Reporting Season

Impairment impacts Resolute Mining’s major FY21 loss

Thu 24 Feb 22, 3:19pm (AEST)
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Key Points

  • Resolute posted -$367.5m loss after tax for year ended 31 December 2021
  • Share price has bounced 27% lower YTD
  • Gold sales for the year reflected a 10% improvement in production from the Syama Sulphide operations

Resolute Mining (ASX: RSG) shareholders witnessed further deterioration in the share price this morning after the gold miner posted a -$367.5m loss after tax for year ended 31 December 2021.

But to put that loss in context, $227.5m was due to a non-cash impairment charge ($167.4m Syama announced on 27 August 2021).

Since the beginning of the year, the share price has bounced 27% lower, and there’s little within today’s result to stanch that downward trajectory.

The company’s portfolio includes Syama Gold Mine located in the south of Mali, West Africa, and the Mako Gold Mine located in eastern Senegal, West Africa, which is an open pit mine.

Highlights of today’s FY21 result include:

  • Gold sales for the year were 316,464oz reflecting a 10% improvement in production from the Syama Sulphide operations.

  • Revenue was $549.2m, generating earnings for the year ended 31 December 2021 of $129.9m.

  • All-in cost of $1,370/oz (2020: $1,074/oz), reflecting lower gold production.

  • 2022 production and cost guidance: 345,000oz at an all-in cost of $1,425/oz.

Strong finish

Commenting on the FY21 result, Resolute’s CEO, Stuart Gale noted that from an operational standpoint the cutback at Mako - which provides an additional two years of production - has progressed well.

“We finished the year strongly with December generating the highest monthly production across each of Resolute’s operations for 2021,” said Gale.

"That momentum has been carried into January and February 2022 and positions us well for the 35-day Roaster shut which commenced on 18 February 2022.

This is an important project for Resolute which provides us with the opportunity to perform key plant improvement and maintenance activities to deliver a more consistent level of production at the Sulphide operations.”

The share price was trading -1.11% lower this afternoon.

Based on the brokers that cover the stock (as reported on by FN Arena) Resolute is currently trading with 66.7% upside to the current price.

Consensus is Strong Buy.

Based on Morningstar's fair value of $0.56, the stock looks Undervalued.

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Resolute Mining has significantly underperformed against the broader market over the last three months.

Written By

Mark Story

Editor

Mark is an investigative financial journalist and editor who started his career working for Marathon Oil in London. He has a degree in politics/economics and a diploma in journalism. Mark has worked on 70-plus newspapers and financial publications across Australia, NZ, the US, and Asia including: The Australian Financial Review, Money Magazine, Australian Property Investor and Finance Asia. Mark is passionate about improving the financial literacy of all Australians through the highest quality content. Email Mark at [email protected].

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