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Thank you for standing by, and welcome to the Resolute Mining Limited June 2020 Quarterly Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. John Welborn, CEO and Managing Director. Please go ahead.
Thanks very much, Cameron, and good morning to everyone. Thanks very much for joining us on our June Quarterly Conference Call. I'm joined here in Resolute's headquarters in Perth by Stuart Gale, Resolute's Chief Financial Officer; David Kelly, Chief Operating Officer; and Jordan Morrissey, our General Manager of Sustainability. We're pleased to release the quarterly this morning. We headlined that with the 64% increase in the Syama Underground production to 35,000 ounces over the quarter, and that follows a 54% increase seen in the March quarter, an important improvement in main ongoing gold generator at Syama being the underground mine. And importantly, in the quarterly, we've indicated that 35,000 ounces from that production base should be seen as the new foundation, and further improvements are expected as we move that towards a consistent and sustainable 40,000 to 45,000 ounces of gold production a quarter. We indicated in the last quarterly conference call that we were expecting 80% recoveries in the June quarter, and that's what we achieved and that was part of that improved performance. And we'll hear from David Kelly on a little bit more detail of what the quarter contained and what we can expect going forward. The Syama oxide mine produced just over 28,000 ounces. That's well ahead of the run rate on our guidance for 2020, and we continue to be excited by the exploration potential as well as the available stockpiles we have to be able to maintain that operation over the next 2 or 3 years, while the other element of that production base is worked on and were reported and updated on the Tabakoroni Underground feasibility study that is due for completion very shortly. Mako had another very strong quarter, producing over 43,000 ounces, very stable, strong cash flow generation from our gold mine in Senegal. And followers of Resolute would be aware that earlier this week, we published a very positive updated life of mine for that asset, which delivered 39% more gold over the total expected life of mine and importantly demonstrates that we will average 140,000 ounces from that mine over the next 5 years. And life of mine from here is a further 900,000 ounces of production at an all-in sustaining cost of USD 900 an ounce. The June quarter also represented closure of our recent refinancing activities. And in discussing the quarter, Stuart will also have a discussion about that. We were pleased to close off on the acquisition of the third-party financing royalty early in the quarter over Mako. And I think the recent gold price strength and our extended life of mine demonstrates the sound strategic move that demonstrated. And obviously, we also completed the equity raising that was commenced in January and have now solidified debt structure, low-cost syndicated loan facility and its associated hedging. And our -- now our focus in the second half means very strongly to continuing the positive operations from Mako, the Syama oxide, improving the Syama sulfide performance, and using -- operating and strong corporate positive cash flow to pay down that debt. A key element of our June quarterly performance is obviously our response to the COVID-19 pandemic, and I'm really proud and pleased with the performance of our operating team and our management in our primary responsibility of keeping our people safe. Given that our operations are in remote parts of Senegal, Mali and Ghana, we also have a responsibility to the broader populations and communities where we work. And we've been very active in supporting government at all levels, country level, regional level and the local communities around we work. And that is absolutely part of our ability and our confidence in maintaining the safety of all of our people and therefore, keeping our mills running. And you see that in our strong commitment to our annual guidance. And obviously, we are at the halfway point and have produced just under 218,000 ounces of gold. We're slightly ahead on costs. We've guided USD 980 an ounce on the total annual production of 430,000 ounces, and we're just over 1,000 at the moment. But we do expect the improved production and cost performance from key parts of the mine in the second half, and we have had some COVID-related costs in the first half of the year that will normalize in the second half. To talk a little bit more detail about our response to COVID, I'm going to pass across to Jordan, General Manager of Sustainability.
Thank you, John. As John mentioned, the company has employed a comprehensive response to COVID-19 in the quarter, and that was largely driven by a risk-based approach employed by the CMT and EMT. That approach is one that's prioritized the health, safety and well-being of our workforce and our people whilst, at the same time, putting strong emphasis and priority on maintaining business continuity and building in business resilience. So we established a suite of controls that we implemented both across the corporate and West African environment. Those controls included health and hygiene measures -- a suite of health and hygiene measures followed by comprehensive health surveillance program. We have invested in validating those controls over a period of time, and we have seen a tremendous response from all sectors of the workforce in terms of their compliance with those controls to the point where our teams, particularly in West Africa, need to be commended on their response and to the extent at which they have taken this challenge seriously. We have established comprehensive operating escalation protocols, and the primary intent there is to ensure that we adopt a planned and considered approach to the ongoing and evolving challenges that COVID-19 presents. And we are confident in those controls to the point that they have allowed us to build that business resilience and we continue to operate the -- our mines in both Mali and Senegal despite these challenges.
