August 24, 2017 Resolute Mining Limiteds3-us-west-2.amazonaws.com/denvergold...Connor O'Brien...

EQU

ITY

RESE

ARC

H Royal Bank of Canada - Sydney BranchPaul Hissey (Analyst)+61 3 8688 [email protected] O'Brien (Associate)+61 3 8688 [email protected]

Alexander Hislop (Associate)+61 3 8688 [email protected]

OutperformASX: RSG; AUD 1.09

Price Target AUD 1.75WHAT'S INSIDE

Rating/Risk Change Price Target Change

In-Depth Report Est. Change

Preview News Analysis

Scenario Analysis*

DownsideScenario

0.9017%

CurrentPrice

1.09

PriceTarget

1.7561%

UpsideScenario

2.40121%

*Implied Total Returns

Key StatisticsShares O/S (MM): 642.0Dividend: 0.01NAVPS: 1.95ROE: 20.3%Debt to Cap: 15%

Market Cap (MM): 700Yield: 0.9%P/NAVPS: 0.56xTr. 12 ROE: 42.00%Enterprise Val. (MM): 968Avg. Daily Volume: 8,599,673

RBC EstimatesFY Jun 2016A 2017A 2018E 2019EEPS, Adj Diluted 0.23 0.21 0.14 0.20Prev. 0.18 0.12P/AEPS 4.7x 5.2x 7.8x 5.5xCFPS, Adj Diluted 0.29 0.25 0.15 0.28Prev. 0.23 0.12 0.27Production 315.0 330.0 299.0 376.0Prev. 334.0

Priced as of ASX market close 24 August 2017All values in AUD unless otherwise noted.

August 24, 2017

Resolute Mining LimitedFY17 result solid - set up for a year of investmentOur view: At current prices, RSG has significant potential upside relativeto its peer group. While cash flow may take a back seat to reinvestment,those with a medium-term horizon and a willingness to focus on the detailshould identify significant latent potential upside in the stock.

Key points:• Revenue: A$541.2m (RBCe A$545.2m)• Underlying EBITDA: A$172.9m (RBCe A$166.4m)• Adj. NPAT: A$153.0m (RBCe A$133.5m)• Net operating cash flow: A$186.4m (RBCe A$166.2m)• Final dividend: A$0.02 (RBCe A$0.01)

A good result to end to the yearRSG's FY17 result was a beat on our estimates, owing largely to lower taxand costs. The company also recorded a A$19.9m credit within the P&L forgold in circuit inventory movements, which helped to lower the cost line.The company reported statutory profit of A$166.1m, including A$13.1mof gains relating to treasury and fair value movements, which we havestripped out from our underlying numbers.

Set up for capex intensive year in FY18RSG ended FY17 with A$247.5m cash at bank, following on from thecompany's A$150m raising earlier in the year. The company has alreadycommenced the transition to underground at Syama, with developmentore coming through in the second half of FY17. We estimate RSG will spenda further A$100m expansionary capital in FY18E at Syama UG, while SyamaOxide and Ravenswood will also incur A$10m and A$20m respectively.Following the sizeable spend in FY18, we forecast capex to roll off in FY19Eto coincide with the increase in production from RSG's assets, driving arecovery in free cash flow and the company's cash balance.

Dividend unchanged as tax payments return in FY18The company declared a final dividend of A$0.02, which was ahead of bothour estimates and consensus (both A$0.01). The dividend equates to 2.7%of gold sales for FY17, above the company's minimum level of 2%. Thecompany stated it would stick with the 2% moving forward, noting therelative captial intensive programs currently underway. Management alsoacknowledged on the call that the company would return to tax paymentsin FY18, given that available carried forward losses will been fully utilisedwithin the next year.

Earnings and valuation impactWe incorporate today's result, which was a beat on our estimates, leadingto minor upgrades. we push out tax payments, towards the second half ofFY18E, leading to earnings upgrades. Both our price target of A$1.75 andour Outperform rating remain unchanged.

Disseminated: Aug 24, 2017 05:04ET; Produced: Aug 24, 2017 05:04ET Priced as of prior trading day's market close, EST (unless otherwise noted).For Required Non-U.S. Analyst and Conflicts Disclosures, see page 10.

Target/Upside/Downside Scenarios

Exhibit 1: Resolute Mining Limited

200m150m100m

50m

A M J J A S O N2015

D J F M A M J J A S O N2016

D J F M A M J J2017

A

UPSIDE 2.40TARGET 1.75CURRENT 1.09DOWNSIDE 0.90

Aug 2018

2.401.501.100.80

0.600.50

0.40

0.30

0.20

125 Weeks 03APR15 - 24AUG17

RSG AU Rel. AUSTRALIAN ALL ORDINAIRES MA 40 weeks

Source: Bloomberg and RBC Capital Markets estimates for Upside/Downside/Target

Target price/base caseOur A$1.75/share price target is based on a weighted 75:25P/CF and NAV methodology which is in line with our goldcoverage peer group. We move back to this conventionalmethod (from purely NAV) given the renewed visibility onnear-term cash flow and therefore earnings. We also apply a1.0x multiple to the NAV, which is slightly below average forour remaining gold coverage due to what we believe to behigher country risk (Mali) and remaining board approvals forprojects such as Bibiani and Sarsfield.

