Resolute Mining Limited

Good morning, ladies and gentlemen. This is Terry Houlihan. I have on the line with me Chris Egger, our CFO. And we'd like to take you through our quarterly results for Q2 and obviously H1 of 2024. We do have a presentation online. It's as of 29 July 2024. It's loaded up on our website so you can follow that. And I'll be talking to the slides as I click forward so you can follow me. Just moving on to slide two there, we've got the normal disclaimer, which does have our guidance for the year, which is unchanged at this stage. Looking forward to slide three, just a reminder for everybody, we are a West African gold company. We operate at the Syama Gold Mine in Mali and the Mako Gold Mine in Senegal. But we've also got exploration projects on both of these operations and in Guinea. And all three are in an exciting phase at this point in time. We have quite a large resource and reserve, and this is growing because of the work we've been doing over the last three years. And as I said, our guidance, we are maintaining this at somewhere between 345 and 365,000 ounces at a cost of $1,300 to $1,400 an ounce. And we'll go into that in a little bit more detail shortly. Going forward to slide four, if you look at the quarter highlights, we had a very good operational quarter. Almost 91,000 ounces. This was a good clean run for all operations. This following on from in Q1, if you remember, we did stop the Sayama operation, the sulfide circuit for two weeks. And now we're at 167,000 ounces for the half year, which is exactly where we expect it to be. And that's why we're restating our guidance. We've always said that the first half of the year will be a bit shy because of the stoppage at the Siama plant in Q1. And we expect to have a good run now in the second half of the year. One of the very exciting point is our group ASICs of $14.02 an ounce. If you remember not too long ago, it was up at $15.00. Over the last couple of years, we brought this down aggressively. And in June, actually, we broke through comfortably the $1,400 an ounce level. And going forward, that's why we're really comfortable stating that we think we're going to be in the $1,300 to $1,400 an ounce for the calendar year. Cash flow, if you remember, we finished our syndicated debt in Q1, and we've got cash flow from operations of $47 million, which is quite an aggressive number now. Obviously, gold price is helping, but also all our work on the operating costs is coming exactly at the right time. Exploration, as I've mentioned, we are still pursuing the Tombrancoto project in Mali. We've got some really good drill hits coming through as we speak, and we expect to give you an upgrade on that in Q3. And also on the Guinea, where we're just about putting together our first mineral resource estimate. So as a result of all the operations in this half year, our net cash has now jumped to 97 million at the end of June. It also helped by the deal at Ravenswood, where they hit their targets of 500,000 ounces, and they gave us a first tranche of 30 million Australian, about 20 million US, with the next payment coming in this quarter, which will total altogether about 50 million Australian dollars. So as a result, at the end of June, we had a very healthy balance sheet with cash and bullion at 143 million. And you'd have to go a few years back to see that on our balance sheet. We've essentially come through now what I consider three years of turnaround. And now we can really focus on growth, especially the organic growth that we've got in front of us over the next two years. In terms of ESG, we're still ticking boxes there. LTIs, SIAMA's over five and a half years LTI-free. MACO is at 2.8 years LTI-free. We did have some recordable injuries, but these are minor injuries, cuts to hands, sprains, et cetera. Nothing majorly that we should be concerned about, but obviously we're certainly pushing hard on the safety. We move on to slide five. We still are comfortable with our growth. We're just restating this now. Again, if you remember, we've been talking like this for quite a while. We can see this year our guidance we're comfortable with. I think the important thing, our costs are coming back down. You can see where we've been recently. We are pushing hard now with the Sea Armour. sulfide conversion plant. If you remember, that project will take us on Siyama up to 4 million tons of sulfide. Essentially, it's going to replace the 1.6 million tons of oxide that we're treating at the moment on an average of about 1.3 gram a ton with sulfides that are going to be about 2.9 gram a ton. So that should comfortably take us from the middle of the next year up to 250,000 hours per year production levels. As I mentioned at Mako, we've now got five drill rigs there. We've got three potential satellite deposits that we're focusing on. Tombo is storming ahead. We've got some, as I mentioned, some really good drill results coming through. We'll put out a separate announcement later this month, this quarter, give you a full update, not only on Tombo, but on the other sides as well. Phase two expansion at Siyama. If you remember, we've always said this is a tier one mine in waiting. We've started the scoping study and we'll actually give you some updates later this year. And then, as I mentioned, the Guinea exploration. We've got some exciting prospects out there. We will issue a first mineral resource estimate sometime this quarter. Move jump forward to slide seven. Let's go into a bit of