Thanks very much, Jordan. And now to talk a little bit more in detail about our operating performance in the June quarter, I'll pass across to Chief Operating Officer, David Kelly.
Thanks, John. Look, overall, a good quarter, a very good quarter. And pleasingly, all of our operations performed to expectations and consistent with guidance, as John has mentioned. Consequently, we were able to produce 107,000 ounces for the quarter, which is in line, as mentioned, with our full year guidance of 430,000 ounces. It would be remiss of me not to mention or acknowledge the contribution of our workforce in achieving this outcome despite the significant difficulties imposed on us by the COVID-19 pandemic. In particular, I think it's worth noting that our expatriate workforce, both our people and contractors, have had to endure longer rosters than normal because of limited aviation services to the mines in West Africa. And despite this, and as Jordan has mentioned, our safe performance has continued, not merely to be maintained but to be improved, which is a testament to the professionalism and commitment of our people on site. Turning to the individual assets. Syama sulfide operation, as many of you are aware, suffered a significant disruption late last year. And really, the first half of this year has been rebuilding capacity in that business, which has essentially started with the recommissioning of the sulfide plant following the repairs to the roaster in the end of 2019. So I'm very pleased to report that in the June quarter, we started to see levels of plant throughput and roaster throughput and utilization and overall recovery consistent with that guidance. Gold produced from the sulfide quarter, as has been mentioned, increased by 64% to 35,000 ounces, following a 54% increase in the prior quarter. This was driven by improvements across the board in the processing area, in crusher and mill throughput, in head grades and in recovery. The increase in recovery is particularly pleasing and reflects a lot of optimization work that's been undertaken, particularly in the concentrator and roaster and calcine leach circuits, which are the core of the recovery process at the Syama plant. We retained surface stockpiles of around 500,000 tonnes. That's nearly 2.5 to 3 months' supply of ore, and that's allowed us effectively to ease back on underground production at the same time as we've increased throughput in the last quarter. So we've got significant operating flexibility both in the nature and the way the cave is being developed, the surface stockpiles we have, which means that we can fill the mill quite comfortably with the underground production plus those stockpiles. The increase in gold production saw a corresponding decrease in unit costs, which is a trend, obviously, we're looking to carry on in the last 2 quarters of the year. And as John has mentioned, we're working our way towards a more consistent target of 40,000 to 45,000 ounces per quarter from here on in. So 35,000 ounces is a great result. It's a stepping stone to where we want to have the operation residing more continuously from here on in. Turning to the other assets. The Syama oxide plant had another very solid quarter. As previously advised, we completed the current phase of open-pit mining at the Tabakoroni complex in the June quarter. In fact, that finished in May. As a consequence and as anticipated, the process grades were lower in the March quarter, but this was partly offset by some of the highest recoveries we've achieved in that plant over its 5-year life during the quarter and in a very consistent plant throughput once again. Mining is in a hiatus at present. So we're processing accumulated stockpiles for much of the current quarter, and then we'll restart the operations in September with the mining of the Cashew satellite deposit, which is located about 8 kilometers south of Syama. We've got stockpiles of over 3 million tonnes, and we expect to supplement those with a number of mining campaigns from additional oxide resources at Cashew, Tellem and Paysans, which are both located -- which all 3 are located in the area sort of 5 to 10 kilometers south of the Syama plant. And further opportunities around Tabakoroni would -- we actually believe will have at least one more phase of open-pit mining at Tabakoroni particularly around the northern and Splay pits, which drilling undertaken over the last few quarters is demonstrating has the capacity to provide further ore over the next year or so. And also, the northern satellites, we've been getting some very encouraging exploration results. That was the initial base for our open-pit oxide satellite operations in the period from 2015 to 2018 -- 2014 to 2018, I beg your pardon. And those areas remain highly prospective. So we see a continued strong contribution from the oxide business out to the end of 2022 at least, and that will be a combination of those stockpiled ore that we've accumulated in the mining campaigns to date, supplemented by other sources over that period. And finally but certainly not least, our Mako Gold Mine in Senegal has continued to be a stellar performer for us in the last quarter. It's a very consistent deposit both in terms of grade and metallurgical characteristics and ore presentation. And as a consequence, you will have