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Ladies and gentlemen, thank you for standing by, and welcome to the Resolute Mining Limited quarterly conference call. [Operator Instructions] I must advise you that this conference is being recorded today, Tuesday, the 24th of April 2018. I would now like to hand the conference over to your speaker, John Welborn. Thank you. Please go ahead.
Thanks very much, Eva, and good morning, everyone. Thanks very much for joining this conference call for Resolute Quarterly Activities Report for March. I'm currently dialing in from Bamako in Mali, so apologies if it's a shorter and briefer call than expected. I would like to stay on the line and answer questions. And I'll dial back in if there's any cutout in coverage. It's a very exciting time to be in Mali. And looking at our progress with the Syama Underground mine. And I traveled here by a car and was very pleased also to see the work we're doing at Bibiani and look forward to publishing the feasibility study that we're working on. Across the company, there's a great deal that has been achieved so far already in 2018. And it's going to underpin the future growth of this company for many years to come. Our main focus remains setting up the Syama Underground mine and the improvement work that they're doing on our processing plants there. That work is continuing well. We work on optimization studies and complete the final approval to the Ravenswood expansion plan. And I mentioned the work we're doing in Ghana with the Bibiani Gold Mine.All of that work is exciting and, quarterly, in the highlights, covers that work that we're doing. And the first thing I'd like to cover, though, is actually the production during the first -- during the March quarter, 67,000 ounces, at an all-in sustaining cost of $1,332 an ounce. As captioned in the title, that represents clearly, steady production and cost and, in fact, a mild improvement cost from the December quarter. But clearly, not the improvement that we're looking for. And as a result, we've revised our guidance, which was originally set at 300,000 ounces production at an all-in sustaining cost of $1,380. And we've revised that to 280,000 ounces of gold at an all-in sustaining cost of $1,360 an ounce.We've been working very hard in order to meet guidance. And if you look through the results of the quarterly, you'll see that the Ravenswood operation is running very steadily hand, in fact, slightly ahead of guidance. The Syama Oxide plant is running smoothly and on track. The real issue that we had during what has been a challenging year is the Syama sulphide operations. And as we covered in the quarterly, people should be aware that we ceased open-pit mining at Syama in May 2015. We have designed what is going to be a world-class, leading African underground mining that is improving its -- and while we're doing that, we're feeding the sulphide plant with a large amount of stockpile material that we have. And obviously, the longer we process stockpiles, the grade and the quality -- the metallurgical quality, of those stockpiles was getting increasingly difficult to process. This quarter, we have managed to source some high-grade 3-gram dirt as part of the underground development. We continue to mine sulphide earlier as part of our satellite oxide mining operations. And we are also planning to mine some remnant ore at the base of the Syama open pit. Unfortunately, the quantity of that ore and the quality of the stockpile wasn't as high-quality as we would have liked. And you can see that represented into Kalgoorlie's -- that sulphide mill during the quarter, which are less than 70%. The good news on that basis is that the amount of development ore and the scaling up of the underground operations during the course of 2018 are expected to lift the quality and the grade of the ore that we put to the sulphide mill. But if look at the year-to-date numbers on that processing facility, we guided, as part of 300,000 ounces, that 130,000 ounces would come from that sulphide mill, and that the 3/4 mark was clearly around 20,000 ounces on an annual basis behind. And that really represents the amendment we've made to guidance. Importantly, it's a short-term effect and it doesn't demonstrate any impact on the development -- the underground mine or the 85% target recovery rate that we had set ourselves for when we start sourcing higher-grade ore. The processing plant at Syama and the sulphides is very reactive to grade. And just quite simply, in this quarter, we won't be able to lift the grade and the quality of that feed sufficiently. We will expect to add significant development ore in the current quarter and are on track for that revised guidance. Some other things that I wanted to cover and are covered in the quarterly, some of the milestones that we've met in terms of project development, seriously, at Syama, where the underground mine is continuing to be our focus. During the quarter, we accelerated the development of some of the fan cabinets and pumping chambers. We're starting to get some underground equipment alive. So it's a very exciting time. You can see some of the photographs in Mali, underground