Welcome to the Resolute Mining conference call for the year-end, 31st December 2021. I would now like to hand the conference over to Mr. Stuart Gale, CEO. Please go ahead.
Great. Thanks, Ollie, and good morning, everyone. Thank you all very much for joining Resolute's preliminary financial results call. I'm joined this afternoon here in Perth with Doug Warden, our CFO, and our GM for Financing Investor Relations, James Virgo. We'll go over the 2021 results during this call. I'll make a few introductory remarks and then hand over to Doug to speak about the financials in a little bit more detail. At the outset, I think it's, you know, fairly clear that these results are dominated by a number of impairment, tax, and fair value changes. We've tried and will continue to try and simplify our results in the presentations, but appreciate that they're a fairly challenging read.
Doug will take you through these in more detail, and I'm sure he'll clarify any of the questions that you might have. First of all, during 2020 and then through 2021, we've transitioned our satellite oxide pit operations at Syama. We're now running purely from those satellite oxide pits following a really successful period of time at the Tabakoroni main pit. This has seen the oxide grades lowered, and it's seen us needing to move more waste and do more pre-stripping to enter these shorter life pits. From a sulphide perspective, our operations performed reasonably well this year and produced a little more gold than we have done in the prior year, 10%.
I think it's important to note that we had a pretty consistent performance through the roaster during the course of 2021, which was very positive. Roaster performance was at its highest level during 2021. No doubt that we still have a number of issues that we need to rectify, particularly from a maintenance perspective and a consistency of performance throughout those operations. At Mako, the cutback's gone well, and the team there have done a fantastic job and continue to deliver on targets. Pleasingly, the adoption of the MillSlicer and new technology's gone really well, and the team continue to consider opportunities to optimize the performance at Mako.
As Doug will allude to fairly shortly, when we look at our operations and the fundamentals of our operations, we can see that the performance year-on-year has been pretty consistent. The key changes that we see in our earnings really relate to a higher gold price and our realization of that higher gold price. The fewer ounces that were produced as a result, really, of the Mako cutback and lower grades at the oxides and also at Mako. The slightly higher costs were reflective really of that increased stripping, some inflationary aspects and a bit of unscheduled downtime that occurred during the year. What was really pleasing, though, is that we finished off 2021 very strongly.
The month of December was the highest performing month across all of our operations. What's also been very encouraging is that momentum has been carried into January and February. That's particularly important, obviously, as we've headed into the roaster shutdown, which started on the 18th of February. We're a few days into that. In reality, though, we've still got a fair number of things to improve on, and our focus remains on those productivity and efficiency initiatives and our focus on lowering that overall unit cost base. With that, I'll hand over to Doug now to run through the financials in a bit more detail.
Yeah. Thanks, Stuart, and I'll just talk to the financial slides in the presentation, the PowerPoint presentation that was released this morning. Turning to slide 10. As Stuart alluded to, for the year end of 2021, Resolute reported a net loss after tax of $367.5 million. Whilst clearly it's a disappointing result, it is important to note that it did include $298.5 million in non-cash charges. The main components of this, non-cash impairments of $227.5 million, which I'll cover later. Unrealized FX revaluations of $26.7 million on loan accounts, both the syndicated loan and an intercompany loan between Australia and a Malian entity.
Inventory NRV adjustments of $44.3 million, which largely relate to a change in the treatment of Mako low-grade stockpiles being reclassified to waste. We still plan to process those low-grade stockpiles towards the end of the mine life, but we have taken it out of inventory, hence the charge to the P&L. The impairment charges comprised of $167.4 million for Syama, which we took at the half year. That was reported back in August. As well as a $55 million impairment for Mako, which we've taken through the year-end results announced this morning.