noted that we've produced between 42,000 and 44,000 ounces every quarter since its acquisition in the mid of last year, and we see that performance continuing for the remainder of this year. And for that reason, we're very pleased to have confirmed it for the 2 years of mine life as a result of redesign and reoptimization work undertaken over the last several months. And one of the reasons we've been working with AMS over the last -- through our mining contractor at Mako over the last several months to bring in a larger class excavator has been to prepare us for those waste CapEx and also -- which we'll need to achieve the final pit dimensions. It will also allow us to accelerate waste movement and increase ore presentation in the current pit over the next couple of years. It's pleasing to note we will average 140,000 ounces over the next 5 years, and the total mine life of 7 years provides us a window in which to identify further resources in the region. And we're very confident that our exploration package around Mako has significant potential to do so. So overall, from the operations side, really a good, solid quarter. We made a lot of progress particularly in the sulfide business. We think there's more to go in both recovery throughput and mining and processing rates at Syama, and that's going to be the focus for the remainder of this year. Back to you, John.
Thanks, Dave. And now to follow up that operational summary with some of the details financially during the quarter both from an operating perspective and also balance sheet, I'll pass across to Chief Financial Officer, Stuart Gale.
Thanks, John, and good morning, everyone. I'll just focus on a few points, as John mentioned, around balance sheet and cash flow, which can really be drawn out of the cash flow graph that you see on our quarterly activities report on Page 8 or if you happen to be looking at the presentation on Page 18 of the presentation. I'll also just run through a brief update from a tax perspective and also on our hedge book. So I think what is immediately obvious when you look at our cash flow graph is that there continues to be quite a bit of tidy-up through this June quarter from the December challenges, which both John and Dave mentioned around the roaster crack. So when we look at this, there's a number of things that I'm not expecting to see as we move forward. So specifically, what we're looking at, when we see our working capital movement there, we saw about a $28 million outflow of working capital, and that working capital outflow is essentially to normalize our accounts payable balances and get it back into a position which we're comfortable with to run forward on a normal operating basis. So at 31 December, we had around AUD 150 million worth of accounts payable. And we've now, through the course of the March quarter and this June quarter, more specifically this June quarter, brought that back into a more sensible space. The next point I'd like to talk to there, which John also touched on and can be combined, is the equity raising and the Mako royalty payment. So the equity raising is again just a tidy-up from the equity raising which was announced in January, the $195 million which was split basically across 3 tranches. So the wrap-up of tranche 2 was essentially received during April. It was about 23 million shares. And then we also issued another 23 million shares to provide the funding for the Mako royalty acquisition. That totaled around $28 million worth of equity raisings, and of course, those raisings were done at $1.10 and around $0.85 at a very low Aussie dollar exchange rate. So if you do the numbers there, that's ultimately where we end up flowing through that $28 million of equity raising. A portion of that was then used to repay the Mako royalty, and that completed the -- essentially the Mako acquisition transaction that occurred in July last year. So now we're all done and dusted with Mako in terms of acquisitions, purchase price accounting, royalty payment and debt refinancing. So it's nice to have all of that squared away. That -- just again, to remind people, that Mako royalty was for USD 12 million. It was based on the previously operational life-of-mine plan and at a gold price which is significantly different to where it is today. So that royalty acquisition is a particularly good deal, I think, when you go back and look at it. Next point across there is net debt repayment. We had a few repayments for our Bank of Mali loan and also for some Sandvik financing that was -- that occurred during the course of the quarter. We, of course, will continue to be focused on allocation of capital towards debt repayment. That's going to be one of the key things as we move forward. So there's just some small movements made on that during the course of the quarter. Exploration and CapEx at $18 million. The prior quarter was $25 million. As we noted in that prior quarter or the March quarter, we're reasonably front-ended in terms of our capital spend. So our guidance for the year is to spend $70-odd million worth of capital on exploration and development on nonsustaining CapEx and sustaining CapEx of $30-odd million. So we're sitting at the moment at around $43 million of that $70 million, which is in line with our expectations. Net interest is just our interest