REG - Resolute Mining Ltd - March 2023 Quarterly Activities Report
27/04/2023 07:00
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RNS Number : 6683X Resolute Mining Limited 27 April 2023
27 April 2023
Quarterly Activities Report
For the quarter ending 31 March 2023 ('March quarter' or 'the Quarter')
Highlights
· Total Recordable Injury Frequency Rate (TRIFR) increased to 0.85 from
0.41 in the preceding Quarter
· Quarterly production (gold poured) of 92,259 ounces (oz), the sixth
consecutive quarter of increased production
· All-In Sustaining Cost (AISC) of $1,453/oz for the Quarter, a 6%
reduction from the December quarter benefiting from a build up of stockpiles
at both Syama and Mako
· Quarterly gold sales of 88,151oz at an average realised gold price in
line with the average spot price of $1,890/oz compared to 93,326oz at an
average realised gold price of $1,817/oz in the previous quarter
· Cash generation of $16.2 million excluding debt, interest payments,
working capital and other movements
· $25 million was repaid on the Group's term loan facility, and $5
million was repaid on the Revolving Credit Facility (RCF)
· Net Debt of $19.9 million (down 37% from $31.6 million), including
Cash and Bullion of $75.8 million. Available liquidity (Cash, Bullion and
undrawn RCF) of $155.8 million
· Ore Reserves and Mineral Resource Statement released on 8 March 2023
indicating a 15% (0.6Moz) increase in Ore Reserves to 4.6Moz and an 18%
(1.7Moz) increase in Mineral Resource to 11.2Moz of gold, both net of
depletion
· Syama North Mineral Resources increased to 3.2Moz, and Ore Reserves
increased to 854koz
· Syama North prefeasibility study (PFS) on track, with expected
outcomes to be available mid-2023
· On track for full year guidance for 2023 of 350,000oz at an AISC of
$1,480/oz
Note: Unless otherwise stated, all dollar figures are United States dollars
($).
Resolute Mining Limited (Resolute, the Company or the Group) (ASX/LSE: RSG) is
pleased to present its Quarterly Activities Report for the period ended 31
March 2023.
Terry Holohan, CEO and Managing Director, commented, "I am pleased to report
another solid quarter for Resolute, recording a sixth consecutive increase in
production with 92,259 oz of gold poured, underpinned by improved productivity
at all three mines (Syama Sulphide, Syama Oxide and Mako). This is a
significant achievement especially given the pre-planned seven day downtime
for roaster maintenance at the Syama Sulphide operations, towards the end of
the Quarter. Costs for the Quarter improved 6% compared to the December
quarter, benefiting from stockpile build up, as the Company mined more
material than was processed across all sites.
"The Company's focus for the remainder of 2023 at Mako is on the planned pit
extension, with mining for the remainder of the year through a lower grade
section. The Company expects the June and September quarterly production
levels to decrease marginally as the operations move through this section of
the pit. Once the extension is complete, operations at Mako will return to the
higher grade ore and benefit from lower stripping ratios, thus enabling higher
production for the remainder of the mining life, out to 2025.
"At Syama, the emphasis remains on progressing the Syama North PFS, with
expected outcomes to be available mid-2023. The Scoping study supports a low
capital expansion costing between $40 - $50 million for items that will
increase the sulphide processing capacity by up to 60% from a nominal 2.4
million tonnes per annum (Mtpa) capacity up to 4.0Mtpa with an expected
lowering of unit operating costs.
"The overall Company focus remains on reducing costs across both operations,
whilst maintaining the improved production particularly at Syama, with a
number of initiatives already underway across the Group."
Operations Overview
The Company's performance compared to the previous quarter and the prior
comparable quarter, is set out below:
Mining
Ore Mined t 1,901,682 1,831,293 4% 1,649,964
Mined Grade g/t 2.24 2.03 10% 1.88
Processing
Ore Processed t 1,471,547 1,536,503 (4%) 1,275,252
Processed Grade g/t 2.33 2.10 11% 2.01
Recovery % 85.2 86.3 (1%) 87.7
Gold Poured oz 92,259 91,777 1% 81,770
Sales
Gold Sold oz 88,151 93,326 (6%) 88,773
Average Realised Price $/oz 1,890 1,817 4% 1,846
Costs
AISC $/oz 1,453 1,547 (6%) 1,383
Table 1: Resolute Group Operational Performance Summary
Refer to the Appendix for Resolute's production and costs for the March 2023 Quarter.
