Resolute Mining (ASX:RSG) share price tumbles 4% on US$220m half year loss

It wasn't a golden six months for Resolute Mining…

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The Resolute Mining Limited (ASX: RSG) share price is under pressure again on Friday following the release of its half year results.

At the time of writing, the gold miner's shares are down 4.5% to 42.5 cents.

This leaves the Resolute share price trading within a whisker of its multi-year low of 41.5 cents.

Resolute share price tumbles after posting US$220 million first half loss

  • Production down 25.1% to 163,118 ounces
  • Gold sales fell 29% to 151,503 ounces
  • Average realised gold price up 20.7% to US$1,723 an ounce
  • Revenue down 14.5% to US$261.3 million
  • Earnings before interest, tax, depreciation, and amortisation (EBITDA) down 23.1% to US$77.7 million
  • Net loss after tax of US$219.8 million

What happened in FY 2021 for Resolute?

It certainly was a difficult half for this gold miner, which has been reflected in the abject performance of the Resolute share price over the last six months.

For the six months ended 30 June, Resolute recorded a 14.5% decline in revenue to US$261.3 million. This was driven by a 25.1% reduction in production to 163,118 ounces, which impacted gold sales volumes and offset a 20.7% increase in its average gold price received of US$1,723 an ounce.

Things were much worse for its earnings due to a 25% increase in its all-in sustaining cost (AISC) to US$1,277 an ounce and non-cash charges of US$172.4 million. The latter reflects the previously announced impairment expense relating to its Syama operation. This ultimately led to Resolute reporting a net loss after tax of US$219.8 million.

What did management say?

Resolute's Chief Executive Officer, Stuart Gale, commented: "Our organisation has been through significant change during the first half of 2021 which has seen renewed enthusiasm and focus. Operational performance over this period is reflective of this as the Syama underground mine achieved record production in the June quarter which was matched by throughput at both the Syama sulphide and oxide processing circuits."

"Unfortunately, this performance was offset by lower mined grades at the Syama sulphide and oxide operations. The team at Mako continue to deliver in line with expectations as they undertake a cut-back of the main pit to extend the mine life."

"We remain focussed on capitalising on our investments, unlocking the significant value within our operations to generate cash and strengthen the balance sheet. With a number of key initiatives progressed during the half and the implementation of significant changes to people, processes and systems, we expect to see improvements to both our operating and financial results."

What's next for Resolute?

Resolute has held firm with its recently updated gold production and cost guidance for FY 2021.

This is for total gold production within the range of 315,000 ounces to 340,000 ounces with an AISC of between US$1,290 and US$1,365 an ounce inclusive of corporate overheads.

The Resolute share price is down 50% in 2021.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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