Upside scenarioApplying a 20% increase to the current US dollar gold price, wederive a valuation of A$2.40/share. This is assuming no otherchanges to our base case assumptions.

Downside scenarioApplying a 20% decrease to the current US dollar gold price,we derive a valuation of A$0.90/share. This is assuming noother changes to our base case assumptions.

Investment summary• RSG provides investors with exposure to a more leveraged

Australian asset, alongside what could well be a firstclass business in Mali at the Syama operation. The latteris currently processing refractory ore from sulphide andoxide sources, while simultaneously developing a newunderground operation which will extend mine life. Inaddition, there is a further 70-80koz gold in concentratewhich has previously been stranded due to capacityconstraints which RSG will continue to draw down over thenext 1-2 years.

• The company has a solid balance sheet, with materialholdings in both bullion and cash which we believe removeany material financial uncertainty, while debt is immaterial.

Potential catalysts• The company remains committed to its exploration

prospects. We view some of the ground held by thecompany as highly prospective, especially for additionalshallow oxide mineralisation at Syama, and undergroundadjacent to the underground development. Furtherdiscoveries here could provide extra value given the existinginfrastructure in place.

Investment risks• Since the majority of RSG’s production is based in Mali,

investors should gather comfort in the sovereign risk profile(perceived or otherwise). Having said that, we highlight nomaterial complications in recent operating history.

• The stock is likely to be disproportionately impactedby changing levels of ownership by key ETFs, and willrequire ongoing communication and strategy simplificationto convince less technical investors to take up an ownershipstake. However, we see sufficient valuation upside over a 12-month view to offset these risks.

Resolute Mining Limited

August 24, 2017 Paul Hissey, +61 3 8688 6512; [email protected] 2

RSG FY17: a solid result, setting up for a year of investment RSG’s FY17 financial result was a beat on our estimates, with tax payments and costs coming in lower than we forecast. The statutory earnings result included a number of one off gains which we have stripped out from our underlying result. The company produced an underlying EBITDA of A$176.9m for FY17, with margins dipping slightly as the company steps up capex at its key assets. The final dividend of A$0.02 was ahead of our estimates (RBCe A$0.01) and consensus (A$0.01) and represented 2.7% of gold sales for the year.

The year ahead for RSG sees higher capex, followed by higher production RSG has positioned itself for substantial reinvestment in its key assets in Australia and Africa. The company is currently well funded, with minimal debt and A$247.5m of cash on hand. We forecast the company will spend ~A$130m on expansionary capex in FY18, while generating A$156m gross cash flow from operations (receipts less direct mining costs). While the lion’s share of the capex for Syama UG comes in FY18E, once the asset is up and running, (generating RBCe 137koz and 190koz in FY19E and FY20E respectively), free cash flow generation should turn positive for RSG (see Exhibit 4). The higher production from Syama UG should coincide with the steady stream of capex for the Ravenswood extension program, for which total capex is guided to A$258m over 6 years to 2022. This production and capex profile should result in a recovery in the cash balance in FY19E, as set out in Exhibit 3.

Tax payments to return in FY18, while the dividend is kept stable On the conference call today management confirmed that tax repayments would resume in FY18, with the company using up all of its net operating losses carried forward. The company also confirmed that given the capital intensity expected in the next 18-24 months, it would be unlikely to step away from the current dividend policy of paying 2% of annual gold sales as dividends. The company maintains a novel option for shareholders, allowing them to receive their dividends in physical gold rather than cash.

The result vs. our estimates and consensus Today’s result was a beat on our estimates, owing largely to lower costs and the fact the company paid no tax in FY17. The result was also a beat on consensus, with the company delivering reported NPAT of A$166.1m (versus RBCe A$129.7m and consensus of A$121m). The financial result is summarised in Exhibit 6.

Earnings and valuation impact We have incorporated today’s result, which was a beat on lower costs and tax, leading to upgrades to FY17 earnings. The company also stated that it would resume paying some tax in FY18, as the carried forward losses have been fully utilised. Overall there were no major changes to our NAV, and our 12 month price target remains A$1.75. Our rating remains Outperform, supported by our price target.

