Resolute Mining Ltd (ASX: RSG), is the owner of three gold mines in Syama, Ravenswood and Bibiani. Syama is located in Mali, Ravenswood in Australia and Bibiani in Ghana. RSG’s one of the world class gold mines unit Syama is robust, long life asset whose capacity is to produce more than 300,000 oz per annum using the current infrastructure. Taking this into consideration, RSG has started developing underground gold mines at Syama which will have large scale operation at a low cost by 2032. RSG’s Ravenswood unit is a consistent performer over decade. Its low-cost mining pit operation has a mine life beyond 2032.The third unit Bibiani, which operates on high margin is a growth opportunity for RSG.
RSG with experience of more than 28 years in exploring, developing and operating gold mines in Australia and Africa is still actively exploring 5300 km2 of its tenure in Australia and Africa in order to expand, explore and improve company’s operations.
In order to expand the Ravenswood expansion project, RSG has taken advantage of AUD$ gold price to hedge company’s gold hedge position. It has forward sold an additional 35k ounces of gold considering AUD 1,728 with an agreement to deliver gold worth 5k ounces on monthly basis.
Company’s other hedging in previous year indicated for forward sell for 96000 gold at US$1330 per ounce in 1st Sept 2017 with a scheduled monthly delivery of 6000 ounces. Another one was during 24 Nov 2017 to deliver 72000 ounces at an average price of AUD 1,715 with the scheduled delivery of 4000 ounces out to June 2019.
In the hedging books, RSG as on 5th Oct 2018, reported that there are 85000 ounces of monthly delivery out to Dec 2019 representing 20% less production but successful increase in the sales revenue of gold through hedging strategies.
Meanwhile, RSG’s FY18 Revenue from gold and silver sales has fallen from A$541m to A$446m. Gross profit from operations has fallen from A$177m to A$69m. NPAT has also narrowed from A$166m to A$78m. Net cash from operations has fallen from A$186m to A$28m. Company has made investment in cash , bullion and listed investments for A$112m. RSG also declared a dividend of 2.0c per share which is equivalent to 3.3% of annual sales of the company.
Meanwhile, if we see the performance of the stock, the share price has fallen 15.69 percent in the past six months as at October 04, 2018 and traded at reasonable PE level of 12.15x. The stock was up 1.1% as at 3PM AEST, October 05, 2018 with the release of the above announcement.
The Income available from dividends remains attractive for many investors.
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