Thank you for standing by and welcome to the Resolute Mining Limited 2022 preliminary financial results release. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by one on your telephone keypad. I would now like to hand the conference over to Mr. Terry Holohan, CEO. Please go ahead.
Thanks, Melanie, welcome everybody. Good morning, and thank you for spending the time with us on. I know it's a busy Friday for you. We'd like to take you through very quickly in sort of 20 minutes, the highlights and, with a bit more color on the financials of our 2022 year. I've got the slide deck in front of me. It's on the website. If you look, go straight to slide three there, TIFR. We're very proud of our improvements over this last year. This 0.41 is a company record for us going back on all our stats. It's a big jump from where we were at the beginning of the year.
I'd just like to mention that, while I was in Darwa a couple of weeks ago, we actually clicked over four years at Syama without a lost time incident. That was a huge improvement, sorry, a huge achievement, sorry, by the operators on the plant. We know that safety is not a destination, it's a journey. We are continuing to focus on that and break some more records going forward across the group. Right now, we are on our sixth consecutive quarter of production growth, we feel we're still on track. We're halfway through that. There's no surprises there at the moment. Again, as we've said that we expect to have a fairly consistent year this year. Compared to last year, our production, 353,000 ounces, all in at $1,498.
We were better than the guidance on the ounces. Remember, we achieved that early on in the year and managed to maintain that through the rainy season. I think the big improvement that we saw across the year was the underground operation, the sulphide operation. I'll go into that a little bit more in detail shortly. The excitement there is the grade of the underground for the last two quarters was over 2.7, and that is when the Reserve is at 2.6. It took us about 14, 15 months to tighten up all the mining to get into that position. Going forward, we believe that we've got that mine fully under control now. Revenue $651 million. Gold sales $357 million.
Average price of 18.19, that's slightly above the spot prices because of our 30% hedge book that we've been carrying as part of the debt covenant. EBITDA, $148 million. What we're really pleased about is we did have an underlying net profit of $20.3 million. I think that demonstrates the turnaround that we were expecting and talking about over the last five, six quarters, we're actually getting to where we expect it to be. The big news on the horizon, which is coming at us like a train, is the Syama North, we're really excited about that. It was a surprise. We've now got 34 million tons. That compares to our 25 million tons underground at Syama Mine, which is also growing.
That was really exciting. Open pit-able material, 2.9 gram a ton for over three million ounces. We will be announcing in the next couple of days, probably next week, the new maiden Ore Reserve on that, which we're very excited about. I can't talk about that today, but we actually spent quite a few hours looking at that this morning. Capital raise, as you know, that was successful. We were comfortable with that. Canaccord and Sprott really did a good job on that. We got what we wanted, slightly oversubscribed, which is great, and that settled our balance sheet for last year and put us in a strong position this year.
We're in line with our peers now with a net debt of about $30 million, which is a huge improvement from where we were at the start of the year. Exactly where we expected to be. If you go to slide four, you can see EBITDA, 23%, operating cash flow, 25%. Those are big improvements, and we expect to see those percentages climb going forward. Go to slide five. It's interesting to look now at the, we've been comparing our quarters on a quarterly basis. Obviously, if you look at the annual numbers, very, very useful to look at. Start with the bottom bar with the sulfides. This is all the material coming from underground, that we started in 2018.
You can see, 2020, we did 123,000 ounces, 2021, 135,000 ounces. Even though we stopped the mine, sorry, the plant in 2022 for 35 days, we did 161,000 ounces. A lot of that was from the 20,000 ounces that we found and got out of the gold in circuit after we fixed it in Q1, and that plant has been operating well with essentially those 20,000 ounces subsidizing the grade as it came up consistently from 2.4 to the 2.7 in the last two quarters that I mentioned. We're very excited with that, the improvements we got there, the reliability we're getting out of that plant now and the mine with the grade.
