24 February 2022

Resolute Mining Limited

(Resolute or the Company)

Appendix 4E Preliminary Final Report

For the year ended 31 December 2021

Resolute Mining Limited (ASX/LSE: RSG) (Resolute or the Company) advises that its Appendix 4E Preliminary Final Report has been released to the Australian Securities Exchange.

Reporting Period

The reporting period is the year ended 31 December 2021 with the corresponding reporting period being for the year ended 31 December 2020.

Results for Announcement to the Market

This Appendix 4E - Preliminary final report has not been subject to audit and there is no audit report provided. This report should be read in conjunction with the Financial Report for the period ended 31 December 2020. The Financial Report for the period ended 31 December 2021 is currently being audited by Ernst & Young and will be finalised for lodgement with ASX in March 2022.

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2021

(1) Discontinued operations relates to the Group's Ravenswood gold mine

(2) A reclassification of net realisable value adjustments has been made in the 2020 comparatives above to present these movements below in Fair value movements and unrealised treasury transactions to ensure consistency with the presentation of these amounts in 2021.

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

Consolidated Statement of Financial Position

for the year ended 31 December 2021

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

Consolidated Statement of Changes in Equity

for the year ended 31 December 2021

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Consolidated Cash Flow Statement

for the year ended 31 December 2021

The above consolidated cash flow statement should be read in conjunction with the accompanying notes

The Group had non-cash offset of VAT credits receivable from the Mali Tax Authorities against previously recognised provision for the tax years ended 31 December 2015 to 2020 amounting to $56.6m. 

Notes to the Preliminary Final Report

For the year ended 31 December 2021

About this Report

The preliminary final report of Resolute Mining Limited and its subsidiaries ("Resolute" or the "Group") for the year ended 31 December 2021 was authorised for issue in accordance with a resolution of directors.

Resolute Mining Limited (the parent) is a for profit company limited by shares incorporated and domiciled in Australia whose shares are publicly traded on the Australian Securities Exchange and the London Stock Exchange.

Basis of Preparation

This report is based on accounts that are in the process of being audited.

This report does not include all of the notes normally included in an Annual Financial Report. Accordingly, this report is to be read in conjunction with the financial report for the year ended 31 December 2020 and any public announcements made by RML during the reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

Rounding of Amounts

The Financial Report has been prepared in United States dollars and all values are rounded to the nearest thousand dollars ($'000) unless otherwise stated.

1     Segment revenues and expenses (continued)

a)  Revenue from external sales for each reportable segment is derived from several customers.

b)  This information does not represent an operating segment as defined by AASB 8, however this information is analysed in this format by the Chief Operating Decision maker, and forms part of the reconciliation of the results and positions of the operating segments to the financial statements.

c)  Segment note references continuing operations

2      Dividends paid or proposed

The company's dividend policy is, subject to board discretion, to pay a minimum of 2% of gold sales revenue as a dividend. A dividend has not been declared for the year ended 31 December 2021.

3      Earnings/(loss) per share

1 Potentially dilutive instruments have not been included in the calculation of diluted earnings per share for 31 December 2021 because the result for the year was a loss. For 31 December 2020, the performance rights outstanding are not dilutive as performance conditions were not met at 31 December 2020.

2 Potentially dilutive instruments have not been included in the calculation of diluted earnings per share for continuing operations for 31 December 2021 and 31 December 2020 because the result for the year was a loss.

4      Cash

5            Receivables

During the year Resolute's subsidiary SOMISY, has received a letter from the Mali Tax Authorities notifying the company that they have offset VAT credits against previously recognised provision for the tax years ended 31 December 2015 to 2020 amounting to $56.6m. As at 31 December 2021 this notification of offset has been reflected in the above amounts in line with the requirements of the accounting standards. Resolute continues to work with its legal and tax advisors to contest the position taken by the Authorities.  Additionally, at 31 December 2021, Resolute has recognised $10.1m of VAT assets for the Mako operations due to the reduction in the tax exoneration period to 5 years. Refer to Note 10.

6      Interest bearing liabilities

7      Contributed Equity

8      Inventories

9      Other financial assets

1) this balance relates to an overpayment received on a gold sale at 31 December 2021. The amount was returned immediately post year end.

10    Asset sale receivable

This balance represents the outstanding amounts receivable from the sale of the Bibiani gold mine amounting to $56.5m. This balance was initially recognised at fair value less transaction costs and subsequently at amortised cost. The balance of the consideration is receivable in two equal instalments of $30.0m on or before six and twelve months following completion.

11    Provisions

Resolute's subsidiaries SOMISY and PMC, have received demands for payment to the Local Tax Authorities in relation to Income Tax and Value Added Tax (VAT) for the tax years ended 31 December 2015 to 2020.

At 31 December 2021 the company has recognised an additional $30.9m of indirect tax provisions in Mali in line with the correspondences received during the financial year along with the requirements of the accounting standards. As noted above, the Group has recorded approximately $56.6m of demands offsets against carried forward VAT receivables. Resolute continues to challenge the factual basis and validity of these demands which are strongly disputed due to fundamental misinterpretations of the application of certain taxes. Resolute continues to work with its legal and tax advisors to contest the positions taken by the Authorities.

