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Resolute Mining mitigates risk by locking in price early for gold sales

The company has forward sold another 22,800 ounces of gold at an average price of US$1,553 per ounce.

Resolute Mining Limited - Resolute Mining mitigates risk by locking in price early for gold sales
Resolute still remains leveraged to upward movements in the gold price

Resolute Mining Limited (ASX:RSG) has forward sold an additional 22,800 ounces of gold at an average price of US$1,553 per ounce in scheduled 3,800-ounce monthly deliveries.

This hedging activity adds to the 55,000 ounces of gold forward sold at an average price of US$1,510 per ounce in monthly delivers from July 2020.

Resolute’s total gold hedge book consists of 177,800 ounces in monthly deliveries out to December 2020.

Notably, this represents less than 3% of its Ore Reserves across its portfolio of four operating gold mines and projects.

Locking in high prices secures cash flow

Resolute’s managing director and CEO John Welborn said: “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.

“Resolute’s active gold sales program and discretionary near-term hedging protects the company’s balance sheet and supports our revenue and cash flows.

“With long mine lives, large gold inventories, and an industry-leading production growth profile, Resolute remains strongly leveraged to future upside in gold prices.”

CY2019 guidance of 400,000 ounces

Resolute’s production and cost guidance for the 12 months to 31 December 2019 is 400,000 ounces of gold at an all-in sustaining cost (AISC) of US$1,020 per ounce.

Hedging is locking in over US$500 per ounce margin ensuring strong cash flows for the company.

Furthermore, if the gold price continues to move higher, Resolute will remain exposed given the hedge book covers about 45% of the 2019 planned production.

Quick facts: Resolute Mining Limited

Price: 1.17 AUD

ASX:RSG
Market: ASX
Market Cap: $1.52 billion
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