Resolute Mining Limited — Annual Report 2008

Aug 26, 2008

APPENDIX 4E: PRELIMINARY FINAL REPORT

For the 12 months ended 30 June 2008

A.C.N. 097 088 689 ASX CODE – RSG

RESULTS

• Revenues from continuing operations increased by 19% to $228.1m (2007: $192.1m).
• EBITDA of $15.1m (2007: $2.8m normalised).
• This result includes the effect of a significant reduction in hedging contracts, with 54% of gold production delivered into forward sales contracts, resulting in an average accounting revenue price achieved per ounce of gold shipped during the year of A$775/oz (2007: A$686/oz).
• Net loss after tax of $44.9m includes a $38.9m unrealised treasury loss on gold forward and put option contracts which do not satisfy the strict accounting criteria to be classified as "effective hedges". The loss relating to the gold forwards will reverse in future periods as these financial instruments mature.

CASH & BORROWINGS

• Group cash at 30 June 2008 was $29.7m (2007: $67.7m).

• Borrowings at 30 June 2008 were $67.8m (June 2007: $7.7m).

• Net operating cash inflows during the year of $22.1m (2007: $16.5m).

• The major non-operating cash inflows during the year were from the $50m rights issue completed in November, and debt drawn-down during the last quarter comprising a US$55m senior debt facility and a US$7.6m gold put option purchase facility (both provided by Barclays Bank PLC).

• $181.5m spent on the advancement of Syama, Mt Wright, and other development and exploration properties.

• The Company is continuing to review its future funding requirements for the period covering the completion of the Syama project and its production ramp-up.

• In addition, the Company has a number of important development activities it wants to proceed with on a timely and efficient basis.

• To meet these demands, funding options, in addition to finalisation of a A$20m standby facility, are being evaluated.

HEDGING

• The hedge book was significantly reduced over the year with the delivery of 155,612 ounces of gold into forward sales contracts.
• At 30 June 2008 approximately 12% of Resolute's gold reserves remain committed to hedging contracts.
• During the last quarter, Resolute restructured its hedge book to allow greater spot price participation.
• In conjunction with the new Barclays debt facility, 110,000 ounces of AUD gold put options with a A$1,000 per ounce strike price were purchased at an average cost of A$72/oz.

OPERATIONS

• Group gold production for the year was 293,057 ounces (2007: 255,942 ounces) at an average cash cost of $617/oz (2007: $634/oz).
• Golden Pride gold mine in Tanzania, Africa, produced 150,224 ounces (2007: 138,421 ounces) of gold at a cash cost of $497/oz (or US$449/oz) (2007: $510/oz or US$403/oz).
• Ravenswood gold mine in Queensland, Australia, produced 142,833 ounces (2007: 117,521 ounces) of gold at a cash cost of $743/oz (or US$671/oz) (2007: $781/oz or US$617/oz).

DEVELOPMENT

Syama (Mali)

• At 30 June 2008, overall progress for the Syama redevelopment was 80% complete with the oxide plant 99% complete.
• To 30 June 2008, US$136m had been spent on the re-development project and power station, with a further US$11m of expenditure committed.
• Commissioning of the oxide circuit is continuing. A month delay has been experienced due to issues with crusher and Mill 1 motor.
• Mining activities commenced during the year.
• Feasibility Study commenced on expansion of the Syama Gold Mine to exploit the free milling resources located near the existing plant.

JUNE 2008

Mt Wright

• To 30 June 2008, there had been two stopes fully developed and mined, and the mining method is proving successful.
• The performance of the ore body to date has been better than projected.
• Decline development to 30 June 2008 had advanced to a depth of approximately 400m allowing access to the next eighteen months ore production.

EXPLORATION

• Exploration drilling continued at regional prospects near Syama in Mali, Golden Pride in Tanzania and Ravenswood in Queensland.
• Excellent results in Mali, including a 53% resource upgrade to 745,000 ounces of gold at the Tabakoroni deposit.

OUTLOOK

Operations

Forecast gold production for the Group for the year ending 30 June 2009 is 400,000 ounces. This improved outlook is being driven by the start up of the Syama project. The forecast cash cost per ounce is approximately $700.

Golden Pride:

• Due to the planned blending of existing ore stockpiles with run of mine ore, the average head grade of ore to be processed is expected to reduce by approximately 20% over the coming year. This is in line with current mine plan ore body models.

Ravenswood:

• Mt Wright's contribution to the Ravenswood project continues to increase with underground ore expected to account for approximately 30% of gold production in the 2008/09 year. This should lead to a small increase in the head grade of the ore to be

processed at Ravenswood in 2008/09.

