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1. Company Snapshot

1.a. Company Description

Resolute Mining Limited engages in mining, exploration, development, operation, and production of gold properties in Africa, the United Kingdom, and Australia.The company's flagship project is the Syama Gold Mine located in Mali, West Africa.It also owns Mako Gold Mine in Senegal, West Africa.


The company is also involved in the prospecting and exploration of minerals.Resolute Mining Limited was incorporated in 2001 and is based in Perth, Australia.

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1.b. Last Insights on RSG

Resolute Mining Limited's recent stock performance was negatively driven by the detention of its CEO in Mali, sparking a tax dispute and subsequent demand for $160 million. The company was forced to suspend trading and pay $80 million upfront, with another $80 million to be paid over the coming months. This development has likely disrupted the company's operations and created uncertainty for investors. The tax dispute and CEO detention have overshadowed any positive developments, making it challenging for the company to regain investor confidence.

1.c. Company Highlights

2. Resolute Mining's Q2 Earnings: A Strong Quarter Amidst Challenges

Resolute Mining reported a strong financial performance in Q2, with revenues of $263 million, driven by a favorable gold price environment. The company's EPS came in at $0.01787, significantly beating estimates of $0.00706. The all-in sustaining cost was $1,668 per ounce sold, within the company's guidance of $1,650 to $1,750 per ounce for the full year. Operating cash flow for the quarter was $85 million, and the company ended the quarter with a net cash position of $110 million. For the first half of the year, the company generated $160 million in operating cash flow, driven by cost reduction initiatives.

Publication Date: Aug -30

📋 Highlights
  • Q2 Gold Production:: 75,962 ounces produced at $1,668 per ounce, with $110 million net cash position.
  • Acquisition & Growth:: Acquired Doropo & ABC projects (2.5M+ oz resource) from AngloGold Ashanti, targeting >500k oz production by 2028.
  • Mali Challenges:: Syama mine produced 41,000 oz at $2,134 AISC, hindered by explosive supply chain issues amid security risks.
  • Senegal Performance:: Mako mine delivered 35,000 oz at $972 AISC, progressing Tomboronkoto (2028) and Bantaco (2027) satellite projects.
  • Financial Strength:: H1 operating cash flow of $160 million, $85 million Q2 operating cash flow, and $157 million ending cash/bullion.

Operational Highlights

The company's operational performance was mixed, with the Syama mine in Mali impacted by explosive supply chain issues due to security challenges, resulting in an AISC of $2,134 per ounce. In contrast, the Mako operation in Senegal had a strong quarter, producing 35,000 ounces at an AISC of $972. The company is progressing with the development of the Tomboronkoto satellite deposit, with anticipated ore processing in 2028.

Exploration and Growth Prospects

Resolute Mining is focused on finding additional oxides in Mali and developing the Tombo and Bantaco projects in Senegal. The company has two exciting projects in Côte d'Ivoire, ABC and La Debo, with a combined resource of over 2.5 million ounces of gold. The acquisition of the Doropo project sets the company up to produce over 500,000 ounces of gold by 2028. As the company's COO, Gavin Harris, noted, the company has "fantastic opportunities internally to create more value for shareholders."

Valuation and Outlook

With a P/E Ratio of 31.64 and an EV/EBITDA of 5.88, the company's valuation metrics suggest that the market is pricing in a moderate growth outlook. The company's ROE of 5.79% and ROIC of 2.68% indicate a relatively efficient use of capital. Analysts estimate next year's revenue growth at -1.8%, but the company's strong H1 performance and progress on its growth projects suggest that it is on track to deliver within its 2025 guidance range. The company's Free Cash Flow Yield of 4.42% is also attractive, indicating a potential source of returns for shareholders.

3. NewsRoom

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Update on shareholding in Loncor Gold Inc.

Oct -15

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Mali approves seven new mining deals under revised code

Sep -25

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A Look At The Fair Value Of Resolute Mining Limited (ASX:RSG)

Sep -12

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Four ways to invest in gold

Sep -08

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Resolute Mining Limited's (ASX:RSG) Stock Has Seen Strong Momentum: Does That Call For Deeper Study Of Its Financial Prospects?

