Resolute Mining (RSG) – which listed depository receipts on the London main market this week – has a slogan inspired by a Chinese pig farmer’s simple explanation of his business – ‘kill pigs, sell meat’. But ‘Mine gold, create value’ might need a rewrite if chief executive John Welborn’s full vision of the company comes to fruition, although ‘pay dividends, bring institutions on board and change underground mining practices’ takes away the snappiness for someone who looks up to now-departed Randgold Resources as a gold-standard miner.
The miner, which trades at A108¢ (59p) on the Australian Securities Exchange, is currently on track to produce 300,000 ounces (oz) of gold in the 12 months to 30 June from its two operating mines in Mali and Australia at an all-in sustaining cost of $960 (£763) an ounce, and made $23m in cash flow in the six months to 31 December. Its arrival is happily coinciding with strong gold prices above $1,350 an ounce.
But beyond those numbers, Mr Welborn is selling Resolute as a company moving with the times. The Syama mine in Mali is automated underground and runs a fleet of electric loaders (the vehicles that take the ore from the face to the haul truck). There is also a plan to power the mine through a 50 megawatt solar plant, which will be finished next year. Syama is not yet in commercial production (measured by hitting 80 per cent of long-term production levels), but Resolute expects to reach this before the end of September.
Mr Welborn is critical of the mining world’s aversion to innovation, which is limited beyond the large-cap space. “The mining industry is incredibly stubborn in not adopting obvious technology,” he said. “The biggest surprise [from Syama], personally, is how obvious I think what we're doing is the right thing to do, but how challenging it is for the mining industry, even for employees who work for me, understanding our decision to go with an electric loader.”
The Syama project has a 14-year mine life currently and will ramp up to 300,000 oz a year, and see its all-in sustaining cost go down to $750 an oz, putting it equal to, or better than, long-term cost numbers at open-pit mines in the region such as Barrick Gold’s Tongon and Hummingbird Resources’ Yanfolila.
But this added production will not see cash flowing into investors' pockets just yet, as there is still plenty of capital expenditure needed around the company. Resolute is looking at how to get the Ravenswood gold mine in Queensland up to 200,000 an oz a year and also has the Bibiami project restart in Ghana, which fits more with Mr Welborn’s plan for the company to become a four to six mine, Africa-focused gold miner.