• Mining in the Sarsfield pit is forecast to be completed in March 2009, however, Sarsfield ore stockpiles will continue to be treated until the end of calendar 2009.

Syama:

• First gold production in the commissioning phase is expected in September 2008 with commissioning of the oxide circuit almost fully complete. A delay of approximately 4 weeks has been encountered as a result of issues with the crusher and Mill 1 motor.
• Mining levels are now increasing to planned rates, with the east wall cutback progressing to catch up with the rest of the pit floor. As the cut back progresses, sulphide ore production from the main zone of the ore body will increase allowing a meaningful reconciliation against the ore body to be made.
• The timing of the commissioning and ramp up phase will have a direct impact on projected gold production and cash costs per ounce in the coming year.

Development

Syama:

• Completion is scheduled for the December quarter with the Roaster commissioning planned to commence in November 2008.
• Total capital costs forecasted to be US$174m.
• The Feasibility Study on Syama free milling ore is expected to be completed in the March 2009 Quarter.
• Commencement of a Feasibility Study for the Tabakoroni project (which is within the Finkolo Joint Venture).

Mt Wright:

• Mt Wright decline development will continue at the rate of

approximately 100 metres per month.

• Further drilling to test the depth extension of the Mt Wright orebody is planned. Results from this could materially alter the development plans for this mine.

Exploration

Exploration of the prospective tenure around Syama, Golden Pride and Ravenswood will continue in the 2008/09 year.

PR SULLIVAN

Chief Executive Officer 27 August 2008

TABLE OF CONTENTS

Appendix 4E	5
Condensed Income Statement	6
Condensed Balance Sheet	7
Condensed Statement of Recognised Income and Expense	8
Condensed Cash Flow Statement	9
Notes to the Financial Statements	10

REPORTING PERIOD

The reporting period is the year ended 30 June 2008 with the corresponding reporting period being for the year ended 30 June 2007.

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Results				A$'000
Revenues from continuing operations	up	19%	to	228,093
Earnings before interest, tax, depreciation and amortisation- normalised	up	438%	to	15,075
Loss from continuing operations after tax attributable to members(Profit in the prior year)	down	n/a	to	(44,863)
Net loss attributable to members(Profit in the prior year)	down	n/a	to	(44,837)

	Amount per	Franked amount
Dividends	security	per security
Final dividend - no final dividend is proposed	n/a	n/a
Interim dividend	n/a	n/a
Record date for determining entitlements to the dividend	n/a

The above results should be read in conjunction with the notes and commentary contained within this report.

CONDENSED INCOME STATEMENT

	Note	Consolidated
		2008$'000	2007$'000
Continuing Operations
Revenue from gold sales	3a	224,160	185,297
Cash operating costs		(180,720)	(162,208)
Other operating costs	3b	(5,442)	(10,230)
Gross profit from operations before depreciation and amortisation		37,998	12,859
Other income	3c	3,497	182,598
Corporate and administration costs	3d	(4,096)	(4,471)
Realised treasury transactions	3e	(15,844)	(4,968)
Other expenses	3f	(6,480)	(3,124)
Earnings before interest, tax, depreciation and amortisation		15,075	182,894
Depreciation and amortisation	3g	(18,941)	(14,793)
Earnings before interest and tax		(3,866)	168,101
Borrowing costs	3h	(1,835)	(1,318)
Interest income		1,826	4,608
(Loss)/profit before unrealised treasury and tax		(3,875)	171,391
Treasury - unrealised (losses)/gains	3i	(31,107)	7,945
(Loss)/profit before tax		(34,982)	179,336
Income tax expense		(9,881)	(9,340)
(Loss)/profit from continuing operations after income tax		(44,863)	169,996
Attributable to:
Minority interestsMembers of the parent		(26)(44,837)	(174)170,170
Earnings per share for (loss)/profit from continuing operations attributable to theordinary equity shareholders of the Company:
Basic earnings per share for (loss)/profit for the year (cents per share)	7	(17.08)	73.91
Diluted earnings per share for (loss)/profit for the year (cents per share)	7	(17.08)	73.55

The above income statement should be read in conjunction with the following notes.

