ASX-listed Resolute Mining Limited – a successful developer and operator of quality gold projects yielding close to 5Moz to date – is underlining the success of its move from Australia into Africa a decade ago by concentrating on Africa in its future search for development opportunities.
Revealing this decision in an exclusive interview with Mining Review Africa, CEO Peter Sullivan said that the challenge for Resolute was to find the next deposit to develop. “We have pretty much developed the resource base that we currently have, and I believe there is probably more opportunity for us in Africa than there is in Australia,” he suggested. “We do have a good base in both East and West Africa now, and I certainly think both sides of the African continent offer opportunities for us to grow further,” he explained.
“But while Resolute intends spending some money on exploration and looking to advance the deposits around its existing operations to improve their longevity, the true challenge is for the company to find opportunities for new production growth, and there are such opportunities in both Tanzania and Mali,” Sullivan declared.
“There are possibilities in both countries,” he said, “but in terms of the real successes at the moment we are having more success around Syama in Mali than we have had at Golden Pride in Tanzania.”
The company’s two established operations (Golden Pride and Ravenswood in Queensland) produced a total of 293 057 oz during its 2008 financial year, and although the figures for the 2009 financial year ended 30 June 2009 have not been published yet, it has predicted an output of over 300 000 oz.
“Our Syama operation in Mali has not yet started production proper. It is now in the commissioning phase, so it has produced some gold – but very little so far. How much over the 300 000 oz will depend on how well Syama managed in June,” Sullivan explained. “Our forecast for the 2010 financial year is that the three mines (Golden Pride, Ravenswood and the newly re-developed Syama) will produce a combined 400 000 oz of gold – an increase of around 33%,” he added.
“Our operating profit for the 2008 financial year was A$5.3 million (R33.4 million). Looking ahead, the problem with trying to predict profits is that there’s a lot of volatility in gold prices at the moment, but from an operating point of view we would expect that we have had a better year in 2009 than last year,” he predicted.
CURRENT FOCUS IS ON SYAMA
“Looking at the individual operations, the big story for us is Syama, and getting that operation going,” Sullivan emphasised. “It’s a big ore body, it’s a long life project, it’s a substantial scale project, and it’s the major focus for us right now.”
Resolute has an 80% interest in the project – located in the south of Mali, about 30kms from the Côte d’Ivoire border and 300km southeast of the capital, Bamako – through its equity in Sociêtê des Mines de Syama S.A. (SOMISY). The Malian Government holds the other 20%.
The project was mined by BHP Billiton and then Randgold resources till 2001, when Randgold placed the operation on care and maintenance. Resolute acquired the mine in 2004, and the re-development project was initiated in June 2006, when Resolute entered into an agreement with GRD Minproc to provide engineering, procurement and construction and management services EPCM).
“The final cost of the Syama re-development project will be around US$190 million (R1.5 billion) – Resolute had originally approved an investment of US$140 million (R1.1 billion), but this escalated over the construction period for a range of reasons,” Sullivan revealed.
“We are currently in the commissioning phase, which started in April, and it will be ramping up to production before the end of this year,” he added. “Over the life of mine average annual production will be about 250 000 oz pa. It won’t of course be that high in the first year, but certainly as we start reaching the main part of the ore body it will pick up to that sort of level,” said Sullivan.
“Syama should reach that production level in our 2011 financial year,” Sullivan predicted. “As we have it at the moment, the mine will have about a seven-year life. There is other resource around there – there’s about 2 to 3Moz sitting below the pit, and then we have discovered, through our exploration programme, another 1 to 2Moz in the areas around Syama that are not in our mine plans as yet,” he explained. “So we believe that there is considerable life to Syama beyond the seven years we have published in the initial pit design.”
GOLDEN PRIDE LIFE OF MINE TO BE EXTENDED AGAIN
Resolute’s Golden Pride mine – situated 750 km northwest of Dar es Salaam – is100%-owned by Resolute through its Tanzanian subsidiary Resolute (Tanzania) Limited.
The mine produced 150 224 in the 2008 financial year – 8% up on the 138 421 oz in 2007 – and plant throughput remained steady at 2.5 Mt at an average head grade of 2.04g/t (2007: 1.94g/t), and a recovery rate of 90% (2007: 88%). “We expect production in the 2009 financial year be a little lower,” Sullivan predicted.
Golden Pride mine has produced in excess of 1.55 Moz of gold since commissioning in 1998. “It started off as a five to six-year life mine, and has been going now for in excess of ten years,” he revealed. “With some of the work we are doing now in the cutbacks, we should extend that life for another three or four years,” he added.
A decrease in gold production in the 2009 financial year is expected. “What we had was a period where we basically could not mine ore from the pit floor, because we had mined the pit as deep as we could, and we were in the process of excavating the walls back so that we could take the mine deeper,” Sullivan explained.
“During that period we had to treat through our mill lowgrade stockpiles that we have at the site, which means that obviously were not producing as much gold as we would have if we were in ore,” he added.
“Regarding production over the remaining years of the mine’s life, our aim is that it will be a relatively consistent production profile of around 150 000 oz pa over the last three or four years,” Sullivan said. “It really is dependent upon grade, how we can access the grade, and how much of the low-grade blending we have to do,” he stated.
“It’s been a very good mine and a very consistent producer,” Sullivan continued. “Although it hasn’t been the highest grade ore body, it has been quite economic to continue as we’ve seen the gold price rise steadily over that period. When we started production there, gold was below US$300 an ounce, which was not a good way to start, given that we had done the feasibility work on a gold price that was quite a bit higher than that,” he added.
Looking ahead, Resolute Mining sees exploration as the key to future expansion, and the company has declared itself committed to expanding its gold resources and production base through exploration. “The main thrust of exploration activities has been on our tenure close to our existing operations in Tanzania and Mali, or on strategic joint ventures on ground that has been identified through our regional studies,” Sullivan said.
“The ramp up of the exploration programme around the Syama Project in Mali is continuing to deliver excellent results, with new and expanded satellite resource discoveries now totalling over 1.3 Moz, and with several additional targets currently undergoing resource drilling,” he added.
“In Tanzania, we have a deposit called Kavsav which is looking interesting, and we have a couple of other areas to the east with a history of mineralisation. We still do not know whether these areas will be found to contain deposits that are minable. It hasn’t been exhaustively explored at this time, but there are definite possibilities,” Sullivan pointed out.
“We do not have any particular deposits in mind – in Tanzania or Mali, or even elsewhere – that have the potential to become new mining operations at this point. We have basically just spent the last two years getting the deposit at Syama developed – that has been the major focus of the company, and still is for the moment,” Sullivan concluded.