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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Thank you for standing by, and welcome to the Resolute Mining Limited June 2022 quarterly report. [Operator Instructions] There will be a presentation followed by a question-and-answer session. [Operator Instructions]
I would now like to hand the conference over to Mr. Terry Holohan, CEO. Please go ahead, sir.
Thank you very much, and good morning, ladies and gentlemen. Thank you again for taking the time this morning to join us. I'm joined this morning by Doug Warden, he's our CFO. He's been on several of these calls already. And then introducing Geoff Montgomery, who has taken over as Chief Operating Officer from me, the operation. He will talk to the operations side in a little bit more detail. Very quick background, Geoff has been in this industry now for over 35 years and has been involved in this project over 12 months now working on the technical side. So he knows our operations very well. And I'd like to say that the handover from myself to him has gone seamlessly.
What I'm planning to do is I'm going to go through the highlights, very quickly go through the highlights and hand over to Geoff to go through a bit more detailed operations, then to Doug for the financials and then go to question and answer.
Starting with safety. I think we're very proud now that we've got now below the magical 0.9 of recordable injury frequency rate. This we've achieved, I think, over a very difficult period. It's the first time in 12 months we've been back at these levels. And if you remember, we talked to you extensively about it on the last quarterly. We also included the 60,000 man-hour sulfide plant stoppage in Q1. At that time, we couldn't bring in a lot of external labor. So we dealt mostly with 90% of the contractors from within Mali and Syama depth. And so we're very proud of our record on safety, where we are right now.
In terms of the Malian situation, you've probably heard that ECOWAS has finally withdrawn the sanctions, we said it in early July. I think we mentioned last time we expected this to be in June. And it was a month late, but well received by everybody. And the country is presently recovering. It'll take a little bit of time, and they're already starting to focus in the city on the elections, which they believe will take place now within 2 years.
There's still activities, security issues in the country that is ongoing. We're still monitoring very, very carefully. And again, at this point in time, we have not had any scares or interruptions to our business, and we've been carrying on our business as usual.
In terms of production, we've again poured a little bit more gold than we planned. Again, we've released a little bit of metal from inventory. And we're now operating at a run rate over this last quarter of over 350,000 ounces per annum. And this is where we expected and we hoped we'd be, and we actually mentioned a couple of quarters previously.
More importantly, we have now recorded 4 quarters in a row of continuous improvement, and we expect this to continue going forward. The individual operations, Mako is humming along nicely. Geoff will give you a bit more information on that. The sulfide is a big story for us.
After 18 months of intense focus on the sulfide plant, which we've always said at the bottleneck, the new bottleneck is now the mining. It's swinging across out right now to the mining and to the milling circuit, where the teams -- just teams are actually focusing to see how we can unlock those sections.
The Syama plant is now operating at a run rate of 2.4 million tonnes per annum. If you remember last year, we had a record 2.1 million tonnes per annum through that plant. And so we are finally excited that somewhat -- after somewhat 30 years, we think we've ticked the box on the processing of this challenging double refractory gold mineralization at Syama.
And that's quite a big step forward, we think. I've said this before, but I'll repeat it again. that the sulfides are the future of Syama, where we already have a respectable 7 million ounces in our books, but we are still counting. We're still adding to it. I'll talk about that shortly. We're adding more sulfide material, as we speak, to our balance sheet.
Now we've got a stable sulfide operation, we can finally focus on the operational costs and efficiencies on that circuit where we believe opportunities do exist while we are continually looking to expand it further.
The oxide circuit, given the rain started early in June this year, we spent a lot of time in the first half of the year preparing for the open pits of the rainy season and beyond by focusing on both grade control and pre-strip. And the mining team do maintain that they will meet their overall plan, which is always back-end loaded with the highest grades coming through Tabakoroni in Q4 this year.
With the cost and price pressures that we're all facing across the industry, this is a circuit where we are most sensitive for fluctuations in costs, so focusing all our efforts on productivity as a priority.