CONDENSED BALANCE SHEET

	Note	Consolidated
		2008	2007
		$'000	$'000
Current Assets
Cash and cash equivalents		29,731	67,661
Receivables		14,922	16,358
Inventories		43,209	31,834
Available for sale financial assets		4,708	13,480
Financial derivative assets		9	205
Deferred expenditure		11,116	4,701
Other		3,629	23,674
Total Current Assets		107,324	157,913
Non Current Assets
Financial derivative assets		8,951	300
Exploration and evaluation		62,109	45,380
Development expenditure		257,433	72,566
Property, plant and equipment		95,438	100,365
Deferred expenditure		3,957	21,537
Deferred tax assets		-	7,439
Other		2,733	6,310
Total Non Current Assets		430,621	253,897
Total Assets		537,945	411,810
Current Liabilities
Payables		39,514	34,908
Interest bearing liabilities		12,562	3,367
Tax liabilities		2,160	5,069
Financial derivative liabilities		31,602	32,702
Provisions		5,289	4,414
Total Current Liabilities		91,127	80,460
Non Current Liabilities
Interest bearing liabilities		55,194	4,330
Provisions		26,298	21,021
Financial derivative liabilities		93,032	39,690
Other liabilities		324	-
Deferred tax liabilities		1,330	1,673
Total Non Current Liabilities		176,178	66,714
Total Liabilities		267,305	147,174
Net Assets		270,640	264,636
Equity
Contributed equity	8	171,867	113,917
Reserves		(9,333)	(1,936)
Retained profits		105,402	150,239
Parent entity interest in equity		267,936	262,220
Minority interest		2,704	2,416
Total Equity		270,640	264,636

The above balance sheet should be read in conjunction with the following notes.

CONDENSED STATEMENT OF RECOGNISED INCOME AND EXPENSE

	Consolidated
	2008$'000	2007$'000
Total equity at the beginning of the year	264,636	83,655
Exchange differences on translation of foreign operationsChanges in the fair value of gold put options, net of tax	1,149-	(16,318)1,233
Changes in the fair value of gold forward sales contracts, net of tax	-	36,156
Amortisation of the gold put options hedge reserve, net of tax	675	-
Amortisation of the gold forward sales contracts reserve, net of taxChanges in the fair value of available for sale financial assets, net of	(4,161)	-
tax	(5,536)	(6,069)
Changes in unearned income, net of tax	-	(5,398)
Net (expense)/income recognised directly in equity	(7,873)	9,604
(Loss)/profit for the year	(44,863)	169,996
Total recognised income and expense for the year	(52,736)	179,600
Transactions with equity holders in their capacity as equity holders:
Contributions of equity, net of transaction costs	57,950	962
Share based payments	476	261
Minority interests	314	158
	58,740	1,381
Total equity at the end of the year	270,640	264,636
Total recognised income and expense for the year is attributable to:
Equity holders of Resolute Mining limited	(53,024)	178,470
Minority Interest	288	1,130
	(52,736)	179,600

The above statement of recognised income and expense should be read in conjunction with the accompanying notes.

CONDENSED CASH FLOW STATEMENT

	Consolidated
	2008	2007
	$'000	$'000
Cash Flows from Operating Activities
Receipts from customers	224,275	179,370
Payments to suppliers and employees	(193,732)	(166,385)
Payments for purchases of put optionsInterest received	(7,923)1,895	-4,470
Interest and other costs of finance paid	(2,416)	(907)
Net operating cash flows	22,099	16,548
Cash Flows from Investing Activities
Expenditure on exploration and development areas	(181,497)	(110,442)
Payment for property, plant and equipment	(31,265)	(22,366)
Proceeds from sale of property, plant and equipment	7,823	143
Royalties received	2,164	2,162
Proceeds from sale of available for sale financial assetsProceeds from the reimbursement for the Syama mining fleet	1,52928,137	199,499-
Cash outflow on disposal of subsidiary	-	(4,096)
Payments for available for sale financial assets	-	(4,655)
Net investing cash flows	(173,109)	60,245
Cash Flows from Financing Activities
Proceeds from issues of securities	51,591	968
Cost of issuing securities	(104)	(6)
Proceeds from borrowings	66,598	12,580
Repayment of borrowings	(3,138)	(26,569)
Repayment of lease liability	(1,568)	(1,554)
Net financing cash flows	113,379	(14,581)
Net (decrease)/increase in cash held	(37,631)	62,212
Cash assets held at the beginning of the year	67,661	13,992
Exchange rate adjustment	(299)	(8,543)
Cash assets held at the end of the year	29,731	67,661

The above cash flow statement should be read in conjunction with the accompanying notes.

NOTE 1: BASIS OF PREPARATION OF PRELIMINARY FINAL REPORT

a) Corporate information

The preliminary financial report of Resolute Mining Limited and its subsidiaries ("Resolute" or the "Group") for the full year ended 30 June 2008 was authorised for issue in accordance with a resolution of directors.