The Mako impairment was a result of a recent notification we had from the Ministry of Mines and in Senegal that they did not intend to extend our exoneration period for tax from five years to seven years. We are disputing this position as we've outlined in our releases today, and we're firmly of the view that we've satisfied all relevant grounds for that exoneration to be granted, with the main one being the extension of the mine life, which we have done, for a period of two years. We'll continue to work with the Senegalese authorities to try and resolve this situation. However, at year-end, we had no choice but to take an impairment in relation to those taxes that we may have to pay if this was to be the case going forward.
The other thing I'd wanna point out is that there is a precedent in the country for a similar operation extending exoneration periods for a considerable period of time. We're confident that we'll be able to come to a successful outcome there. At year-end, that was the position we had to take. In addition to the tax impact, we've also taken a higher discount rate to the future cash flows, which has also contributed to the Mako impairment. Turning to the tax expense on slide 10. Obviously, this is quite a large number, so I'll just take a little bit of time to help you understand this. There's some notes there on slide 10, which will also assist. Essentially, we've got an income tax expense for the year of $64.4 million.
Of that number, about $41.5 million of that number, $41.5 million, we're currently disputing with various tax authorities. Most of these amounts are legacy items that date back several years and some as far back as seven years. It's as you can work out from the notes, I think $21 million of the disputed amounts have been offset by the Malian tax authorities against our VAT receivable. There's a further $3.5 million that's also been offset against the VAT receivable. It's important to note this, you know, whilst we are disputing it, that it's been offset and so it won't result in a cash outflow in respect of those offsets against the VAT receivable.
Turning to slide 11, Stuart's touched on a number of these points already, but just to outline the movements in the EBITDA from 2020 to 2021. The gold price was obviously a tailwind compared to 2020 and 2021, where we averaged $1,733 an ounce last year versus $1,562 back in 2020. The second bar there relates to grade. Stuart's already talked about it. Syama oxide, as we moved out of Tabakoroni to the satellite pits, we experienced average grades through the year of 1.4 g against 2.2 g in 2020. And Mako, partly as a result of the cutback, but also, the high grades that were experienced in 2020 of 2.7 g were more like 2.1 g for 2021.
As a result of that, you see the impact in that waterfall chart there. In terms of throughput recoveries, you know, the two more or less cancel each other out. Slightly higher throughputs with slightly lower recoveries, which are to a large extent, grade-related. The royalties reflect the lower gold sales. Turning to slide 12 and the cash flow waterfall, just to talk through some of the salient points here. The royalties there, number there you see from a cash outflow perspective is Mako-related with the Syama royalties being offset against our VAT receivable, which we've talked about in the past. VAT and tax. Well, the VAT that's paid relates to the VAT receivable that we have on our balance sheet, essentially.
We talked about in the December quarterly a couple of legacy payments that were made to settle historical claims from both Senegalese and Mali tax authorities. One was $9 million in relation to Senegal and $3.5 million in relation to a historical Mali matter. That's the $38.1 million. CapEx of $56.9 million. These have been largely well documented. Mako was about $15 million of that, largely relating to the cutback and some sustaining capital. Syama, you know, a component of the roaster shift, preparation for the roaster shift that's going on now. Some tailings storage facility lifts.
We've talked about things like the on-stream analyzer and various plant upgrades that have been made to try and enhance throughput and recoveries, as well as the purchase of underground equipment as we move from the contractor to owner-operator. The asset sale proceeds, that's largely the first tranche of Bibiani, $30 million, as well as a small amount from the sale of our Côte d'Ivoire exploration assets. Pleased to say that we received the second tranche of the Bibiani funds after year-end, this week, actually. We've received $60 million now of the $90 million, with a final $30 million due in August of this year. Just last couple of items. The net debt movement, we paid down $25 million, the first amortization installment on the term loan in September last year.
That's the majority of that amount and some movement back with that related to the overdraft facilities in-country for both Senegal and Mali. The government dividend and withholding tax. There's a reminder the Senegalese government holds 10% of the Mako mine, so that's their share of the dividend that was paid during the year as well as the withholding tax that applies to that dividend. Finally, our last slide for me, which is slide 13, just the net debt and the hedge book. Look, we went through this on the quarterly call. Net debt at $228.8 at year-end, largely unchanged from 2020. The hedge book, under our banking facilities, just a reminder that we're required to hedge 30% of the next 18 months of forecast production.