Longer term, we are now looking at the feasibility of converting the oxide plant to a sulfide plant by adding the flotation section. And again, Geoff will give you a little bit more detail on that and all the other points there.
In terms of all-in costs, yes, we recorded a top line number of 11% quarter-on-quarter increase. However, I'd like to bring to your attention that if we look at pure cash costs only quarter-on-quarter, i.e., excluding the noncash adjustments, we were actually flat due to the extra units that we did produce for the month.
Of note are the spikes in diesel prices in Mali. We had some panic buying, low availability. This is obviously also with the sanction lease, et cetera. We saw prices fluctuating in the range of $1.2 to $1.3 a liter. While in comparison with Senegal next door, the prices are close to $0.76 per liter.
We all know, we've experiences in history before this, if these prices are sustained, these high energy prices are sustained, they tend to have [indiscernible] not on effect to all raw material prices and consumables. And we are maintaining our focus on both extra gold units, as I mentioned previously, in the previous call, and higher productivities as well as improving our dosage systems and effort -- sorry, to offset any potential increases.
We also have some extra one-off costs, which is open pit grade control. We're now several months in front of the mining now, whereas I mentioned couple of quarters, we need to get that space in front of the mining, and we've done a lot of pre-stripping, as I mentioned.
There are also noncash costs associated with further release of Golden Circuit and the sulfide operations. And Doug will give you a little bit more color on the situation on the costs.
Exploration. I think, again, with the big tick in the box, the sulfide processing, this is becoming a step change for us at Syama. The geologists have got back out there and they've been reinvigorated, and they're out there looking for higher grade sulfide. I mentioned we've got 7 million ounces already. But we've returned to the original A21 satellite pits, which are 4 kilometers north of the Syama complex. If you remember, in '21, we upgraded these pits. At the end of the year, we recorded a mineral resource of 1.4 million ounces at a grade of 2.14.
While this year, we've drilled a 2.5-kilometer fence line with 150-meter deep holes. So they're not deep holes at this stage. Underneath the spacings, and we've been hitting anomalous gold in every hole, we then detected a whole range of higher-grade intercepts, which we published over the last quarter.
We're presently infilling this first pass, which will take most of the rest of the year to complete where we'll have a full MR estimate probably for the end of the year. However, we will produce an interim mineral resource of some of this easily accessible mineralization, which in terms of grade tonnes is something exciting.
By September, with a view to give us time, if we're looking at over another sort of 18 months, we'd like to actually develop this in competition to the underground, which also gives the underground the opportunity to advance and increase its production at a slightly slower rate and thereby not compromising the grade.
We've also initiated a helicopter low-level high-density aeromagnetic survey. This is now at 50-meter line spacing, east, west over the whole 85-kilometer strike, and we're very excited to see what that [ work is ]. Given the helicopter is only 20 meter above ground, this would be a very high resolution aeromagnetic survey.
And we've also completed our first underground core exploration drilling bay, although it is covered at grade control. We've now got an exploration drill at the 950 meters RO level. And this is annexing the higher-grade southern section, which we've discussed before, which we know has got some higher-grade material, some long-haul open stope opportunities. Given the original exploration model accounts for about 5% of the overall underground ore reserve, and this was at the higher-grade end.
Okay. So that's exploration. Debt, you'll see that we've paid down another $15 million on our RCF facility. So in summary, I feel we've had a very busy quarter, but a very rewarding quarter. I think we made some key, key steps here. And we do maintain our 2022 guidance of 345,000 ounces at $14.25 per ounce.
And with that, I'll pass over to Geoff to just give you a little bit more color on the Mako operation -- sorry, on the operations. Thanks, Geoff.
Thanks very much, Terry. Good morning, everybody. Starting off on Mako then. Obviously, one of our primary focus is on safety, as it is to all our operations. Pleased to announce that we've had 0 LTIs for the quarter. However, one area of focus that we're looking at is fatigue. We're finding that as we're having many high potential injuries due to fatigue incidents. And I'll talk a little bit more about what we're planning to do about it when we get to the Syama where we have a pilot program in place.