Going forward, we think we're in a solid position. If you look at the gray section above that, which is the open pit, if you remember, we took quite a lot of pain in 2021. We stopped the open pits in 2022 to put a lot of great control in place, and we started to see the benefit of that towards the end of the year, 62,000 ounces. You'll see, this following year, 2023, with the higher confidence we reckon now we're comfortably gonna get about 73,000 ounces out of the circuit there. If you look at Mako is a function of grade. We've been consistently running that plant at capacity, and the grade in the upper layers were pretty high. You can see under 70,000 ounces in 2020.
Grades came down to just over two grams a ton in 2021, 2022. In 2022, we squeezed a little bit more through the mill by putting a mill slicer on the system and I'll go into guidance on that a bit later on. I think the production improvements we're very comfortable with. We think we've put ourselves in a very good platform going forward for the next couple of years. At this point, I'm gonna hand over to Doug to take us through a bit more color on the earnings.
Thanks, Terry. Turning to the profit and loss on slide six of the presentation. Stepping through that revenue for the year was up 19% or $102 million due to a 13% increase in gold sold and a 5% increase in the gold price year-on-year. However, we have seen a substantial increase in costs with a 27% increase in cost of sales. After adjusting for increased material movements in 2022 and inventory movements, we estimate that the inflation impact on costs to be upwards of 15% for the year. With lower corporate and exploration costs partly offsetting these cost increases, EBITDA increased 14% to $148 million, with an EBITDA margin of 23% for the year compared to 24% in 2021.
The reported net loss after tax was $34.7 million. After adjusting for abnormal items of $55 million, the underlying net profit after tax was $20.3 million as Terry's mentioned. The majority of the abnormal amounts relate to provisions raised for the Senegalese tax exoneration matter and historical tax matters which are largely Mali and attributable to Mali, which together totaled $38.7 million. In respect to the Senegalese tax exoneration matter, this was first recognized in the 2021 financial statements you'll recall. We took an impairment as well as some provisions in the 2021 accounts. A reminder that this relates as to whether Mako is entitled to a five or a seven-year tax holiday.
We're currently six and a half years in to that tax holiday and continue to enjoy the benefits of the tax exoneration. We're confident that we'll formally achieve the seven-year tax holiday, which would end in the middle of this year. However, because of the notifications received from the government in late 2021, the Senegalese government, we have continued to book provisions that assume the exoneration period is not extended beyond five years. The historical tax adjustments largely relate to legacy tax matters in Mali, the majority of which we are either disputing or expect to be able to offset against VAT receivables. As we state in the notes there, approximately $3 million of this amount is the cash settlement that we're expecting in 2023, with the others being non-cash offset against VAT receivables, as I said.
The remainder of the abnormal items is a $16 million provision raised for obsolete store stock, which was taken up in the 2022 accounts. This has resulted from a year-end review where we've taken a conservative approach to provide for slow-moving consumables in the store. The majority of this provision relates to Syama, with just over $2 million of it pertaining to Mako. Turning to slide seven and the cash flow waterfall. Operating cash flow for the year of $161 million. CapEx was $63 million, which the major items included just under $22 million for tailing storage facilities, the majority of which was at Syama. $4.5 million associated with the roaster shutdown.
Remembering that I've, I think I've said previously that about five and a half million was spent on that in preparing for that with long lead items in 2021, but four and a half million for the 2022 year. Just under $28 million in stripping and development costs, made up of $8.6 million for Syama oxide, Mako of $15.7 million, and some underground development making up the remainder. If we aggregate the operating cash flow, CapEx exploration, and the working capital bars, we get to a free cash flow from the business for the year of $39 million.
Which together with the asset sale proceeds of $84 million, inclusive of Bibiani sale proceeds of $60 million, and the remainder attributable to our investments in Orca, Toro, and Oklo Shares, have helped pay down debt of $195 million in the year, which included $50 million off the term loan under the syndicated facility and $145 million worth of repayments on the revolving credit facility, $50 million of which is permanent amortization, the remaining $95 million being a voluntary pay down of that facility. Working capital of -$42.5 million includes a reduction in creditors of $28 million over the year, with the remainder being an increase in consumable stock.
