641
15,971
159,612
-
88,362
122,117
33,307
155,424
(167)
(9,284)
(22)
(174)
(429)
(10,076)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23,368
-
-
-
-
-
23,368
-
-
-
-
(48,936)
(48,936)
(4,471)
6,856
-
-
(4,471)
6,856
12 months to 30
June 2018
Opening write
down value
Additions
Disposals
Depreciation
expense
Transfers from
exploration and
evaluation
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
307
4,142
26
101
(1)
4,575
9,878
427
10,305
Cost
17,199
553,642
7,777
160,385
1,000
5,705
2,838
656
172,656
301,389
769
302,158
9,724
21,928
608,198
669,230
49,705
718,935
Accumulated
depreciation and
impairment
Net carrying
amount
(9,422)
(393,257)
(4,705)
(6,886)
(21,272)
(435,542)
(367,841)
(48,936)
(416,777)
7,777
160,385
1,000
2,838
656
172,656
301,389
769
302,158
84
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
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 period
Expenditure during the period
Adjustments to rehabilitation obligations
Transfers to areas in development
Foreign currency translation
Balance at the end of the period
Recognition and measurement
6 months to 31
December 2018
$’000
12 months to
30 June 2018
$’000
53,162
7,098
(184)
-
2,828
62,904
64,879
14,592
(4,743)
(23,368)
1,802
53,162
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 period/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 is 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 twelve months ending 31 December 2019 for the consolidated entity is approximately $16.515m (actual
expenditure for the six months ended 31 December 2018: $7.1m). This includes the minimum amounts required to retain tenure.
There are no material exploration commitments further out than one year.
85
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
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. No indicators of impairment or indicators for reversal of prior
period impairment loss were identified.
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 loss or reversal of prior period impairment loss was recognised in the six months to 31 December 2018.
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 are estimated by management based on prevailing market conditions.
When applicable, 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
mine (LOM) plans. Consideration is also given to analysts’ valuations, and the market
requirements, based on CGU life
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
‐
‐
86
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements B: Production and Growth Assets
B.4 Segment expenditure, assets and liabilities
For the 6 months to 31 December 2018
Capital expenditure
Segment assets of continuing operations
Segment liabilities of continuing
operations
Ravenswood
(Australia)
$’000
7,708
Syama
(Mali)
$’000
176,466
Bibiani
(Ghana)
$’000
6,233
Corp/
Other
$’000
23,106
88,442
764,239
99,655
169,149
52,934
213,327
12,463
142,062
Treasury
Total
$’000
-
$’000
213,513
-
-
1,121,485
420,786
For the 12 months to 30 June 2018
Capital expenditure
Segment assets of continuing operations
Segment liabilities of continuing
operations
Ravenswood
(Australia)
$’000
21,162
Syama
(Mali)
$’000
161,855
Bibiani
(Ghana)
$’000
9,822
Corp/
Other
$’000
29,204
98,435
638,125
87,337
111,373
63,068
137,287
10,503
15,770
Treasury
Total
$’000
-
-
-
$’000
222,043
935,270
226,628
87
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
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
6 months to 31
December 2018
12 months to 30
June 2018
$'000
38,717
$'000
42,445
For the purpose of the cash flow statement, cash and cash equivalents comprise the following at the end of each period:
Cash at bank and on hand
Bank overdraft
38,717
(67,298)
(28,581)
42,445
(47,282)
(4,837)
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
AA-
A
B
Counterparties without external credit ratings
Total cash at bank and short term deposits
Recognition and measurement
13
32,759
-
5,945
38,717
495
40,269
-
1,681
42,445
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$30.5 million of cash and cash equivalents at 31 December 2018 (12 months to June 2018: A$30.4 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 (6 months to December 2018: A$28.7 million; 12 months to June 2018:
A$11.9 million equivalent) and Euro 6 months to December 2018: A$0.03 million; 12 months to June 2018: A$5.0 million
equivalent).
Average interest rates earned on cash and cash equivalents during the period was 0.98% (12 months to June 2018: 2.4%).
88
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements C: Cash, Debt and Capital
C.1 Cash (continued)
Reconciliation of net (loss)/profit from continuing operations after income tax to the net operating cash flows
Net (loss)/profit from ordinary activities after income tax
Add/(deduct):
Share based payments including employee long term incentive costs
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
Foreign exchange gains
Inventory net realisable value movements
Share of associates’ losses
Non cash finance costs
Changes in operating assets and liabilities:
Increase in receivables
Decrease/(increase) in inventories
Decrease/(increase) in prepayments
(increase)/decrease in stripping activity asset
Increase in payables
Decrease/(increase) in current tax balances
(Increase)/decrease in deferred tax balances
Increase/(decrease) in operating provisions
Net operating cash flows
6 months to
31 December
2018
12 months
to 30 June
2018
$'000
(5,324)
1,346
6
(352)
893
(237)
10,157
$'000
77,837
1,782
587
-
1,505
(1,223)
14,547
(15,555)
(30,574)
29,157
(12,822)
476
16
1,500
42
(10,021)
(32,949)
7,781
4,745
(7,029)
20,303
(8,905)
(2,577)
15,681
24,112
3,838
(24,488)
(9,439)
3,088
33,849
6,751
(2,447)
28,359
89
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements C: Cash, Debt and Capital
C.1 Cash (continued)
Cash flow by segment
Ravenswoo
d (Australia)
Syama
(Ghana)
Bibiani
(Ghana)
$’000
$’000
$’000
Unallocated (b)
Corp/
Other
$’000
Treasury
$’000
Total
$’000
For the 6 months to 31 December 2018
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 poured but unsold at
market value
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 12 months to 30 June 2018
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 poured but unsold at
market value
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
(29,758)
(98,594)
(7,776)
(21,126)
154,696
(2,558)
(514)
(2,763)
(20,016)
242
(25,609)
(12,074)
(112,182)
(17,550)
(47,887)
(14,424)
(204,117)
(40,726)
(605)
(12,724)
2,730
(255,442)
90
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements C: Cash, Debt and Capital
C.2 Interest bearing liabilities
Interest bearing liabilities (current)
Bank overdraft - ref C3.1
Insurance premium funding
Interest bearing liabilities (non-current)
Borrowings
6 months to
31 December
2018
12 months to
30 June 2018
$’000
$’000
67,298
1,215
68,513
47,282
-
47,282
138,711
-
207,224
47,282
Recognition and measurement
All loans and borrowings are initially recognised at fair value less transaction costs and subsequently at amortised cost. Any
difference between the proceeds received and the redemption amount is recognised in the income statement over the period of
the borrowings using the effective interest method.
Resolute has a Security Trust Deed in place with various banks. The total assets of the entities over which security exists amounts
to $1,075m (12 months to June 2018: $875m). $262m (12 months to June 2018: $152m) 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 equal to the carrying value.
The Group held $139m of interest bearing liabilities at 31 December 2018 (12 months ended June 2018: 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 5.97% (2018: 8.0%).
During the six month period to 31 December 2018, Resolute entered into a US$100m Revolving Loan Facility agreement with
Investec Australia Limited. As part of the process of syndication of the Syndicated Facility Agreement, the facility limit was
expanded to US$150m. The expanded facility was signed on 21 December 2018, all Conditions Precedent were satisfied as of
31 December 2018 and the expanded facility was fully available to Resolute to draw from 3 January 2019.
91
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
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
C.3 Financing facilities
C3.1 Bank overdraft
6 months to
31 December
2018
12 months to
30 June 2018
$'000
$'000
1,776
76,258
149,486
227,520
(20,296)
207,224
-
49,184
-
49,184
(1,902)
47,282
The current facility with the Bank Du Mali SA is in place and is subject to an annual revision in approximately September 2019.
