RESOLUTE Mining kept the wolf from the door today announcing a refinancing of its balance sheet and a new life of mine plan that defers up to $100m in capital expenditure.
The Sydney- and London-listed gold producer has struggled to cut net debt which stood at $229m at the end of 2021. It had planned to expand its Syama mine with the development of the Tabakoroni sulphide deposit at a cost of $80m to $100m.
In terms of its new life of mine plan, oxide production from Syama will be extended to 2026 whilst the development of Tabakoroni will be from 2024 with first production due to come on stream in 2026.
Including production from the firm’s Mako gold mine in Senegal, Resolute’s life of mine output will be 370,000 ounces a year over five years to 2026 at an all in sustaining cost (AISC) of $1,191/oz. Of this total production, Syama will average 243,000 oz at an average AISC of $993/oz for 12 years to about 2033.
Stuart Gale, CEO of Resolute, said exploration campaigns extended oxide production “for an additional two years together with exceptional drilling results at Tabakoroni … This allows us to defer the development of the Tabakoroni Sulphide mine as we continue to assess and optimise the plan for the development of this resource”.
Resolute also announced the extension of a credit revolving facility for an additional 12 months to March, 2024. The extension included a review of the “structure and tenure” of the firm’s debt facilities.
In terms of a new repayment timetable, the company has until March 2024 to repay the $140m RCF with the first $30m repayment due in August upon receipt of the third installment of the settlement amount from the sale of its Ghana mine, Bibiani.
“I am confident the underlying financial performance of the business will continue to improve, with the aim to reduce gearing levels over the near term,” said Gale.
This is all a far cry from Resolute’s ambitions about two years ago in which it planned to reach production of 500,000 oz/year during 2020, partly anticipated following the purchase the year before of Mako from Toro Gold for $274m.
Gold processing problems at Syama followed the transaction which put pressure on Resolute’s balance sheet. Attempts to sell Bibiani were foiled by objections raised by the Ghana government to a Chinese buyer. The mine was eventually sold to another buyer.
Resolute also had a gold hedge in place that prevented full exposure to the rising gold price. During this period, the company parted ways with its then CEO John Welborn who was replaced by Gale firstly on an interim basis until his full time appointment last year.
In the meantime, shares in Resolute plummeted from A$2/share in mid 2019 to an all-time low of 30 Australian cents per share in February. Shares in the company have revived slightly following a kick up in the dollar gold price, which briefly edged through $2,000/oz this week. On a 12 month basis, shares in Resolute are 48% lower.