Due to the reduction in the Mako tax exoneration period to 5 years, Resolute has recognised tax provisions comprising $10.1m relating to the VAT receivable (refer Note 5) and $8.2m in tax provisions for income tax and duties.  These amounts are recognised as provisions, however Resolute is firmly of the view that it has complied with all the requirements for the extension of the tax exoneration and will continue to work with the Senegalese authorities to resolve this matter. 

12    Investments in associates

Continuing Operations                                       Turaco Gold Ltd

                                                                    (formally Manas Resources Ltd)                                           Loncor Gold Inc

(a)  Resolute holds a position on the board of directors and has significant influence over Turaco Gold Ltd.

13    Subsequent events

On 31 January 2022, the Group completed the sale of its shares in Orca Gold Inc (Orca) to Perseus Mining Limited for total consideration of $13.7 million.

On 17 February 2022, the Group announced that the Tabakoroni Measured and Indicated Mineral Resource estimate increased to 9.2 million tonnes at 4.4g/t for 1.3 million ounces of gold a 40% increase over previous estimate.

On 22 February 2022, the Group received $30 million for the sale of the Bibiani Gold Mine, the final $30 million is receivable in August 2022.

14    Impairment testing

Impairment indicator assessment

At 30 June 2021, Resolute's quoted market capitalisation was lower than its net asset carrying value. Further, Resolute noted that there was a reduction in gold prices and increase in risk free rate that underpins the applicable discount rate. These factors were considered as indicators of impairment. As a result, an impairment test was performed to determine the recoverable amounts for all CGU's of the Group, being the Syama Gold Mine and the Mako Gold Mine using the fair value less cost to sell (FVLCD) method.

At 31 December 2021, indictors of impairment were again identified for the Group as Resolute's quoted market capitalisation was lower than its net asset carrying value at 31 December. As a result, an impairment test was performed to determine the recoverable amounts for all CGU's, the results at 31 December 2021 are outline below.

Syama CGU - 30 June 2021

Syama indicator assessment

At 30 June 2021, in addition to the impairment indicators noted above, Resolute also revised its CY21 production and cost guideline for Syama. These factors collectively were considered to be indicators of impairment and as such a formal impairment test was performed to determine the recoverable amount for the Syama CGU.

Key Assumptions used to determine recoverable amount

The table below summarises the key assumptions used in the carrying value assessment:

Gold prices

Gold prices are estimated with reference to external market forecasts based on a consensus view of market experts.

Discount rate

In determining the recoverable amount of assets, the future cash flows were discounted using rates based on the CGU's estimated real weighted average cost of capital, with an additional premium applied having regard to the CGU's risk profile.

Unmined resources

Unmined resources which are not included in the life‐of‐mine plan as result of the current assessment of economic returns, timing of specific production alternatives and the prevailing economic environment have been valued and included in the assessed fair value.

Operating and capital costs

Life‐of‐mine operating and capital cost assumptions are based on the Group's latest budget and life‐of mine plans. Operating cost assumptions reflect an assumption of maintaining current cost, over the long term, without including expected improvements over the life of mine.

Recognition

An impairment loss of $167.373 million was allocated to the Syama CGU at 30 June 2021.

Syama indicator assessment

At 31 December 2021, in addition to the impairment indicators noted above, Resolute also revised its CY21 production and cost guideline for Syama. These factors collectively were considered to be indicators of impairment and as such a formal impairment test was performed to determine the recoverable amount for the Syama CGU.

Key Assumptions used to determine recoverable amount

The table below summarises the key assumptions used in the carrying value assessment:

Recognition

As a result of the impairment test performed, no further impairment loss was recognised at 31 December 2021, above the $167.373 million at 30 June 2021.

Mako CGU - 31 December 2021

Mako indicator assessment

Whilst Mako's 2021 forecast production and cost remain in line with budget, as a result of the general indicators of impairment noted above and the reduction in the tax exoneration period to 5 years (refer to Note 5), a formal impairment test was performed to determine the recoverable amount for the Mako CGU.

Key Assumptions

The table below summarises the key assumptions used in the carrying value assessment:

Gold prices

Gold prices are estimated with reference to external market forecasts based on a consensus view of market experts.

Discount rate

In determining the recoverable amount of assets, the future cash flows were discounted using rates based on the CGU's estimated  real discount rate, with an additional premium applied having regard to the CGU's risk profile.

Unmined resources

Unmined resources which are not included in a CGU's life‐of‐mine plan as result of the current assessment of economic returns, timing of specific production alternatives and the prevailing economic environment have been valued and included in the assessed  fair value.

Operating and capital costs

Life‐of‐mine operating and capital cost assumptions are based on the Group's latest budget and life‐of mine plans. Operating cost assumptions reflect an assumption of maintaining current cost, over the long term, without including expected improvements over the life of mine.

Recognition

The impairment loss of $55.024 million has been allocated to the Mako CGU at 31 December 2021.

A full PDF version of the announcement is available from the Company's website: link to announcement.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 which forms part of UK law pursuant to the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via a Regulatory Information Service (RIS), this inside information is now considered to be in the public domain.

Authorised by Mr Stuart Gale, Chief Executive Officer