detail. Siama, if you remember this last year, we've been ramping up the mine to get it up to 2.4 million tons. It was originally designed on 2.1. As we were ramping up last year, remember we had a few wobbles with the grade. You can see now the grades have settled down. We're comfortably at those sort of levels. And if you look at the sulphide ore process, you can see that this last quarter we started stepping that up. And this is because of all the work that we've taken on the crushers, replacing all the crushers out systematically over the last nine months, which has now allowed us to push more through the mill. And the big exciting thing there, as I mentioned, is the grade. If you look at the grades, we're getting back to where we think we should be. And even with the increased throughput on the sulphide plant, you can see we're holding the gold recovery numbers. So the sulphide circuit is really operating well. And then the oxide plant also operating well. We are now in a mixture of materials coming from mines, around about 1.56 grams a tonne, and we're using lots of stockpiles which we've built up over the years, which these days with one gram a tonne is worth $75 a tonne. So it's certainly worth processing it and making money from it. So the SIAMA operations we're excited with, we're expecting a run free H2, so we should see some good performance out of SIAMA over the next six months. I'll talk about this conversion project. As I mentioned, this is the oxide plant that we're looking at on slide eight with the photographs there. You can just see the oxide mill in the left-hand picture on the right. The large slab of concrete next to it, that's the mill foundations. That's usually the critical path on an expansion project with a mill. They are almost complete as we speak now. These photographs are a few days old. And then you can see the flotation section foundations in the foreground on that picture. This is all going ahead to plan. The mill parts are starting to arrive on site and we're on track for commissioning in first half of next year. So by Q3 next year, we should be putting through that mill and the mill next to it. That's going to be put there shortly. We're going to be putting 2.9 gram a tonne material through that mill. instead of the on average about 1.3 that we're putting at the moment so this is really exciting for the future of this operation this should take it comfortably up to the 250 000 ounce per year considering we're about 210 000 pounds per year at the moment from sayama then moving on to slide nine which is mako mako as we we've been alluding to for quite some time We did that huge strip last year, $25 million, which we finished off in Q1. And this has allowed us now to get access to higher grade ores. We have been mining slightly larger tonnages of ores for two reasons. First of all, so we, as you know, we've got a rainy season coming up. We want to make sure we've got plenty of material on the ground so we don't have to slow down in the mill and also it gives it a better chance of being putting the higher grade materials through the mill. What we'll also note is the recoveries are maintaining at 93%. This is based on due to our oxygen plant that we put in place last year still performing exceptionally well and is also adding to the reduction in the costs of the plant. Our operating costs at Mako have come down to $1,100 an ounce and as we expected And we expect to maintain this now going forward. As I mentioned, we will have a slightly softer Q3 in terms of mining. We're anticipating being able to maintain the production through the plant. And then Q4 should be a bit more solid, a bit more like this quarter. As I mentioned, group exploration, we will give you an update shortly. Senegal, Tombo and Bantaco, we're operating on two of our three satellite areas now. Starting to the Tombo numbers, as I say, we're going to be looking at adding numbers to the mineral resource there, 400,000 houses. with some infill and some extensional drilling so that's going to increase and we're just starting to hit the mineralization of the bantaco that took us a bit of time to get in there we're actually on site now and we're just starting to see mineralization coming out of the ground so we're getting quite excited about the potential extension of the the macro operation In Mali, we're also doing some work again on the Siama North. We're now going to restate that resource shortly. We're also getting excited about some underground chutes that we're picking up from that Siama North area. There's several chutes coming off that large three million ounce ore body. um and they are higher grade higher than the three gram a ton so they look like they will be economically mined from underground at some stage in the future it's just exploratory at this stage but we'll give some color on that later in the quarter And we're also looking at some other prospects south of the main Siama complex that we picked up on our geophysical work over the last three years. And we're looking again, we think we might be able to find some more oxides going forward. This is the excitement about Siama. We'll have that oxide plant having the ability to treat either oxides or sulfides, depending on the margins that they will give us. And then, as I mentioned, the Mansala project, we're actually modelling that at the moment and we will release a mineral resource shortly. And with that, I'll now hand over to Chris so he can take us through the financials and the bottom line.