Environmental Social Governance
Resolute's TRIFR at 31 March 2023 was 0.85, an increase compared to the
previous quarter, due to a rise in first aid and medical treatment injuries,
especially at Syama. Corporate and Site management teams are monitoring the
incidents and working on strategies to raise awareness on behavioural-based
safety, which has been the root cause of the majority of those incidents.
Following the award of the International Organization for Standardisation
(ISO) certification for ISO:45001:2018 (Occupational Health & Safety) and
ISO:14001:2015 (Environmental Management Systems), the Company is focusing its
efforts on closing out follow-up actions, in preparation for Year 1
surveillance audits, which are scheduled for later in the year.
Syama, Mali
The Syama sulphide operation produced 41,142oz, a decrease of 5% from the
prior quarter. AISC remained in line with the prior quarter at $1,389/oz. The
oxide operations had another steady quarter with production of 17,513oz at an
AISC of $1,659/oz. Further details of these two operations are set out below.
Syama sulphide
Ore Grade Ore Grade Recovery Gold Poured AISC
(t) (g/t) (t) (g/t) (%) (oz) ($/oz)
December 2022 665,297 2.74 561,475 2.83 79.1 43,508 1,400
March 2023 630,445 2.86 549,072 2.99 79.1 41,142 1,389
Table 2: Sulphide Production and Cost Summary
The underground mined grade increased to 2.86g/t from 2.74g/t in the prior
quarter, this was as per schedule with the current mine sequence and areas
mined. Ore volumes mined remained high for the Quarter to allow a build-up of
stockpiles to provide a strong position leading into the middle of the year
and the coming wet season.
Ore processed was comparable with the previous quarter with the processing
grade increasing to 2.99g/t with preferential ore blending delivered from the
underground. Gold poured reduced 5% to 41,142oz impacted by a planned
seven-day roaster shutdown towards the end of the Quarter to complete minor
maintenance work on the fluoseal return leg to the roaster.
AISC of $1,389/oz reduced from the December quarter, with cash costs remaining
in line with December and a reduction in gold drawn from the circuit.
Syama oxide
Ore Grade Ore Grade Recovery Gold Poured AISC
(t) (g/t) (t) (g/t) (%) (oz) ($/oz)
December 2022 384,996 1.55 430,882 1.41 88.0 17,834 1,693
March 2023 495,293 1.83 421,203 1.56 84.9 17,513 1,659
Table 3: Oxide Production and Cost Summary
The majority of the ore mined of 495,293t was sourced from the Tabakoroni
pits. Additionally, mining commenced at the Folona pit during the Quarter.
The increased mined grade provided an 11% increase to the processed grade,
partially offset by a lower recovery rate due to high organic carbon in the
mill feed resulting in gold poured of 17,513oz in line with the December
quarter.
Oxide AISC/oz reduced by 3% from the December quarter to $1,659/oz with
operational costs increasing due to the increase in volume mined during the
Quarter, offset by build-up of ore stockpiles and gold in circuit.
Mako, Senegal
Mako gold production for the Quarter was 33,604oz at an AISC of $1,307/oz. The
operational performance for Mako is set out in the table below.
Ore Grade Ore Grade Recovery Gold Poured AISC
(t) (g/t) (t) (g/t) (%) (oz) ($/oz)
December 2022 781,000 1.68 544,146 1.91 92.3 30,435 1,520
March 2023 775,944 1.99 501,272 2.26 92.3 33,604 1,307
Table 4: Mako Production and Cost Summary
Ore mined at Mako remained in line with the December quarter. Throughput
decreased 8%, due to a mill reline during the Quarter. The mill feed grade
increased by 18%, reflecting a higher mine grade, resulting in a 10% increase
in gold poured of 33,604oz from the prior quarter.
AISC decreased 14% to $1,307/oz, with increased gold poured and reduced
sustaining capital spend. Total operational costs remained in line with the
prior quarter, with a build-up in stockpiles.
The Company completed the acquisition of the Mako power plant during the
Quarter. This purchase will reduce the ongoing operational overheads for power
generation at the mine site.
Gold poured at Mako will decrease over the remainder of the year as the focus
moves to the Stage 6 pit extension. During this period, the Company will be
mining through a lower grade section in the Mako pit.
Exploration
Total exploration spend for the March quarter was $5.2 million, primarily on
Syama North.