Exhibit 2: Our changes

FY16 FY17 FY18E FY19E

Current Current Previous Change Current Previous Change Current Previous Change

Underlying Net Profit A$m 147.2 152.9 133.5 15% 104.7 86.1 22% 144.9 143.8 1%

Underlying EPS ¢ 22.5 20.8 18.1 15% 14.3 11.7 22% 19.8 19.5 1%

Dividend ¢ 1.7 2.0 1.5 35% 1.5 1.5 1% 1.9 1.9 1%

Gold Production koz Au 315 330 330 0% 299 299 0% 376 376.2 0%

AISC A$/oz 1,181 1,132 1132 0% 1,261 1261 0% 1,286 1286 0%

NAV A$/share 1.95 1.95 (0%)

12 Month TP: A$/share 1.75 1.75 0%

Source: Company reports, RBC Capital Markets estimates



A year of investment ahead… Resolute gets set for capex in FY18 Resolute approaches FY18 with a healthy balance sheet, with minimal debt and ample cash to meet the capex spend required. The company is transitioning its largest asset, Syama, to underground operations in FY18, with first development ore already coming through in 4Q FY17. We estimate RSG will spend RBCe A$100m in expansionary capex at the underground operations in FY18E. We also estimate the Syama Oxides and Ravenswood operations should incur a further A$10m and A$20m expansionary capex respectively. After considering the capex required for Syama and Ravenswood, we forecast RSG’s cash balance to bottom out at A$138m in early 1Q FY19. We have not included any capex for the potential Bibiani recommissioning, a decision for which has yet to be made by the company. RSG has stated within the feasibility study for Bibiani, it expects US$161m of total capital expenditure over the life of the project. We have included A$38m for group exploration in FY18E, in line with the company’s guidance as it looks to further test the prospective Nafolo discovery, which lays proximate to the Syama assets. We believe this will be the key focus for exploration in FY18, with the company currently operating 3 drill rigs to test the discovery.

Exhibit 3: Capex is forecast to fall away following FY18E, with the cash balance recovering

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1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

Cas

h a

nd

cas

h e

qu

ival

ents

(A

$m

)

Cap

ital

sp

end

(A

$m

)

Expansion capex Sustaining capex Exploration Cash balance


Following the investment, higher production and lower capex will drive a recovery in cash flow in FY19+… Once RSG has invested in the transition to Syama UG, group capex should decline in future years. While the company’s Ravenswood extension Project is awaiting approvals, mining from Sarsfield and the higher grade Buck Reef West should follow the conclusion of Nolans East. The Ravenswood extension capex has a smoother profile, with total capex guided to A$258m over 6 years to 2022. The spend is spread across a number of years, given the progressive staging of the project. The optimal outcome (pending approvals) would be to cease mining from Mt Wright, transition to Nolans east in the interim, then commence mining at the higher grade, lower capex Buck Reef West, prior to mining the Sarsfield project. Once the capex of Syama UG has been invested and the company begins to produce upwards of 370koz in FY19E, margins and free cash flow should return the company to positive free cash flow (see Exhibit 4).



Exhibit 4: Lower capex and higher production should lift group free cash flow in future

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-5

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1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20

Cap

ex (

A$

m)

and

Pro

du

ctio

n (

koz)

Capex - LHS Production - LHS Free cash flow (CFO-capex-expl.) - RHS


Dividend policy set at 2% of gold sales, tax losses fully utilised The company declared a final dividend of A$0.02, which was above both our estimates and consensus (both being A$0.01). The payment represented a payout of 2.7% of the company’s FY17 gold sales (A$541.2m). RSG’s has a stated minimum payout of 2% of gold sales for the year. Management confirmed it would stick to this policy for the time being, in light of the capital intensity of its current group of projects, as it looks to build out Syama UG and the Ravenswood extension project. The company also mentioned that it expects to resume paying taxes in FY18E, after it fully utilises carried forward losses from previous periods.

Exhibit 5: RSG has a relatively flat dividend profile in future years, with the novel option to have dividends paid in physical gold

0.0

0.5

1.0

1.5

2.0

2.5

FY15 FY16 FY17 FY18E FY19E FY20E FY21E FY22E FY23E

Dividend RBCe Dividend actual




Exhibit 6: a summary of RSG’s financial performance, cash flow and balance sheet position following FY17