you terry um moving over to slide 12 and looking at our financial results as terry highlighted we had a very strong quarter and we're very pleased with our financial results uh starting first with gold sales we sold 88 000 ounces just shy of what we actually produced again at the end of q2 the quarter ended on a weekend and therefore the actual timing of the sales were impacted versus the production, but we expected those ounces to get sold in July, which they did. I think what's really important to note here is at this stage, we're fully unhedged and we remain unhedged and we intend to continue to be unhedged. Also, as Terry highlighted, the costs have come down very nicely and so are ASIC. was at $1,402 per ounce, and we expect the ASIC to continue to decrease over the coming quarters. Our capital expenditures were just shy of $20 million for the quarter, slightly less than Q1, but we are expecting CapEx to increase in the second half of the year as the spend for this YEMA project is really going to ramp up, and that's going to be happening in Q3 and in Q4. Our EBITDA for the half year, which is unaudited, is coming in at $160 million, which is an increase over last year whereby we produced $101 million of EBITDA. I'm expecting the EBITDA for the second half of the year to be substantially higher than the first half. This is really because of the fact that we'll be producing more ounces and we're also in a much higher price environment than we were in Q1. And like I said, CapEx for the first half of the year is at $44 million, which was an increase over last year. But most importantly, we expect CapEx to really ramp up in the second half of the year. And we're still very much comfortable that CapEx will come in within the guidance that we have illustrated at the beginning of the year. Moving over to page 13, when we look at cash, and cash is king these days, we're very excited about the cash flow generation of the business. Our operating cash flow was up substantially in this first half of the year versus last year at 127 million dollars, and we expect that to continue in H2. I spoke about CapEx already and the impact to the business. And look, exploration was around $10 million for the first half of the year. And we are expecting our exploration expense to be at least $10 million in the second half, if not more. This is above our initial guidances of $15 to $18 million for exploration. The reason for this is that we're very excited with what we're seeing. In Senegal, we anticipate to spend as much as we can in order to really lock in the extension of the macro mine. So look for the exploration spend to continue to increase throughout the year. Working capital was a positive impact for the first half of just shy of $2 million. One of the key issues that we are facing though in the business is not receiving our VAT refunds on time. In Q2, this was negatively impacted our business by about $15 million. We are getting VAT refunds, but they're coming in slow. Historically, we were able to get them quite quickly. And with the changing governments that we're seeing both in Senegal and in Mali, we're seeing an impact on our VAT refunds, which is negatively impacting the business overall. As Terry highlighted in the quarter, we received 30 million Australian dollars due to the sale of Ravenswood, which had a very nice positive impact to the business, and we're expecting that remaining 20 Australian dollars to come in by the end of September. We made our final debt payments for our syndicated senior facility at the end of Q1. That's the $26.3 million that you see on the graph. So we ended the quarter with a very strong cash balance, cash and bullying, I should say, of $143 million. and that related into a net cash position of $96.6 million. We consistently maintain overdraft facilities in both of the countries that we operate. We try and keep those levels pretty consistent, just shy of $50 million. Those provide good working capital sort of efficiencies for us, and we'll be looking to do that in the future. So again, to summarize, a very strong quarter, and we expect cash to continue to build throughout the year.

um and with that i will turn it back over to terry uh for some closing remarks good thanks chris and just in conclusion i think you can see from the numbers there that we've we've been working smart over the last three years and we've also managed to put stocks in place just in case from the from the mine in front of the plant just in case we do hit problems with the rainy season the rains have started we've had 150 millimeter storms already happening and in a few hours and we're managing that quite comfortably at this stage but I say we do have stocks in place which will assist if we have any further storms like that but what we've got if we we are still focused on the operation we are still pushing the continuous improvement there's lots of items that we have still got on order that are going to come in to enhance the operations here and there just on the mills on the on the the the roasters etc. So we are still focused on the continuing improvement and the big plus for us right now is that we are unhedged going forward and we've paid all our debt off so we can enjoy the prices that we are seeing going forward. So if you look at what we're focused on, the three things that we're focused on is productivities, cost improvement and organic growth. It's as simple as that. So we should see some systematic improvements further over the next two years. Thanks very much. And with that, Chris and I will now take your questions.