payments for the quarter, nothing really to talk too much on that. And then I'd just turn back then to the royalty payments. We had royalty payments of around $10 million there. That's based on our royalty rates and obviously the gold sold, royalty rates just about 6%. And then probably the key thing there is VAT and tax. The VAT and tax of $17 million is made up of a $3 million tax payment that was made to the Mali government for our oxide operations in 2019. If you look back to our 31 December accounts, you'll have noted about a $20 million tax expense and tax liability. That's all fine. That relates specifically to those oxide operations and is agreed. So we've got another $17 million worth of tax that will flow out in the September quarter that will satisfy that tax obligations for our oxide operations. The balance of that is essentially VAT. The VAT is an amount which we should be able to recover. And you will also recall from our 31 December accounts that we were carrying about a $40 million receivable for VAT, which we can recover in Mali. Now that turns me to our tax discussion and the progress that we're making with the Mali tax office in relation to some claims that were put on us for the 2015 to 2018 years. We've responded to all of those claims. And just to remind the audience that we're vigorously defending all of those claims although have made a $50-odd million provision for them. So we've responded to them. We're working well with our advisers and have a plan, which we think will result in a positive outcome. We just have to wait for the Mali tax office to come back to us on that. And obviously, there's a few challenges in Mali from a political standpoint at the moment. So I'm sorry, but we'll just have to wait and see how all that progresses over the next little period of time. But again, we believe we have a very strong position in relation to all of those claims. So lastly then, I would just like to touch on the hedge position. So Page 9 of the quarterly activities report sets out our latest hedge position. We've got in place currently around 213,000 ounces of contracts that flow through into December 2021 at an average price of USD 1,624 per ounce. So we're obviously very happy to see the end of the Aussie dollar hedges that rolled off -- or that we sold into, sorry, in the June quarter. They averaged just over AUD 1,800 for that period. So as a result of that, our average price received for the quarter was USD 1,446 per ounce, which, of course, if you consider the spot price of around -- just over $1,700, $1,700, $1,600 for the quarter, we're obviously a little bit out of the money when it comes to all of that. But we're gradually improving this hedge book. We have a pretty flexible and discretionary policy that supports the funding obligations which we need to meet, and those funding obligations from a hedge perspective to ensure that at any point in time, we have a minimum of 30% of the next 18 months where the forecast production hedged. So we're a little bit over-hedged as you look at this table, but we've just put in place some recent hedges to ensure that we're well positioned as our July and August positions roll off. So John, I think with that, I'll hand it back to you.
Thanks very much. And Cameron, interested if there's any questions from the audience.
[Operator Instructions] Now your first question comes from Matthew Frydman at Goldman Sachs.
Sure. I've got a couple of questions. Firstly, on Syama Underground, I guess as -- I suppose we expected -- we've seen a step-down in some of those development expenditures during the quarter, clearly a step-down in lateral development. And you also talked about the healthy situation in terms of broking the blasted stocks. Just wondering if you can give us some context on -- can we expect that step-down to continue? And how important is that reduction in the development requirement as a driver in terms of getting your all-in sustaining costs down towards their targeted levels?
Matthew, thanks for that question. I assume you've got some others. So we'll deal with that really quickly. The short answer is yes, you can expect that to continue. And obviously, while we're focusing on production and the overall recoveries, it's important obviously that we also recognize that the sublevel cave at Syama is working really well and absolutely as we expected. We're seeing the cave propagate and under control in the manner in which we expected. The control center and the technology we've applied is fantastic when you compare it to some of the challenges we faced in the sublevel cave that we ran very successfully at Mt. Wright in Queensland. And so the tonnage and control of the cave is going very well and particularly dilution and grade elements. And that's allowing us to reduce, as you say, that development and CapEx expense. The other thing you'll notice in the quarterly obviously is that we've -- because of the roaster issues in the September and December quarter of 2019, we still have almost 0.5 billion tonnes of underground ore on the ROM pad. So the ROM pad is effectively completely full. And that allows us to manage the underground mining rates in order to maintain total processing. But in terms of that development CapEx and lateral development, I'll pass across to Dave for some further detail.