As at 31 December 2018 A$2.6m of the facility was unused.
C3.2 Syndicated facilities
Resolute established a new three-year US$100m revolving credit facility with Investec Australia Limited (“Investec”) as Facility A
of a new Syndicated Facility Agreement (the “SFA”) on 13 July 2018.
As part of the process of syndication of the Syndicated Facility Agreement, the facility limit was expanded to US$150m with the
participation of Investec, BNP Paribas, Citibank N.A. and Nedbank Limited. The expanded facility was signed on 21 December
2018, all Conditions Precedent were satisfied as of 31 December 2018 and the expanded facility was fully available to Resolute
to draw from 3 January 2019.
The A$35.0m Letter of Credit Facility with Citibank N.A., now forms part of the new Syndicated Facility Agreement as Facility B.
The Letter of Credit Facility relates mainly to Environmental Performance Bonds for the Ravenswood Project. A$29.4m of this
facility has been drawn and expires on 31 December 2019;
The Syndicated Facility Agreement, Citibank N.A. Letter of Credit Facility and hedging facilities provided by Investec Bank Plc,
Société Générale and Citibank N.A. are secured by the following:
(i) Cross Guarantee and Indemnity given by Resolute (“the Borrower”), Carpentaria Gold Pty Ltd, Resolute (Somisy)
Limited, Resolute (Treasury) Pty Ltd and Resolute (Bibiani) Limited;
(ii) Share Mortgage granted by Resolute over all of its shares in Carpentaria Gold Pty Ltd;
(iii) Share Mortgage granted by the Borrower over all of its shares in Resolute (Bibiani) Limited and Resolute (Somisy)
Limited;
(iv) 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;
(v) 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;
(vi) Mortgage of Contractual Rights granted by Resolute Mining Limited in favour of the Security Trustee over a loan provided
to Société des Mines de Syama SA;
(vii) Mortgage of Contractual Rights granted by Resolute (Bibiani) Limited in favour of the Security Trustee over a loan
provided to Drilling and Mining Services Limited, Mensin Gold Bibiani Limited and Noble Mining Ghana Limited; and,
(viii) Mortgage of Contractual Rights granted by Resolute (Treasury) Pty Ltd in favour of the Security Trustee over a loan
provided to Mensin Gold Bibiani Limited.
92
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
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, the following ratios are required:
(Interest Cover Ratio): the ratio of EBITDA to Net Interest Expense will be greater than 5.00 times;
(i)
(ii) (Net Debt to EBITDA): the ratio of Net Debt to EBITDA will be less than 2.00 times;
(iii) (Consolidated Gearing): the ratio of Net Debt to Equity will be less than 1.00 times; and
(iv) (Reserve Tail Ratio): will exceed 30%.
There have been no breaches of these ratios.
The A$9.5m (US$7m) Letter of Credit Facility Agreement with Société General Ghana Limited relates to Environmental
Performance Bonds for the Bibiani Project. This facility is fully drawn and expires on 31 December 2019. The Société General
Ghana Limited Letter of Credit Facility Agreement is also supported by a guarantee provided by Resolute Mining Limited.
C.4 Contributed Equity
Ordinary share capital:
757,512,088 ordinary fully paid shares (2018: 741,477,595)
Movements in contributed equity, net of issuing costs:
Balance at the beginning of the period
Issue of shares to Level 1 and 2 employees (net of costs)
Issue of shares to Orca Gold1
Issue of shares to Loncor2
Issue of shares to Manas Resources3
Balance at the end of the period
6 months to
31 December
2018
12 months to
30 June 2018
$'000
559,809
$'000
544,972
544,972
544,987
-
11,774
2,646
417
(15)
-
-
-
559,809
544,972
¹This relates to the purchase of 16,182,480 shares in Orca Gold Inc which resulted in the issue of 8,953,421 Resolute shares.
2This relates to the purchase of 25,000,000 shares in Loncor Resources Inc which resulted in the issue of 2,012,466 Resolute shares.
3This relates to the purchase of 79,290,000 shares in Manas Resources Limited which resulted in the issue of 317,160 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.10 for details of the employee share based payment plans which includes option and performance rights plans. Each
option entitles the holder to purchase one share. The names of all persons who currently hold employee share options or
performance rights, granted at any time, are entered into the register kept by the Company, pursuant to Section 215 of the
Corporations Act 2001. Persons entitled to exercise these options and holders of performance rights have no right, by virtue of
the options, to participate in any share issue by the parent entity or any other body corporate.
93
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
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/Share options equity
reserve
Employee benefits equity reserve
This reserve records fair value changes on financial assets at fair value through other
comprehensive income.
This reserve records the value of the equity portion (conversion rights) of the convertible notes and
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.
Foreign currency translation reserve
Represents exchange differences arising on translation of foreign controlled entities.
Non-controlling interest’s reserve
This reserve records the difference between the fair value of the amount by which the non-controlling
interests were adjusted to record their initial relative interest and the consideration paid for
Resolute’s acquisition for that share of the interest.
Key financial and capital risks associated with Cash, Debt and Capital
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 31 December 2018 is 24% (twelve months ended 30 June 2018: 0%). The Group is not subject
to any externally imposed capital management 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
controlling interest) plus net debt.
Statement of Financial Position (including non
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.
‐
Interest rate risk
Foreign exchange risk
-1%
+1%
-10%
+10%
Carrying
Amount
Profit
Equity
Profit Equity
Profit
Equity
Profit
Equity
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
38,717
138,711
(227)
(992)
(227)
(992)
227
992
227
992
2,221
2,221
(1,817)
(1,817)
11,028
11,028
(9,023)
(9,023)
(1,219)
(1,219)
1,219
1,219
13,249
13,249
(10,840)
(10,840)
42,445
(279)
(279)
(279)
(279)
279
279
279
279
2,260
2,260
2,260
2,260
(1,849)
(1,849)
(1,849)
(1,849)
31 December 2018
Cash
Interest bearing liabilities
Total (decrease)/increase
30 June 2018
Cash
Total (decrease)/increase
94
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
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
Trade receivables
Taxation receivables ¹
Loans advanced to other parties ²
6 months to 31
December 2018
12 months to
30 June 2018
$'000
2,757
50,316
3,749
56,822
$'000
1,783
38,181
5,133
45,097
¹ The taxation receivables primarily relate to indirect taxes owing to the group by the State of Mali.
² $2,999,471 (30 June 2018: $5,132,579) relates to loan advanced to a supplier which is secured over assets that the loan was used to purchase.
Interest at the rate of 9.5% per annum as determined off a reference rate, is charged on the balance outstanding and the loan is repayable by the
supplier by way of deduction from future amounts payable under the contract. The balances outstanding at 31 December 2018 is expected to be
repaid within the next 12 months and therefore the loan has been classified as current. The remaining $750,000 (30 June 2018: nil) relates to a
loan advanced to Kilo Goldmines Ltd (a Canadian company listed on the TSX-V). The loan bears interest at 10% per annum, is repayable in
March 2019 and is secured against all the assets of Kilo Goldmines Ltd including a pledge of the shares in Kilo Goldmines Inc a wholly owned
subsidiary of Kilo Goldmines Ltd.
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
Group 2
6 months to 31
December 2018
12 months to
30 June 2018
$'000
$'000
1,822
1,061
54,544
456
56,822
43,689
347
45,097
*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 expected credit
losses. Trade receivables are due for settlement no more than 30 days from the date of recognition.
Taxation receivables are considered statutory in nature and therefore not accounted for as financial assets under AASB 9.
Taxation receivables are initially recognised and subsequently measured at amortised cost.
