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Resolute Mining strengthens balance sheet with another 37,200 ounces forward sold

The company has taken advantage of market volatility and current gold price strength to incrementally extend its US dollar-denominated gold hedge position.

Resolute Mining Limited - Resolute Mining strengthens balance sheet with another 37,200 ounces forward sold
The company’s total gold hedge book now contains 215,000 ounces

Resolute Mining Limited (ASX:RSG) (LON:RSG) has further strengthened its balance sheet through the forward sale of an additional 37,200 ounces of gold at an average price of US$1,562 per ounce.

This arrangement includes scheduled monthly deliveries of 1,200 ounces between July 2020 and December 2020 and 5,000 ounces between January 2021 and June 2021.

Securing price certainty

The hedging secures price certainty for a portion of US dollar revenues generated from Resolute’s Syama Gold Mine in Mali and Mako Gold Mine in Senegal.

Managing director and CEO John Welborn is pleased to continue Resolute’s success in maximising gold sales revenue through responsible hedging strategies.

He said: “Incremental expansion of our US dollar hedging position at current levels which are significantly above our budgeted gold price, protects and supports Resolute’s revenue and cash flow.”

Forward sales program extended

The additional hedging extends Resolute’s existing US dollar forward gold sales program which consisted of 77,800 ounces of gold forward sold at an average price of US$1,522 per ounce in scheduled monthly deliveries to December 2020.

The total gold hedge book as at January 20, 2019, including the new US dollar gold hedges, consists of 215,000 ounces in monthly deliveries out to June 2021 representing less than 3% of Resolute’s ore reserves.

“Leveraged to future upside”

Welborn added: “As we seek to expand our existing low-cost senior revolving syndicated loan facility, our hedging program has strong support from our syndicate banks as our modest hedge book protects the company’s balance sheet and supports a portion of our future revenue and cash flows.

“With long mine lives, large gold inventories, and an industry-leading production growth profile, Resolute remains strongly leveraged to future upside in gold prices.”

Hedging policy

Resolute maintains a hedging policy of committing to modest short-dated forward deliveries of a percentage of the company’s gold production to take advantage of elevated gold prices.

The company’s flagship asset is the Syama Gold Project in Mali which can annually produce more than 300,000 ounces from existing processing infrastructure.

The world’s first fully automated underground mine is being commissioned at Syama, which will deliver a low-cost, large-scale operation with a mine life beyond 2032.

Mako Gold Mine in Senegal is a high-quality, low-cost asset with average annual production of around 140,000 ounces of gold.

Bibiani Gold Project in Ghana provides Resolute with significant production growth potential.

Quick facts: Resolute Mining Limited

Price: 1.185 AUD

ASX:RSG
Market: ASX
Market Cap: $1.23 billion
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