Resolute Mining Limited is a company incorporated in Australia and limited by shares, which are publicly traded on the Australian Stock Exchange.

b) Basis of preparation

This preliminary financial report has been prepared in accordance with Australian Accounting Standards, other Australian Accounting Standards Board authoritative pronouncements, Urgent Issues Group Interpretations and the Corporations Act 2001.

This report is based on accounts that are in the process of being audited.

This report does not include all notes normally included in an annual financial report. Accordingly this report is to be read in conjunction with the financial report for the year ended 30 June 2007 and any public announcements made by RML during the reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The accounting policies adopted are consistent with those of the previous financial year and corresponding reporting period.

c) Going concern

As at 30 June 2008, the Group's payables of A$39 million and estimated future committed capital expenditure requirements in connection with the redevelopment of the Syama Gold Mine in Mali of US$11 million are in excess of the Group's available cash and bullion on hand at 30 June 2008 of A$30 million. Additionally, the Group plans to enter into further commitments for capital expenditure as the redevelopment progresses.

Notwithstanding this matter, management and the directors are satisfied the Group can continue on a going concern basis after having regard to the following mitigating factors:

• (i) Management has received an offer for a A$20 million standby credit facility; and,
• (ii) Other fund raising initiatives, as and when necessary, are adequately advanced to provide the directors with comfort that funding will be available on an as needs basis.

NOTE 2: ANNUAL GENERAL MEETING

The annual general meeting will be held as follows:

Place:	To be advised
Date:	To be advised
Time:	To be advised
Approximate date the annual report will be available:	Late October 2008

		Consolidated2008$'000	2007$'000
	NOTE 3: (LOSS)/PROFIT FROM CONTINUING OPERATIONS
(a)	Revenues from gold sales
	Gold sales	224,160224,160	185,297185,297
(b)	Other operating costs
	Royalty expenseGold in circuit adjustmentOperation support costs	7,453(3,580)1,5695,442	6,4062,3551,46910,230
(c)	Other income
	Profit on sale of plant and equipmentRehabilitation adjustment for non operating minesitesRoyalty incomeProfit on sale of available for sale financial assetsProfit on sale of subsidiaryOther	-9312,107204-2553,497	19-2,24325,679154,414243182,598
(d)	Corporate and administration costs
	Staff costsShare based paymentsDirector feesOther corporate and administration costs	2,1912092511,4454,096	2,2293702991,5734,471
(e)	Realised treasury transactions
	Realised loss on net settlement of gold forward sales contractsRealised loss on gold loanRealised loss on expired gold put optionsRealised (gain) on gold optionsRealised foreign exchange loss	-1,3778,313-6,15415,844	722588-(4,052)7,7104,968
(f)	Other expenses
	Provision for doubtful debtsWrite down of mineral exploration and development costsLoss on sale of plant and equipmentInsuranceOther	5,546163204475926,480	-968-4651,6913,124
(g)	Depreciation and amortisation
	Amortisation of exploration, development & rehabilitation costsDepreciation of mine properties, plant & equipmentDepreciation of non mine site assets	9,2929,50914018,941	3,51111,12915314,793

	Consolidated20082007$'000$'000
	NOTE 3: (LOSS)/PROFIT FROM CONTINUING OPERATIONS (continued)
(h)	Borrowing costs
	Interest and fees paid/payable to other entitiesRehabilitation provision discount adjustment			1,0497861,835	9074111,318
(i)	Treasury - unrealised (losses)/gains
	Unrealised (loss)/gain on gold forward contractsUnrealised gain/(loss) on gold put optionsUnrealised gain on gold loanUnrealised gain on gold call optionsUnrealised loss on lease rate swapsUnrealised foreign exchange gain/(loss)			(46,849)7,990621--7,131(31,107)	6,980(1,634)7672,694(29)(833)7,945
	NOTE 4: SEGMENT INFORMATION
2008
	Geographical Segments	Tanzania$'000	Ghana$'000	Mali$'000	Australia$'000	Consolidated$'000
Revenue
SalesSegment revenue		125,431125,431		----	98,72998,729	224,160224,160
Results
	Segment results from continuing operations	28,000	(197)	-	(62,785)	(34,982)
expense	Group loss from ordinary activities before income tax					(34,982)
	Income tax expense					(9,881)
expense	Group loss from ordinary activities after income tax					(44,863)
Assets
Segment assets		92,449	7,223	268,057	170,216	537,945
Liabilities
Segment liabilities		31,317	72	24,219	211,697	267,305

NOTES TO THE FINANCIAL STATEMENTS

NOTE 4: SEGMENT INFORMATION (continued)