Resolute Mining Ltd. FY17 result

FY15 FY16 FY17 yoy % FY17 RBCe A v E % Consensus A v Cons % FY18E

Sales revenue US$m 460 555 664 20% 664 0.0% 524 27% 554

Total revenue US$m 473 555 541 (2%) 545 -0.7% 524 3% 554

Operating costs US$m -302 -360 -368 (2%) -379 2.8% -322 (14%) -403

EBITDA US$m 171 194 173 (11%) 166 3.9% 202 (14%) 151

Depreciation US$m -101 -39 -20 50% -21 5.9% -47 58% -26

EBIT US$m 70 155 153 (1%) 145 5.3% 155 (1%) 126

Net interest US$m -11 -8 -0 97% -1 76.9% n.a n.a -1

PBT US$m 59 147 153 4% 144 6.0% n.a n.a 124

Tax US$m 1 0 0 #DIV/0! 11 -100.0% n.a n.a 20

Underlying NPAT US$m 58 147 153 4% 133 14.6% 141 8% 105

Abnormals US$m -625 66 13 (80%) -4 446.3% -20 165% 0

Reported Profi t US$m -567 213 166 (22%) 130 28.0% 121 37% 105

EPS Underlying ¢ 9 22 21 (7%) 18.1 14.9% 21 (1%) 14

DPS ¢ 0.0 2 2.0 18% 1.5 35.2% 1.0 100% 1.5

Net Op CF US$m 62 193 186 (3%) 166 12.2% n.a n.a 111

Inv CF US$m -73 -43 -128 (195%) -122 -4.5% n.a n.a -223

Fin CF US$m -2 -79 136 272% 151 -10.3% n.a n.a -24

Cash US$m 10 80 282 253% 282 -0.1% n.a n.a 147

Total assets US$m 414 504 838 66% 769 8.9% n.a n.a 909

Total l iabi l i ties US$m 249 154 189 22% 178 5.7% n.a n.a 166

Net assets US$m 165 350 649 85% 591 9.9% n.a n.a 743

Gearing % 39% (18%) (62%) (244%) (66%) 6.2% n.a n.a (18%)

147.2 152.9

104.7

-13.4-7.8 19.4

7.7 0.013.1

-34.6

-6.0 -1.0-19.8

0

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180

FY16 Revenue Costs D&A Net

interestTax FY17 Revenue Costs D&A Net

interestTax FY18E

Ad

j. N

PA

T A

$m

79.9

274.2

139.3

186.4-127.8 135.7

111.4

-222.8

-23.5

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FY16 Op CF Inv CF Fin CF FY17 Op CF Inv CF Fin CF FY18E

Cas

h f

low

A$

m




Production and financial summary Exhibit 7: RBCe price, fx, volume, earnings and valuation estimates

Resolute Mining Limited ASX: RSG Price Target: 1.75 Rating: OutperformRBC Capital Markets No Shares (m): 735 Risk Specifier: -

Paul Hissey +613 8688 6512 Turnover (M $ month) $165 Share Price ($/sh): $1.09 Implied Return (%): 61.3%

Connor O'Brien +613 8688 6519 Market Cap. (M $): $807 2016E Dividend ($/sh): $0.00 Implied Total Return (%): 61.3%

Alexander Hislop +613 8688 6552 Enterprise Value (M $) $559 NAV ($/sh): $1.95 P/NAV (x) 0.56x

All AUD unless noted Year End June 30 All AUD unless noted Year End June 30

RATIO ANALYSIS FY17 FY18E FY19E FY20E PRICES & EXCHANGE RATES FY17 FY18E FY19E FY20E LT -FY22+

Earnings - Adjusted $/sh $0.21 $0.14 $0.20 $0.22 Gold Price US$/oz $1,259 1300 1300 1300 1300

P/E Multiple x 5.2x 7.6x 5.5x 5.0x Exchange rate AUD:USD 0.75 0.72 0.73 0.73 0.75

CFPS (CFO) $/sh $0.25 $0.15 $0.28 $0.33 EQUITY PRODUCTION & COSTS (100%) FY17 FY18E FY19E FY20E FY21E

P/CF Multiple x 4.3x 7.1x 3.9x 3.3x Syama (oxides) koz Au 102 88 80 80 0

FCFPS (CFO-capex-expl.) $/sh $0.09 ($0.11) $0.07 $0.21 Syama (sulphides) koz Au 136 100 57 0 0

FCF Yield % 8.4% (10.0% ) 6.3% 19.7% Ravenswood koz Au 92 77 102 130 130

Dividends Per Share $/sh $0.00 $0.00 $0.00 $0.00 Syama Underground koz Au 4 34 138 190 190

Dividend Yield % 0.0% 0.0% 0.0% 0.0% Total Gold Production koz Au 334 299 376 400 320

LTD/(Total Cap) % 0.0% 0.0% 0.0% 0.0% guidance 300

INCOME STATEMENT FY17 FY18E FY19E FY20E Total Gold Sales koz Au 317 315 392 400 320

Revenue M $ $541 $554 $698 $708 guidance 300

Operating Costs M $ ($368) ($403) ($425) ($392) C1 Cash Cost A$/oz 995 1056 1031 1011 970

EBITDA M $ $173 $151 $273 $316 All-in Sustaining Cash Cost A$/oz 1132 1261 1286 1246 1190

D&A M $ ($20) ($26) ($64) ($89) guidance 1280

EBIT M $ $153 $126 $209 $227

Other Income/Expenses M $ ($0) ($1) ($2) ($1)