As I said on the quarterly call, with monthly cash costs of around $45 million, we see the current level of creditors where they ended 2022 in the mid $60 million mark as being about the right level. A reduction during the year as a result. The increase in consumables is due to a combination of higher prices, meaning it costs us more to hold the same amount of inventory and some increase in volumes, which we should see rectify over the course of 2023, which were taken on due to concerns around sanctions in Mali. The government dividend and withholding tax relates to the dividend to the Senegalese government in relation to Mako. Turning finally to slide eight, net debt and the hedge book.
As a result of that free cash flow generated, plus the equity raise and the asset sales, net debt reduced from $229 million at the end of 2021 to $31.6 million at the end of 2022. Finish with cash and bullion of $94 million and $95 million in undrawn facility with total liquidity of $189 million. The hedge book comprised 172.5 thousand ounces in forwards at an average price of $1,886 an ounce. With that, I'll hand back to Terry to wrap up and take any questions.
Thanks, Doug. If we look at the guidance, we did put that out, and we're comfortable with that. We, Syama sulfide, 160,000 ounces at a cost of about $1,400, which we think we're gonna reduce our costs a little bit from last year. We think there could be a little bit of upside on the Syama sulfide if we can release more metal from GIC, it's gonna be a bit tougher this year. Obviously, though, our focus this year is gonna be costs. We've focused for 18 months now hard on the physical side, and we're gonna put the same attention now into the costs over this next year. We expect to see those costs coming down.
As I mentioned, the oxide, we think based on the grade control we've got now, which is nine months ahead compared to only a couple of weeks ahead previously, we're in a very comfortable position to be able to accurately say how many ounces we're gonna get out this year and at what cost. You can see there's a step down in cost there accordingly. Mako, as I mentioned, is a function of grade through its mine life. We're at below the two gram a ton this year, 117,000 ounces. That takes those costs up. However, I will mention, you'll see on the capital below on the non-sustaining, we're doing quite a bit of stripping for the next section of the mining over the next couple of years.
With that stripping cost going in, we're gonna get back to the following two years at 130,000-140,000 ounces, and those will be close to $1,100 or less because of that upfront cost taking place. We think $350 at $1,480, don't necessarily see much upside on the cost of Mako, but I do see some potential upside on the costs that still at the Syama and oxide as we still tinker with those circuits. These are excluding Syama North, which will only really kick in firmly in 2024. We're just waiting for the pre-feasibility on that, which will come out probably mid-year to be able to tell us what the upside will be and the guidance will be for 2024, 2025, 2026 at Syama.
On the CapEx guidance, this year at 34, you'll note there's no TSF big numbers there this year. We have got a little bit of a holiday on that for a couple of years now. All the TSF at Syama now finished. We're doing in-pit filling of tails, and then we've just got one final lift sometime next year on the Mako tailings dam. Some strip costs, and then Syama project costs, we're looking underground fleet replacement, et cetera, some miner sustaining cap projects. Non-sustaining, I've mentioned the Mako, that will open a lot of metal going forward. We're purchasing the Mako power plant. The contract came to an end. We had an option to purchase it. We are purchasing it.
We are in that number, enhancing it and improving the operation of that, essentially lowering the gas temperature or the ambient air temperatures going into the plant, which should reduce our diesel consumption and therefore operating costs for the rest of the life of mine, by about 10% on diesel there. We've got the expansion study projects. I mentioned the pre-fees will go straight into a FEED project study after that. We're also already started putting money into enhancement of the Syama sulfide circuit. We have already kicked off working on the crushing stages. Last but not least, on the exploration, we're again giving Bruce and his team $16 million. They have been finding gold for $10 an ounce last year. I expect that to continue.