Fair value and foreign exchange risk
The carrying amount of receivables approximates their fair value. The Group always recognises the lifetime expected credit loss
for trade receivable carried at amortised cost. The expected credit losses on these financial assets are estimated based on the
Group’s historic credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an
assessment of both the current as well as forecast conditions at the reporting date.
For all other receivables measured at amortised cost, the Group recognises lifetime expected credit losses when there has been
a significant increase in credit risk since initial recognition. If the credit risk on the financial instrument has not increased
significantly since initial recognition, the Group measures the loss allowance for the financial instrument at an amount equal to
expected credit losses within the next 12 months.
The Group held $1.9m in receivables at 31 December 2018 (12 months to June 2018: $1.8m) in currencies other than
Australian dollars or in a different currency to that of the functional currency of the company which holds the item.
95
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements D: Other assets and liabilities
D.1 Receivables (continued)
As at balance date, the aging analysis of current and non-current sundry debtors is as follows:
0-30 days (Past due but not impaired)
31-60 days (Past due but not impaired)
61-90 days (Past due but not impaired)
+91 days (Past due but not impaired)
+91 days (Considered impaired)
6 months to 31
December 2018
12 months to
30 June 2018
$'000
4,356
68
1,683
222
177
6,506
$'000
6,639
132
94
-
51
6,916
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 bullion on hand - at net realisable value¹
Gold in circuit - at cost
Gold in circuit - at net realisable value²
Consumables at cost
6 months to 31
December 2018
12 months to
30 June 2018
$'000
$'000
27,347
14,524
41,871
16,553
4,980
9,598
66,736
38,885
178,623
38,296
35,946
74,242
28,675
-
72,830
-
58,973
234,720
¹ Resolute retained 22,768oz of gold bullion on hand at 31 Dec 2018 with a market value of $39.5m (12 months to June 2018: 21,962oz with a
market value of $37.1m).
² Included in gold in circuit is inventory with carrying value of $56m that is expected to be processed after 12 months.
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.
96
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements D: Other assets and liabilities
D.3 Other financial assets and liabilities
Financial assets at fair value through other comprehensive income (current)
Shares at fair value - listed
28,324
-
6 months to 31
December 2018
12 months to
30 June 2018
$'000
$'000
Available for sale financial assets (current)
Shares at fair value - listed
Other financial assets (current)
-
22,859
Environmental bond - restricted cash (face value approximates fair value)
3,890
-
Other financial assets (non-current)
Environmental bond - restricted cash
Other
-
32
32
3,707
44
3,751
Recognition and measurement
Financial assets at fair value through other comprehensive income
These financial assets consist of investments in ordinary shares, comprising principally of marketable equity securities.
Investments are initially recognised at fair value plus transaction costs. Unrealised gains and losses arising from changes in the
fair value of these investments are recognised in equity in the financial assets revaluation reserve. Amounts recognised are not
recycled to the statement of comprehensive income in future periods.
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 $3.891m (AUD equivalent) of restricted cash as security for the rehabilitation and
restoration provision of Mensin Gold Bibiani Limited’s Bibiani Gold Mine. 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% (12
months to June 2018: 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.
D.4 Prepayments
Non-current prepayments relate to payments made for the acquisition of plant and equipment.
97
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements D: Other assets and liabilities
D.5 Payables
Trade creditors
Accruals
6 months to 31
December 2018
12 months to
30 June 2018
$'000
46,922
73,060
119,982
$'000
36,234
56,254
92,488
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.
6 months to 31
December 2018
12 months to
30 June 2018
$'000
$'000
3,888
13,384
135
364
5,488
23,259
68,891
1,430
70,321
5,330
12,517
135
473
2,716
21,171
64,257
1,430
65,687
D.6 Provisions
Current
Site restoration
Employee entitlements
Dividend payable
Withholding taxes
Other provisions
Non-Current
Site restoration
Employee entitlements
98
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements D: Other assets and liabilities
D.6 Provisions (continued)
Recognition and measurement
Provisions are recognised when the Group has a present obligation as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the
amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate,
the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised
as a borrowing cost.
Employee benefits
The Group does not expect its long service leave or annual leave benefits to be settled wholly within 12 months of each reporting
date. The Group recognises a liability for long service leave and annual leave measured as the present value of expected future
payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected
future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are
discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currencies that
match, as closely as possible, the estimated future cash outflows.
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 period
Rehabilitation and restoration provision accretion
Change in scope of restoration provision
Utilised during the period
Foreign exchange translation
Balance at the end of the period
Reconciled as:
Current provision
Non-current provision
Total provision
6 months to
31 December
2018
12 months to
30 June 2018
$'000
$'000
69,587
893
1,224
(237)
1,312
72,779
3,888
68,891
72,779
65,425
1,505
2,113
(1,223)
1,767
69,587
5,330
64,257
69,587
99
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements D: Other assets and liabilities
D.6 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 risks associated with other assets and liabilities
Interest rate risk, diesel price risk and foreign exchange risk management
Refer to About this Report (page 34) and Section C (page 53) 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, 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.
Foreign exchange risk management
The following table summarises the sensitivity to a reasonably possible change in foreign exchange rates with all other variables
held constant:
Carrying
Amount
$'000
5,824
3,749
683,685
119,982
3,751
5,133
574,677
92,278
Foreign exchange risk
-10%
+10%
Profit
$'000
303
150
53,175
(1,489)
52,139
288
243
44,697
(1,123)
44,105
Equity
$'000
303
150
53,175
(1,489)
52,139
288
243
44,697
(1,123)
44,105
Profit
$'000
(248)
(122)
Equity
$'000
(248)
(122)
(43,507)
(43,507)
1,218
1,218
(42,659)
(42,659)
(236)
(199)
(236)
(199)
(36,570)
(36,570)
919
919
(36,086)
(36,086)
31 December 2018
Other financial assets
Loans advanced to other parties
Loans to subsidiaries
Payables
Total increase/(decrease)
30 June 2018
Other financial assets
Loans advanced to other parties
Loans to subsidiaries
Payables
Total increase/(decrease)
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Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
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 enabled Resolute to secure, with the endorsement of the Ghanaian government,
ultimate ownership of the Bibiani gold mine with protection from those liabilities which had been incurred at a time when the mine
was owned by Noble. The Scheme sets out the timing and amounts of payments to be made by the Companies to a Scheme
Fund and to a Future Fund, from which funds, payments are to be made 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 effectively 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 were paid in 2014. In addition to
those unconditional obligations to pay into the Scheme Fund, the Scheme imposed following contingent liabilities to provide
funding to the Scheme Fund and Future Fund:
• 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.
•
•
The Scheme provided that if Commercial Production had not been achieved by June 2019, then the Bibiani gold mine had to be
sold and the proceeds applied in the manner set out in the Scheme. Even in the event that the Board makes a decision to proceed
with mining at Bibiani, it is clear that Commercial Production will not be able to be achieved by June 2019. Therefore, in order to
avoid the need to sell the Bibiani gold mine, an Amended Scheme has been proposed to Scheme Creditors, which will allow
additional time to, effectively, commence mining at Bibiani. In consideration for the Scheme Creditors agreeing to the extended
timeframe to commence mining, the Amended Scheme will provide that upon the Amended Scheme becoming operative, the
payment of US$3.600m ($4.854m) will become payable (ie it will not be dependent upon the decision of the board of Resolute to
proceed with the development of Bibiani). The meetings of Scheme Creditors to consider the Amended Scheme are scheduled
for early April 2019, and if the Scheme Creditors approve the Amended Scheme, it is expected that the Amended Scheme will
become operative in May 2019, triggering the obligation to make the payment US$3.600m ($4.854m) within about 2 months
thereafter.
