Resolute Mining Limited (ASX:RSG) (LON:RSG) has strengthened its US dollar gold hedge book by forward selling an extra 30,000 ounces at an average price of US$1,501 per ounce.
The additional gold from the Syama mine in Mali and Mako Senegal is scheduled in monthly deliveries of 5,000 ounces between July and December 2020.
Extending the US dollar-denominated gold hedge position secures price certainty for the company during 2020 for a portion of the US dollar revenues generated from the West African mines.
“Responsible” hedging strategies
The company’s managing director and CEO John Welborn said the program enabled Resolute to maximise gold sales revenue through responsible hedging strategies.
This new hedging extends Resolute’s existing US dollar forward sales program, which consists of 35,000 ounces at an average price of US$1,494 per ounce in scheduled monthly deliveries of 5,000 ounces to June 2020.
The total hedge book now consists of 165,000 ounces in monthly deliveries out to December 2020 and represents less than 3% of Resolute’s ore reserves.
“Protects and supports” revenue
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 above our 2020 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.”
Shares on the ASX have been up almost 6% to an intra-day high of A$1.175.
Resolute’s production and cost guidance for the 12 months to December 31, 2019, is 400,000 ounces of gold at an AISC of US$1,020 per ounce.
Pathway to 500,000 ounces
The company has a pathway to annual gold production in excess of 500,000 ounces from a global mineral resource base of more than 18 million ounces of gold at four projects.
Its flagship asset is the Syama Gold Project in Mali which can annually produce more than 300,000 ounces 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 Gold Mine in Senegal is a high-quality, low-cost asset with average annual production of around 140,000 ounces of gold.
Ravenswood Gold Project in Australia and the Bibiani Gold Project in Ghana are existing large-scale assets which provide Resolute with significant production growth potential.
The company has more than 30 years of experience as an explorer, developer and operator of gold mines in Australia and Africa which have produced more than 8 million ounces.