Resolute Adds To US$ Gold Hedges 30,000 Ounces Forward Sold At US$1,250/Oz To Mitigate Risk Of US$ Revenues From Syama Gold Mine

October 29, 2018 09:33 AM AEDT | By Team Kalkine Media
 Resolute Adds To US$ Gold Hedges 30,000 Ounces Forward Sold At US$1,250/Oz To Mitigate Risk Of US$ Revenues From Syama Gold Mine

Resolute Mining Limited (Resolute or the Company) (ASX:RSG) made an announcement regarding the agreement to forward sell an additional 30,000 ounces of gold scheduled to deliver on a monthly basis from the January 2019 to June 2019 at an average price of US$1,250 per ounce.

There is a US$ volatility in the gold price. As a result of this i.e. strengthening of the gold price volatility, Resolute has taken advantage to add to the Company’s US$ gold hedge positions. The purpose of hedging was to mitigate the risk of US$ revenues from Resolute’s Syama Gold Mine in Mali (Syama) during the ramp-up phase of the Syama Underground Mine.Â

Forward sales of additional 30,000 ounces of gold is made in order to extend the existing US$ hedge positions established to deliver 6,000 ounces per ounce monthly at US$1,330 from September 2017 till December 2018. As per Resolute’s total gold hedge book, as on 29 October 2018 is 115,000 ounces of gold is hedged which includes the gold hedge till 29 October 2018. This represents 26% of the total production of gold over the period.

Mr. John Welborn who is the Managing Director and CEO of Resolute Mining Limited is happy to be a part of Resolute’s success and wish to continue in increasing the sales revenue by increasing the sales of gold using the hedging strategies.

At US, currently the gold prices are highly volatile. So, Mr. John Welborn says that the hedging strategy is a wise decision in order to maintain US$ gold price certainty at these levels during the ramp up phase of the Syama Underground Mine. There is a high exposure of US$ capital and expenditure at Syama Underground mines. The hedging program will bring a level of certainty in regards to the company’s future cashflows as well as the profit from the project. Resolute remains strongly influenced due to gold prices. Its current hedge position represents less than 2% of the gold Ore reserves. As per the hedge books of Resolute, the company has made a forward sold of 115,000 ounces of gold that is hedged at an average price of approximately A$1,756 per ounce (US$1,247 per ounce).

As per the CEO presentation on AGM this Friday 26 October 2018, the company made net profit after tax worth A$78 million. There was a strong shareholders return where dividend of 2.0 cents per share was declared. Syama DFS update delivers more than 300kozpa at US$746/oz. The Ravenswood expansion project delivers 115ozpa at US$823/oz. In the FY18, there was a total gold production of 284,185 oz and total gold sold was 262,381oz at an average price of A$1,703oz. The company generated a revenue of A$446 million from the sales of gold and silver. The NPAT was A$78 million. The ROE was 12%. There was a net cash inflow of A$28.359 million. The major cash outflow from the operating activities was due to payments made to the suppliers, employees worth A$391.955 million. The company made payments for the property, plant and equipment worth A$88.421 million and in development activities worth A$138.565 million. These were the major cash outflow from the investing activities. The net cash outflow from the investing activities was A$268.956 million. The company also paid dividend of A$14.830 million to its shareholders. The cash and cash equivalent at the end of the period was -A$4.837 million.

The current market price of the share is A$1.075 with a market capitalization of A$795.39 million and PE ratio 11.86x.


Disclaimer

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkinemedia.com and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.


Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.


AU_advertise

Advertise your brand on Kalkine Media

Sponsored Articles


Investing Ideas

Previous Next
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.