Resolute Mining Faces Challenges: Lower Production and Rising Costs Ahead
Resolute Mining anticipates lower production and higher costs in 2025 due to the nearing depletion of its Mako mine and fiscal changes in Mali. The revised production guidance is set at 275,000-300,000 ounces with AISC between $1,650-$1,750 per ounce. The company faces pressures due to increased government contributions following a recent tax dispute and regulatory changes, affecting its overall financial position.
Resolute Mining (ASX: RSG), a gold producer focused on West Africa, announced lower production expectations and increased costs for 2025 as its Mako mine in Senegal approaches depletion and new fiscal changes in Mali escalate expenses. The company forecasts production between 275,000 and 300,000 ounces, with all-in sustaining costs (AISC) projected at $1,650-$1,750 per ounce, notably up from 2024’s $1,476 per ounce at 340,000 ounces of production.
In late 2024, Resolute encountered significant challenges due to sweeping fiscal reforms imposed by Mali’s military-controlled government. CEO Terry Holohan and two executives were detained amid a tax dispute, resulting in a $160 million settlement after 20 days of negotiation. Acting CEO Chris Eger noted Holohan’s return to the company is expected to be clarified soon.
The company’s financial state has been impacted, with cash and gold holdings now at $101 million post a $30 million payment to the Malian government in December. The agreement with Mali is set to inflate the AISC by $250 per ounce, driven primarily by increased royalties that rose from 6% to 10%.
The Malian government has increased pressures on international mining firms to contribute more, following changes to the mining code introduced in 2023, which effectively requires substantial contributions to community development. Among the firms affected are Barrick Gold, B2Gold, and AngloGold Ashanti.
Despite these hurdles, Resolute remains committed to enhancing operational efficiency. The company successfully increased production at its flagship Syama mine in Mali and plans to develop the second phase of operations this year, although some investments, such as a $100 million sulphide conversion project, have been postponed.
The Malian government maintains a 20% stake in the Syama project, which processes approximately 2.4 million tons of ore annually. Resolute has focused on optimizing mine sequencing to ensure short- and medium-term cash generation while contemplating long-term capital strategies.
Beyond Mali, the company is targeting opportunities in Guinea and Côte d’Ivoire while navigating the complex political dynamics of West Africa. For 2025, Resolute emphasized its objectives of adding value in Guinea and Côte d’Ivoire while managing the increasingly complicated political climate.
Shares of Resolute Mining dropped 3.6% to 41 Australian cents, resulting in a market capitalization of A$862 million ($537 million). The share price has experienced a steep decline, more than halving since October 2024, following the onset of fiscal troubles in Mali.
Resolute Mining’s production and cost challenges stem from the depletion of its Mako mine and new fiscal regulations in Mali. The company’s strategic operations are affected by government policies following a military coup, altering the financial landscape for mining firms. The shift in regulatory expectations and operational hurdles necessitates adjustments in production forecasts and cost structures, leading to increased financial strain on Resolute Mining.
Resolute Mining expects reduced gold production and increased costs for 2025 due to challenges at its Mako mine and fiscal changes in Mali. Following a tax dispute, the company has settled significant payments impacting its financial performance. Despite these challenges, Resolute continues to seek optimization and opportunities in Guinea and Côte d’Ivoire while adapting to a complex operating environment in West Africa.
Original Source: www.mining.com
Post Comment