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RSG

Resolute Mining Ltd Up 6% On Positive Gold Outlook

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities qualifications.

Resolute Mining Ltd (ASX: RSG) is a gold mining company that finds, develops and operates gold mines. Resolute owns four gold mines with operations in Australia and Africa. Resolute has a market capitalisation of A$1.11 billion.

RSG - PRODUCTION UPDATE

The main points for Resolute December quarter activities are as follows:

  • Gold production for the December quarter is 105,293oz, up 2,092oz (or up around 2%) from the previous quarter.
      • Gold production at the Syama gold mine for the December quarter is 46,945oz.
      • Gold production at the Mako gold mine for the December quarter is 42,997oz.
      • Gold production at the Ravenswood gold mine for the December quarter is 15,351oz.
  • Resolute’s total gold production for the 12 months to 31 December 2019 totalled 384,731oz representing a variance of less than 4% to annual production guidance of 400,000oz.

What are the drivers of this result?

Resolute December quarterly activities is on par with an overall 2% increase in gold production relative to the previous quarter. However, Resolute announced that annual gold production was down by 4% compared with FY19 guidance. The main cause for the slight underperformance in annual production was due to the roaster downtime at the Syama gold mine. The roaster was taken offline in early October due to the detection of a crack in the main external shell. The roaster is now fully operational and operating at nameplate capacity.

Managing Director and CEO, Mr John Welborn notes that

Syama sulphide production fell well short of our expectations in both the September and December quarters. Our operating and project teams have worked hard to offset lost production with strong performance from our other operating assets. The repairs to the Syama roaster are now complete and the sulphide circuit is ready for a strong performance in 2020.

What is the outlook for Resolute?

All-in sustaining costs (ASIC) for the December quarter has not been released along with FY20 production guidance and capital and exploration expenditure guidance. Resolute management notes that these factors are scheduled to be announced on 13 January 2020.

The spot price of gold has increased in the last few days. This is in light of the United States (US) authorizing a drone strike on Iran’s top military commander, Qasem Soleimani, which resulted in Qasem Soleimani’s death. This has significantly increased military tensions between the US and Iran in the middle east. Iran has responded by launching more than a dozen missiles at two Iraqi bases that holds US troops today (8 January 2019). It is becoming more likely that this military action by both countries may lead into a conflict between the US and Iran along with their allies. This build of military escalation and political turmoil could make gold a more favourable investment moving into 2020.

What is the market reaction?

The market reaction to Resolute’s quarterly activities report is positive. Resolute share price is up 6% and is currently trading at A$1.305 (Wednesday 8 January). This upward movement reflects the upward movement in the gold price and the positive immediate outlook for the gold price rather than a reaction to the quarterly report. 

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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