Notwithstanding the Scheme’s approval by the court, the creditors, and the Ghanaian Minister of Mines, two Ghanaian creditors
have sought to circumvent the operation of the Scheme and are seeking to enforce a winding up order against Mensin, on the
basis of a debt incurred prior to implementation of the Scheme. Resolute is defending Mensin’s right to unencumbered ownership
of Bibiani which was a key element of the Scheme supported by both Resolute and the Ghanaian government.
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Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements E: Other items
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
6 months to 31
December 2018
12 months to
30 June 2018
$'000
1,807
7,130
8,937
$'000
3,253
12,917
16,170
Pursuant to the terms of the Syama Sale and Purchase Agreement, Randgold Resources Limited 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 and US$5 per ounce on the next three million attributable ounces of gold production. As
at 31 December 2018, Resolute’s 80% attributable share of Syama’s project to date gold production was 1,287,453 ounces of
gold, therefore the royalty is currently US$5 per ounce.
Other contracted expenditure commitments
Due within one year
Aggregate lease expenditure contracted for at balance date but not provided for
Gold contracts
6 months to 31
December 2018
12 months to
30 June 2018
$'000
6,775
6,775
$'000
8,780
8,780
As part of its risk management policy, the Group enters into gold forward contracts to manage the gold price of a proportion of
anticipated sales of gold. As at 31 December 2018, 125,000 ounces remains outstanding.
The gold forward contracts disclosed below did not meet the criteria of financial instruments for accounting purposes on the basis
that they met the normal purchase/sale exemption because physical gold would be delivered into the contract. Accordingly, the
contracts were accounted for as sale contracts with revenue recognised in the period in which the gold commitment was met.
Gold for Physical
Delivery Ounces
Contracted
Gold Sale Price
per Ounce ($A)
Value of
Committed sales
$’000
31 December 2018
USD
Within one year
Within one year
Within one year
Within one year
AUD
Within one year
Within one year
Within one year
102
6,000
2,000
2,000
30,000
40,000
20,000
35,000
30,000
85,000
1,817.17
1,799.66
1,789.74
1,772.30
1,715.00
1,728.16
1,783.20
10,903,020
3,599,320
3,579,480
53,169,000
71,250,820
34,300,000
60,485,600
53,496,000
148,281,600
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements E: Other items
E.3 Auditor remuneration
Auditing
Other assurance services
Taxation planning advice and review and other services
6 months to 31
December 2018
12 months to
30 June 2018
$
140,500
46,300
-
186,800
$
175,500
-
20,000
195,500
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
21,267
208,067
28,451
27,860
223,360
47,446
103
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements E: Other items
E.4 Investments in associates
6 months to
31
December
2018
12 months
to 30 June
2018
6 months to
31
December
2018
12 months
to 30 June
2018
6 months to
31
December
2018
12 months
to 30 June
2018
Kilo Goldmines Ltd
Manas Resources Ltd
Loncor Resources Inc
46,568,000
46,568,000
603,189,835
523,899,835
51,000,000 51,000,000
-
24,700,000
-
-
-
-
Continuing Operations
Shares held in associates (No.
of shares)
CA$0.135 warrants, expiring 25
August 2018 (No. of warrants)
Percentage of ownership (%)
27.44%
27.44%
22.82%
19.90%
27.22%
27.22%
Carrying Value
$'000
2,893
$'000
3,077
$'000
1,541
(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
3,077
-
(184)
3,986
-
(909)
1,263
417
(139)
$'000
1,263
1,854
-
(591)
$'000
5,149
$'000
2,654
2,654
2,647¹
(153)
-
2,654
-
2,654¹
At 31 December
¹ On 13 July 2018, Resolute paid Loncor Resources Inc for 25 million shares acquired during the year, via the issue of
2,012,466 Resolute shares.
2,893
1,263
5,148
1,541
3,077
(c) Market value of investments in associates
Market value of the Group's
investment
726
1,195
2,413
3,143
3,977
3,927
(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
376
710
1,086
1,006
-
1,006
80
22
388
742
1,130
253
2
255
875
240
8,852
839
9,691
155
-
155
9,536
2,176
9,500
244
9,744
169
-
169
9,575
1,905
1,673
40,336
42,009
1,514
25
1,539
40,470
11,014
Extract from the associates' statement of comprehensive income:
Revenue
(Loss)/profit before tax,
(loss)/profit for the year and
total comprehensive loss
Recognition and measurement
-
-
-
-
-
(696)
(3,248)
(62)
(2,844)
(286)
2,539
37,998
40,537
1,745
11
1,756
38,781
10,555
-
30
The fair value less cost to dispose (“FVLCD”) for the investments in associates has been determined based on valuation
multiples based on comparable companies. The fair value methodology adopted is categorised as Level 3 in the fair value
hierarchy. In determining the FVLCD, estimates were made in relation to the underlying resource/reserves and the valuation
multiple.
104
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements E: Other items
E.5 Subsidiaries and non-controlling interests
Subsidiaries
The following were controlled entities during the period 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
ACN 627 384 098 Pty Ltd, Aust.
Resolute Mining Limited
Amber Gold Cote d’Ivoire SARL, Cote d'Ivoire
Resolute (CDI Holdings) Pty Ltd
Carpentaria Gold Pty Ltd, Aust.
Resolute Mining Limited
Drilling and Mining Services Limited, Ghana
Resolute (Bibiani) Pty Ltd
Excalibur Cote d’Ivoire SARL, Cote d'Ivoire
Geb and Nut Resources SARL, Cote d'Ivoire1
Resolute Corporate Services Pty Ltd, Aust. 2 (a)
Resolute (CDI Holdings) Pty Ltd
Resolute Cote D’Ivoire SARL
Resolute (Treasury) Pty Ltd
Mensin Gold Bibiani Limited, Ghana
Resolute (Bibiani) Pty Ltd
Nimba Resources SARL, Cote d'Ivoire
Resolute (CDI Holdings) Pty Ltd
Noble Mining Ghana Limited, Ghana
Resolute (Bibiani) Pty Ltd, Aust. 3 (a)
Resolute Burkina Faso Pty Ltd, Aust.
Resolute (Bibiani) Pty Ltd
Resolute Mining Limited
Resolute Mining Limited
Resolute Burkina SARL, Burkina Faso
Resolute Mining Limited
Resolute Canada Pty Ltd, Aust.
Resolute Canada 2 Pty Ltd, Aust.
Resolute (CDI Holdings) Pty Ltd, Aust. 4 (a)
Resolute Mining Limited
Resolute Mining Limited
Resolute Mining Limited
Resolute Cote D’Ivoire SARL, Cote d'Ivoire
Resolute (CDI Holdings) Pty Ltd
Resolute Egypt (Australia) Pty Ltd, Aust.
Resolute Mining Limited
Resolute Egypt (Australia) 2 Pty Ltd, Aust.
Resolute Egypt Pty Ltd, Egypt
Resolute Exploration SARL, Mali
Resolute (Finkolo) Pty Limited, Aust. 5 (a)
Resolute (Ghana) Limited, Ghana
Resolute Mali S.A.,Mali
Resolute (Somisy) Pty Ltd, Aust.6 (a)
Resolute Sudan Pty Ltd, Aust.
Resolute Sudan 2 Pty Ltd, Aust.
Resolute Mining Limited
Resolute Egypt (Australia) Pty Ltd
Resolute Egypt (Australia) 2 Pty Ltd
Resolute (Finkolo) Pty Ltd
Resolute Mining Limited
Resolute Mining Limited
Resolute (Somisy) Pty Ltd
Resolute Mining Limited
Resolute Mining Limited
Resolute Mining Limited
Resolute (Treasury) Pty Ltd, Aust. (a)
Resolute Mining Limited
RSG Tanzania Pty Ltd, Aust.