Yes. Look -- and John is correct in the sense there has been a material step-down in the required development rates. We've typically, through the last couple of years, been running between 700 to 800 to even 900 meters a month, but we will now settle at about 500 for the next couple of years, and that has a material effect on unit cost. So nearly half of total outlays in the mine were on development capital -- sorry, development advance. And so as we reduce development advance, that has a proportional effect on overall outlays in the mine. The other thing that's noteworthy in respect to development cave, as John has mentioned, is that we have to blast -- drill and blast less material to generate the same volume of ore as the cave advances. So whereas -- and I think we've repeated this a few times in previous quarters, whereas in the past, for every tonne we blast, we've only drawn about 0.5 tonne as we've been effectively creating the ore blanket and allowing the cave to propagate safely and appropriately. The situation is starting to reverse, and we will, by the end of this year, be getting about 0.8 to 0.9 of a tonne of draw for every time we blast. So that means, again, less activity to generate the tonnage from the mine that we're targeting. So that is a significant driver in the gradual reduction in unit cost. The other big driver, which isn't related to mining directly although mining is a consumer of this particular resource, is that our power cost will come down next year by about 40%. And that obviously directly goes to processing costs, and it goes also at mining costs for the maintenance of ventilation and pumps, et cetera. We notice that more in the wet season clearly when we pump more water, but most of the benefits are felt in the processing plant. And that should save us about -- over USD 1 million per month in direct outlays on that. So there's a few things that we're doing now that will start to affect unit costs in the latter half of this year but to an even greater extent next year.
That's great.
I think you have more questions, Matt.
Yes. Thanks for much for the detail there, the numbers, Dave. That's very helpful. Yes. Just a couple of other quick ones. Firstly, the Syama life-of-mine update that we're expecting later this year, can you, I guess, give us a bit more detail on what we might expect in that update? Is that just an extension of the work you're doing at the Tabakoroni Underground? Or are we also reviewing the Syama sulfide underground as well?
Thanks, Matt. Yes, we're looking forward to that. Obviously, we've indicated that we're close to completing the Tabakoroni Underground feasibility study, and there was some detail in the quarterly activities report. We've indicated that we don't think the capital demands of that potential new ore source for the Syama processing complex will be extensive. And we're looking forward to publishing that, and that will allow us to put out an updated life of mine for Syama. So you're correct that, that will include the Tabakoroni Underground. The other key element obviously that you'll see we're working on with exploration is more detail around the future oxide mine, and David spoke to that in his operational summary. But with the stockpiled material and the opportunities that we're developing at Tellem, Cashew, Paysans or nearby satellite deposits, the life-of-mine target is to demonstrate that we've got good 3 years of oxide processing, and that will allow us plenty of runway to transition that part of the Syama's production to a longer-term future with the Tabakoroni Underground mine. And obviously, the feasibility study and other work we're doing needs to answer all of the associated processing questions around that. So that work is programmed to be updated during the current quarter. That will allow us to put out a comprehensive life-of-mine update, which will, as you ask, also include updated expectations for the Syama Underground Mine in terms of referencing the 2016 feasibility study, the 2018 update that we published and indicating that those life-of-mine costs that originally were around that USD 750 mark. We'll be updating those to demonstrate that -- the advantages that Dave is talking about, which were largely programmed into that 2018 update, being higher recoveries, lower energy costs and lower mining costs as you progress through the cave. We'll update those and be able to demonstrate what people can expect from Syama over its life of mine. And we're particularly focusing over the next 5 years, and our ambition is to maintain steady, sustainable production similar to this year's guidance going forward.
That's great, John. Just finally, a quick one maybe for Stu. Thank you very much, Stu, for the data that you gave particularly around working cap in the quarter. That was one thing that did stand out to us. Just, I guess, quickly, the question is on the hedge book. You talked about the need to hedge a minimum of 30% of production over the next 18 months from a funding perspective. How should we think about how that policy might change as you, I guess, repay debt, generate cash from your operations and use that to repay debt? Will that, I guess, cause an adjustment in how you guys think about hedging or potentially a reduction in the requirement to hedge that 30%?