Geographical Segments	Tanzania$'000	Ghana$'000	Mali$'000	Australia$'000	Consolidated$'000
Other Segment Information
Depreciation and amortisation	3,699	-	-	15,242	18,941
Acquisition of non-current assets	27,552	1,023	155,057	32,768	216,400
Write off of mineral exploration and development expenditure	122	7	-	34	163
2007
Revenue
SalesSegment revenue	99,12699,126	--	--	86,17186,171	185,297185,297
Results
Segment results	15,907	(1,142)	75	164,496	179,336
Group profit from ordinary activitiesbefore income tax expense					179,336
Income tax expense					(9,340)
Group profit from ordinary activities after income taxexpense					169,996
Assets
Segment assets	81,251	6,983	119,872	203,704	411,810
Liabilities
Segment liabilities	32,791	372	14,445	99,566	147,174
Other Segment Information
Depreciation and amortisation	6,627	6	-	8,160	14,793
Acquisition of non-current assets	12,776	2,515	80,498	37,021	132,810
Write off of mineral exploration and development expenditure	75	729	-	164	968

	Consolidated20082007$'000$'000
NOTE 5: DIVIDENDS PAID OR PROVIDED FOR
The amount of franking credits available for the subsequent financialyear is as follows. The amount has been determined usinga tax rate of 30%.	5,453	5,453
There were no dividends paid or provided for during the year.
NOTE 6: NET TANGIBLE ASSETS
Net tangible assets per ordinary security is:	$0.98	$1.14

NOTE 7: EARNINGS PER SHARE

	Consolidated
	2008	2007
Basic earnings per share
(Loss)/profit used in calculation of basic EPS ($'000)	(44,837)	170,170
Weighted average number of ordinary shares outstanding during theperiod used in the calculation of basic EPS	262,465,888	230,252,733
Basic EPS (cents per share)	(17.08)	73.91
Diluted earnings per share
(Loss)/profit used in calculation of dilutive EPS ($'000)	(44,837)	170,170
Weighted average number of ordinary shares outstanding during theperiod used in the calculation of basic EPSWeighted average of notional shares used in determining diluted EPS	262,465,888n/a	230,252,7331,107,301
Weighted average number of ordinary shares outstanding during theperiod used in the calculation of diluted EPS	262,465,888	231,360,034
Number of potential ordinary shares that are not dilutive and hencenot included in calculation of diluted EPS	-	475,000
Diluted EPS (cents per share)	(17.08)	73.55

NOTES TO THE FINANCIAL STATEMENTS

NOTE 8: ISSUED & CONTRIBUTED EQUITY

	TotalNumber	NumberQuoted	Issue PricePer Security	Amount PaidUp Per Security
Ordinary securities
As at 30 June 2008	280,829,725	280,829,725
Changes during current period
Increases through exercise of unlisted options	787,500	787,500	$0.81	$0.81
Increases through exercise of unlisted options	70,000	70,000	$1.48	$1.48
Increases through exercise of unlisted options	30,000	30,000	$1.28	$1.28
Increases through exercise of unlisted options	30,000	30,000	$1.57	$1.57
Increases through exercise of unlisted options	60,000	60,000	$1.33	$1.33
Increases through exercise of unlisted options	200,000	200,000	$1.13	$1.13
Increases through exercise of unlisted options	180,000	180,000	$1.42	$1.42
Issue of shares pursuant to the 1 for 5 Renounceable Rights Issue	45,637,398	45,637,398	$1.10	$1.10
Issue of shares pursuant to the Nyakafuru Sale & Purchase Agreement	2,960,268	2,960,268	$2.40	$2.40
	TotalNumber	NumberQuoted	ExercisePrice	ExpiryDate
Options
As at 30 June 2008	265,000	-	$1.42	21/12/09
	175,000	-	$1.13	23/03/11
	335,000	-	$1.33	24/10/11
	471,000	-	$2.13	22/05/13
Changes during current period
Exercise of unlisted options during the current period	(787,500)	-	$0.81	19/09/07
Exercise of unlisted options during the current period	(70,000)	-	$1.48	24/10/11
Exercise of unlisted options during the current period	(30,000)	-	$1.28	23/03/11
Exercise of unlisted options during the current period	(30,000)	-	$1.57	21/12/09
Exercise of unlisted options during the current period	(60,000)	-	$1.33	24/10/11
Exercise of unlisted options during the current period	(200,000)	-	$1.13	23/03/11
Exercise of unlisted options during the current period	(180,000)	-	$1.42	21/12/09
Options lapsed during the current period	(105,000)	-	$1.48	24/10/11
Issue of unlisted options during the current period	471,000	-	$2.13	22/05/13

Signed in accordance with a resolution of directors.

P.R. Sullivan Director Perth, Western Australia 27 August 2008