It has been a long and painful journey but Resolute Mining’s belief in the Syama mine in Mali is beginning to pay dividends.
The miner yesterday forecast a modest 4 per cent rise in output this financial year across its African and Australian mines, from 398,452 ounces to 415,000/oz, amid increased confidence about Syama’s long-term contribution.
There is a sting, of course.
Cash costs will be $830/oz, compared with $750/oz in 2011-12.
Resolute blames rising input costs, the impact of the carbon tax at Ravenswood in Queensland, and waste stripping at Syama.
Resolute shares fell 3¢ to $1.31 amid a sea of red on the bourse.
The warning of higher cash costs this year will not have helped. It was only last week that Resolute’s board approved a $US241 million ($237 million) expansion at Syama that will see production increase to 270,000oz a year at a cash cost of $US720/oz. The expansion, which underpins Resolute’s bigger picture growth strategy, will comprise the expansion of the open pit and construction of a new one million tonne a year oxide processing circuit.
Work will start immediately and investors will be hoping the forecast increase in cash costs this year as a result of waste stripping at Syama will be short-term pain for long-term gain.
Investors will be hoping that Resolute can avoid the same pitfalls when it comes to commissioning the Syama expansion, and that beyond this year group cash costs begin to head south again.
Murchison selling down
Murchison Metals has taken another step in its self-liquidation, announcing yesterday it had sold the Rocklea iron ore asset near Tom Price to Dragon Energy for $3.2 million cash.
Dragon owns an adjacent tenement and combining the tenements of the Rocklea channel iron ore deposit makes sense.
For Murchison, it further tops up the kitty (which stood at $226 million at June 30) as the company prepares to return cash to shareholders ahead of being wound up early next year.
No to Geko deposit
Bullabulling Gold (BAB) has decided not to exercise an option to acquire the Geko deposit, saying it would have been too dilutionary and not in shareholders’ best interests.
BAB will instead focus on the “significant potential” of its Bullabulling asset, near Coolgardie.
BAB was created in March when Auzex Resources and GGG Resources merged. Auvex had signed the Geko option in January, with a proposed purchase price of $3 million. Geko is 17km from the Bullabulling asset.
BAB has struggled in an unforgiving market for juniors. Its shares have fallen from 29¢ at time of creation to 18¢ last night, which explains the lack of interest in issuing stock to pay for Geko.