168,000 oz hedged at just under $1,800 an ounce at year-end with a small amount of euro there that you can see. That's all from me. With that, I'll hand over to Stuart to wrap up before we take some questions.
Yeah. Thanks, Doug. I think on the question front, we've got a little bit of a technical glitch going on, which is a bit disappointing. It doesn't look like we have the facility on this call, unfortunately, for questions to come through. I'm thinking that we might try and do a workaround. If you do have any questions, would you be good enough, please, to email them to James Virgo? His email address is jvirgo @rml.com.au. Okay, apologies for that. I'll just repeat that. The email address is jvirgo @rml.com.au. Apologies for that. Look, I'll just touch on a couple of things before we wrap it up and hopefully we get some questions come through to James' email address.
If that doesn't work, then please feel free to send emails through to myself, Doug or James, and we'll get back to you as soon as we can. Look, there's no doubt that 2021 was really a year of transition for us, and that was across a number of fronts. In particular, from a people perspective, it took us a while to get the core complement of people across our operations. I'm pleased to say now that we do have that core competency in situ. I think, you know, it's fair to say that they've been in situ now for at least the last quarter, maybe a little bit longer than that. That's really important.
No doubt we've seen the benefits of that in the strong performance during the December and January, February months. You can contrast that as well with Mako, where they have had a core group of people, a consistent group of people on site for a long time, and you know, have continued to deliver very positive results over that period. The other core transition, I suppose, has been a focus around our systems and processes. We've implemented a number of these initiatives, on-stream analyzers, cleaner cells, MillSlicer, management operating systems. Obviously the power plant got itself up and running as well.
We really haven't seen the full benefit of these initiatives flow through, so it's gonna be really important to capture the benefits of that capital and those productivity initiatives throughout 2022. For 2022, we set our guidance, as discussed previously, at 345,000 oz at an all-in sustaining cost $1,425 per ounce. You know, we are very conscious around that cost, and we are very focused on looking at those productivity and improvement initiatives to lower that cost base. Key to achieving those targets, of course, is gonna be the successful delivery of the roaster shutdown. As I said, that's ongoing at the moment.
It's not only about the roaster, but it's also about the, I guess, the upstream side to the roaster, where we're looking at our crushers, we're looking at our mills. We're looking at the location of pumps and the scale of the pumps, the cyclones and really a broad range of that sulphide processing plant. Really important to give everything a spruce up there. That's what we're looking to achieve in that 35-day shutdown. You know, we'll give you an update on that once that's all complete. The other key thing there is the maintenance program. You know, we have been very reactive on our maintenance over the last couple of years, I guess.
We really need to move from reactive to planned from a maintenance perspective and make sure that we move then into being more proactive around maintenance and ultimately getting to that sort of predictive stage. That's not a quick journey, but certainly, you know, we've got some actions and plans in place to improve that performance from a maintenance perspective. Haven't touched on exploration, but the exploration that was undertaken during 2021 was pretty successful, I think, really, because we were able to extend that oxide, those oxide mine lives. They are from the satellite pits, and we've got a number of satellite pits are on the go, Beta, A21, Splay, Gap.
There's a number of areas where we're in and out relatively quickly. The exploration team were able to identify resource and then we were able to bring some of those pits into production really very quickly. The coordination between the teams has been very, very positive on that front. In 2022, there'll be a bit more of the same with that. The focus, of course, from an exploration perspective, will be around our existing assets at Syama, where we're looking to identify further oxides and as well as that, really, extend the sulphide strategy. Tabakoroni has had some fantastic results and they've all been published, and we've seen the upgrade on the resource there.
