Resolute Mining Limited (ASX:RSG) (LSE:RSG) continues to ride high on the gold wave with its US Dollar gold hedge book strengthened through the forward sale of a further 30,000 ounces.
This comes on the back of the acquisition of Toro Gold, an upward gold price and successful presence this week at Diggers & Dealers in Kalgoorlie.
These have seen the mid-tier gold miner’s share price rise from $1.68 at the start of August to a new high of $2.12 this week.
“Maximising” gold sales revenue
Resolute has forward sold an additional 30,000 ounces of gold at an average price of US$1,519 per ounce in scheduled monthly deliveries of 5,000 ounces between January 2020 and June 2020.
Resolute’s managing director and CEO John Welborn said the company was pleased to continue its success in maximising gold sales revenue through responsible hedging strategies.
The US Dollar-denominated gold hedge position has been extended to take advantage of recent gold price strength.
Securing price certainty
Through the hedging, the company aims to secure price certainty for a portion of US dollar revenues generated from its two operating African gold mines – Syama in Mali and Mako in Senegal.
Welborn said: “We continue to actively manage our gold sales and undertake near-term hedging to take advantage of gold price volatility, maximise revenues and protect the company’s balance sheet.
“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.
“With long mine lives, large gold inventories, and an industry-leading production growth profile, Resolute remains strongly leveraged to further upside in gold prices.”
This additional hedging extends Resolute’s existing US dollar forward gold sales program which consists of 50,000 ounces of gold forward sold at an average price of US$1,337 per ounce in monthly deliveries scheduled to December 2019.
Total hedge book
Resolute’s total gold hedge book as at August 8, 2019, consists of 190,000 ounces in monthly deliveries out to June 2020 representing less than 3% of current ore reserves.
The company owns four gold mines – Syama, Mako, Bibiani in Ghana and Ravenswood in Queensland, Australia - and has a clear pathway to annual production well in excess of 500,000 ounces.
This is from a global mineral resource base of more than 18 million ounces of gold.
Flagship asset Syama can produce more than 300,000 ounces of gold per annum 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 is a high-quality, low-cost asset with average annual production of around 140,000 ounces of gold.
Ravenswood and Bibiani are existing large-scale assets which provide Resolute with significant production growth potential.