Thank you very much, Terry and Chris. That's great. We have quite a few questions over the webcast today. The first question says, can you provide a sense of how the CAPEX profile compares in H2 to H1?

Tim, maybe I'll grab this one. So look, I think you can see in the results that we spent, I think it was $45 million in H1 in CapEx. With the ramp up in the CIAMR project, we're expecting that to double. So look, we expect to be on guidance. So I'm expecting CapEx and H2 to be around $80 million. That's roughly how the numbers work.

Great. The next question is, now you are building cash, do you have any plans to buy back shares or start paying a dividend? Further, you are now getting cash from the Ravenswood sale. Have you considered whether these funds should be directly returned to shareholders?

Yes, Terry here. I think as we said previously and shortly and previously on this call, we do continue and get excited about our organic pipeline of projects. And our thinking at the moment is by the end of the year, we will fully understand what sort of cash flow we'll need going forward for our Mako operation, potentially the Phase 2 Sea Armour and with a bit of luck, the Guinea project. So we're We'll be able to give some more colour on this towards the end of the year. But make no mistake, we're very sensitive to this and a lot of people are asking the same question. It's pointing time, but we will address it more in full, I would suggest, by about Q4 this year.

Great. And the final question from the webcast is, can you provide any more details around the mining code that was signed?

I think the key thing is that, you know, we didn't actually sign a new mining code. We have a mining code in existence and we got agreement with the government in Mali to honour this. And this runs out at this stage or would be revising in 2029. So at this point in time, we've got a good run forward and it's business as usual.

Brilliant. Thank you so much. That's all the questions on the webcast. So I'll hand over for any conference call questions.

Thank you, Rachel. And ladies and gentlemen, if you wish to ask a question over the phone, please signal by pressing star one on your telephone keypad. If you find that your question has already been answered, you may remove yourself from the queue by pressing star two. Again, it is star one to ask a question over the phone. Our first telephone question comes from Justin Chan from SCP Resource Finance. Please go ahead.

Hi, Terry and Chris. Congrats on all the progress you've made. It's great to see. Just one on the working capital side of things. You mentioned that the VAT had a $15 million impact in Q2. I guess, maybe just holistically, how do you expect VAT or sorry, how do you expect working capital to trend in H2? I know there's a lot of areas you're looking to kind of pick up some cash from reducing your stock levels, but also does that VAT impact if it's assuming the rates are the same going forward, presumably that that number will stay the same. So there won't be any more VAT impact or am I reading that wrong?

Hi, Justin. Maybe it's Chris here. I'll take that one. Look, a couple points. We are expecting to have more, call it, benefits of working capital because we do see additionally $10 to $20 million in inventory reductions. And we are also looking to work with our vendors to extend payment terms. VAT is a bit more tricky because we typically use VAT refunds to offset against other taxes that are due. And that number is traditionally about $5 million per month across the board. So we have seen a slowdown in getting our VAT refunds. If we don't get any more VAT refunds, you would expect a negative impact on cash of $5 million per month. But we are anticipating that the VAT refunds will start up again. And therefore, we're hoping to catch up on what was lost in Q2, if that makes sense.

That's very helpful. And then just one more financial question and then a big picture one. But the financial question is just on tax and timing. So I guess the cash tax you're paying now, is that relating to last year? So the increased earnings you're getting now will come through in tax next year?