Also the Northern Pit sulphide strategy, I think, needs a bit of work as well because those Northern Pits do contain, from the looks of it, quite a lot of sulphide ore that we probably haven't paid a lot of attention to over the last little period of time. Of course, balance sheet strengthening is really key for us as well. We received the second tranche of the Bibiani proceeds earlier in the week, so there's another $30 million that has just come in. Those proceeds will be applied to improve our balance sheet. That's really very key for us. I think there's definitely a debt overhang in the market, and we've got an ambition to have a lower gearing rate than what we currently do.
Just a reminder that the final tranche of the Bibiani proceeds of $30 million is due in August this year. From a sustainability perspective, I'm really pleased and proud of our response to COVID. It's presented a lot of challenges on a global basis, and I think the vaccination program that we've run across both Mako and Syama has been exemplary. We've vaccinated, double- dosed approximately 2,000 people together or in partnership with the governments there. I think that's a, you know, very good initiative and is looking after our people. Just as importantly, we've been able to adopt a program which really hasn't had any impact in terms of the operations of our mines.
Disruption has been very low from COVID throughout the course of the last year or the last two years really. Less pleasing unfortunately though has been the safety performance, and you may have noted that we've seen an increase in TRIFR at 1.25, which is a significant increase from last year. A lot of this is related to minor hand injuries and other minor injuries. You know, our focus is always on people's wellbeing, and is really very focused on ensuring that we send people home safely every day. To this end, you know, we need to do something about this. We need to be monitoring what's going on.
We've escalated our leadership interactions on that front, training programs, as well as implementing some critical hazard standards to ensure that we're managing the safety and well-being of our people. Before we get into any questions, I would just like to take a moment to thank all of our employees, contractors and people who have been associated with our operations. It's been quite a challenging year, and we've delivered a significant amount of change across our operations. We're very appreciative of the support and the effort that our teams have provided to us in terms of continuing to deliver production and make general improvements across the sites. I'll just pause there. We've got a couple of questions that have come through.
I'll read those questions out for everyone. The first one is, "What's the cash impact of the tax change if the five- to seven-year tax ruling stays in place?" That's obviously dealing with the Senegal exoneration and the challenge there. I would just say we're still working with the Senegalese government on that. They have said to us that they're reviewing the situation. We have some people in Dakar this week to continue discussions with the Ministry of Mines. We still remain hopeful that we will resolve that to our favor. In actual fact, there's no reason that we shouldn't be receiving that seven-year position.
Doug, did you want to comment just from a tax perspective and the cash impacts?
Yeah, sure. Thanks, Stuart. What we've modeled in the impairment is the worst- case scenario, so that we don't get anything. We've mentioned in the commentary that it was largely due to that with also the discount rate impact. I would say of the $55 million, that's obviously a net present value impact that represents. In present value terms, the impact would be around $50 million for the tax and about $5 million for the higher discount rate. I would stress that because of the conservative nature of the way accounts are prepared, that is a worst-case scenario, and we would hope that we would do a lot better than that.
Yep.
Second one?
Second one as well.
Yeah. You've got that, have you? What drove the obsolete inventory number of $44 million?
Yeah. That's the comment I made earlier about the NRV adjustment, which was largely around the Mako low-grade stockpile. If you go to the segment note, you can see it's broken down between Mako at $53.2 million debit, if you like, or charged to the P&L, and an $8.9 million credit for Syama. The Mako one was really the reclassification around how we treat low-grade stockpiles. In other words, no longer taking that to inventory and therefore writing it off. That's what that represents. Doesn't mean that we won't process that material, but we're just going to change the way we deal with it.
Great. Thanks, Doug. Question number three.
We're nearly three, two months into the new year, how are the ops running at Syama and Mako? Yeah, look, I touched on that briefly in the commentary. Yeah, they're running well. They're running certainly in line with our expectations, which is pleasing and you know, continues the momentum that we had through that month of December to finish 2021 off. You know, as we look at Syama and we look at the components there from a sulphide perspective and an oxide perspective, everything's moving along on target. So really nothing to call out specifically there through either January or the 24 days, well, 23 days in February so far.