An updated Mineral Resource estimate for Syama North was announced on 19
January with an increase to 34 million tonnes at 2.9g/t Au for 3.18 million
ounces.
The drilling program at Syama North is ongoing and will be extended throughout
2023 with the expectation of increasing the Mineral Resources. The sulphide
mineralisation remains open at depth and appears to be contiguous along the
entire 6km strike length of the Alpha to A21 deposits.
Infill drilling will continue similarly to the previous period to convert more
of the 1.3 million ounces of Inferred resources to indicated in the updated
Resource Model.
To date exploration drilling has been restricted to zones within 150m of the
surface to concentrate on identifying open pit extractable Mineral Resources.
This was increased to 200m below surface at the centre of A21 where the
mineralisation widens sufficiently to enable recovery by open pit mining.
It is expected Resolute will be able to provide a further updated Mineral
Resource model for Syama North during Q3 2023.
During the Quarter, the Company released its 31 December 2022 Ore Reserves and
Mineral Resource Statement. Refer to ASX announcement entitled "Ore Reserves
and Mineral Resource Statement" dated 8 March 2023. The Global Mineral
Resources increased by 1.7Moz to 11.2Moz (net of depletion), with the Mineral
Resource at Syama North increasing to 3.2Moz. Ore Reserves increased to 4.6Moz
(net of depletion), with Ore Reserves at Syama North increasing to 854koz,
with 10% (85koz) being oxide material.
Syama North prefeasibility study
The Syama North PFS is progressing and is forecast to be completed and
presented to the Company board for project stage gate approval in the third
quarter of 2023. The maiden reserves for the Syama North Sulphide deposits
were published early this year and form the basis for the expanded Sulphide
processing capacity.
A Scoping study was completed in the first quarter of 2023, in which lead
engineering consultancies investigated several low capital options with
various processing capacity rates, along with the corresponding mine
schedules. Initial mine schedules confirm that Syama North can deliver the
required ore to the modified process plants over the eight years of the
project life.
The Scoping study confirmed the robustness and viability of the project, and
the most feasible option was selected to progress the PFS, which would see the
overall Sulphide processing capacity increase by more than 60% from a nominal
2.4Mtpa to a nominal 4.0Mtpa.
This increase in capacity will be achieved by making modifications to the
existing Oxide comminution circuit to enable it to process Sulphide ore and
includes modifications to the roasting circuit and Calcine carbon-in-leach
circuit to handle the increased throughput as well as expansions to
non-process infrastructure. A key design feature of the modified comminution
circuit is it will be able to be switched to treat either Oxide ore, or
Sulphide ore, both at a throughput rate of 1.6Mtpa. The circuit will be able
to switch ore types within one shift. A new flotation circuit will be added
downstream from the modified comminution circuit to produce concentrate when
the circuit treats Sulphide ore. The concentrate from this modified
comminution circuit and the concentrate from the existing Sulphide flotation
circuit will be blended and treated in the roasting circuit to produce
calcine, which will be leached in the existing calcine carbon-in-leach
circuit.
The new comminution and flotation circuits will enable overall concentrate
production to be higher than the roasting circuit can process. Excess
concentrate will be stored in ponds to be reclaimed and treated while the
comminution circuit is treating oxide ores. This flexibility is a key focus of
the project, which will allow calcine production at full roaster throughput
capacity, taking full advantage of the enhancements made to the roaster in the
2021 shutdown, when the modified comminution circuit is switched to treat
Oxide ore, but also provides concentrate inventory to continue calcine
production if one of the flotation circuits were not available.
When the modified comminution circuit is switched to treat Oxide ore from
Syama North or from future discoveries, the resulting Oxide slurry will be
leached in the existing Oxide carbon-in-leach circuit.
Assessments have also been carried out to further increase the roasting
circuit throughput with lower capital options than those initially
anticipated. The addition of oxygen to manage the next phase of expanded
throughput capacity remains an option for the roasting circuit.
The PFS is expected to build on the results from the Scoping study to confirm
a robust and executable project, with key activities during the second quarter
of 2023 including the following:
· geotechnical drilling within the open pit designs
· advancing regulatory approvals
· infill drilling to increase the Ore Reserves
· further metallurgical test work and PFS-level engineering
· investigation of opportunities to optimise capital and maximise
cash flow, preparation of operational and capital cost estimates
· engagement with the Local community to increase their
understanding of the project
The delivery of the project is expected to be during the first half of 2025,
assuming the results of the PFS support the initial Scoping outcomes.