EBT M $ $153 $124 $207 $226 ATTRIBUTABLE RESERVES & RESOURCES

Taxes M $ $0 ($20) ($62) ($68) Au EV

Net Income - Adjusted M $ $153 $105 $145 $158 Moz $/oz

Adjustments M $ $13 $0 $0 $0 Proven/Probable Reserve (P&P) 5.1 $111

Net Income - Statutory M $ $166 $105 $145 $158 Measured/Indicated (M&I) - Inclusive 9.6 $58

Weighted average diluted shares M 735 733 733 733 Measures/Indicated/Inferred 12.1 $46

CASH FLOW STATEMENT FY17 FY18E FY19E FY20E CAPEX BREAKDOWN FY17 FY18E FY19E FY20E FY21E

Cash Flows from Operating Activities Sustaining & Evaluation Capex M $ 57.9 20.8 54.7 47.2 34.4

Net Income M $ $153 $105 $145 $158 Expansionary Capex M $ 61.8 170.4 98.8 40.4 30.0

D&A M $ $20 $26 $64 $89 Exploration M $ 8.4 38.0 20.0 8.0 4.0

Taxes Paid M $ $11 $10 $54 $69 Total M $ 128.2 229.2 173.5 95.6 68.4

Non Recurring/Other M $ $0 $5 $6 $6

Operating Cash Flow (excl. stripping) M $ $184 $145 $268 $322 GROUP ALL-IN SUSTAINING COSTS AND PRODUCTION

Changes in Working Capital M $ $2 ($34) ($65) ($78)

Net Operating Cash flow M $ $186 $111 $203 $244

Cash Flows From Investing Activities

Capital Expenditure (inc exploration, sust.) M $ ($120) ($191) ($154) ($88)

Other M $ ($8) ($32) $0 $0

Net Investing Cash Flow (incl. stripping) M $ ($128) ($223) ($154) ($88)

Cash Flows From Financing Activities

Equity Issues (net of costs) M $ $147 $0 $0 $0

Net Borrowings M $ ($0) ($13) $9 $0

Dividends Paid & Other M $ ($11) ($11) ($11) ($14)

Net Financing Cash Flow M $ $136 ($24) ($2) ($14)

Increase (Decrease) in Cash M $ $194 ($135) $48 $143

Cash at End of Year M $ $248 $113 $160 $303

Operating Free Cash Flow M $ $117 ($59) $105 $204

Free Cash Flow M $ $59 ($111) $50 $157

BALANCE SHEET FY17 FY18E FY19E FY20E

Cash & Equivalents M $ $282 $147 $195 $338 NET ASSET VALUE DR Ownership (A$m) A$/Sh NAV (%)

Other Current Assets M $ $216 $248 $248 $248 Operating Value

PP&E & Mining Interests M $ $90 $255 $345 $344 Syama (Oxide and Sulphide) 8.0% 80% $137 $0.19 21%

Other Long Term Assets M $ $249 $259 $264 $266 Syama Underground 9.0% 80% $259 $0.35 40%

Total Assets M $ $838 $909 $1,052 $1,195 Ravenswood 7.0% 100% $256 $0.35 39%

Current Liabilities M $ $122 $122 $122 $122 Sub Total $652 $0.89 100%

Long Term Debt M $ $0 $0 $0 $0 Exploration $460 $0.63

Other Long Term Liabilities M $ $66 $44 $52 $51 Bibiani (60% risk discount) 90% $128 $0.17

Total Liabilities M $ $189 $166 $175 $174 Cash $282 $0.38

Shareholder Equity M $ $649 $743 $877 $1,021 Bullion $0 $0.00

Total Liabilities & Shareholder Equity M $ $838 $909 $1,052 $1,195 Corporate G&A ($55) ($0.07)

FINANCIAL RATIOS FY17 FY18E FY19E FY20E Debt ($35) ($0.05)

Return on Equity (ROE) % 23.6% 14.1% 16.5% 15.5% Other $0 $0.00

Return on Capital (ROIC) % 18.3% 11.5% 13.8% 13.2% Total Net Asset Value $1,433 $1.95

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Production All-in Sustaining Cash Cost

Source: Company reports, RBC Capital Markets estimates, IRESS



Production and financial sensitivity to price and FX Exhibit 8: Sensitivity to earnings and valuation under spot price and commodity assumptions

Resolute Mining Limited ASX: RSG SPOT SCENARIORBC Capital Markets No Shares (m): 735

Paul Hissey +613 8688 6512 Turnover (M $ month) $165 Share Price ($/sh): $1.09

Connor O'Brien +613 8688 6519 Market Cap. (M $): $807 2016E Dividend ($/sh): $0.00

Alexander Hislop +613 8688 6552 Enterprise Value (M $) $559 NAV ($/sh): $1.75

All AUD unless noted Year End June 30 All AUD unless noted Year End June 30

RATIO ANALYSIS FY17 FY18E FY19E FY20E PRICES & EXCHANGE RATES FY17 FY18E FY19E FY20E LT -FY22+

Earnings - Adjusted $/sh $0.21 $0.09 $0.15 $0.17 Gold Price US$/oz $1,259 1291 1291 1291 1291

