Why the Resolute Mining Limited share price is moving higher

Shares in gold mining and exploration company Resolute Mining Limited (ASX: RSG) opened up 1.3% this week at $1.13 after a volatile 12-months.

Resolute posted a 40% drop in first-half profit on February 22 to $38 million, but the company said the fall was in line with expectations as it remain locked in its investment phase, with revenue up 20% from the previous corresponding period and all fundamentals pointing towards its “strong position” for future growth.

Resolute’s balance sheet looks solid, with $200 million in cash, bullion and listed investments and analysts last year praised the company’s track record as a consistent outperformer, with a price guide of $1.90 set by Citi in mid-2017 and a buy recommendation on the share when the price was around $1.06 – not far below where it currently sits.

The company has benefited from CEO John Weborn’s knowledge of Africa and strong financial background, but share prices bottomed out to 95c per share in mid-December and had a volatile journey to the $1.13 price today – still down from $1.34 at this time last year.

Resolute are coming out of a period of declining stockpile grades at Syama and some lower production out of their Mt Wright at Ravenswood, but anticipate improved production in the second half and its tendency to under-promise and over-perform holds the company in good stead to easily meet guidance for FY18.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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