Corporate
Quarterly Cash and Bullion Movements
(*Included in Operating Cash flows are $5.1 million of royalties, $13.0
million of VAT and taxes, and movements in Bullion.)
Chart 1: Quarterly Cash and Bullion Movements
The average realised gold price achieved for the Quarter was $1,890/oz in line
with the average spot price of $1,890/oz. Debt repayments consisted of $25.0
million on the Term Loan Facility and $5.0 million on the RCF (now fully
undrawn). Working capital and other comprises of an inflow of $2.4 million for
creditors and consumables movements offset by overdraft movements, government
dividends and other taxes for a net outflow of $0.9 million.
Balance sheet
Net debt decreased by $11.7 million to $19.9 million at 31 March 2023.
Available liquidity of $155.8 million including cash of $54.0 million, bullion
of $21.8 million, and undrawn RCF of $80.0 million. Total borrowings at 31
March 2023 were $95.7 million, comprising $50.0 million on the Term Loan
Facility and $35.6 million and $10.1 million on the overdraft facilities in
Mali and Senegal, respectively.
Hedging
At 31 March 2023, Resolute's forward sales commitments were:
June 2023 $1,900 55,000
September 2023 $1,919 60,000
December 2023 $1,926 59,000
March 2024 $1,940 42,500
Total $1,920 216,500
Table 5: Committed Hedging Forward Sales in US dollars
As well as the above, the Company has in place 12,000oz of zero cost collars
maturing in the March 2024 quarter. These comprise of put options at an
average strike price of $1,600/oz and call options with an average strike
price of $1,873/oz.
Resolute maintains a policy of discretionary hedging in compliance with its
funding obligations, requiring a minimum of 30% of the next 12 months of
forecast production to be hedged.
Reporting Calendar
25 May 2023 - Annual General Meeting
27 July 2023 - June Quarterly Activities Report
Investor and analyst conference call
Resolute will host a conference call for investors, analysts, and media on
Thursday, 27 April 2023, to discuss the Company's Quarterly Activities Report
for the period ending 31 March 2023. This call will conclude with a
question-and-answer session.
Conference Call (pre-registration required)
Conference Call: 4:30pm (AEST, Sydney) / 7:30am (BST, London)
Pre-Registration Link: https://s1.c-conf.com/diamondpass/10030292-hd94u6.html
(https://s1.c-conf.com/diamondpass/10030292-hd94u6.html)
Participants will receive a calendar invite with dial-in details once the
pre-registration process is complete.
The Conference Call will also be streamed live online at:
https://webcast.openbriefing.com/rsg-qtr-2023/
(https://webcast.openbriefing.com/rsg-qtr-2023/)
About Resolute
Resolute Mining (ASX/LSE: RSG) is an African gold miner, developer, and
explorer with more than 30 years of experience across Australia and Africa. To
date the Company has produced over nine million ounces of gold. It currently
operates the Syama Gold Mine in Mali and the Mako Gold Mine in Senegal.
Resolute's gold production and cost guidance for 2023 is 350,000oz at an AISC
of $1,480/oz.
Through all its activities, sustainability is the core value at Resolute. This
means that protecting the environment, providing a safe and productive working
environment for employees, uplifting host communities, and practicing good
corporate governance are non-negotiable priorities. Resolute's commitment to
sustainability and good corporate citizenship has been cemented through its
adoption of and adherence to the Responsible Gold Mining Principles (RGMPs).
This framework, which sets out clear expectations for consumers, investors,
and the gold supply chain as to what constitutes responsible gold mining, is
an initiative of the World Gold Council of which Resolute has been a full
member since 2017. The Company is on track to reach full compliance with these
RGMPs in 2023.
