REG - Resolute Mining Ltd - Group 3 Year Forecast and Update to 2023 Guidance

Resolute MiningAnnouncement

13/10/2023 07:45

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RNS Number : 0569Q  Resolute Mining Limited  13 October 2023

13 October 2023

Group Three-Year Forecast and Update to 2023 Guidance

Total group gold production of over 1,000,000 oz from 2024 to 2026

 

Resolute Mining Limited ("Resolute" or "the Company") (ASX/LSE: RSG) is
pleased to provide an operational forecast for the Syama mine and Mako mine
for the three years of 2024 to 2026 as well as providing an update of 2023
Guidance.

Over the next three-years we are expected to see strong growth from the Syama
sulphide operations, with the mine exceeding 260,000oz per year by 2026 as the
underground Sub-Level Cave ("SLC") performance further improves and the Phase
I Expansion project ramps up.

At Mako, following the successful cut-back completion over 2023, both 2024 and
2025 will increase profitability with production between 130,000-140,000oz per
year at an all-in sustaining cost (AISC) reducing to US$1100-1200/oz from
approximately $1,450/oz.

The Company is also taking the opportunity to update the market of its 2023
Guidance. Mako and Syama sulphide operations continue to perform according to
their respective schedules, however the Syama oxide operations have not
performed to plan as a result of mining lower grade ores therefore impacting
production.  This has resulted in overall gold production being revised down
from our target of 350,000oz to a range of 330,000-340,000oz for the year.

Group AISC guidance for 2023 remains unchanged at US$1,480/oz, due to the
implementation of sustainable cost reduction initiatives put in place over
2023 across all aspects of the Group. Capital expenditures for 2023 are
expected to be approximately US$70 million, excluding the Phase 1 Expansion
capital, down from the previous guidance of US$88 million.

 

Highlights For Three Year Forecast

·      Total Group gold production of 1,000,000-1,100,000 oz for the
three years 2024 to 2026;

·      Syama gold production increasing to over 260,000 oz per year in
2026 as the Syama North enhancement becomes fully operational;

·      Mako gold production of 130,000-140,000 oz in 2024 and 2025 as
high-grade (>2 g/t) ore is processed; and

·      Group AISC systematically falling from US$1480/oz in 2023 to
US$1,175-1,275/oz by 2026.

 

 

 

Resolute Mining Limited ("Resolute" or "the Company") (ASX/LSE: RSG) is
pleased to provide three-year forecast for its Mako and Syama Operations. This
follows mine optimisations and incorporation of the Phase I Expansion Project
at Syama.

 

Resolute's Chief Executive Officer, Mr Terry Holohan, commented:

"The release of our three-year forecast is to provide clarity and confidence
to the market that Resolute remains on its stated organic growth path to
increase ounces and improve margins across all its operations. I am pleased to
report that the Sub Level Cave, which is the heartbeat of Syama, continues to
improve its overall performance and is presently being constrained by the
crusher plant which has enhancements scheduled for commissioning over Q4 2023;
these improvements will allow the SLC to increase capacity.  The Syama North
Phase I Expansion project, which is on track for commissioning in H1 2025,
will enable stable production in excess of 260,000oz per year at the mine for
many years to come with the flexibility of having two reliable sources of ore.
All of this being now possible since we have rebuilt the Syama sulphide plant
and demonstrated the ability to economically recover gold from the refractory
sulphide ores over the last two years at production rates of approximately
160,000 oz per year.

At Mako, we have two extremely strong years ahead of us with production around
135,000 oz per year at very healthy margins. While we have presently scheduled
to start ramping down the operations in 2025, we are actively drilling in
close proximity to the mine with full stakeholder support and are, over time,
becoming more confident of being able to extend the mine's life.

Unfortunately, in Syama due to precluding operations in the Tabakoroni open
pit due to the presence of carbon pockets, where we had scheduled 150kt of
high grade (4g/t) material (approx.16,000 oz recovered) for treatment in the
oxide plant we had to replace this ore with significantly lower grade
material. As a result of this change in the mine plan, we are expecting
slightly lower gold production in 2023 from the oxide operation. Specifically,
we are revising down our guidance to 330,000-340,000 oz. Over Q4 2023 the
oxide operations will return to planned grades as mining in the A21 open pit,
originally scheduled for start-up in Q1 2024, commenced stripping mid-year
with ore access in Q2 2023 and plant head grades returning to planned levels
over Q3 2023.

I am happy to report that, despite the lower ounces projected, we still expect
the same Group AISC of US$1,480/oz due to the sustainable cost reductions we
have implemented over 2023 across the Group."

Three-Year Forecast

Resolute is pleased to provide three-year production and cost forecast for its
Mako and Syama Operations - Table 1.

Syama

Syama gold production will be stable in 2024 and 2025 and then increase by
approximately 15% in 2026 where production is expected to exceed 260,000 oz.
From 2026 onwards over 90% of production is expected to come from sulphide ore
from underground and open pit sources. The Phase I Expansion, expected to be
commissioned in the first half of 2025, will retain flexibility to switch
between processing oxide and sulphide ore. At this stage, the board has
approved the funding for long lead items and final board approval of the
project is anticipated once definitive technical documentation is completed.

The capital expenditure at Syama over the next three years is driven by the
Phase I Expansion and waste stripping of Syama North pits to access deeper
higher-grade sulphide ore. Phase I Expansion capital expenditure will be
approximately US$45-55 million and US$5-10 million in 2024 and 2025
respectively.