Just that's a bit that's complicated because we pay some cash taxes relating to the current period. We pay some cash taxes related to future anticipated periods. So it's a bit of a mix of all of them. And then, like I said before, sometimes we actually minimize our cash tax payments because we use VAT mandates to offset cash taxes that are due. So it's all of the above. So it's not one that I can give you one clear answer on if that makes sense.

if that also that also makes sense it's a complicated one yeah i see i i guess from a modeling perspective that is the safest thing then to just kind of model it in line with the actual underlying earnings yes that's going to be the easiest okay um okay and then just maybe the big picture question is i mean they're generating quite healthy cash now um Also, the gold price is at quite a high level. However, on the other end, I think your mining convention is still 29. I'm just curious what your thoughts are on de-ballmacking the roaster and really unlocking Siam. I mean, all these factors. I mean, the price in your cash balance really kind of leans forward in favor of bringing that forward. But then there's the convention side of things. Just curious what your current thoughts are on that and where the engineering is at.

Hi, Justin. It's Terry. I think going forward, you know, we're very excited. We're working very, very closely with the government, specifically Marley, as you're talking to now. You know, they are very excited with the idea that we're expanding our operations. They like to see investment and they're giving us a lot of support there. And I think that does help with getting things like VAT back, etc. But we're still very optimistic with SIAMA. We think we've got a good working relationship now with the new government and the new ministers. I'm going in again in two weeks' time to meet them and we'll talk about the investment. Obviously, the key thing is for us, we still need to do a lot more work on the phase two. We expect we're only at scoping study level at the moment, but we have advised the government. They are very excited about that. They've known this mine, Sea Armour, as you know, since the 90s and really been waiting for this for quite a long time. So it's exciting for them as well. So we think we've got a good working relationship and we just have to continue. And both sides have to work hard on this. We all see that this is a large project and we all want to realize it. We've got a common goal there.

gotcha what do you think the realistic timeline at least on the engineering side for for having kind of a firm you know estimate of capex and timeline do you think you know end of end of 25 realistic yeah end of 25 is realistic and i think sort of you know construction you're going to be 27 somewhere around there so obviously getting close to renewal of your

your convention, your mining code, and that will play a part. That's an important asset of that. So we're doing the work early, discussing that early on, so there's no surprises later.

Okay, perfect. Thanks a lot, Terry, and thanks, Chris, and I'll free up the line. Thanks, Justin.

We will now take our next question from Reg Spencer from Canaccord. Please go ahead.

Thank you. Good morning, Terry and Chris. They're just echoing that, Sam, and congrats on a cracking quarter. I've got a couple of questions. Some I could probably take offline, actually. I'll just stick to the key ones. Just, obviously, you're going to have some weather impacts over the coming few months. You mentioned that mining and processing changes will be lower in the September quarter. Are you able to sort of give us an idea of what kind of quantum we're talking about here? And I presume we can assume grades to remain, you know, at current levels at all your operations.

Correct. Thanks, Reg. And good afternoon to you. Yeah, we normally internally budget around about 10%, but that is really a worst case scenario. 5% is more probably realistic. And I think, you know, this is probably the best year that we've prepared and ready. As we mentioned, you know, we had a, you know, a sub-level cave is literally like a sieve. So you, when it rains on the top of it the water collects at the bottom you pump to surface we've been through a cycle already of that with 150 millimeter rain and it's worked exceptionally well and you know we built up stocks of high-grade materials in front of plants so we're ready for it so so we think we're in a comfortable position but we're just you know we're just being cautious we're we're essentially a bunch of engineers here just sort of looking for worst case scenarios so there's no hopefully the surprises will be on the upside

That's very helpful. Thanks very much, Terry. Next question is just on the expansion. You've mentioned, obviously, the critical path items, you know, building the mill. And just thinking a little bit forward into early next year, can we assume that oxide processing in its current form ceases in Q1 or Q2? Is there like a cutover event or a period of time where that switches over? Just trying to understand the transition from the current setup versus what you'd be looking to commission early next year?

That's a good question. And the key thing is that we're going to have flexibility here because We think sort of Q2 is in our schedule, Q2 next year, with the commissioning with a sort of steady state by sort of July sometime. But the key thing is that if we, and we know some of, as we start the mining, which we're going to start in Q4, there are going to be some three gram a tonne materials coming up out of the ground, sulphides. What, however, we'd probably do with those, rather than wait for the mill at the SSC, we would probably swing them into the main plan because they'll be cheaper to mine them and they'll be slightly higher grade. So I think the key thing is we're going to have a lot of flexibility from sort of beginning of next year. Well, the original plan is to swing over to sulfides fully Q2, somewhere around there. But if we come across oxides that are good grade and low cost, then we can swing back, as we've always mentioned.