P/E Multiple x 5.2x 12.3x 7.3x 6.5x Exchange rate AUD:USD 0.75 0.79 0.79 0.79 0.79

CFPS (CFO) $/sh $0.25 $0.09 $0.22 $0.28 EQUITY PRODUCTION & COSTS (100%) FY17 FY18E FY19E FY20E FY21E

P/CF Multiple x 4.3x 12.0x 4.9x 3.8x Syama (oxides) koz Au 102 88 80 80 0

FCFPS (CFO-capex-expl.) $/sh $0.09 ($0.15) $0.02 $0.17 Syama (sulphides) koz Au 136 100 57 0 0

FCF Yield % 8.4% (14.2% ) 2.2% 15.2% Ravenswood koz Au 92 77 102 130 130

Dividends Per Share $/sh $0.00 $0.00 $0.00 $0.00 Syama Underground koz Au 4 34 138 190 190

Dividend Yield % 0.0% 0.0% 0.0% 0.0% Total Gold Production koz Au 334 299 376 400 320

LTD/(Total Cap) % 0.0% 0.0% 0.0% 0.0% guidance 300

INCOME STATEMENT FY17 FY18E FY19E FY20E Total Gold Sales koz Au 317 315 392 400 320

Revenue M $ $541 $503 $641 $654 guidance 300

Operating Costs M $ ($368) ($400) ($423) ($391) C1 Cash Cost A$/oz 995 1045 1003 979 935

EBITDA M $ $173 $103 $218 $263 All-in Sustaining Cash Cost A$/oz 1132 1236 1244 1201 1142

D&A M $ ($20) ($25) ($61) ($86) guidance 1280

EBIT M $ $153 $78 $157 $178

Other Income/Expenses M $ ($0) ($1) ($2) ($2)

EBT M $ $153 $76 $155 $176 ATTRIBUTABLE RESERVES & RESOURCES

Taxes M $ $0 ($12) ($46) ($53) Au EV

Net Income - Adjusted M $ $153 $64 $108 $123 Moz $/oz

Adjustments M $ $13 $0 $0 $0 Proven/Probable Reserve (P&P) 5.1 $111

Net Income - Statutory M $ $166 $64 $108 $123 Measured/Indicated (M&I) - Inclusive 9.6 $58

Weighted average diluted shares M 735 733 733 733 Measures/Indicated/Inferred 12.1 $46

CASH FLOW STATEMENT FY17 FY18E FY19E FY20E CAPEX BREAKDOWN FY17 FY18E FY19E FY20E FY21E

Cash Flows from Operating Activities Sustaining & Evaluation Capex M $ 57.9 20.1 52.8 45.1 32.5

Net Income M $ $153 $64 $108 $123 Expansionary Capex M $ 61.8 158.6 93.7 40.4 30.0

D&A M $ $20 $25 $61 $86 Exploration M $ 8.4 38.0 20.0 8.0 4.0

Taxes Paid M $ $11 $7 $38 $53 Total M $ 128.2 216.7 166.5 93.5 66.5

Non Recurring/Other M $ $0 $5 $6 $6

Operating Cash Flow (excl. stripping) M $ $184 $101 $214 $268 GROUP ALL-IN SUSTAINING COSTS AND PRODUCTION

Changes in Working Capital M $ $2 ($34) ($50) ($61)

Net Operating Cash flow M $ $186 $66 $164 $207

Cash Flows From Investing Activities

Capital Expenditure (inc exploration, sust.) M $ ($120) ($179) ($147) ($85)

Other M $ ($8) ($32) $0 $0

Net Investing Cash Flow (incl. stripping) M $ ($128) ($210) ($147) ($85)

Cash Flows From Financing Activities

Equity Issues (net of costs) M $ $147 $0 $0 $0

Net Borrowings M $ ($0) ($13) $9 $0

Dividends Paid & Other M $ ($11) ($11) ($10) ($13)

Net Financing Cash Flow M $ $136 ($24) ($1) ($13)

Increase (Decrease) in Cash M $ $194 ($168) $16 $108

Cash at End of Year M $ $248 $80 $96 $204

Operating Free Cash Flow M $ $117 ($92) $70 $166

Free Cash Flow M $ $59 ($144) $17 $121

BALANCE SHEET FY17 FY18E FY19E FY20E

Cash & Equivalents M $ $282 $114 $130 $239 NET ASSET VALUE DR Ownership (A$m) A$/Sh NAV (%)

Other Current Assets M $ $216 $248 $248 $248 Operating Value

PP&E & Mining Interests M $ $90 $244 $329 $328 Syama (Oxide and Sulphide) 8.0% 80% $104 $0.14 20%

Other Long Term Assets M $ $249 $259 $264 $266 Syama Underground 9.0% 80% $240 $0.33 46%