We estimate total sustaining capital expenditure of between US$20-30 million
for each of the next three years with the remainder being classified as
non-sustaining capital. Non-sustaining capital over the years relates to the
Phase I Expansion capital, fleet additions to increase the underground
production capacity from 2.4 Mtpa to 2.8 Mtpa and pre-stripping.

There is also approximately $2 million of capital allocated in 2024 for
studies on the Phase 2 Expansion Project.

The Syama AISC is expected to decrease gradually over the next three years due
to the continued positive impact of cost-saving initiatives and from the
increase in gold production in 2026 as the SLC and the Phase 1 Expansion hits
optimal capacity.

Mako

Mako gold production will peak in 2024 and 2025 as the high-grade zones in the
Mako pit, that have been exposed in 2023, are mined and processed. In 2026
stockpiles start to be processed. The production and cost forecast provided
assumes Mako stops gold production in 2027 and the closure plan commences.
However, Resolute is growing more confident that additional ore source can be
found to extend the mine life with several options being actively pursued.
Further details will be provided throughout the course of the year.

 

Assuming the mine is closed, the remaining capital expenditure at Mako will
consist of minimal sustaining costs and final stage of waste stripping. The
estimated waste stripping remaining is US$6-8 million in 2024 with a further
US$4-6 million of sustaining capital. Total capital expenditure falls to
US$5-8 million and US$1-3 million in 2025 and 2026 respectively. This capital
expenditure profile is based on a conservative mine closure scenario; however,
management is actively exploring alternative scenarios to extend the mine life
which if developed would require additional capital expenditure.

 

The AISC at Mako over the next three years are expected to be considerably
lower than in 2023. The primary reason are the strong head grades expected
2.2-2.3 g/t and 2.0-2.1 g/t for 2024 and 2025 respectively, in addition to the
lower sustaining capital. The stockpiles schedules to be processed in 2026 are
expected to have a head grade between 0.9-1.0 g/t; the cessation of mining
activities in 2026 keep the AISC at US$1100-1200/oz.

 

 

Revised 2023 Guidance

Group gold production guidance for 2023 is being revised to 330,000-340,000
oz, down from 350,000oz, due to lower production from Syama with oxide
operations requiring treatment of lower grade ores leading to Syama gold
production for 2023 being revised down from 233,000 oz to 215,000-225,000 oz.

There has been no change at Mako which is performing in line with guidance of
117,000 oz for 2023.

At Syama, the oxide mining schedule changed because of mining in an area of
the Tabakoroni open pit which hit unexpectedly high carbon content which
impacted recoveries. As a result, this area was removed from the 2023 mine
plan, impacting 2023 total recovered ounces by approximately 16,000 oz
(scheduled at 150kt at 4g/t Au and 85% recovery).  As a result of ceasing
mining at Tabakoroni, mining oxide ore from the A21 pit was brought forward
from 2024 into the 2023 schedule however with lower grades being fed into the
mill as compared to the original plan.

The Company remains comfortable of cash costs and capital expenditures. Group
AISC guidance for 2023 remains unchanged at US$1480/oz as the volume effect is
offset by the reduced costs. Due to a revised budget, we have reduced 2023
capital expenditure guidance from US$88 million to approximately US$70 million
excluding capital required for the Phase 1 Expansion.

 

 

Contact

 Resolute                                                                   Public Relations

 Matthias O'Toole-Howes                                                     Jos Simson / Emily Moss, Tavistock

 matthias.otoolehowes@resolutemining.com (mailto:contact@rml.com.au)        resolute@tavistock.co.uk (mailto:resolute@tavistock.co.uk)

 +44 203 301 7620                                                           +44 207 920 3150 / +44 7788 554 035

 Australian Media                                                           Corporate Broker

 Cameron Morse, FTI Consulting                                              Jennifer Lee, Berenberg

 cameron.morse@fticonsulting.com (mailto:cameron.morse@fticonsulting.com)   +44 20 3753 3040

 +61 433 886 871

 

Authorised by Mr Terry Holohan, Managing Director and Chief Executive Officer

 

Production Targets

Certain information in this announcement comprise a Production Target and/or
forecast financial information for the Mako and Syama Operations and are based
on mine optimisations and the incorporation of the Phase I Expansion Project
at Syama.

The Ore Reserves and Mineral Resources underpinning the Production Target (and
the forecast financial information based on that Production Target) have been
prepared by a competent person in accordance with the requirements in the JORC
Code (2012 Edition).

The Production Targets and/or forecast financial information for the Mako and
Syama Projects are based on Resolute's current expectations of future results
or events and should not be relied upon by investors when making investment
decisions.  All material assumptions upon which a Production Target (and
forecast financial information based on the Production Target) are disclosed
in this announcement.  Resolute has concluded it has a reasonable basis for
providing the Production Targets and forecast financial information included
in this announcement.

Of material included within the Mako Production Target: material classified as
Proven Ore Reserves contributes ~11% and material classified as Probable Ore
Reserves contributes ~89%.

Of material included within the Syama Production Target: material classified
as Proven Ore Reserves contributes ~33% and material classified as Probable
Ore Reserves contributes ~67%.

No new information

The information in this announcement that relates to Mako and Syama Production
Targets is underpinned solely by Ore Reserves and Mineral Resources from a
report entitled 'Increases in Mineral Resources and Ore Reserves from
Exploration Success' announced on 8 March 2023.  The Company confirms that it
is not aware of any information or data that materially affects the
information included in the relevant market announcement and all material
assumptions and technical parameters underpinning the estimates in the
original announcement continue to apply and have not materially changed.

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 current economic climate with the significant
volatility, uncertainty and disruption caused by the COVID-19 pandemic.
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.

 

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