Resolute interim CEO, Stuart Gale, “under no misconception” positive cash flow is critical

Stuart Gale, interim CEO, Resolute Mining

RESOLUTE Mining interim CEO, Stuart Gale, said there was “no misconception” among the company’s executives that the task was to return the company to positive cash flow.

Commenting three days after the company parted ways with its CEO, John Welborn, Gale said that the 15% production decline in the third quarter was nearly equal to $30m in cash. “If we get that we are cash positive. There’s no-one here under any misconception that that is what we are here to do,” he said.

Gale, the firm’s CFO, was commenting following the publication of third quarter numbers which were negatively affected by a short strike at its flagship Syama mine in Mali.

Resolute announced on October 19 that Welborn, CEO of five years, had stepped down with immediate effect. “John has worked hard to reposition and transform the business … and the time is right to introduce a new CEO to take Resolute forward to deliver improvement in operational outcomes and resilience,” said Resolute chairman, Martin Botha.

Resolute announced in September that production for 2020 would be at the lower end of re-stated guidance of some 400,000 to 430,000 oz following the strike, whilst costs would be consequently at the higher end of restated guidance of between $980 to $1,080/oz.

The share has been under pressure since July and fell another 6% today on the Australian Stock Exchange. On a one year basis, shares in Resolute had fallen 26% which compares to improvements at Perseus Mining and Centamin – African-focused gold companies with similar-sized production – of 78% and 28% respectively in share price.

Net debt had also increased nearly $15m to $234.4m quarter-on-quarter owing to the Syama disruption.

Gale said that concerns over procurement and supplies had eased after the ECOWAS group of nations near or bordering Mali had lifted sanctions. The sanctions had been imposed on the West African country in the wake of the toppling in July of its unpopular president, Ibrahim Boubacar Keita.

However, getting VAT payable out of the Mali government was “a tricky business” and “slow going” owing to the political situation in the country, said Gale. In the meantime, the company was offsetting royalties due to the government in lieu of receiving the VAT.

Gale also said the company was proceeding with the sale of the firm’s mothballed Bibiani mine in Ghana. Access to the mine for due diligence purposes had been limited owing to Covid-19 travel restrictions. However, Ghana had recently reopened its borders so finalisation of disposal would be before the year-end, he said.