On the mining side, we achieved better grades in the pushback area, a lot less impact on the scheduled mill stoppage. I'm very pleased that the mill optimization software that we've been working on for the past almost a year now, is nearing completion, and we've achieved better grind and better recoveries. This has enabled us to reduce the number of mill relines from 43 per year. In addition to this, the TSF lift has been completed. On the metallurgical side, we are now using hydrogen peroxide as a temporary measure. This has allowed us to improve our recovery by 0.6%. We have ordered an oxygen plant, which we expect to be up and running quarter 1 in 2023, which will keep this increased recovery. The recoveries has remained 2% above the budget, and we're forecasting recoveries of 92.5% for the remainder of the year.
Also on the mining side, we are just about to sign up the contract extension for the contract mining at AMS. Other work that -- other things that we are doing is the power plant contract, which expires in October. We are also very close to changing our contract over to another service provider. And once that's complete, we'll be investing in the use of solar power to reduce our greenhouse gas emissions.
Also on the ESG side, we'll look -- we have an exercise where we're looking at water conservation by water collected from the pit and improved water recycling and also reducing our water in the TSF. This has resulted in 10% less extraction from the Gambia River. This is an ongoing process. We have started a cost reduction exercise due to the cost pressure that Terry has alluded to, and Doug will explain a little bit later.
One of the other key focus areas that we are continue in both operations is continuous improvement. And I'm pleased that, that is not just a manager exercise. It has been adopted by all levels of staff on the mine.
Moving on to Syama in general. I'll talk a little bit more about safety and the fatigue issues we have. We have a number of high-potential incidents with heavy vehicles caused by people falling asleep. We have installed in the cabs monitoring equipment now. So for example, if you yawn, it talks to you. Yawning and [indiscernible]. If your eyes close, it talks to you and warns you. If you go on to your cell phone, it warns you, amongst a few other things.
And I'm pleased to announce that the 60 incidents when we first started have been reduced to 10 per day. Still a long way to go, it's still unacceptable, but we're working on that.
The -- we're also looking at installing solar power on the TSF. That's a longer-term project for us.
In addition, the culture continuous improvement we've talked about is also being adopted by both the management and lower management teams. And we're doing that via the [ most ] consultants.
Moving on to sulfide. Again, starting on the mining side. We're focusing on the underground fleet availability. We're not where we want to be, and we're also looking at the fleet type.
During the quarter, we focused on dewatering the underground to improve safety and operability and efficiencies in the underground. Also, a new area which we'll be exploiting in 2023 is the Syama site, where we'll be doing long-haul stoping. The advantage of that for us is that it would provide a higher grade than the current Syama block here, and it utilizes the existing infrastructure.
As Terry alluded to, the A21 pit is starting to look very good. And we're still drilling and modeling there.
With respect to the outlook for the grid for underground, we continue from the conversion to -- from transverse to longitudinal to increase the grid. However, that's in appropriate areas only, where the geology allows us.
Moving on to the processing plant. The roaster performance during the quarter, we had a record tonnage. And in fact, we're now able to process 10% more above the mill equivalent. So it gives us catch-up area, catch up capacity. So this has enabled us to decrease our gold in circuit by recovering gold from ponds and various villages on the floor. This will continue for the next quarter.
We're expecting to start depositing in-pit field in the old Beta pit in quarter 4. So we have now completed our last capital intensive TSF raising for a number of years.
Unfortunately, we've had delays in the commissioning of the cleaner flotation cell circuit and the onstream analyzer. This is due to issues with the presentations to the sampler. I'm pleased to announce that we have had breakthroughs with that in the last two weeks. And I'm hoping over the next few months, we'll be able to get the cleaning circuit on OSA online, allowing us to have a reduced mass pool and increased recoveries that we thought we were going to get earlier in the year.