workers that are there as well as our contractors and having 2 of the underground facilities during the week. It's a very exciting time. If you look at the development breadth that we continue to publish on the Syama Underground, which is included in Figure 8 in the quarterly, you can see that they're on track in terms of that development. We have, as I mentioned, prioritized some of the infrastructure work and chambers and pump chambers, and that's why you've seen that in the March month, we've had less development meters than we had originally programmed. Having completed that underground infrastructure, the work will now go back to focusing on development meters. And we expect that, that will be back on track between 800, 900 meters a month in April, May and June. And we expect to continue to be on track to start full sublevel caving in December this year.The 3D tool for bigger mine is available in our website. And we continue to update that, and it's quite an interesting tool for bigger [indiscernible] in terms of seeing the progress and how we're doing. We've made a point in this quarter with focusing on health and safety. It's a renewed focus across the company, and we continue to see an improved focus on that area. The outlook for Syama is quite exciting. We -- as I mentioned, we'll continue to source development ore from the underground, and that will reduce our dependency on stockpiles. And we look forward doing [indiscernible] at least get recoveries there for production. The Project 85 commissioning is continuing in Stage 2 of that development. And we're also encouraged that the increased roaster efficiency that we're seeing in temporary shut during the course of the year, and that's allowed us to delay the biannual 42-day shut to after the end of this financial year. I'll mention that Ravenswood, our operation is ongoing steadily. We've got a very good chain there as we work through the stage process of closing the Mt Wright underground mine. We continue to get overgrow there as well as mining the Nolans East pit. A key significant achievement of Ravenswood during the quarter was the receipt on time, as expected, of the environmental approval for Buck Reef West. Buck Reef West is a critical element of the Ravenswood Expansion Project, and that has allowed us to now focus on an optimization study in determining the stage process of the plans to mine Sarsfield and Buck Reef West. The Ravenswood Expansion project has a 13-year mine life. We have 4 million ounces of resources within 4 square kilometers of the mill. And I look forward to publishing the results of that optimization work during the current quarter.A key element as well is in the feasibility work in the work we're doing in the Bibiani gold mine. This is a mine with a 3 million tonne [indiscernible] mill. It sits on top of extensive underground workings. We have upgraded the resource about 40%. And we're looking at a number of key opportunities, including improving the processing recovery rates that are going to significantly change the economic results of our proposed development. A key element is the drilling program that we've invested in since the last feasibility study is looking to extend the mine life, decrease the typical mining risk and improve the financial outcomes and anticipating releasing that study also during the current quarter.We remain very well-funded, and a strong cash balance sheet. The only debt we have in the company is an unsecured overdraft that we used herein Mali to fund our Mali activities. The -- we continue to focus on exploration across the Syama belt. And we're looking forward to show the results from the drill rigs we currently have work at Apollo, and also the capital earning deposit which is 30 kilometers south of Syama. Our focus at the moment continues to be looking at the trends that exist south of the Syama main pit. The market will also have noticed that we've been investing in our African-focused juniors. We've extended significantly the footprint we have in the Democratic Republic of Congo. We have a shareholding in Kilo. And in that Kilo and Moto are built, really 2 companies that have the key ground that controls the gold belts. And the other company also, TSX is a company with Loncor, and now the similar, roughly 30% stake in Mt Wright. Both of the companies have key projects, joint venture with Randgold. And we believe that there is a major orebody there, and we're looking forward to participating in the exploration success and potential development. We're also taking some pretty small stakes in explorers that we think are well-managed and have good ground where we think there's an opportunity to expose ourselves to future pipeline with mine developments that we've described both investments in Oklo and Mako. I mentioned the minor amendment to guidance. We're now on track to produce 280,000 ounces at an all-in sustaining cost of AUD 1,360 or USD 1,020. And I look forward to what's going to be a busy quarter with news flow from Bibiani and Ravenswood and the Syama optimization work as well as exploration results.And with that summary of the conference call, I'll pass it back to you, Eva, for any questions.
