Resolute Mining Extends LOM for Mako Open Pit; Elevated Gold Spot a Key Driver

Summary

• With every uptick in gold prices the attention of the market is diverted towards ASX-listed gold stocks, and these stocks are gaining momentum.
• The surge in gold prices has propelled high exploration activities across the continent, leading to a surge in the production expectation.
• Many miners are notifying their shareholders about their improved operations and production capacity, and while for some the higher exploration and production guidance has already translated into strong financial positions, some such as Resolute Mining Limited (ASX:RSG) are now reporting strong results.
• RSG has improved its Life-of-Mine for the Mako open pit in Senegal and is now expecting higher production and better processing rate for the future, including the current year.

Gold prices have been a stallion so far with gold spot vaulting to a record high of USD 1,818.13 per ounce (as on 8 July 2020) and oscillating around the same level since then.

Also Read: China- The Catalyst to Gold and Iron Ore Rally

Every uptake in the gold spot is further contributing towards the momentum of ASX-listed gold stocks, which have climbed the price ladder swiftly over the high market price of gold.

Furthermore, with the surge in gold prices, there has been a surge in activities across many operations of gold mining companies across the continent, leading to record production for some such as St Barbara Limited (ASX:SBM).

To Know More, Do Read: St Barbara and Dacian Gold Release Quarterly Performance Figures

While for some high gold prices have been translating into strong financial positions, for some it has been acting as an impetus to fund their existing exploration and build strong production pipeline to lock in trades to secure high prices, and Resolute Mining Limited (ASX:RSG) has come out on the frontline as an example.

To Know More, Do Read: Elevated Gold Spot Prices Transcending into Strong Financial Position for Saracen and Northern Star

RSG Extends Life-of-Mine for Mako Gold Mine in Senegal

• RSG suggested that the successful extension exploration drilling programs, mine design improvements, and optimisation of mine scheduling work delivered a considerable improvement at the Mako Gold Mine with a LOM improvement by an additional two years.
• The updated LOM would now deliver an improvement of 39 per cent in the total gold production of the mine from 890,000 ounces to 1.24 million ounces of gold.
• Furthermore, RSG estimates that the mine would now deliver annual average production of 140,000 ounces for the next five years.
• The LOM for Mako would now stand at 9 years, representing an extension of two years to early 2027.
• The updated average LOM all-in sustaining cost (or ASIC) is estimated to remain USD 848 per ounce over the full nine-year.

RSG also mentioned that the potential for a further mine life extension would be generated from the ongoing regional exploration program.

Updated Life of Mine

The updated Mining Inventory has now enabled a new mining schedule; however, the updated LOM requires higher rates of waste stripping from 2022 to 2024 to expose ore in the deeper portions of the open pit and secure the extensions of mine life out to early 2027.

• While the updated LOM is consistent with the original mine plan, a key enhancement in the updated LOM is a higher processing rate from 1.8 million tonnes per annum to 2.2 million tonnes per annum, resulting in reduced costs and accelerated production in future, including the production of 2019 and 2020.
• Also, the Company anticipates that the mine would now deliver a further 900,000 ounces of gold until early 2027, including 2020, at an expected average AISC over this period of USD 900 per ounce, up against the initial expectation of 700,000 ounces at an AISC of 840 per ounce, at the beginning of the year.

Production to Date and Regional Exploration

Post the completion of its construction and commissioning; the Mako Gold Mine was anticipated to deliver an average annual production of 140,000 per ounce at an AISC of USD 780 per ounce over seven-year mine life.

• Since commencement in January 2018, the mine has delivered 423,703 ounces of gold at an AISC of USD 719 per ounce until June 2020.
• Furthermore, RSG plans to produce 160,000 ounces of gold from the Mako Mine at an AISC of USD 800 per ounce for the year 2020.

Exploration activities of the Company in Senegal during 2019 primarily focused on the existing Mako open pit to expand the existing Mineral Resource and mine life.

• RSG completed 7,000 metres of DD including a follow-up drilling of a previously identified high- grade gold mineralisation in the north-east corner at Mako while targeting a down-dip extension.
• The follow-up drilling further defined ore shoots for future resource modelling and estimation, which are located below the base of the 2019 Ore Reserve pit shell.
• The same ore shoots also demonstrated a potential to expand the open pit Ore Reserves and extend mine life with some excellent results, confirming the presence of a coherent high-grade lode of gold mineralisation at the north-eastern end of the Mako open pit.
• Some of those results are as below:
  • The drill hole identified as PWD423 resulted in 6.0m at 14.9g/t of gold from 224.7m.
  • The drill hole identified as PWD424 resulted in 6.0m at 11.7g/t of gold from 224.7m.
  • The drill hole identified as PWD425 resulted in 10.5m at 5.4g/t of gold from 229.7m.
  • The drill hole identified as PWD435 resulted in 6.0m at 8.3g/t of gold from 58.2m.
  • The drill hole identified as PWD436 resulted in 27.0m at 3.6g/t of gold from 29.7m and 8.5m at 11.7g/t of gold from 74.7m

In a nutshell, a high exploration in lieu of surmounting gold prices has finally resulted in better production expectation for future from the Mako Gold Mine, including the current year.

On 20 July 2020, the stock of the Company closed at $1.210, up by 3.89 per cent against its previous close on ASX.