We have also completed the new reagents, efficient circuits, [indiscernible] and they cover sulfate, and this gives us better control and ability to reducing reagent consumption. With the long stoppage we had in quarter 1, we're now able to increase the period between roaster shutdowns. So we're expecting another shutdown 3 years from a shutdown in March, which we will be doing to replace the burners and do some work on the [ spray color ].
After that work is done, we will then move to 5 yearly shuts, which is a huge improvement from the biannual shuts of the past. We are maintaining our focus on debottlenecking the milling circuit to -- in an effort to utilize the install capacity around the motors. We have had a consultant on site recently, and he's looking at what short-term things we can do and what are the longer-term options. In addition to this, we have initiated what we call the enhancement project, which will be looking at approximately a 30% increase in -- sorry, 25% to 30% increase in mill tonnes ounces.
This study was done at a prefeasibility study level, and we're hoping to complete that by the end of the year. The mine operating system, MOS, has worked extremely well in the processing plant and maintenance. We are now self-managing that in those 2 areas. However, we are now trying to extend that to the mining and supply on a couple of other areas.
On the oxide circuit, it was a difficult quarter for us. However, we completed the wet season preparation to [indiscernible] season. In addition to this, we will complete the prestrip at Taba during this quarter. So we will see a significant reduction in strip ratio in quarter 4, which obviously will reduce our cost and gives us access to higher grade ore.
The other point of note is we were very much living hand to mouth with bit control drilling and mining. I'm extremely pleased that we had control drilling is now several months ahead, [indiscernible], enabling us to do better mine planning and more efficient mining.
Over the remaining six months of the year, we're going to be focusing on grid dilution of the pits. The other -- on the processing circuit for the oxide materials, we have done some changes in the oxide combination circuit, and this has led to a 4% additional throughput, which, to some extent, has offset the reduction in grids.
Thank you very much. We can hand over to Doug now.
Okay. Thanks, Geoff.
Go on, Terry.
I was just saying, as you can all appreciate, there's still a lot of work ahead on the technical side. And I think we've got a very capable team in there now focusing on all these productivity improvements.
Okay. Let's move across to Doug to take us through the financials.
Yes. Thanks, Terry. Yes. Look, I'll just take a few minutes to provide some additional color on all-in sustaining and cash costs, the cash flow waterfall for the quarter and a bit of an update on the hedge book.
Just touching on unit costs. So the June quarter cash cost per ounce of $14.72 were broadly in line with the March quarter of $14.86, as Terry said, with higher sulfide and Mako throughputs and grades offsetting higher cash costs, additional tailings storage CapEx and lower quarter-on-quarter benefit from gold recovered in circuit as well as the oxides that have been talked about already.
Like everyone in the industry, we're facing higher input costs, which is largely centered around diesel, but also consumables and heavy fuel oil, which is used for the Syama power plant. Just by way of example, fuel costs were approximately $4 million higher in Q2 than they were in Q1, and that was all related to Syama. Costs were actually slightly lower in Senegal because of how the government prices for diesel in their country versus what we pay in Mali, as Terry has already alluded to in the cents per liter quotes.
So while unit cash costs per ounce were broadly in line with the March quarter, obviously, the June quarter all-in sustaining costs, as reported, were up 11% to $1,540 versus $1,383. That increase was predominantly due to noncash inventory adjustments, which we outline on Page 2 of our quarterly.
I guess what I'd urge you to look at is the position at the half year. So notwithstanding the quarter-on-quarter movements, which include the impacts of the roaster shut and the significant gold recovered from circuit in the first quarter, in the March quarter. If you look at it at a half year level, group all-in sustaining costs were $1,463 and those noncash movements was actually a benefit of just $14 an ounce. But if you actually go through the quarter-by-quarter, there's some significant swings there in the inventory, which happy to take any questions on.