Yes, Matt. The funding documents have various triggers in them. And obviously, as we repay debt, then you get closer and closer to hitting some of those triggers. But we're a little way away from that just at the moment, but it's certainly one of those things we'll update the market with where we're at, at that point in time. But you can certainly see one of the things that we've tried to do is become a little bit more near-term focused from a hedge book perspective. So as you look at that table, you can see that for the next couple of months, we're 60,000 ounces hedged. So it's just less variability in the -- it should be anyway, in terms of the pricing today and the pricing that we're going to achieve over those next couple of months. So that's really been where the focus is. It's just to tidy up some of those sorts of factors. There are, as you would expect, triggers within the debt documentation that result in a step-down of those requirements. And there's also, of course, potential to renegotiate some of those conditions as well as we get closer to that point.
Your next question comes from Paul Howard at Hartleys.
Just a couple of questions. First one for Stuart. Stuart, can you give me any sort of update on debt repayment schedules, please?
Yes. Look, it's all going to be driven, Paul, around ultimately the free cash flow that we're generating at any particular point in time. So it's a little hard to give you the schedules off the top of our heads. But the reality is we have amortization that is part of the funding documents that we have in place, and they set out around $25 million worth of amortization that kicks in from next year on a 6-monthly basis for our syndicated loan facility, which is $150 million. So basically, you're going to have a natural repayment of debt that kicks in from next year, about every 6 months. Other than that, with available free cash flows, then we have certainly the flexibility within our funding structure with our revolving credit facility to be able to repay that pretty easily without any impact on cost.
Okay. Great. The second question was sort of following up on the previous one around the Syama life-of-mine plan. And perhaps Dave could answer this one. Do we expect to see like Nafolo? I think that's what it was called, the discovery from a couple of years ago. Do we expect to see that kind of come into play? Or what are you thinking there?
Look, base production for the sulfide business from the existing Syama reserves is more than adequate to see out our life of mine. So Nafolo represents an upside case or enhancement, if you like, for the reserves that underpin our life of mine. So probably it wouldn't feature in, if you like, the base case projections for production for the next 5 or even next 10 years. Clearly, it gives us a growth option that we're examining as part of an overall optimization of the asset at Syama, but it doesn't, at present, form part of our base case. But clearly, it's a great exhibition in a sense of the resource potential that remains at Syama. One of the interesting things about the business is that we continue to identify oxide deposits and extensions of oxide deposits, which will expand and extend our oxide operations. And as John is saying, we're looking for a minimum of sort of 3 full years of production from that source. But what that reveals is the degree to which we actually haven't done a lot of deep exploration. Nafolo, as you may recall, was discovered underneath the waste dump immediately north of Syama -- immediately south of Syama, sorry. And it exhibits, just as the discoveries we're making around the northern satellites, the discoveries we're making to the south, how little exploration has been done at depth. And so there's a bigger province, I suppose, opportunity at Syama that we've yet to exploit. But the fundamental life-of-mine plan is based on the existing sulfide reserves and augmenting that with Tabakoroni and oxides and obviously separately running Mako at -- in Senegal.
Yes. I think -- I'll just add, Paul. I think your 2 questions are linked because your question around debt, we do have a focus on reducing our debt. And obviously, as Stuart is saying, positive free cash flow and above our amortization profile will be preferentially used for debt repayment. And I'd add obviously that the strategic review we're running on Bibiani as well as the upside sharing payments and gold future payment we have from our Ravenswood sale all represent potential opportunities to reduce that debt quicker than just free cash flow and amortization. And that does link to our discretionary spend on things like exploration. So you're correct that we have not followed up the exciting opportunities at Nafolo and lateral opportunities off the sublevel cave because, one, it represents an investment in exploration that we're not making at the moment; and also, we're not being expansive with further development capital while we work on demonstrating the long-term future benefit of the existing operation, and that is a 2.4 million tonne per annum sublevel cave operating at 85%. And that's the key operational focus at the moment, and the key financial focus is debt reduction.
Your next question comes from Warren Edney at Baillieu.
I've just got a couple of questions on stockpiles. Firstly, with the oxide stockpiles, there's obviously a lot to choose from there. Do we assume an average grade of the 1.36 over the year? Or can you sort of muck around with where you draw the stockpiles -- stocks from the [ Tabakoroni ] oxide mill?