I guess the important thing there is the roaster shutdown that started on the 18th. There's been a lot of planning that's gone into that roaster shutdown. As you'd all be aware, we had originally planned to start that in October, November last year, but given the extended wet season, it made it very difficult for that to occur, so we pushed it back. We've had all of the gear that we need on site. All the people are very well prepared, and we've got all the people on site now. There's at least 200 people that have come onto site in order to carry out those shutdown works. The roaster's being cooled down.
People are being inside the roaster, refractory is coming out, and as well as undertaking a number of other engineering activities as well, on the roaster and the upstream side of it, as discussed. That's going well. Look, Mako continues, you know. I mean, Mako really, as we've said it in a number of these quarterly calls, it just hits its targets day in, day out. The Mako team continue to do that. We're continuing to look at areas that we might be able to see slightly improved recoveries and management of that. The team are looking into a couple of things at the moment on that front. Look, nothing to see here.
We have also discussed our life of mine plans, our reserve and resources. You know, the plan for us is to publish those fairly shortly. That'll give a little bit of an update on how we're looking from a life of mine perspective across both of those sites. That'll be coming out fairly shortly. Fourth question, which is, can we run through the $72 million expense, fair value movements and unrealized treasury transactions? I think Doug can.
Yes, sure. Yeah. Slide 10, which is in your packs, the reference there, the third bullet point under the non-cash impacts, it's the foreign currency or foreign exchange revaluation of the loan accounts is $26.7 million of that number. The inventory NRV adjustments that I've just been talking about of $44.3 million make up the rest of that number. Just to explain the foreign currency revaluation, they're unrealized losses that relate to two loan accounts. The first one, and again, it's in the segment note, where it references unrealized foreign exchange loss of $17.1 million relates to the revaluation of the U.S. dollar syndicated debt facility that we have being revalued into effectively the Australian company's Aussie dollar accounts.
Perversely, when we're U.S. dollar reporting, we have this noise coming through the P&L created by that dynamic. The company that loans that money is an Australian company, has an Aussie dollar functional currency. Hence we get the reval coming through, which is somewhat perverse, I know. The second amount is $11 million, and this one's even a bit more strange. It's an intercompany loan, Australian dollar loan between the parent, obviously, and the Malian entity that owns Syama. Again, it's a revaluation that occurs every year and that $11 million relates to that. It's essentially the loan has to be repaid in Aussie dollars, theoretically. It's intercompany. The Malian entity is a CFA entity from a currency perspective. That's what's going on there.
Unrealized FX impacts of $26.7 million and the inventory adjustment that I've always referred to as non-cash of $44.3 million makes up that $72 million there.
Great. Thanks, Doug. Yeah, look, a lot of ins and outs on that one, so challenging for us. It's a little bit of a legacy that we're dealing with some of these historical balances and something that we are trying to get a little bit more simplicity into our accounts. Look, that looks like the end of the questions. I'll just conclude by thanking you all for joining today. Sorry about the confusion on Teams with the questions, but I think we've managed this reasonably well. Please feel free to reach out to Doug, James or myself if you do have any other questions.
Look, I guess I'll just leave you with the thought that, you know, we've taken a number of important initiatives during the course of a challenging 2021. We've got a really good team of people on the ground at our operations who are very focused on improving the underlying performance of the business. And that has been a key theme for us, as we've entered 2022. As just alluded to, from a corporate perspective, there's still a number of outstanding issues. You see a lot of those outstanding issues sitting there in the tax, I guess the tax and government relations space. Again, it's an area that we're focused on improvement, and we're working with the governments reasonably well in terms of delivering and improving on that, getting a better understanding of where we're going.
The production momentum from December, as said a couple of times, has continued into January and February. That's really positive for us from a shutdown perspective, and the shutdown is going well. You know, I'll look forward to providing you with a bit more of an update on how all of that's gone together with the production, I guess, at the March quarterly, if not before that. With all of that, I will again thank you for your time this morning and sign off. Cheers.