I note that, as I mentioned and Terry has mentioned, the higher sustaining capital in the second quarter that feeds into that all-in sustaining cost as well, it's about -- was about $6.3 million higher in the June quarter than it was in the March quarter. And as Terry and Geoff have touched on, that was largely relating to the periodic spend on tailings facilities. So we should be right for some time to come now in relation to tailings facilities.
Just moving to the cash flow. And I'll draw your attention to the waterfall chart in the quarterly as I speak through that. Operating cash flow $42.3 million for the quarter. We've already talked about the CapEx, $19 million, which was higher than normal and more weighted towards sustaining CapEx and hence, impacted all-in sustaining costs.
Exploration, broadly in line with previous quarters, which was largely centered around that drilling that Terry was talking about at Syama, but also some work at Mako as well. The working capital we've just drawn attention to here, negative impact of nearly $24 million. This was really, as we said in the quarter -- sorry, the quarterly report, relating to the timing of creditors as well as some buildup of consumables inventories given the inflationary environment that we're facing the wet season in terms of building up stocks ahead of that and also the ECOWAS sanctions, which only got lifted after the end of the quarter. So we're just sort of preparing ourselves for those events. And so that working capital just moved up a bit in the quarter. We would expect that to normalize in the third quarter, but it was a drain on cash flow for the June quarter.
The asset sale process, the sale of our investment in Turaco was the $4.5 million. We've talked about the $15 million voluntary repayment on the revolver. And the government dividend withholding tax, that's larger than it is in other quarters because we paid the annual withholding tax to the Senegalese government in relation to the dividend that we pay out there, both to ourselves and the Senegalese government. We pay that withholding tax in one go. So that was $4.5 million of that $5.4 million.
After taking all that into account and netting off cash and bullion balances, we finished the quarter with net debt of $182.8 million.
A brief update on the hedge book. As you know, with the debt facilities, we're required to hedge a minimum of 30% of the next 18 months forecast production. As at 30 June, we had 230,000 ounces hedged at an average price of USD 1,875 an ounce.
And with that, I'll hand back to Terry to wrap up. Thank you.
Thanks, Doug. So after that, I think the message is 4 quarters in a row now. We're looking forward to a few more. We are focusing really hard now on sweating our assets, finding better sulfide materials that we can give a bit of flexibility to the underground mine expansion and obviously looking at unlocking some of our large mineral resources and oil reserves on our balance sheet.
And we're happy to take questions. Thank you very much.
Thank you. [Operator Instructions] Our first question comes from the line of Andrew Bowler with Macquarie.
You're just touching before about the well-known inflationary environment globally and lifting diesel prices and also consumable prices. But I noticed you didn't mention wages at all. Can you just run through what you're seeing in West Africa in terms of wage inflation sort of if there is any?
We're not seeing any inflation at this point in time. And I would suggest that going forward, looking a little bit now, we've cleaned up the site operations specifically at Syama. We're probably looking at some consolidation there going forward. I mean, obviously, when we -- a couple of months ago with the way the plant was performing, we were actually spilling a lot of materials on the floor. Then you need crews to clean up continuously. Those crews are still working continuously, cleaning up while GICs there. And as Geoff has alluded to, we've probably got another quarter of that. But after that, we should see some thrifting, I would suggest. So we don't see any major headwinds at this point in time on wage increases.
All right. And last one for me. Obviously, the sanctions lifting for Mali is good news. But can you just expand in relation to Resolute specifically why that is good? And sort of what are the positive impacts? Or I guess, what were the negative impacts you were seeing before the lift in sanctions?
I think initially, I think the being indirect cost savings is no direct. So we had a lot of problems initially getting raw materials in through the normal courses. So we had to use different routes. Four out of the seven countries closed off, so we had to reroute a lot of equipment, et cetera. We built stocks a little bit. I wouldn't say we would necessarily relax those stocks, especially with the price pressures we've got right now, but there will be more indirect savings. I don't think we've really had a sort of a step increase in cost because of sanctions. And to us, it is very much business as usual.
