Resolute Mining Limited

This report is an updated version of the report published on 18 October 2022 at 3:55 PM (GMT +11) AEST

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Resolute Mining Limited (ASX: RSG) is involved in gold mining, development of resource projects and prospecting and exploration for minerals. The company was listed on ASX in January 1979.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders: The top 10 shareholders together form ~46.67% of the total shareholding. ICM Limited and IPConcept (Luxemburg) S.A. hold a maximum stake in the company at ~11.85% and ~7.23%, respectively.

1.4 Key Metrics:

During 1HFY22, RSG recorded an asset turnover ratio of 0.34x against 0.30x of the industry median. In addition, the accounts receivable turnover ratio stood at 4.2x in 1HFY22 as compared to 2.7x in 1HFY21. Below is captured the trend of the asset turnover ratio and cash cycle days: 

Section 2: Business Updates, Financial Highlights and Operational Summary

2.1 Business Updates:

2.2 Insights of 1HFY22: Going forward, RSG remains focused on further improvements in production profile. EBITDA for 1HFY22 amounted to USD 78.5mn as compared to USD 77.7mn in 1HFY21:

2.3 Operational Summary: The following picture provides an overview of gold production by different mines operated by the company:

Section 3: Key Risks and Outlook:

Mines Overview: The below picture provides an overview of mines and outlook:

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.3 Fundamental Valuation

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is October 18, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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