The assessment followed a review of Resolute’s operating subsidiary at Golden Pride by a government appointed auditor, with Resolute saying the review “purports that [Resolute] has not been able to substantiate the capital development costs and operating costs associated with Golden Pride”

Resolute, however, is strongly disputing the tax claim.

“The company is surprised to receive this assessment and is currently working on gaining a better understanding of the rationale (or lack there of) behind the assessment,” Resolute said in a market statement.

“The assessment, in the company’s opinion, contains fundamental and material errors, has no substance or foundation in fact, and its issue appears to be a serious breach of due process.”

Resolute said it was considering remedies, and would also seek a waiver of the rule that says any appeal against assessments requires the lodgement of one-third of the assessed amount – in this case $US10.66 million – as a deposit with the tax authorities.

Golden Pride produced just under 150,000 ounces last financial year at a cash cost of $US269/oz. It was far and away the most profitable of Resolute’s two mines, with the Ravenswood mine in Queensland producing 165,522oz at $A495/oz.

Resolute’s full year net operating profit was $A13.9 million. The company had cash and bullion of $A38.7 million at June 30 (plus liquid investments worth $A9.1 million), and borrowings of $A30.2 million.

Investors took flight with today’s news, with the stock closing down 20c at 95c.

Update
Shares in Resolute were down a further 7c at 88c in afternoon trade.