Total Assets M $ $838 $865 $971 $1,081 Ravenswood 7.0% 100% $181 $0.25 34%

Current Liabilities M $ $122 $122 $122 $122 Sub Total $525 $0.71 100%

Long Term Debt M $ $0 $0 $0 $0 Exploration $460 $0.63

Other Long Term Liabilities M $ $66 $40 $48 $48 Bibiani (60% risk discount) 90% $110 $0.15

Total Liabilities M $ $189 $162 $171 $170 Cash $282 $0.38

Shareholder Equity M $ $649 $702 $800 $911 Bullion $0 $0.00

Total Liabilities & Shareholder Equity M $ $838 $865 $971 $1,081 Corporate G&A ($55) ($0.07)

FINANCIAL RATIOS FY17 FY18E FY19E FY20E Debt ($35) ($0.05)

Return on Equity (ROE) % 23.6% 9.2% 13.5% 13.5% Other $0 $0.00

Return on Capital (ROIC) % 18.3% 7.4% 11.1% 11.4% Total Net Asset Value $1,287 $1.75

1060

1080

1100

1120

1140

1160

1180

1200

1220

1240

1260

0

50

100

150

200

250

300

350

400

450

FY17

FY18

E

FY19

E

FY20

E

A$/

oz

Au

Go

ld P

rod

uct

ion

(ko

z A

u)

Production All-in Sustaining Cash Cost

Source: Company reports, RBC Capital Markets estimates, IRESS



ValuationOur 12-month price target of A$1.75 is a product of a 75:25 blended P/CF and NAV basedmethodology, in line with other Australian peers. Our P/CF multiple of 8x is commensurate withmine life and visibility on current production profiles. Our NAV multiple (1.0x) is marginallybelow the average for our remaining Australia-listed gold coverage due to what we believe tobe higher country risk (Mali) and unproven production from Syama Underground, which is inthe development phase. Our price target supports an Outperform rating.

Risks to rating and price targetRisks to our price target and rating include but are not limited to:

• As with most gold producers, volatility in the gold price is a risk to the company’s share priceperformance. We also view currency as a risk; however, since only Ravenswood produces inAustralian dollars, the currency exposure should decrease, and the decision to retain goldmetal should also help with exposure from the timing of conversion into EUR, USD and AUDas required.

• VanEck's passive ETF also looms as an additional driver, given the significant shareholdingof both GDX and GDXJ in RSG, fund flows into and out of the ETF products are likely to havea disproportionate impact on RSG.

• We view the timing of first production of the underground at Syama to be a key risk factorfor RSG. Since the current milling of the sulphides is now primarily reliant on the stockpiles,which have an expected life to c.2018, any delays on the underground development wouldleave little buffer for stockpiled material. Although our base case assumes smooth transitioninto the underground sulphide production, if the roaster were to turn off at Syama, then thecosts to re-start and lack of consistent production would have a negative effect.

Company descriptionResolute Mining (RSG) is an ASX-listed gold producer based in Perth, Western Australia. Thecompany currently produces c.320koz Au pa from its Syama operation in Mali and Ravenswoodoperation in Queensland, Australia.



Required disclosures

Non-U.S. analyst disclosurePaul Hissey, Connor O'Brien and Alexander Hislop (i) are not registered/qualified as research analysts with the NYSE and/or FINRAand (ii) may not be associated persons of the RBC Capital Markets, LLC and therefore may not be subject to FINRA Rule 2241restrictions on communications with a subject company, public appearances and trading securities held by a research analystaccount.

Conflicts disclosuresThe analyst(s) responsible for preparing this research report received compensation that is based upon various factors, includingtotal revenues of the member companies of RBC Capital Markets and its affiliates, a portion of which are or have been generatedby investment banking activities of the member companies of RBC Capital Markets and its affiliates.

Please note that current conflicts disclosures may differ from those as of the publication date on, and as set forth in,this report. To access current conflicts disclosures, clients should refer to https://www.rbccm.com/GLDisclosure/PublicWeb/DisclosureLookup.aspx?entityId=1 or send a request to RBC CM Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza,29th Floor, South Tower, Toronto, Ontario M5J 2W7.

An analyst involved in the preparation of this report has visited material operations of Resolute Mining Limited, and morespecifically, the facilities of Resolute Mining Limited, which includes but is not limited to mines, distribution centres, warehouses,production plants and/or other facilities related to the day-to-day operation of Resolute Mining Limited as applicable.

