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Growth Portfolio: Resolute Mining Ltd (ASX: RSG)


Published 18-FEB-2016 00:00 A.M.


2 minute read

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Overview: Resolute Mining Ltd ("Resolute", "the Company") is an Australian gold mining company with operations in Queensland and Africa. Commissioned in 2009 the Syama mine in Mali produced 225,000oz during FY15. Ravenswood (QLD) was commissioned in 2004 and produced over 100,000oz in FY15. Resolute has operated six other gold mines in Australia and Africa, producing over 7million oz during the past 25 years. Presently, its operating mine and project portfolio hosts Reserves of 5.3million oz and Resources of 9million oz

Catalysts: Resolute is on course to produce over 300,000oz in FY16 and post its second consecutive year of higher operating profit. The long-term potential of its Resource inventory is due to be highlighted by the completion of Definitive Feasibility Studies for a mine life extension at Syama and redevelopment of Bibiani, a ~2moz brownfield's site acquired in 2014. With the Company rapidly extinguishing borrowings, operating cash flow can be increasingly directed to growth projects and capital management.

Hurdles: Whilst Resolute has a track record of successful mine operations, there is no guarantee it can execute the underground mine plan at Syama or operate Bibiani more efficiently than the previous owner, Noble Resources. With 2/3rd of production tied to its Syama Mine in Mali, the geopolitical risk may challenge the Company's ability to attract fair value in its stock price. Further deterioration in the gold price could impair the Company's financial performance.

Investment View: Resolute offers profitable exposure to the gold mining industry. We are attracted to the Company's history of successful mine operations, its current production profile, large resource inventory, and recent balance sheet initiatives. Whilst its African focus carries risk, Resolute’s operating history in the region presents a source of mitigation. With the Company demonstrating increasing operating profit despite weak gold prices, it is well-positioned to benefit from any recovery and we initiate coverage with a 'buy‘.


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S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

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