Resolute Strengthens Australian Dollar Gold Hedge-Book - Stock Price Rallied Over 6 Percent on ASX

  • Dec 21, 2018 AEDT
  • Team Kalkine
Resolute Strengthens Australian Dollar Gold Hedge-Book - Stock Price Rallied Over 6 Percent on ASX

Resolute Mining Limited (ASX: RSG) is into the production of gold. It operates in mining and exploration projects at Ravenswood, Syama and Bibiani. It has more than 28 years of production experience and has produced about 8 million ounces of gold.

Syama can produce more than 300,000 ounces of gold per annum from its current processing infrastructure, being a world-class long-life asset. It is a fully automated underground gold mine that Resolute is working on to develop. The Syama might turn out to be low cost and very large-scale operation with life beyond 2032.

Ravenswood’s operation is based on open pit mining. It has become a very important part of Resolute’s business. It operates in a large-scale, with effectively low cost with an extended mine life of at least till 2032. Bibiani has high margin opportunities and long life.

Resolute is actively exploring areas in Africa and Australia, to expand and improve the company’s operations. The company investments strategically in gold exploration companies which have high prospects, well managed and focussed into African zone. It has a robust pipeline for the future which can provide several growth opportunities to the company.

The company sold forward contracts for additional 30,000 ounces of gold. The average price for the contract was A$1,783. These contracts will deliver 5,000 ounces monthly, between July 2019 and December 2019.

As per the Managing Director and CEO of Resolute, Mr. John Welborn, the company continued to grow its revenue from the sale of gold using hedging strategies. The company actively manages its sales for gold and resort to hedging to benefit from the gold price movement and volatility by maximizing revenues and protecting the company’s balance sheet. The company will significantly benefit from its hedging position with a minimum increase in AUD to protect the revenue and cash flow generation going forward. Resolute is strongly hedged against any upside in gold prices going forward.

The company entered into the forward contract with an objective to hedge the Australian dollar so that it can protect the projected returns from the Ravenswood Gold Mine project during the staged development phase of expansion. The development phase at Ravenswood will see the operation transition back to large-scale open-pit mining and will deliver a new 14-year mine life.

Let us now quickly analyze the performance of Resolute’s stock and the returns it has produced over the past few months. The stock price of Resolute Mining Limited ended the session at A$1.165 per share which implies the rise of A$0.070 per share or 6.393%. The stock opened at $1.145 with a day high of $1.165. However, on the lower side, it touched $1.140. The stock yielded a negative YTD return of 6.41% and produced -12.40% return based on past six months. The stock has a 52-week high price of $1.440 and a 52-week low of $0.910. The market capitalization of the company stands at $829.48 million. The stock is trading at a current P/E multiple of 12.37x with an EPS of AUD 0.089 and annualized dividend yield of 1.83%.


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