Appendix
March 2023 Quarter Production and Costs (unaudited)
UG Lateral Development m 1,136 - 1,136 - 1,136
UG Vertical Development m - - - - -
Total UG Development m 1,136 - 1,136 - 1,136
UG Ore Mined t 630,445 - 630,445 - 630,445
UG Grade Mined g/t 2.86 - 2.86 - 2.86
OP Operating Waste BCM - 1,943,569 1,943,569 1,830,086 3,773,655
OP Ore Mined BCM - 233,629 233,629 275,502 509,131
OP Grade Mined g/t - 1.83 1.83 1.99 1.91
Total Ore Mined t 630,445 495,293 1,125,738 775,944 1,901,682
Total Tonnes Processed t 549,072 421,203 970,275 501,272 1,471,547
Grade Processed g/t 2.99 1.56 2.36 2.26 2.33
Recovery % 79.1 84.9 81.6 92.3 85.2
Gold Recovered oz 41,575 17,954 59,529 33,682 93,211
Gold in Circuit Drawdown/(Addition) oz (433) (441) (874) (78) (952)
Gold Poured oz 41,142 17,513 58,655 33,604 92,259
Gold Bullion in Metal Account Movement (Increase)/Decrease oz (916) (59) (975) (3,133) (4,108)
Gold Sold oz 40,226 17,454 57,680 30,471 88,151
Achieved Gold Price $/oz 1,890
Mining $/oz 507 543 518 729 595
Processing $/oz 511 587 534 396 484
Site Administration $/oz 151 301 196 116 167
Site Operating Costs $/oz 1,169 1,431 1,248 1,241 1,246
Royalties $/oz 113 108 111 85 104
By-Product Credits + Corp Admin $/oz (2) (2) (2) - 38
Total Cash Operating Costs $/oz 1,280 1,537 1,357 1,326 1,388
Sustaining Capital + Others $/oz 94 207 127 5 83
Total Cash Expenditure $/oz 1,374 1,744 1,484 1,331 1,471
Inventory Adjustments $/oz (11) (111) (41) (56) (46)
Asset Reclamation & Remediation $/oz 26 26 26 32 28
Total Non-Cash Adjustments $/oz 15 (85) (15) (24) (18)
All-In Sustaining Cost (AISC) $/oz 1,389 1,659 1,469 1,307 1,453
AISC is calculated on gold poured
Cautionary Statement about Forward-Looking Statements
This announcement contains certain "forward-looking statements" including
statements regarding our intent, belief, or current expectations with respect
to Resolute's business and operations, market conditions, results of
operations and financial condition, and risk management practices. The words
"likely", "expect", "aim", "should", "could", "may", "anticipate", "predict",
"believe", "plan", "forecast" and other similar expressions are intended to
identify forward-looking statements. Indications of, and guidance on, future
earnings, anticipated production, life of mine and financial position and
performance are also forward-looking statements. These forward-looking
statements involve known and unknown risks, uncertainties and other factors
that may cause Resolute's actual results, performance and achievements or
industry results to differ materially from any future results, performance or
achievements, or industry results, expressed or implied by these
forward-looking statements. Relevant factors may include (but are not limited
to) changes in commodity prices, foreign exchange fluctuations and general
economic conditions, increased costs and demand for production inputs, the
speculative nature of exploration and project development, including the risks
of obtaining necessary licences and permits and diminishing quantities or
grades of reserves, political and social risks, changes to the regulatory
framework within which Resolute operates or may in the future operate,
environmental conditions including extreme weather conditions, recruitment and
retention of personnel, industrial relations issues and litigation.
Forward-looking statements are based on Resolute's good faith assumptions as
to the financial, market, regulatory and other relevant environments that will
exist and affect Resolute's business and operations in the future. Resolute
does not give any assurance that the assumptions will prove to be correct.
There may be other factors that could cause actual results or events not to be
as anticipated, and many events are beyond the reasonable control of Resolute.
Readers are cautioned not to place undue reliance on forward-looking
statements, particularly in the significantly volatile and uncertain current
economic climate. Forward-looking statements in this document speak only at
the date of issue. Except as required by applicable laws or regulations,
Resolute does not undertake any obligation to publicly update or revise any of
the forward-looking statements or to advise of any change in assumptions on
which any such statement is based. Except for statutory liability which cannot
be excluded, each of Resolute, its officers, employees and advisors expressly
disclaim any responsibility for the accuracy or completeness of the material
contained in these forward-looking statements and excludes all liability
whatsoever (including in negligence) for any loss or damage which may be
suffered by any person as a consequence of any information in forward-looking
statements or any error or omission.
Authorised by Mr Terry Holohan, Managing Director and Chief Executive Officer
Contact
Resolute Public Relations
James Virgo, GM Finance, and Investor Relations Jos Simson / Emily Moss, Tavistock
contact@rml.com.au resolute@tavistock.co.uk
+61 8 9261 6100 +44 207 920 3150 / +44 7788 554 035
Corporate Broker
Jennifer Lee, Berenberg
+44 20 3753 3040
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