Obviously the priority is Syama North. Mako, we know we've got four targets there we're chasing down. We're doing some work in Guinea. We're also, as part of that $16 million, we have already developed underground in the system, so we can actually start exploring from underground at the sub-level cave. We know we've got some higher grade materials in the Syama Underground South, and that would be accessed by long hole stoping rather than sub-level caving. It's in the inferred, but I'd say it's higher grade, so we'll be doing some work on that this year. That's only about 600 of that $16 million. With that, I'll hand you back to Melanie for questions.
Thank you. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Richard Hatch with Berenberg. Please go ahead.
Yeah, thanks. Morning, Terry and Doug, thanks for the call. Congrats on a decent set of numbers. Look, operationally, I think, we're good and it's good to see you guys keeping going on that. Congrats and keep up the good work. My questions are unfortunately very boring in relating to financials.
Thanks, Richard.
Indeed. An accountant apple doesn't fall far from the tree, right?
Exactly.
Doug, the questions on. Well, first one's on DNA. Doug, it's come down quite a lot, second half from what I can see. Versus previous years, it has been quite elevated, sort of, you know, running at that sort of, sort of over $100, $120 million sort of level. It's come down quite a lot this year. What is the kind of forward guidance for DNA, just so we can get our numbers right for earnings? That's the first one.
Yeah.
Yeah. Thanks, Richard. Come down largely because of the impairments taken last year. That's the primary reason. I think, you know, fair to say that relatively flat going forward is what we would expect. Obviously, Mako, shorter mine life, depends how far out you're going, but in the near- term, next few years, relatively flat.
Okay. Thanks. The second one's just on working cap. I mean, thanks for the color just in terms of inventories and such like. How should we think about working capital this financial year? How should we think about, you know, VAT, sort of cash flow, whether that impacts the cash flow on a negative basis or how should we think about that? Yeah, just be good to get some kind of color on your thoughts on working cap and tax, please. Thanks.
On the working capital, look, as I said, I think we've got to a decent, a reasonable level of creditors now, that we're in a stronger financial position, so I don't see that being a major swing factor. On the store stock, you know, now that the production performance has improved significantly, we're really, as Terry has said, focused on costs, and that includes the store. I think, you know, really shining a light on that and making sure that we are at appropriate levels in that store and reducing that working capital and chewing through the stores there as much as we can without obviously putting the operation at risk, is a clear focus.
You know, I won't be here, but I'd be very disappointed to hear if the store stock was going in the other direction. I think we'll see that come down this year as the operation really focuses on using what they've got and trying to minimize the working capital that's consumed in that area. Your other question was on tax and VAT.
Yes.
We are still trying to get the avenant signed. This has been going on for some time, before I even got here, in fact, which would give us exemption from that, those VAT payments, which obviously don't get refunded, but do in some way get recovered by offsetting other, usually legacy taxes as it's, as it's been. So until that is signed, we still have some VAT leakage, as it were. And that's, I can't give you a timeframe, but we, you know, we continue to hope that we'll be able to achieve that avenant signing. But to date, we haven't been able to.
Okay. The quantum of the VAT leakage is what?
It's a couple of $2 million-$2.5 million a month.
Okay. Cool. Okay.
That's net.
All right.
That's net of the royalties that we offset against-
Yeah.
-that VAT.
Okay.
That's.
Okay.
When I talk about that leakage, it depends on, you know, obviously what we're spending on site, but somewhere in that range of, you know, let's call it $25 million-$30 million a year.
Okay. All right. Helpful. All right. Cool. Thanks for all the hard work as the CFO and, all the best in the future.
Thanks, Richard. Appreciate it.
Thanks, Richard.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. We'll now pause a moment to allow for any final questioners to register. Thank you. We are showing no further questions at this time. I'll now hand back to Mr. Holohan for closing remarks.
Thanks, Melanie. Again, thank you for taking the time today. In closing, there's three things we're focusing on this year, and that is consolidation of all of which we've achieved on the production to make sure the systems carry it forward, organic growth, and operating cost reduction. It's as simple as that. Thank you very much. Bye-bye.
That does conclude our conference for today. Thank you for participating. You may now disconnect.