I think the subtle reduction in costs really probably over this period more COVID related. However, we are cognizant that the freight costs are a big issue and freight times are a big issue across the industry. So we're continually focused on that. We do have a specific freight forwarding company now focused on all our freight. But I wouldn't say -- I'd say we are neutral at this point, Andrew.
No worries. And I think it was mentioned that part of that $23.9 million working capital build was building inventory before the sanctions got lifted. Can you just give us a little bit of color as to how much of that was building processing inventory and consumables and things like that? And I guess, so we can figure out what a more normalized rate would be going forward for working capital.
Doug, would you be able to assist on that?
Yes. Look, probably the -- just broadly, Andrew, I guess, probably 2/3 of its creditors, a reduction in creditors, just to a more normal level following the roaster shut. And the rest is around sort of inventory and build of those inventories. So that probably gives you an idea.
Thank you. Our next question comes from the line of Reg Spencer with Canaccord.
Terry and Doug, I'd just like to follow up on Andrew's question on the working capital. So can we expect that to unwind? So I might have missed it, but did I -- you said, Doug, that you would expect that to mostly unwind in the September quarter?
Yes. It's not that I mean -- by that, I don't mean it will necessarily reverse and we'll get a nice big credit to cash flow. All I mean was we'd expect the movement in creditors just to be less pronounced in the third quarter. So if we have a $13-ish million reduction in creditors like we have in the second quarter, we're not expecting to see that be significant in the third quarter. So more or less flat, give or take.
Okay. Understood. And then so on that basis, Doug, should we then be expecting a better cash conversion based on your reported gold sales and all-in sustaining costs from this point on?
Yes. Yes, because you're not seeing strain from working capital around inventory build and creditor reduction. I think now that the sanctions are over and we get through wet season preparation, creditors more normalize level, you might see the big swings.
Understood. Now I may have missed it, but were we -- should we have been expecting the third tranche of the Bibiani sale this quarter? Or am I a little early on that?
You're a little early. It's due in about a month, due in late August.
Okay. Okay. No problem. And then lastly, maybe one for you, Terry. Obviously, Syama North had fantastic drilling there that you've put out. You've mentioned on the call that, that may ultimately give you some more flexibility with the underground. But are you able to give us at this early stage an idea of how that material or how those resources might fit into any mine plan, when that could be developed and how soon could that be developed?
We could start prestripping that in the last quarter of this year if the results come out as well as we expect. You're probably familiar with our ability to move into areas relatively quickly once we get the ore reserves done. We have the facility to be able to revise our mineral resources on a monthly basis. And that's why we wanted to put some numbers out in this quarter. And we're doing our first ore reserve counts at the moment. They are preliminary because we haven't got all the drill results in that we've -- these drill results are coming in on a daily basis, and we're just trying to draw a line and say, right, let's actually put some numbers down now. Let's get them out.
But as I say, every drill that we're drilling we're seeing a bit of gold there. And we've had some really high intersections. It's exciting. It's longer, a 2.5-kilometer slide length. We have conducted some test work on the metallurgical side, and it's behaving very similar to the [ individual ] Syama type stuff. So recoveries are relatively good. So we just need to do that study now on the oxide plant and say, at what point do we look at converting that?
Could you...
Sorry, that's the longer term. To put a flotation section on an oxide plant, you're looking 12 to 18 months minimum. And that's on a new swing. What I'm probably alluding to is that we said that we'd run the oxide plant on upside for the next 4 years typically. And we may well find some more with the aeromags that we're doing now. But they will be now competing with the sulfides, which is a nice position to be in.
Okay. Any indication of any improvement on the existing resource grade there? Or obviously, the existing resource is about 2 grams. Your underground is, what, 2.6 in terms of reserve grade. Can that be a stage where that underground material could displace any of -- sorry, the open pit could displace any of the underground, if the grade is there and based on ore availability? Because I do know your comments about having that flexibility allowing you to slow down the rate of your underground production in order to preserve the grade or the sanctity of the grade, for lack of a better term. Is...
