Mali political ructions part of solution, not the problem, says Resolute Mining MD

John Welborn, former CEO, Resolute Mining

THE political ructions this month in Mali were “part of the solution”, said John Welborn, MD of Resolute Mining, the Sydney- and London-listed gold mining firm.

“We have been watching the protests growing in the past two months, but really [the problems started] from the re-election [of now ousted president Ibrahim Boubacar Keita] last year,” said Welborn.

“It is disappointing to see the impact on our share price … but we have seen this before in 2012,” he said of how political insurrection left Mali’s legal, industrial and supply infrastructure intact. “We are getting fuel, the courts of working, the airport is open. The day to day running of the mine is the same as two weeks ago.”

Resolute’s flagship Syama mine, which returned to full production following a mill outage, is situated in Mali. The company has recently reopened its office in the country’s capital, Bamako; it had been closed for a week.

Keita announced on August 19 that he would step down in order to avoid further bloodshed in the country which had been mired in civil strife since he re-election in 2018. His administration faced increased opposition over a rise in jihadist violence and an economic crisis. In July, Keita announced the dissolution of the country’s constitutional court in an attempt to calm unrest.

Resolute reported a $5.2m half-year taxed loss amid noisy financials largely affected by amortisation and depreciation costs likely to persist for the remainder of the year. The firm’s balance sheet was also busy as Resolute concluded an equity raise, closed a royalty stream attached to its Mako mine in Senegal, and sold Ravenswood, a mine in Australia.

Production, however, came in at 217,946 ounces putting the company on track for full year production of about 430,000 oz which it anticipates producing at an all-in sustaining cost (AISC) of $980/oz compared to the first half AISC of $1,020/oz (which included the Ravenswood mine).

The company was working through Australian dollar denominated hedge obligations which has capped the revenues relative to the firm’s gold producer peer group. It received an average gold price of $1,427/oz against current spot prices north of $1,900/oz. Another issue was a dispute with the Mali inland revenue authorities over VAT owing.

Resolute CFO, Stuart Gale, said the VAT issue would be stuck within government for the foreseeable period whilst it worked through the political crisis. In the meantime, Resolute would offset the VAT amount against royalties owing.