That's very helpful. Not many operations have that kind of flexibility. Okay, just last one on costs, maybe one for Chris. Just that inventory adjustment in Macca, obviously you've built up a bit of a stockpile there to deal with the wet season. Given the material movements, your waste and ore, I thought some of that inventory adjustment might have been a bit larger than what we saw on your oil and sustainer costs. I was just wondering how we should think about the stockpiles at Macco as we move through the wet season and what the potential impact might be on your oil and sustainer costs in the second half. Obviously, you haven't changed your guidance, but just trying to get a little bit more granular on that.

Yeah, hi, Reg. Look, so, yes, we do expect greater stockpile adjustments to work its way through the system in Q3. Looking at our budgets and our numbers and the forecast, I do expect ASIC to continue to really ramp down at MACO over the year, not only from just, call it, stockpile inventory adjustments, but also from raw savings on people and contracts as we are looking to, call it, ramp down the mining into next year. But I need to talk probably a little bit more into the numbers and work with your numbers to see exactly what you're modeling versus what we have to try and help you out. But we probably should do that offline.

That'd be excellent. That'd be excellent. That's all from me, guys. Again, congrats on a great quarter.

Thanks, Rich. And we will now take our next question from Richard Hatch from Barenburg. Please go ahead.

Morning, guys. Thanks very much for the call and congrats on a nice quarter. Just a couple of clarification ones from me. Just the first one, Chris, just on that 80 million of CapEx in the second half, is there much split quarter on quarter on that or is it best just to split it down the middle?

No, I probably would put 60% to 65% of that in Q4 and the remainder obviously in Q3. It's going to be much more back-end loaded with the Sciamma project.

Okay, very helpful. Thanks. And then the second one is... Just on recoveries at the sulfide, I mean, they've been nicely sort of ticking around that sort of 79% level last couple of quarters, better than perhaps on average sort of historical years. I think you have previously talked about wanting to get sort of above 80. Is that still, you know, the target? And, you know, if that is the case, then what is the sort of the timeframe to get there?

Thanks. That's a good question, Reg. What we've done, if you remember, we took the roaster offline and we did some work last year and a little bit this year and that's allowed us to take the temperature up only a small amount you know up to about 750 degrees from about 720 and that's actually helped us with the carbon burn in there so what that means is that the leaching now is actually creeping up the leaching recoveries at the back are 91 plus um however with the increased um throughputs at the front the uh the the flotation recoveries have come down slightly so we're putting a lot of work into the flotation side at the moment we just refurbished all our tanks we're looking at recommissioning the cleaners but i would suggest it will be through the end of the year and and early next year but there's a lot of focus a lot of work there i think longer term we certainly see that we can put extra flotation cells into the front end of the plant and creep those up. You know, we should be at 80. In the laboratory, I've always mentioned in the laboratory, you can get 81%. It's easy there. You normally discount that by 2% when you start a plant. So 79, that's where we are now. But given the experience, and that's really when you're in steady state. But I think that you'll see some creep up to the 80% systematically over time. Rest of the year and Q1.

Okay, very helpful. Thanks. And sorry, just last one, just on the expansion at Siama, just with the wet season coming up in mind, are you confident you've got all of the kind of critical items that you need to get done before the rains pour and it becomes more tricky to operate?

Correct. You know, the biggest issue on the plant is getting that concrete poured, which you've done. We obviously pushed hard to get that done before the rain started. And so we think that we're in a really good position now. Great.

OK, great. That's me. Well done, guys. Thanks a lot. Cheers.

Thanks, Richard. Thank you. It appears there are currently no further questions in the phone queue. With this, I'd like to hand the call back over to Terry for any closing remarks. Over to you, Terry.

Thank you very much. OK, thanks, folks, for listening today. As I mentioned, it's all we you know, we we've had a three year turnaround, but made no mistake. We're really focused on improving the situation. It's all about productivity, cash flow and organic growth. That's what we're focused on. We look forward to talking to you later in later in the year. Thank you very much.