Aug -22

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Avanti Gold Corp. Announces the Appointment of Terry Holohan as Non-Executive Independent Director Along with Management Changes

Jul -30

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Will AngloGold Ashanti's Portfolio Optimization Efforts Unlock Value?

Jul -08

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Resolute Mining Full Year 2024 Earnings: EPS Misses Expectations

Mar -28

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.73%)

6. Segments

Syama

Expected Growth: 4.73%

Syama's 4.73% growth is driven by increased gold production, improved ore grades, and enhanced processing recoveries. Additionally, Resolute Mining's cost-saving initiatives and favorable foreign exchange rates have contributed to the growth. The mine's life extension and exploration success have also boosted confidence in its long-term prospects, supporting the upward trend.

Mako

Expected Growth: 4.73%

Mako's 4.73% growth is driven by increasing gold production, improved ore grades, and enhanced processing recoveries. Additionally, Resolute Mining's cost-saving initiatives, exploration success, and strategic investments in West Africa have contributed to the growth. The mine's low-cost profile, strong cash flow generation, and potential for further exploration upside also support its growth trajectory.

7. Detailed Products

Gold

Resolute Mining Limited is a gold producer with operations in Africa and Australia, producing gold doré and gold concentrate.

Silver

As a by-product of gold mining, Resolute Mining Limited also produces silver, which is often used in industrial applications.

Copper

Resolute Mining Limited's gold mines also produce copper as a by-product, which is used in various industrial applications.

Exploration Services

Resolute Mining Limited offers exploration services to identify and develop new gold deposits.

Mining Services

Resolute Mining Limited provides mining services, including mine planning, operations, and maintenance.

8. Resolute Mining Limited's Porter Forces

Forces Ranking

Threat Of Substitutes

Resolute Mining Limited operates in the gold mining industry, which has few substitutes. However, the company faces competition from other gold mining companies, which could lead to a moderate threat of substitutes.

Bargaining Power Of Customers

Resolute Mining Limited's customers are primarily gold refineries and jewelry manufacturers. The company's customers have limited bargaining power due to the lack of alternative suppliers.

Bargaining Power Of Suppliers

Resolute Mining Limited relies on suppliers for equipment, materials, and services. While the company has some bargaining power, suppliers also have some leverage due to the specialized nature of the industry.

Threat Of New Entrants

The gold mining industry has high barriers to entry, including significant capital requirements and regulatory hurdles. This limits the threat of new entrants to Resolute Mining Limited.

Intensity Of Rivalry

The gold mining industry is highly competitive, with many established players competing for market share. Resolute Mining Limited faces intense rivalry from other gold mining companies, which could lead to downward pressure on prices and profit margins.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 12.50%
Debt Cost 9.71%
Equity Weight 87.50%
Equity Cost 9.71%
WACC 9.71%
Leverage 14.28%

11. Quality Control: Resolute Mining Limited passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Growth: 9.1

Quality: 8.6

Yield: 6.0

Momentum: 10.0

Volatility: 3.7

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Perseus Mining

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OceanaGold

A-Score: 6.2/10

Value: 2.8

Growth: 7.1

Quality: 8.1

Yield: 0.0

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Volatility: 9.0

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Kinross Gold

A-Score: 6.0/10

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Growth: 7.2

Quality: 8.0

Yield: 2.0

Momentum: 10.0

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Resolute Mining

A-Score: 5.0/10

Value: 2.4

Growth: 5.2

Quality: 6.8

Yield: 0.0

Momentum: 8.5

Volatility: 7.3

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Karora Resources

A-Score: 4.2/10

Value: 1.9

Growth: 7.4

Quality: 6.6

Yield: 0.0

Momentum: 6.0

Volatility: 3.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

0.55$

Current Price

0.55$

Potential

-0.00%

Expected Cash-Flows