Resolute shares recover from five-year low after firm increases Syama output forecast

Stuart Gale, CEO, Resolute Mining

SHARES in Resolute Mining responded to a company statement today that the optimisation of its Syama mine in West Africa’s Mali would yield higher average annual gold output during the mine’s forecast 11-year life.

The company was trading at 48 Australian cents a share after having earlier traded at 42 cents/share, a five-year low. Pressure on Resolute shares was owing to a decline in the dollar gold price and the confiscation of its mining lease at Bibiani, a mine in Ghana it was hoping to sell for $105m.

In terms of the production upgrade, Resolute has forecast gold output of 250,000 to 300,000 ounces a year at an average all-in sustaining cost (AISC) of $1,000/oz from now until 2029. This compares to 2020 production of 214,360 oz at an average AISC of $1,203/oz.

“We are very pleased to release our latest plans for the Syama operations, which highlight an improved production and cost profile over the current 11-year mine life,” said Stuart Gale, interim CEO of Resolute Mining. “This follows a period of exploration and mine design work at the Tabakoroni Underground together with the extension of our oxide operations.”

Further extensions of Syama were possible, he said. The company was also looking at the extension of mine life at Mako, a mine Resolute operates in Senegal.

Resolute has forecast total gold production of 350,000 to 371,000 oz this year.

The company said in March that should the sale of Bibiani not be completed, it would nonetheless continue to deleverage the balance sheet which is one of the other concerns investors have about the company’s prospects.

It would generate sufficient operating cash flows to support debt repayments of $50m in 2021 including the early repayment of $25m over and above the minimum debt repayment obligations of $25m which are due in September 2021, it said.

Net debt as of December 31 stood at $230m, a 28% year-on-year reduction, after taking into account cash and bullion of $106m.