Company Overview: Resolute Mining Limited is engaged in gold mining, and prospecting and exploration for minerals. The Company operates through three segments: Ravenswood, Syama and Bibiani. It operates over two mines, the Syama gold mine in Africa and the Ravenswood gold mine in Australia. The Syama gold mine is approximately 30 kilometers from the Cote d'Ivoire border and over 300 kilometers southeast of the capital Bamako. The Ravenswood gold mine is approximately 95 kilometers south-west of Townsville and over 60 kilometers east of Charters Towers in north-east Queensland. Its key development focus is in Mali. It has a portfolio of open pit oxide resources located in various satellite pits to the north and south of the main Syama pit. In Ghana, it owns over 90% underground Bibiani Gold Project. It is exploring over 10,800 square kilometers of prospective tenure across two continents and holds Birimian age greenstone tenure in West Africa, with tenements across Mali, Ghana and Cote d'Ivoire.

RSG Details

Syama Resource Upgrade:Resolute Mining Limited (ASX: RSG) has announced a major upgrade of underground resources at the Syama Gold Mine (Syama) in Mali, and the resources have enhanced significantly in both size and grade. The new mineral resource has been independently estimated in accordance with the JORC code 2012 edition, incorporating results from the Syama deep drilling program. Syama Underground Mineral Resource Estimate now totals 5.7 million ounces at 3.2 grams per tonne of gold. This is an increase of 39% from their earlier total underground resources of 1.6 million ounces. The total Syama Underground Indicated and Inferred Resources have increased to 55.9 million tonnes at 3.2 grams per tonne gold for 5.7 million ounces. The indicated Resources have increased by 42% to 45.6 million tonnes at 3.2 grams per tonne gold for 4.7 million ounces. The grade has increased by 14% from 2.8 grams per tonne Au to 3.2 grams per tonne gold at 1.5 grams per tonne gold cut off. A majority of the further 1.6 million ounces of resources is in the Indicated category and offers an opportunity for a major potential uplift in Ore Reserves. Moreover, the new resource estimate includes a maiden resource for the Nafolo discovery. This initial estimate only includes results from the drillings at Nafolo until April 2017.
 

Syama’s longitudinal projection with resource model (Source: Company Reports)
 
Forecasting more potential for Syama: Based on the maiden resource and the subsequent and ongoing drilling, the group believes that this new zone of mineralization at Syama would continue to grow. The maiden Inferred Resource for Nafolo discovery is of 400,000 ounces at 2.9 grams per tonne gold. Additionally, an updated mining study is underway which would enable an updated Syama Underground Ore Reserve estimate prior to the end of the current financial year. Syama optimization study has begun to investigate production expansion and cost reduction opportunities and also evaluating the unconstrained potential of Resolute’s Syama mining operations. Meanwhile, the Syama deep drilling program had started in December 2015 and continued throughout 2016. The results of the program have confirmed a major extension of the Syama mineralization at depth and identified a new discovery at Nafolo. The Syama orebody remains open at depth with opportunities for further mineralization to be identified along strike to the north and south. In addition, an updated mining study to establish a new Syama Underground Ore Reserve has started. The group forecasts this work to be finished by the end of December 2017. Along with this in parallel, the company would also undertake an optimization study for Syama. The recent work on autonomous trucking and loading, in addition to resource expansion, has identified options for expanding production rates from the underground mine. The Syama optimization study would seek to identify a maximum, or unconstrained mine production rate, and then assess options for expanding processing capacity to accommodate increased tonnage. The Syama optimization study will be finished during the current financial year and results will be incorporated into future Life of Mine plans and FY19 guidance.
 

Upgraded Mineral Resource estimate (Source: Company Reports)
 
September quarter activities report:RSG in the September quarter of 2017 has posted the gold production of 76,168 ounces as compared to the June 2017 quarter production of 70,654 ounces. They also controlled their all-In Sustaining Cost to A$1,397 per ounce or US$1,133 per ounce during the September 2017 quarter as compared to A$1,502 / US$1,127 in June 2017 quarter. The company has indicated for an average gold price of A$1,682 per ounce from gold sales of 61,480 ounces. In the September quarter, strong operating cash flow of A$54 million (unaudited) was also reported. Given the on-going progress, RSG maintained its FY18 gold production guidance at 300,000 ounces at an All-In Sustaining Cost of A$1,280 per ounce (US$960 per ounce). Syama Underground mine development continues be on schedule with pre-production ore of 28,408 tonnes at 2.8 grams per tonne Au delivered to the processing plant. Syama has US$ hedging contracts locked in with 96,000 ounces forward sold at US$1,330 per ounce to December 2018. Additionally, the company reported cash, bullion and listed investments of A$230 million / US$180 million as at 30 September 2017. The gold in circuit inventory as at 30 September 2017 are of 83,148 ounces worth A$136 million / US$107 million.
 
Significant lift in Bibiani total resource:RSG has recently announced an updated Mineral Resource estimate for Bibiani of 2.5 million ounces (21.7Mt at 3.6g/t Au), which is a 40% increase over the previous estimate of 15.7Mt at 3.5g/t Au for 1.8Moz. The resource upgrade included a 26% increase in indicated resources to 1.5Moz (13.3Mt at 3.5g/t Au). The updated resource estimate will be incorporated into an updated feasibility study, which is due to be completed by the end of 2017.
 

Bibiani Mineral Resources (Source: Company Reports)
 
Positive outlook: As stated earlier, the group expects gold production of 300,000oz at AISC of A$1,280/oz (US$960/oz, and a capital expenditure for growth projects at Syama underground and Ravenswood Expansion Project of A$162M (US$122M). RSG’s exploration budget is forecasted to be A$38M (US$29M). The group is continuing with the open pit mining at the BA-01 pit with a better oxide ore production from the BA-01 North pit. Mill feed grades are forecasted to rise as the underground development ore enhances towards ~500ktpa in the coming quarters. The underground development ore is forecasted to grade in a range of 2.5-3.0g/t Au and the higher sulphide content from the underground ore would lead to improved recoveries from the sulphide circuit. On the other hand, the group has engaged Optiro Pty for undertaking this work which is expected to be finalised in the coming days.  
 

FY18 Production and Costs Guidance (Source: Company Reports)
 
Stock Performance: The sharesof RSG fell over 17.5% in this year to date as on October 24, 2017, owing to commodity price volatility and challenges due to the transition of the gold mines at both Syama and Ravenswood to new long-life futures. On the other hand, the group has generated positive cash flows recently and sees a strong start to the financial year. The group’s major asset, Syama Underground project is progressing on schedule while the deep drilling campaign and the related discovery of Nafolo have identified major extensions to the known mineralisation at Syama. RSG has processed the first development ore from the underground mine which is a major milestone in the development of the flagship asset even though it is a relatively minor contributor to the overall production. The completion of a revised resource estimate for the Bibiani Gold Mine is a major progress towards the mine’s redevelopment as a low cost long life operation. The group has declared a final dividend of 2.0 cents per share which is equal to 2.7% of FY17 gold sales revenue of A$541M. This has been on track with their policy to pay a minimum dividend of 2% of gold sales revenue. Looking at the prospects and resource upgrades with positive exploration results, we give a “Buy” recommendation on the stock at the current price of $1.06
 
RSG Daily Chart (Source: Thomson Reuters)

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