You're right, Warren. We can muck around a little bit. The grade ranges vary from 1 to 2 grams within that overall 1.36 volume, but there's a couple of other complexities in that slightly lower grade material that's located adjacent to the mill, might be preferable for us to process than -- compared to stuff that's 30 kilometers way down at Tabakoroni of marginally higher grade given the haulage cost. So what we'll probably do is average withdrawals from stockpiles at about 1.5 grams this year, and then that will decline over time. And obviously, what we're looking to do is supplement that stockpile mining with as much supplementary higher-grade material from the oxide open pits that we'll be exploring over the next couple of years. The aim is to keep a head grade on average at [indiscernible] grams or better for '21 and '22. And the work we're doing now in re-optimization design, extra drilling, extra exploration effort that we're making at the moment is supporting that ambition at the moment. So our aim would be to keep the overall average head grade at something around 2 in '21 and '22.
And now just going on to the underground. Obviously, the stocks that you've got on surface also included a proportionate development ore, and the grade is improving. Will the grade continue to improve? Or is it sort of going to also be a sort of a blended feed into the mill this year?
Look, I think if you look at the reserve grade, it's 2.7, and we ran last quarter at 2.8. So clearly, we're at [indiscernible] grade, and I'd expect us to stay there, give or take modest fluctuations as you get from time to time from here on in. So it's not an ore body that we would expect to see dramatic fluctuations in grade from quarter to quarter and now that we're up and running.
[Operator Instructions] Your next question comes from Kate McCutcheon from Citi.
Congrats on the quarter. You said that Syama would hit 80% recoveries, and it did. Two Syama questions. What are the next steps for the things that are kind of left to do to get to those mid-80 kind of recovery numbers? And is it something that -- where we should look for in '21? And then secondly, you're able to talk about the automation. Is autonomous haulage still something that you're working towards? And a bit of an update on how that's all going.
I think I'll answer that in the order in which you asked them. The next steps are probably a combination of ongoing optimization particularly in the flotation and calcine leach circuits and in roaster operation. At the concentrator, what we're going to do is introduce an onstream analyzer probably in the next 6 to 9 months. What that will give us is get better control over sulfur grades and mass pool and, therefore, enhance the product going to the roaster and hopefully improve recovery at the concentrator step. And at the concentrator, we lose the most gold at -- in the entire process. So that's the area where the grade gains are. And interestingly enough, over the last several years, it's the area where we probably had the least instrumentation and ongoing process control. So we see a really easy win there. The other thing we're doing is working on a whole lot of sensors around the plant to improve, in particular, density control from the concentrator into the roaster. The combination of the slurry density is very critical to the operating temperature of the roaster. And so we've finally taken possession of a series of nuclear densitometers, which we ordered some time ago and which will give us much more precise, minute-by-minute control over feed densities into the roaster. Also, densities from our -- from the -- from this calcine regrind circuit, which feeds in the [ CIL ] circuit. So those are all sort of incremental improvements that we expect to eke another 1% or 2% out of. The other thing that we've left off -- on the shelf at the moment is our float tails leach circuit. We made the decision to suspend that early in the year so we can focus on those other 2 core circuits which generate the bulk of the 80-plus percent recoveries that we're now securing. And then that's the next cab off the rank, and that's -- that would give a material lift in recovery, probably another 2% or 3%. But we're keen to ensure that we have a couple of things right before we recommit to that circuit. In particular, our carbon regeneration circuit probably struggles to do the volume of carbon that we have to manage when we run all 3 lead circuits. So we're needing to work on that to ensure that we have sufficient capacity. So it's a process of gradual improvement. I mean we're really thrilled to get over 80% from what is a very complex and metallurgically challenging ore body, and I think it's a great testament to the work that the guys on-site have done to achieve that for a quarter. And we're going to now consolidate from there and move forward. On the question of automation, I think where we got to with automation at the end of last quarter is we've done a quite successful series of trials particularly on the trucking between late 2019 and early 2020. What they demonstrated is a capacity to autonomously fill and then drive trucks as a service, disgorge their loads at the ROM and then return underground unimpeded by the presence of a driver in the seat. What -- the single limitation of that circuit is the fact that we have to operate it in complete segregation from rest of the mine and that means we have a dedicated decline with passing bays, et cetera, to manage that traffic. Because of the COVID restrictions, we've suspended