[Operator Instructions] Our first question comes from Warren Edney from Baillieu.
All right, John, first question. Just in terms of production from the sulphide as the year progresses, I note that in the quarterly, it says it's going to be a roaster shut in early FY '19. So does that mean the September quarter is also likely to be weaker?
Thanks, Warren, for your question. The roaster shut was originally planned actually for this quarter. But I mentioned that we are still seeing really good, strong building and sustainable operations from the roaster. So we've been able to delay that roaster that have allowed us to do some change work between the -- when we scheduled that. A key part of Project 85 allows us to actually continue to process some of the non-refractory sulphide ore we have through the sulphide circuit and core gold while the rest is nonoperational. And so we don't expect to see the production drop-offs that we've had in the past. One of the key benefits of Project 85 is that it'll actually allow us to continue to produce gold through both circuits at Syama during that biannual 42-day shut.
Okay. And just I had a question Bibiani. Obviously, the environmental permitting sort of dragged things out a bit. What do you think is realistic to expect? And what do you see in terms of when you actually going to -- the board's going to commit in terms of spending the money? And what's the time line going forward?
Yes, thanks for your question. We've obviously been doing some cautious work on Bibiani. There's going to be -- if you look at the portfolio of Resolute assets, we acquired the more major -- Ravenswood was originally an Xstrata asset. We bought it in a difficult time in the gold price, and we made it work by developing a new underground mine 10 kilometers away, which has been a real boom to Resolute shareholders. Syama, we bought up Randgold in a distressed state and -- in 2004, and we recommissioned it in 2009, and that's becoming one of Africa's great gold mines. And Bibiani, originally owned by AngloGold Ashanti, has had a troubled history under a couple of small Junior ownership. We really secured ownership from 2014. We are now up 2 drilling campaigns. And it represents a significant asset in our portfolio. And I want to -- just want to -- I've always said that we're the one owner of. In terms of -- you're asking a question, really, which will be answered when we published the study. But my ambition for Bibiani is the same ambition we had for all of our assets. We want to run mines that had a salt line on a [indiscernible]. We've aimed to run mines that produce more than 100,000 ounces a year. Across the company, we want to commission and build new mines that bring down our overall, all-in sustaining costs. At the moment, that all-in sustaining cost ambition is that if you look at Syama Underground mine and the Ravenswood Extension Project, it puts us in the mid-USD 850 range net. We'd like to get down to $700. And so that's what our ambition is with Bibiani. And now the work we've done, if you look at the feasibility study we published in Bibiani in the middle of 2016, it had a 5-year mine life. We've had an all-in sustaining cost similar to the other projects in the mid-800s. We'll be doing a lot of work on the mine plan. We've obviously significantly -- we upgraded the resource, which will lead to a larger reserve and a longer mine life. But much more importantly, we've got a much better geological knowledge on the orebody. And our ambitions are that this will be Resolute's lower-cost mine when we commission it. The previous feasibility study had a total capital cost of USD 72 million, and we're also looking to reduce that through a number of new initiatives. So there's a lot of work that's been going on. And other than that, I'll ask that you have to look forward along with me to when we could complete that work and publish it.
The next question comes from the line of Paul Hissey from Royal Bank of Canada.
Yes, look, a couple of questions for me. I'm just interested in, I guess, the underperformance of the stockpiles. Is it that they've not delivered what you thought they had within them? Or that you've had to rely on a greater contribution? And what does that mean going forward? I mean, hopefully, Syama Underground comes on. I understand you grew lines less on stockpiles, but do we need to discount work in the stockpile contribution from this point forever going forward?