RSG Tanzania 2 Pty Ltd, Aust.
Resolute Mining Limited
Resolute Mining Limited
Société des Mines de Finkolo S.A., Mali
Resolute (Finkolo) Pty Ltd
Société des Mines de Syama S.A., Mali
Resolute (Somisy) Pty Ltd
(a) Entities not separately audited. Entity’s audit scope is limited to the purpose of inclusion in the consolidated entity's accounts.
1 Resolute’s shareholding in this company is subject to a dispute.
2 Previously Goudhurst Pty Ltd, Aust.
3 Previously Resolute (Bibiani) Limited, Jersey
4 Previously Resolute (CDI Holdings) Limited, Jersey
5 Previously Resolute (Finkolo) Limited, Jersey
6 Previously Resolute (Somisy) Limited, Jersey
Percentage of Shares Held by
Consolidated Entity
6 months to 31
December 2018
12 months to
30 June 2018
%
100
100
100
100
100
80
100
90
100
100
100
100
100
100
100
100
100
100
100
50
50
100
100
100
100
100
100
100
100
100
100
90
80
%
100
100
100
100
100
80
100
90
100
100
100
100
100
100
100
100
100
100
100
50
50
100
100
100
100
100
100
100
100
100
100
90
80
105
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
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:
Société des Mines de Syama SA ("SOMISY")
Mensin Gold Bibiani Limited ("Mensin")
Société des Mines de Finkolo SA ("Finkolo")
Total Non-Controlling Interest
(Loss)/profit allocated to material Non-Controlling Interest:
SOMISY
Mensin
Finkolo
Total Non-Controlling Interest
6 months to
31 December
2018
12 months to
30 June 2018
$'000
$'000
(11,181)
(1,661)
3,160
(9,682)
(3,351)
-
1,329
(2,022)
(7,510)
(1,700)
1,796
(7,414)
12,775
(183)
(325)
12,267
The summarised financial information of subsidiaries with non-controlling interests is provided below. This information is based
on amounts before inter-company eliminations.
6 months
to 31
December
2018
$'000
12
months
to 30
June
2018
$'000
6 months
to 31
December
2018
$'000
12
months
to 30
June
2018
$'000
6 months
to 31
December
2018
$'000
12
months
to 30
June
2018
$'000
SOMISY
Mensin
Finkolo
130,670
306,626
(17,779)
64,659
(17,779)
64,659
-
12
12
-
21,518
-
(1,734)
14,903
(3,219)
(1,734)
14,903
(3,219)
240,277
293,236
4,304
4,086
34,046
5,857
569,763
395,841
94,788
84,695
44,534
26,363
(137,721)
(110,494)
(2,607)
(2,694)
(40,666)
(8,492)
(38,949)
(37,946)
(9,430)
(9,502)
(2,073)
-
(660,928)
(550,974)
(487,077)
(457,440)
(64,650)
(55,125)
Statement of Comprehensive Income
Revenue
(Loss)/gain for the period
Total comprehensive (loss)/income for the
period
Summarised Statement of Financial
Position
Current assets
Non-current assets
Current liabilities
Non-current liabilities - External
Non-current liabilities - Intra Resolute Mining
Limited Group
Total deficiency
(27,558)
(10,337)
(400,022)
(380,855)
(28,809)
(31,397)
Summarised Statement of Cash Flow
Operating
58,623
82,298
(223)
(1,550)
9,518
(8,076)
Investing
Net (decrease)/increase in cash and cash
equivalents
(157,625)
(176,896)
(6,233)
(12,829)
(9,110)
(13,480)
(99,002)
(94,598)
(6,456)
(14,379)
408
(21,556)
106
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements E: Other items
E.6 Joint operations
The consolidated entity has an interest in the following joint operations whose principal activities are to explore for gold.
Entity Holding Interest
Other Participant/Joint Operation
Percentage of Interest
Held
6 months to
31 December
2018
%
12 months
to 30 June
2018
%
Resolute Mining Limited
Etruscan Resources Bermuda Ltd/N’Gokoli
Est JV¹
60%
60%
¹ Interests in joint operations greater than 50% have been accounted for as joint operations as all decision making requires unanimous agreement.
E.7 Subsequent events
On 31 January 2019, Resolute forward sold 30,000 ounces of gold at an average price of US$1,335 per ounce in scheduled
monthly deliveries of 5,000 ounces between July 2019 and December 2019. Additionally, on 11 February 2019, Resolute
forward sold 30,000 ounces of gold at an average price of A$1,887 per ounce in scheduled monthly deliveries of 5,000 ounces
between January 2020 and June 2020.
As part of the process of syndication of the US$100m Syndicated Facility Agreement, the facility limit was expanded to
US$150m with the participation of Investec, BNP Paribas, Citibank N.A. and Nedbank. The expanded facility was signed on 21
December 2018, all Conditions Precedent were satisfied as of 31 December 2018 and the expanded facility was fully available
to Resolute to draw from 3 January 2019.
E.8 Related party disclosures
Resolute is the ultimate Australian holding company and there is no controlling entity of Resolute at 31 December 2018.
E.9 Parent entity information
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Accumulated losses
Convertible note/Share option equity reserve
Employee equity benefits reserve
Reserves - unrealised (loss)/gain
Total shareholders equity
Profit of Resolute Mining Limited
Total comprehensive profit of Resolute Mining Limited
6 months to
31 December
2018
12 months to
30 June 2018
$'000
1,468
470,150
(2,564)
(2,569)
467,581
559,852
(103,976)
6,342
5,364
(1)
$'000
181
460,338
(1,323)
(1,329)
459,009
545,014
(97,710)
6,342
5,364
(1)
467,581
459,009
5,320
5,320
8,035
8,035
Refer to E1 for the contingent liabilities and commitments of Resolute Mining Limited. The parent company guarantees provided
by Resolute Mining Limited are outlined in C3.
107
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements E: Other items
E.10 Employee benefits and share based payments
Salaries
Superannuation
Share based payments expense
Total employee benefits charged to profit and loss
Share based payments
6 months to
31 December
2018
12 months
to 30 June
2018
$'000
39,019
1,577
1,566
$'000
58,523
2,714
2,307
42,162
63,544
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 and recognises an expense in the profit and loss over the vesting period
with a corresponding increase in equity.
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
6 months to 31
December
2018
12 months to
30 June 2018
$
$
1,507,394
3,115,873
59,887
23,265
147,869
74,058
730,674
1,882,044
2,321,220
5,219,844
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.
108
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements E: Other items
E.10 Employee benefits and share based payments (continued)
Performance rights plan
The performance rights plan is broken down between:
Performance Rights Plan Category
Type of employee
Band 1
Band 2
Band 3
Band 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
Band 1
Grant and frequency
Annually set at 100% of
fixed remuneration for the
Managing Director & CEO
Band 2
Annually set at 65% of fixed
remuneration
Band 3
Annually set between 30%
and 50% of fixed
remuneration
Band 4
Annually set between 10%
and 20% of fixed
remuneration
Special
Varies
•
•
•
•
•
•
•
•
•
Performance period
3 years
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.