Yes. So look, at this point, it's early to be able to make a statement like that. But let's say I'm hoping to see healthy competition between this open pit sulfide versus the underground sulfide.
Okay. Excellent. And lastly, are you able to just give me an indication of what proportion of your overall operating cost -- this probably might be one for you, Doug, fuel and diesel in just broad percentage terms?
Yes. So up until this year, it's probably 12%, 13%. It's probably increasing closer to 15%, I'd say.
Our next question comes from the line of [ G Khan ] from [ Group G7 ].
I just would like to ask about the balance sheet. Like every quarter now, the production seems to be consistent, but the inflow of the cash, it's completely -- it's gets reduced, like -- so is there any way to address this and the cash can improve going forward?
Do you want me to take that one, Terry?
Yes, please.
Yes. Look, obviously, in this quarter, we had that working capital that we've already talked about, which was about a $23 million impact to cash flow in itself. As well as that, we had -- we moved 27% more material in the oxide operations and produced less ounces in that quarter. So they're the primary sort of reasons for the poor performance from a cash flow generation perspective. So really, it's getting to a steady state on our working capital and getting -- ramping up the ounces, both in oxide, clearly, but then incremental improvement in the sulfide.
So it's a long-winded way of saying we need to produce more ounces and get back to normalized working capital. And look at our overall cash costs where we can, as Terry was alluding to with the answer to the question around wage inflation.
Right. So the CapEx and working capital, is it included in ASIC (sic) [ AISC ] or it's apart from ASIC (sic) [ AISC ]?
No. The sustaining capital is -- that's another point around this quarter and the higher all-in sustaining costs is that -- the sustaining capital is included in the all-in sustaining cost. And the majority of the capital this quarter, over $16 million of that $19 million, I think, was sustaining capital and then therefore, captured in that all-in sustaining cost.
So do you think that going forward in the next quarter date will be improving the cash flow? Like do you think the CapEx and working capital will go down?
Yes. That's -- as we said, about a big chunk of that sustaining capital was around tailings facilities, about $7 million. So we don't expect that to repeat, certainly not in the second half and not next year either. So that's a periodic investment. And then the working capital, I think I've answered that, around creditors should normalize. So we don't expect that to be draining cash flow like it did in the second quarter.
Right, right. So I mean -- so from your perspective, you think like the cash flow will improve and like the balance sheet will improve going forward?
That's certainly the plan.
Yes, plan. Yes, is a plan. The consistent production is happening. Everything is normal. I mean, now Mali situation is getting better. So with the production in line, so obviously, the shareholder wants to see the money. Like at the end of the day, the balance sheet has to improve, no matter. I mean, we put a lot of effort, lot of production. But at the end of the day, the cash flow stays like that and keeps going down. So it's like it sends a panic, kind of alarming situation in the market is our Resolute is not performing.
Whereas I've been with Resolute for about 4 years and, yes, it's been up and down. But now things are at a stage where everyone is thinking things will improve because now everything has been set. The ground is ready. And yes, but still, there is no inflow of cash. That's what everyone is looking for. And so my question is, will it improve going forward in next few quarters? Or it will stay flat or still keeps going down?
Terry, do you want me to answer that one? Look, I think...
Yes, I think you're right.
Go on, Terry.
No, I think that's right where we are. I mean, we've been very, very intensively focused on fixing the circuitry, fixing the mine. I think we're starting to see the stabilization. We're at a point now where it's almost like we've pressed the reset button. When you're in the situation we have been in the last couple of years, there are lots of issues that you have to solve, that are there starting to generate cash. But we're starting to get our head above water now, you're right. And then we do expect our cash flow to improve over the coming months.
Thank you. There are no further questions at this time. I will now hand back to Mr. Holohan.
Good. Thank you very much for your attention and your time. I know it's a busy day, a busy quarter. And as I say, I think the bottom line on all this is that we are holding our -- we're maintaining our guidance going forward. I think that's a big step for this company. Thank you very much.
Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may now disconnect your lines.