Thanks, Paul. That's a good question. One of the issues we had was actually the transitional material that we're mining at the bottom of the outward Beta pit. Now those pits are going to be completed during the course of the current quarter. And that material is really metallurgically difficult. So what we're looking for was high-grade material from the Syama open pit and from our satellite pit and from the underground. And one of the issues we had with term problem submitting currently transitioned over the bottom of those pits. Obviously, it's really just a month's wage. Fortunately, there's something that we better complete, a great deal of metallurgical test work. That's what flows through into those recoveries. The performance historically at the sulphide mill [indiscernible] reacted to grade. We discussed in the quarterly that the average grade of around 1.6 million tonnes of stockpile is now 1.3 million. The good news is, is that they're sourcing development ore out of the underground mine, which processes beautifully, which is 3 grams a tonne. I expect -- obviously, if you look at our guidance, we're expecting to produce more than 70,000 ounces a year from the sulphide -- sorry, more than 70,000 ounces across the company in the current quarter. And that represents similar performance in sulphide operation during this quarter, but we would expect that to improve in the first and second quarters FY '19 as we head towards the sublevel cave in December. Now you will recall that I said a similar thing after December. We were expecting better performance from the sulphide circuit this quarter. And we really got caught out by the metallurgical characteristics of that ore at satellite pits.
Okay, sure. Yes, so it sounds like you're sort of caught on the hop a little bit. And you tried Plan A, and Plan A let you don't. And Plan B wasn't really ideal. Yes, I'm still here, John.
[Technical Difficulty]
Paul, I'm not sure when I cut out then, but you probably thought you've asked a tough question and I just disappeared into the night here in Bamako. Look, in short, the -- on an ongoing basis, we did have what we develop into an issue in mining, some transitional ore, but outward Beta pits. The good news is, is that the plans as we currently got it set up post the 3-gram that we're getting out of the development beautifully. We are still committed to receiving 85% recoveries. We think that we can get that freed. And I'm confident the performance and the recoveries of the sulphide plant will improve gradually as we go. But yes, the reality remains that while we're relying in any way about our stockpiles, it is a difficult circuit to manage.
Okay. So just to follow up on that then. We know at Syama, you have a huge -- can you hear me, John?[Technical Difficulty]
Thanks you all for standing by. John Welborn has now rejoined. Paul, please continue with your question.
John, can you hear me?
Yes, I can, Paul. Did you get any of my answer?
Just that recoveries will improve as a result of the project work you're doing, and you'll be relying less and less on stockpile material as Syama Underground ramps up.[Technical Difficulty]
John Welborn has rejoined. Sorry, Paul. Please continue with your question.
Yes, look, the transitional material in alpha and beta pits was a short-term mining issue that didn't [indiscernible]. We were expecting greater recovery if we got those recoveries we would have gotten in the quarter. It's not something that -- the reality is while we're relying on stockpile material, it's a difficult circuit. But a lot of the good news is, is that they're fully grounded. They're putting in from underground processes beautifully.
Yes. No, that's fine. That was the gist of it. So just on top of that, I mean, we understand you've got this huge inventory of gold and concentration.[Technical Difficulty]
We've had John join the conference. Thank you, John.
I'm thankful for everyone's patience. Sorry about the technical problems from dialing in from Bamako. I think Paul has left the line. Hopefully, he heard that there were some short-term issues with mining the satellite pits in the sulphide ore. It is one of the key issues in terms of the low recoveries we've had this quarter. And hopefully, we can improve on them this quarter. Are there any other questions?
[Operator Instructions] Thank you, John. There seems to be no further questions from the telephone lines. Thank you, and please continue.
Okay, look, thanks very much for everyone who's persevered. Apologies if I dropped off. If anyone does have any questions, please feel free to e-mail them through to the contacts in our website or contact my cellphone or any of the Resolute executives. We look forward to working on the strongest possible finish to the year from the reduction point of view. And as pointed out in the quarterly on this call, we've got a lot of really exciting work that we're working on. Thanks very much for your interest in Resolute, and have a great day.
Ladies and gentlemen, that does conclude our conference for today. Thank you for your attendance. You may all disconnect.