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
109
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements E: Other items
E.10 Employee benefits and share based payments (continued)
Performance rights on issue
Band 1 to 4
Band 1
Band 1
Band 2 to 4
Band 1
Band 2 to 4
Band 2 to 4
Band 1
As at 31 December 2018
Opening number of performance rights
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 (Band 1 to 4)
Decrease through lapsing of performance rights (Band 1 to 4)
Decrease through lapsing of performance rights (Band 1 to 4)
Decrease through lapsing of performance rights (Band 1 to 4)
Decrease through conversion of shares upon vesting of performance
rights (Band 1)
Decrease through lapsing of performance rights (Band 1 to 4)
Decrease through lapsing of performance rights (Band 1 to 4)
Decrease through lapsing of performance rights (Band 1 to 4)
Increase through issue of performance rights to eligible employees
(Band 1 to 4)
Decrease through lapsing of performance rights (Band 1 to 4)
Decrease through lapsing of performance rights (Band 1 to 4)
Increase through issue of performance rights to eligible employees
(Band 1)
Closing number of performance rights
Issue Date
Total
Number
Fair Value
per Right at
Grant Date
24/10/16
2,263,300
29/11/16
600,000
29/11/16
1,000,000
17/10/17
1,403,379
28/11/17
07/03/18
26/10/18
26/10/18
587,500
319,571
887,167
277,559
7,338,476
$1.27
$1.20
$1.18
$0.81
$0.74
$0.85
$0.92
$0.77
$0.75
Vesting
Date
30/06/19
30/06/19
30/06/20
30/06/20
30/06/20
30/06/20
30/06/21
30/06/21
Date of
Change
Total
Number
11,307,704
Fair Value
per Right at
Grant Date
Vesting
Date
24/08/18
(3,829,341)
$0.25
30/06/18
24/08/18
(321,706)
$0.25
30/06/18
24/08/18
10/09/18
18/09/18
21/10/18
(421,482)
(6,926)
(6,703)
(5,927)
15/12/18
(22,281)
24/08/18
(400,000)
10/07/18
10/09/18
21/10/18
26/10/18
21/10/18
15/12/18
26/10/18
(16,513)
(26,667)
(26,667)
887,167
(26,667)
(23,074)
277,559
7,338,476
$1.89
$1.27
$1.27
$1.27
$1.27
$1.18
$0.81
$0.81
$0.81
$0.92
$0.81
$0.81
30/06/18
30/06/19
30/06/19
30/06/19
30/06/19
30/06/18
30/06/20
30/06/20
30/06/20
30/06/21
30/06/20
30/06/20
$0.77
30/06/21
110
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements E: Other items
E.10 Employee benefits and share based payments (continued)
The following table lists the key variables used in the valuation of performance rights:
Hurdle
Number of performance rights
issued
Underlying share price ($)
Exercise price ($)
Risk free rate
Volatility factor
Dividend yield
Period of the rights from grant date
(years)
26 October 2018 Issue
26 October 2018 Issue
6 months to 31 December 2018
Reserve and
resources
rights
221,792
1.28
-
2.01%
36%
1.42%
Reserve and
resources
rights
69,390
1.08
-
2.01%
59%
1.42%
TSR rights
665,375
1.28
-
2.01%
36%
1.42%
TSR rights
Total
1,164,726
208,169
1.08
-
2.01%
59%
1.42%
3
3
2.68
2.68
Effect of performance hurdles
Value of performance right at grant date (Band 1 to 4)
Value of performance right at grant date (Band 1)
Fair value of performance
rights granted
$0.92
$0.77
Hurdle
Number of performance
rights issued
Underlying share price ($)
Exercise price ($)
Risk free rate
Volatility factor
Dividend yield
Period of the rights from
grant date (years)
12 months to 30 June 2018
17 October 2017 Issue
28 November 2017 Issue
Reserve
and
resources
rights
Reserve
and
resources
rights
TSR
rights
481,658
1.19
-
1.92%
78%
1.80%
1,444,976
1.19
-
1.92%
78%
1.80%
146,875
1.04
-
1.82%
78%
1.80%
TSR rights
440,625
1.04
-
1.82%
78%
1.80%
7 March 2018 Issue
Reserve
and
resources
rights
TSR
rights
79,893
1.21
-
2.04%
36%
1.42%
239,678
1.21
-
2.04%
36%
1.42%
3
3
2.59
2.59
2.32
2.32
Total
2,833,705
Effect of performance hurdles
Value of performance right at grant date (Band 1 to 4)
Value of performance right at grant date (Band 1)
Value of performance right at grant date (Band 1 to 4)
Fair value of performance
rights granted
$0.81
$0.74
$0.85
111
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements E: Other items
E.11 Other accounting policies
Derivatives
Derivatives are categorised as held for trading unless they are designated as hedges. Assets in this category are classified as
current assets or liabilities if they are either held for trading or are expected to be realised within 12 months of the consolidated
statement of financial position date. Items of this nature are recorded at their fair values through profit or loss.
Investments in associates
The Group’s investment in associates is accounted for using the equity method of accounting in the consolidated financial
statements. An associate is an entity over which the Group has significant influence and that are neither subsidiaries nor joint
arrangements. When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any
unsecured long-term receivables and loans, the Group does not recognise further losses, unless it has incurred obligations or
made payments on behalf of the associate.
New and amended Accounting Standards and Interpretations
A number of new Standards, amendment of Standards and interpretations have recently been issued that were effective for the
period ended 31 December 2018 or effective in future periods (and have not been adopted by the Group as at the financial
reporting date). Details of these are provided below:
Title
Application
Date for
Group
Detail
The Group has adopted AASB 9 which replaces AASB 139 Financial Instruments:
Recognition and Measurement. In accordance with the transitional provisions in AASB 9,
comparative figures have not been restated. The standard contains requirements in the areas
of classification and measurement, impairment, hedge accounting and de-recognition.
Existing financial assets and liabilities of the Group were assessed in terms of the
requirements of AASB 9. In this regard, the Group has determined that the adoption of AASB
9 has impacted the classification of financial asset and liabilities as follows:
Class of financial instrument
presented in the statement of
financial position
Original measurement
category under AASB 9
(i.e. prior to 1 July 2018)
New measurement category
under AASB 9 (i.e. from 1
July 2018)
Cash and cash equivalents
Loans and receivables
Trade and other receivables
Loans and receivables
Available for sale financial
assets
Available for sale
financial assets
Other financial assets
Loans and receivables
Trade and other payables
Interest bearing loans and
borrowings
Financial liability at
amortised cost
Financial liability at
amortised cost
Financial assets at
amortised cost
Financial assets at
amortised cost
Financial assets at fair value
through other
comprehensive income (held
for strategic purposes)
Financial assets at
amortised cost
Financial liability at
amortised cost
Financial liability at
amortised cost
The Group adopted AASB 9 retrospectively. The change in classification has not resulted in
any re-measurement adjustments at 1 July 2018. There was no impact on hedging as the
Group does not apply hedge accounting.
The adoption of AASB 9 has changed the Group’s accounting for impairment losses for
financial assets by replacing AASB 139’s incurred loss approach with a forward-looking
expected credit loss (ECL) approach. AASB 9 requires the Group to recognise an allowance
for ECLs for all debt instruments not held at fair value through profit or loss and contract
assets in the scope of AASB 15.
As all of the Group’s trade receivables and other current receivables which the Group
measures at amortised cost are short term (i.e., less than 12 months) and the Group’s credit
rating and risk management policies in place, the change to a forward-looking ECL approach
did not have a material impact on the amounts recognised in the financial statements.
