Christmas shines early for Resolute Mining

The booming gold prices, amazing operational performance and great future potential. What more could a miner ask for? Well, everything seems to be working in favour of Resolute mining. The Afro-Australian mining conglomerate operates four gold mines, all in different countries but still working together to boost the company’s fundamentals. Mining companies to optimize their operations, carry out drilling programs either to find new reserves for future or for better understanding of mineralogy of its operating assets and similar is the Resolute’ s story. Resolute mining acquired Toro in July, upgraded its Ravenswood mine to better its performance in its home country and carried out an exploration program to maximize its potential at newer mines.

Resolute Mining Limited (ASX:RSG),the company stock closed at $1.210 at ASX on December 6, 2019 with day’s high standing at $1.267. The stock saw an increase of 9.56% on 5 December 2019 whereas it had a fall of 3.968% today. The stock has a market capitalization of $1.14 Billion. The golden period for the gold miner seems to be around the corner.

Source: ASX

The rally in share price comes from the drilling results for Mako mine. The company had performed 7,000 meters of diamond drilling at the currently operating Mako mine. The objective of the drilling program is to expand the life of mine by expanding the mineral resources beneath the operating open pit and at the nearby satellite pits.

The company carried out the diamond drilling activities during the first ten months of the year, following the positive results from the 17,000 meters exploration drilling from 2018. The core samples from the drillings were studied to come up with results and would provide valuable insights for future resource estimation and study. The northeastern corner of the Mako open pit has been explored to increase the confidence of the prospective mineral resources.

The Mako project is located in the Keneiba geological gold belt of Senegal which also hosts other large gold mines such as Teranga gold owned Sabodala gold operations. The gold mineralization is within an igneous rock system with volcanic origins rich in alumina and silica of potassium, sodium and calcium minerals, with crystallized sheets like the occurrence of gold in association with sulphide and carbonate minerals. The diamond drilling samples would show the structure and occurrence pattern of the gold minerals in the mining area.

The high-grade drilling targets are located beneath the base for mineral reserves estimate with gold grades for samples varying from 3.16 to 14.9 grams per tonne. The increase in mineral reserves will increase the life of the mining operations. The positive outcomes recommend a vast drilling program in 2020 to tap the maximum potential of the mining project. Mako’s current mineral reserves stand at 928 kilo ounce with a grade of 2.05 grams per tonne as of 31 December 2018. The target production for Mako was set at 160 kilo ounce for the year in July but can be exceeded seeing Mako’s recent quarterly performance.

Resolute’s current strategy allows it to look for both immediate and additional future opportunities through acquisitions or joint ventures to ensure mill feed to its processing plant at Mako beyond the depletion of the mine. The company would also carry out more exploration program at its prospects in Cote d'Ivoire. The company earlier this year formed two joint ventures for mining licenses near the Mako pit. Resolute formed a JV with Ardimines to explore and develop Tomboronkoto which shares a boundary with Mako and Tombo which shares its gold mineralization strike with Barrick Gold’s exploratory pits. The drilling program identified low-grade gold mineralization in the area and requires additional reverse circulation (RC) and core (Diamond) drilling for better insights on the mineral beneath.

Resolute mining in July this year, acquired Toro Gold from Lion selection group to add Mako to its arsenal as Resolute to strengthen its operational cash flow, increase revenue which would in return yield shareholders dividends and provide strong platform for future growth.

Source: Company Reports and Kalkine Research

The operational results for last quarter reported high operating costs for Syama underground operations mostly due to the 18 days of the unplanned shutdown of the recovery plant, which affected the company’s profitability. Though Mako entered Resolute’s portfolio as the newest entrant, it boosted up the company’s financial by emerging as the lowest cost producer with future potential to grow. The company has also hedged at the gold price higher than the projected gold price to take benefit of the gold price volatilities.

The company’s managing director has expressed his consent with Mako’s operational performance and the drilling results. Mako emergence as the underdog could be the trump card for Resolute mining for long. With good news from Mako, and Syama underground plant soon to stabilize its production with an average metallurgical recovery of 85%, the future for Resolute looks brighter with production due to increase in short term and also maintaining the throughput for longer years due to life of mine expansion as reflected by the exploration drilling results.

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