those trials for the moment, and we're operating in manual operations for the trucking fleet. What that has obviously provided us is with fairly good comparative data between the 2 operations. And because the manual operations and the benefit of operating a twin decline, we are still achieving, for the moment, higher speeds and, therefore, higher volumes of truck material through that process and by automating that particular element of the mine. So our view has been very much to put the owners back on our suppliers and say, "Well, look, is there a way in which you can operate effectively with the automated trucks integrated with the rest of the mine traffic," so that they get the benefit of the looped twin decline as opposed to the single decline. And that's something that I think will develop over the next little while. The interesting thing about the trucking fleet is that to move the 2.4 million tonnes per annum, we actually still only need 6 trucks. So it's not a particularly large inventory of machinery to run that process. When it gets deeper, then there's obviously more benefits in reduced haulage numbers. Other elements of the automation are going very well. The production drilling is pretty much all automated, and we're getting good -- very good penetration rates and very good accuracy with that drilling, and that's reflected in the performance of [ the K ], which, after the usual teething troubles, is going very well from a drilling and blast perspective. We're also looking to introduce wireless blasting. So that again reduces both time and setting up and charging rings but allows us to have several rings sleeping, if you like, during the cycle, which means we'll get more productivity out of that element of the mining cycle. One of the interesting things is the whole drill-and-blast cycle, which is an important part of the production system, a disproportionately large time is actually taken up by charging. So we've actually introduced a new emulsion provider, Orica, who's been looking to provide this WebGen wireless blasting system, which will also, we think, give us the speed and efficiency and also safety benefits. So we're very keen to pursue that. So automation remains a really important element of our overall improvement opportunities at Syama. And then it also extends into the mill. We're actually implying to one of the 30-year old plants a lot of new sensors and a lot of new systems to give us much greater minute-by-minute control over various elements of the circuit. So I think it's always important to see automation as -- and technological enhancement as something that covers the entire value chain, not merely the underground mine.
That concludes our question-and-answer session. I will now hand back to Mr. Welborn for closing remarks.
Thanks very much, Cameron, and thanks, everyone, who's joined us on this call. A summary of a solid quarter from Resolute, strong signs that the Syama Underground is setting new benchmarks for production. The journey of recovery stepping up from 75% last quarter to 80% this quarter and now continuing to target towards long-term threshold of 85% is something to continue to look at and to improve, and we'll see that being part of a reduction in our ongoing costs when associated with the power plant and other aspects of the mine. In summary of the quarter, I'll just provide some view on our outlook and focus on half a dozen points. The main one being what I've already mentioned is that we are looking for further improvement in the Syama Underground operations, which are now largely stabilized. The mine itself is working well and the processing plant continues to improve and operate to inspections -- to our expectations. Syama oxide continues to be a solid generator, and we look forward to updating the life of mine during the current quarter. And Mako, as David said, a very consistent performer, and we're excited about the life of mine we published during the quarter. Looking forward, this quarter, we're going to publish a feasibility study for the Tabakoroni Underground mine, an exciting organic growth opportunity, and that will allow us to update a comprehensive life-of-mine plan for Syama, which will include the updated cost outcomes and forecast production from the Syama Underground Mine and then the transition from the Syama oxide business to a longer-term Tabakoroni Underground business and provide clear clarity for the Syama mine. And when matched with the recently published Mako life-of-mine update, we'll be able to provide people with a very clear outlook on what to expect from a production and cost point of view from Resolute across our Mako and Syama operations over the next 5 years and beyond. The team continue to focus on the resolution of our Mali tax issues. And we have some exciting exploration, ongoing exploration, and that is all driven around improving our existing business. And we're pleased that the exploration crew is now back in place in Mako. And in addition to continuing our extensions of existing Mako ore body, that exploration is also going to look, for the first time in Resolute's case, at some of the really exciting regional opportunities we have in our tenement package in a very prospective part of Eastern Senegal, which provides opportunities for even more mine life extension and value creation from our Senegalese asset. With that, the rest of the team and myself will continue to work very hard to keep our people safe and to build value for all of our stakeholders in Resolute. Thanks very much for your time today.