AASB 9 – Financial
Instruments
1 July 2018
112
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018 Notes to the Financial Statements E: Other items (continued)
E.11 Other accounting policies (continued)
New and amended Accounting Standards and Interpretations (continued)
Title
Application
Date for
Group
Detail
AASB 15 - Revenue
from Contracts with
Customers
1 July 2018
Amendments to AASB
28: Long-term interest in
associated and joint
ventures
1 January
2019
Amendments to AASB
10 and AASB 28: Sale or
Contribution of Assets
between an Investor and
its Associate or Joint
Venture
1 January
2019
AASB Interpretation 23 -
Uncertainty over Income
Tax Treatments
1 January
2019
AASB 15 was issued in December 2015 and establishes a five-step model to account for
revenue arising from contracts with customers. Under AASB 15, revenue is recognised
at an amount that reflects the consideration to which an entity expects to be entitled in
exchange for transferring goods or services to a customer. Under AASB 15 the revenue
recognition model will change from one based on the transfer of risk and reward of
ownership to the transfer of control of ownership. The Group adopted AASB 15 as of 1
July 2018. Adoption of AASB 15 did not result in any impact. Refer to Note A.1 for
additional information.
The amendments clarify that an entity applies AASB 9 to long-term interest in an
associate or joint venture to which the equity method is not applied but that, in
substance, form part of the net investment in the associate or joint venture (long-term
interests). This clarification is relevant because it implies that the expected credit loss
model in AASB 9 applies to such long-term interests.
The amendment also clarified that, in applying AASB 9, an entity does not take account
of any losses of the associate or joint venture, or any impairment losses on the net
investment, recognised as adjustments to the net investment in the associate or joint
venture that arise from applying AASB 28 Investments in Associates and Joint Ventures.
The amendments should be applied retrospectively and are effective from 1 January
2019, with early application permitted. Since the Group does not have such long-term
interest in its associate and joint venture, the amendments will not have an impact on its
consolidated financial statements.
The amendments address the conflict between AASB 10 and AASB 28 in dealing with
the loss of control of a subsidiary that is sold or contributed to an associate or joint
venture. The amendments clarify that the gain or loss resulting from the sale or
contribution of assets that constitute a business, as defined in AASB 3, between an
investor and its associate or joint venture, is recognised in full. Any gain or loss resulting
from the sale or contribution of assets that do not constitute a business, however, is
recognised only to the extent of unrelated investors’ interests in the associate or joint
venture. The AASB has deferred the effective date of these amendments indefinitely, but
an entity that early adopts the amendments must apply them prospectively. The Group
will apply these amendments when they become effective.
The Interpretation addresses the accounting for income taxes when tax treatments
involve uncertainty that affects the application of AASB 12 and does not apply to taxes
or levies outside the scope of AASB 12, nor does it specifically include requirements
relating to interest and penalties associated with uncertain tax treatments.
► Whether an entity considers uncertain tax treatments separately
► The assumptions an entity makes about the examination of tax treatments by taxation
authorities
► How an entity determines taxable profit (tax loss), tax bases, unused tax losses,
unused tax credits and tax rates
► How an entity considers changes in facts and circumstances.
The Group is in the process of assessing the impact of the new interpretation.
113
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Notes to the Financial Statements E: Other items (continued)
E.11 Other accounting policies (continued)
New and amended Accounting Standards and Interpretations (continued)
Title
Detail
Application
Date for
Group
AASB16 – Leases
1 January
2019
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. The depreciation of the right of use asset and interest
on the lease liability will be recognised in the consolidated income statement.
Transition to AASB 16
The standard has an effective date for the Group of 1 January 2019. AASB 16
introduces a single lessee accounting model, requiring the recognition of assets and
liabilities for all leases with a term of more than twelve months, unless the underlying
asset is of low value. A lessee is required to recognise a right-of-use asset representing
its right to use the underlying leased asset and a lease liability representing its
obligations to make lease payments.
The Group is party to contracts for leases of property, plant and equipment; including but
not limited to: office premises, mining equipment and contractor-provided equipment.
Adoption of the new lease standard is expected to result in lower operating costs and
higher finance and depreciation costs as the accounting profile of the lease payments
changes under the new model. The statement of financial position will also be impacted,
with an increase to both non-current assets (right-of-use assets) and liabilities (lease
liabilities) expected. Cash flows from operating activities will increase as affected lease
payments will be now be classified as financing cash flows. Conversely, cash flows from
financing activities will decrease for the same reason.
The Group has progressed its assessment of the impact of the new lease standard.
During the six month period ended 31 December 2018, the Group has developed an
implementation plan and review framework to facilitate analysis of its contract
population. The Group has conducted a preliminary review of its lease population for the
potential application of AASB 16 and identified areas for further analysis, including
embedded leases as prescribed under the new standard. Implementation of the project
plan will continue into the second half of FY2019. It has not yet been determined
whether the impact of adopting the new accounting standard will have a material effect
on the Group’s financial statements. Information regarding the Group’s operating lease
commitments can be found in Note E.2. The impact of adopting AASB 16 on 1 January
2019 will be measured and disclosed in the Group interim financial statements for the six
months ended 30 June 2019.
114
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
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.
ii.
giving a true and fair view of the consolidated entity’s financial position as at 31 December 2018 and of its
performance for the period ended on that date; and,
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 period ended 31 December 2018.
On behalf of the Board
J.P. Welborn
Managing Director and CEO
Perth, Western Australia
22 February 2019
115
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor's report to the members of Resolute Mining Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Resolute Mining Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 31
December 2018, the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated cash flow statement for the six month period then ended, notes to the
financial statements, including a summary of significant accounting policies, and the directors'
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a)
giving a true and fair view of the consolidated financial position of the Group as at 31 December
2018 and of its consolidated financial performance for the six month period ended on that date;
and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our
audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a
separate opinion on these matters. For each matter below, our description of how our audit addressed
the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report.
The results of our audit procedures, including the procedures performed to address the matters below,
provide the basis for our audit opinion on the accompanying financial report.
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116
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
1.
Physical existence and valuation of ore stock piles and gold in circuit
Why significant
How our audit addressed the key audit matter
As at 31 December 2018 the Group had ore
stockpiles and gold in circuit inventories of
$41,871,000 and $76,334,000 respectively
(refer to Note D2).
Critical to the determination of the carrying value
of ore stockpiles and gold in circuit inventories is
the cost and net realisable value assumptions
adopted by the Group in measuring the ore
stockpiles and gold in circuit and the
determination of the physical existence of the ore
stockpiles (tonnes) and gold in circuit (ounces).
We focused on this matter because of the:
►
►
►
Significant judgment required to assess the
quantity of ore stockpiles and the quantity
and recoverable metal content for gold in
circuit. This includes determination of
estimated grades, recovery rates and other
geophysical properties.
Significant estimates and judgments involved
in the valuation of ore stockpiles and gold in
circuit including the allocation of operating
costs to various stock types included in ore
stockpiles and gold in circuit inventories.
Significant estimates involved in the
determination of the net realisable value of
ore stockpiles and gold in circuit, including
the appropriateness of the estimated
recoverable gold, selling price in the ordinary
course of business and estimated costs of
completion necessary to make the sale.
Our audit procedures included the following:
►
►
►
►
►
Obtained an understanding of the Group’s
processes and controls in place for
determining the physical quantities and
metal contents of stockpiles and gold in
circuit, which included observation of the
stockpile surveys at both the Syama and
Ravenswood mine sites during the financial
period.
Assessed the qualifications, competence and
objectivity of the Group’s internal experts
involved in determining the quantity and
recoverable metal content for ore stockpiles
and gold in circuit.
Agreed the estimated grades, recovery rates
and other geophysical properties against the
underlying reports prepared by the Group’s
internal experts and assessed the
reasonableness of this information based on
the current operations.
Assessed the accuracy of the inventory
valuation models including assessing the
nature of costs allocated to inventories in
determining the unit cost of inventories.
Assessed the carrying value of inventories at
31 December 2018 to evaluate whether they
were valued at the lower of cost and net
realisable value. This included evaluating the
assumptions and methodologies used by the
Group, in particular those relating to the
forecast gold price, costs to complete and
gold recoveries.