Explanation of RBC Capital Markets Equity rating systemAn analyst's 'sector' is the universe of companies for which the analyst provides research coverage. Accordingly, the rating assignedto a particular stock represents solely the analyst's view of how that stock will perform over the next 12 months relative tothe analyst's sector average. Although RBC Capital Markets' ratings of Top Pick (TP)/Outperform (O), Sector Perform (SP), andUnderperform (U) most closely correspond to Buy, Hold/Neutral and Sell, respectively, the meanings are not the same becauseour ratings are determined on a relative basis.RatingsTop Pick (TP): Represents analyst's best idea in the sector; expected to provide significant absolute total return over 12 monthswith a favorable risk-reward ratio.Outperform (O): Expected to materially outperform sector average over 12 months.Sector Perform (SP): Returns expected to be in line with sector average over 12 months.Underperform (U): Returns expected to be materially below sector average over 12 months.Risk RatingAs of March 31, 2013, RBC Capital Markets suspends its Average and Above Average risk ratings. The Speculative risk rating reflectsa security's lower level of financial or operating predictability, illiquid share trading volumes, high balance sheet leverage, or limitedoperating history that result in a higher expectation of financial and/or stock price volatility.



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Distribution of ratingsFor the purpose of ratings distributions, regulatory rules require member firms to assign ratings to one of three rating categories- Buy, Hold/Neutral, or Sell - regardless of a firm's own rating categories. Although RBC Capital Markets' ratings of Top Pick(TP)/Outperform (O), Sector Perform (SP), and Underperform (U) most closely correspond to Buy, Hold/Neutral and Sell, respectively,the meanings are not the same because our ratings are determined on a relative basis (as described above).

Distribution of ratings

RBC Capital Markets, Equity Research

As of 30-Jun-2017

Investment Banking

Serv./Past 12 Mos.

Rating Count Percent Count Percent

BUY [Top Pick & Outperform] 826 52.01 293 35.47

HOLD [Sector Perform] 657 41.37 144 21.92

SELL [Underperform] 105 6.61 7 6.67

References to a Recommended List in the recommendation history chart may include one or more recommended lists or modelportfolios maintained by RBC Wealth Management or one of its affiliates. RBC Wealth Management recommended lists includethe Guided Portfolio: Prime Income (RL 6), the Guided Portfolio: Dividend Growth (RL 8), the Guided Portfolio: ADR (RL 10), andthe Guided Portfolio: All Cap Growth (RL 12), and former lists called the Guided Portfolio: Large Cap (RL 7), the Guided Portfolio:Midcap 111 (RL 9), and the Guided Portfolio: Global Equity (U.S.) (RL 11). RBC Capital Markets recommended lists include theStrategy Focus List and the Fundamental Equity Weightings (FEW) portfolios. The abbreviation 'RL On' means the date a securitywas placed on a Recommended List. The abbreviation 'RL Off' means the date a security was removed from a Recommended List.

Equity valuation and risksFor valuation methods used to determine, and risks that may impede achievement of, price targets for covered companies, pleasesee the most recent company-specific research report at https://www.rbcinsight.com or send a request to RBC Capital MarketsResearch Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South Tower, Toronto, Ontario M5J 2W7.


Valuation



https://www.rbcinsight.com

Our 12-month price target of A$1.75 is a product of a 75:25 blended P/CF and NAV based methodology, in line with other Australianpeers. Our P/CF multiple of 8x is commensurate with mine life and visibility on current production profiles. Our NAV multiple (1.0x)is marginally below the average for our remaining Australia-listed gold coverage due to what we believe to be higher countryrisk (Mali) and unproven production from Syama Underground, which is in the development phase. Our price target supports anOutperform rating.

Risks to rating and price target

Risks to our price target and rating include but are not limited to:

• As with most gold producers, volatility in the gold price is a risk to the company’s share price performance. We also view currencyas a risk; however, since only Ravenswood produces in Australian dollars, the currency exposure should decrease, and thedecision to retain gold metal should also help with exposure from the timing of conversion into EUR, USD and AUD as required.

• VanEck's passive ETF also looms as an additional driver, given the significant shareholding of both GDX and GDXJ in RSG, fundflows into and out of the ETF products are likely to have a disproportionate impact on RSG.

• We view the timing of first production of the underground at Syama to be a key risk factor for RSG. Since the current milling ofthe sulphides is now primarily reliant on the stockpiles, which have an expected life to c.2018, any delays on the undergrounddevelopment would leave little buffer for stockpiled material. Although our base case assumes smooth transition into theunderground sulphide production, if the roaster were to turn off at Syama, then the costs to re-start and lack of consistentproduction would have a negative effect.

Conflicts policyRBC Capital Markets Policy for Managing Conflicts of Interest in Relation to Investment Research is available from us on request.To access our current policy, clients should refer tohttps://www.rbccm.com/global/file-414164.pdfor send a request to RBC Capital Markets Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, SouthTower, Toronto, Ontario M5J 2W7. We reserve the right to amend or supplement this policy at any time.

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Analyst certification



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All of the views expressed in this report accurately reflect the personal views of the responsible analyst(s) about any and all ofthe subject securities or issuers. No part of the compensation of the responsible analyst(s) named herein is, or will be, directly orindirectly, related to the specific recommendations or views expressed by the responsible analyst(s) in this report.

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