RESOLUTE Mining, the London- and Sydney-listed gold producer, did not anticipate producing less than the 400,000 ounces in gold to which it had previously guided investors. This was despite having lost sulphide processing capacity at its Syama operation in Mali for a large part of the remainder of the year.
The company said on October 10 it anticipated a material impact to production at Syama after staff discovered a crack in the exterior shell of a roaster – equipment that heats sulphide ores to high temperature in order to extract gold. The roaster required repairs.
In an update today, Resolute said the repair downtime would be six weeks costing $5m, but production losses would be ameliorated by a combination of remedial actions at Syama, higher than budgeted gold production at the firm’s Australian mine, Ravenswood, and the contribution of Mako Gold Mines, acquired in the takeover of Toro Gold in July.
Whilst the roaster was in repair, Resolute would also conduct other maintenance at Syama that would minimise routine maintenance downtime scheduled for 2020. Shares in Resolute responded positively to the news, gaining 9% in the first few hours of London trade.
The workaround at Syama will be to process oxide material through the mine’s sulphide circuit carbon-in-leach infrastructure. Historical stockpiled transitional ore mine from the Beta satellite open pit at Syama would be treated in order to do this, it said.
There would be a cost impact, however. “The impact of the roaster repairs will affect unit costs for the Syama sulphide circuit,” the company said. This impact would be disclosed in the publication of the firm’s September quarter numbers, set down for October 31. The company had previously guided to all-in sustaining costs of $960 per ounce.
The roaster breakdown is a timely reminder of how fortunes can change quickly in the mining sector. Resolute has had a breakthrough year: in addition to the $274m takeover of Toro Gold – which cements the firm as a 100,000 oz per quarter producer – it debuted on the London Stock Exchange amid a bull run in the gold price that analysts expect will continue in the short- to medium-term.
John Welborn, CEO of Resolute, has also struck a bullish note, telling Miningmx in August that the company remained on the lookout for merger and acquisition targets is it sought to bring UK investors a new gold investment following the delisting of Randgold Resources.
Resolute’s growth ambitions will also ring true with investors – such as Blackrock – who say single-asset mining companies are considered too fragile an option set against demand for cash flow and dividend flow, growing ESG and geopolitical risk, and market volatility.