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117
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
2.
Impairment assessment of non-current assets
Why significant
How our audit addressed the key audit matter
As at 31 December 2018 the Group had non-
current assets of $756,767,000 comprising
capitalised development expenditure, property,
plant and equipment and capitalised exploration
and evaluation expenditure (refer to Notes B1 and
B2).
At the end of each reporting period, the Group
exercises judgment in determining whether there
is any indication of impairment or indication that
an impairment loss recognised in prior periods
should be reversed. If any such indicators exist,
the Group estimates the recoverable amount of
that asset. No indicators of impairment or
indicators of reversal of prior period impairment
were identified in the current period (refer to Note
B3)
We focused on this matter because of the
significant judgment involved in considering if
indicators of impairment or indicators that an
impairment loss recognised in prior periods should
be reversed, were present.
We evaluated the Group’s assessment as to the
presence of any indicators of impairment or
indicators that an impairment loss recognised in
prior periods should be reversed. Our audit
procedures included the following:
► Comparison of the Group’s market
capitalisation relative to its net assets.
► Reading operational reports, board reports,
minutes and market announcements.
► Consideration of changes to reserves and
resources and other macro-economic factors
including the gold price.
► Consideration of the status of capital
projects via discussions with management,
review of operational reports and minutes
and site visits.
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118
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
3.
Rehabilitation and restoration provisions
Why significant
How our audit addressed the key audit matter
As a consequence of its operations, the Group
incurs obligations to rehabilitate and restore its
mine sites. Rehabilitation activities are governed
by local legislative requirements. As at 31
December 2018 the Group’s consolidated
statement of financial position includes provisions
of $72,779,000 in respect of these obligations
(refer to Note D6).
We focused on this matter because estimating
the costs associated with these future activities
requires judgment and estimation for factors
such as timing of when rehabilitation will take
place, the extent of the rehabilitation and
restoration activities and economic assumptions
relating to inflation and discount rates are taken
into account to determine the provision amount.
We evaluated the assumptions and methodologies
used by the Group in determining their
rehabilitation obligations. Our audit procedures
included the following:
►
►
►
Assessed the qualifications, competence and
objectivity of the Group’s external and
internal experts, the work of whom, formed
the basis of the Group’s rehabilitation cost
estimates. We assessed the appropriateness
of the cost estimates, including comparing
these to historical rehabilitation costs
incurred.
Considered the estimated timing of when the
rehabilitation cash flows will be incurred
based on the life of mine and the resultant
inflation and discount rate assumptions used
in the Groups cost estimates, having regard
to available economic data relating to future
inflation and discount rates.
Evaluated the adequacy of the Group’s
disclosures relating to rehabilitation
obligations and considered the
appropriateness of the accounting for the
changes in the rehabilitation and restoration
provision.
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119
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
4.
Taxation
Why significant
How our audit addressed the key audit matter
The Group has operations in multiple countries,
each with its own taxation legislation. The nature
of the Group’s activities give rise to various
taxation obligations including corporate income
tax, royalties, employment related taxes, and
other indirect taxes.
As set out in the Consolidated Statement of
Financial Position the Group has a current tax
receivable of $17,561,000 and recognised
deferred tax assets of $19,261,000 as at 31
December 2018. In addition, the Group has
recognised a tax benefit of $1,835,000 in the
Consolidated Statement of Comprehensive
Income for the six month period ended 31
December 2018
Our audit procedures in relation to current and
deferred tax included the following:
► Involved our tax specialists in the
interpretation of enacted tax laws in these
multiple jurisdictions, where necessary,
including the related judgments and
interpretations made by the Group.
► Considered the appropriateness of the
Group’s assumptions and estimates in
relation to tax positions, assessed those
assumptions and considered the advice the
Group received from external experts to
support the accounting for the tax positions
in accordance with enacted laws.
Further, as set out in Note A4 the Group has
significant unrecognised tax assets at 31
December 2018.
► Where external experts were engaged by
the Group, we assessed their qualifications,
competence and objectivity.
We focused on this matter because the:
► Group is required to exercise significant
judgment with regards to interpretation of
enacted tax laws in these multiple countries.
The Group engages external independent
tax advisors to assist with the interpretation
of tax laws when appropriate.
►
Determination of the probability of the Group
deriving taxable income in the future to
utilise deferred tax assets is highly
judgmental. This is subject to numerous
assumptions around the future profitability
of the Group’s mining assets, which in turn is
primarily dependent upon assumptions
including future production levels, gold
prices and exchange rates, operating and
capital development costs.
In respect of deferred tax assets recognised and
unrecognised at 31 December 2018, our audit
procedures included the following:
► Evaluated the appropriateness of the
Group’s assessment of the probability of the
Group deriving assessable income in the
future to utilise the recognised deferred tax
assets.
►
Assessed the adequacy of the Group’s
disclosures relating to current and deferred
tax in the 31 December 2018 financial
report.
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120
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information
included in the Company’s 2018 Annual Report other than the financial report and our auditor’s report
thereon. We obtained the Directors’ Report that is to be included in the Annual Report, prior to the date
of this auditor’s report, and we expect to obtain the remaining sections of the Annual Report after the
date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and
our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the Directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of this financial report.
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121
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
►
►
►
►
►
►
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Directors.
Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going
concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible
for the direction, supervision and performance of the Group audit. We remain solely responsible for
our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated to the Directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
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122
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the Directors' report for the six month period
ended 31 December 2018.
In our opinion, the Remuneration Report of Resolute Mining Limited for the six month period ended 31
December 2018, complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Ernst & Young
Gavin Buckingham
Partner
Perth
22 February 2019
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123
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
Shareholder Information
Substantial Shareholders as at 28 February 2019
Shareholder
ICM Limited
Van Eck Associates Corporation
Dimensional Fund Advisors LP
Distribution of Equity Securities as at 28 February 2019
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 for Ordinary Shares
Ordinary Shares
137,526,167
84,303,918
48,089,068
Percentage of
Issued Capital
18.14%
11.12%
6.34%
Ordinary Shares
Percentage of
Issued Capital
1,607
2,564
1,325
1,992
264
7,752
Holders
750
0.10%
0.99%
1.41%
8.17%
89.33%
100.00%
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 February 2019
Name
1
2
3
4
5
ICM Limited
Van Eck Associates Corporation
Dimensional Fund Advisors LP
L1 Capital Pty Ltd.
The Vanguard Group Inc
6 Wellington Management Company LLP
7
8
9
BlackRock, Inc.
Ellerston Capital Limited
Lemanik S.A.
10 State Street Corporation
11
Baker Steel Capital Managers LLP
12 Realindex Investments Pty Ltd
13
Investec Group
14 NAB Equities
15
16
17
LSV Asset Management
Segall Bryant & Hamill LLC
Stabilitas GmbH
18 Deutsche Bank AG Group
19 Accident Compensation Corporation
20 IFM Investors
124
Ordinary Shares
137,526,167
84,303,918
48,089,068
34,993,722
28,991,578
25,477,134
18,929,720
16,321,814
14,741,433
13,129,322
11,176,000
10,798,293
8,476,509
8,231,996
7,108,665
6,822,297
5,800,000
5,734,811
5,311,774
5,268,017
497,232,238
Percentage of
Issued Capital
18.14%
11.12%
6.34%
4.62%
3.82%
3.36%
2.50%
2.15%
1.94%
1.73%
1.47%
1.42%
1.12%
1.09%
0.94%
0.90%
0.77%
0.76%
0.70%
0.69%
65.59%
Resolute Mining Limited | 2018 Annual Report | Financial Report – for the six months ended 31 December 2018
ASX:RSG | www.rml.com.au