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Thank you for standing by, and welcome to the Resolute Mining Limited September 2020 Quarterly Conference Call. [Operator Instructions]I would now like to hand the conference over to Mr. Stuart Gale, Interim CEO. Please go ahead.
Thanks, Rachel, and good morning, everyone. Thank you all for joining Resolute's September quarterly conference call. Joining me today in our office is Dave Kelly, our Chief Operating Officer; Jordan Morrissey, our Head of People and Sustainability; James de Crespigny, our Head of Business Development, newly joined; and James Virgo, our Financial Controller. I will just make some opening remarks before handing over to Dave to provide an update on our operations. And then we'll come back to work through some financials and then go into Q&A.Before we get into the detail of the quarterly though, I'd just like to make a few comments about John Welborn's departure, which was announced on Monday this week. John was at Resolute for 5 years and, over that period of time, worked really hard to reposition and transform the company. A couple of John's key achievements over that period of time were the development of the Mt. Wright underground mine at Ravenswood; Syama underground development, commissioning and commencement of operations; the Mako acquisition in Senegal. We also listed under the London Stock Exchange during that period of time and, of course, early this year, completed the sale of the Ravenswood mine. John is a dynamic and charismatic leader. And all of us at Resolute are very sorry to see him leave the team. Importantly, though, John has built a great team of people from an operational perspective, which is led by Dave. This team has been doing a fantastic job of keeping our operations running, in particular, with -- under some pretty challenging circumstances through the September quarter. Please be assured that the executive team and I are absolutely focused on continuing the good work of the teams and continuing to deliver operationally to ensure the success of Resolute. With that, I'll turn to the September quarter. Look, at the outset, I think the September quarter can be characterized by continued strong performance of the Mako gold mine in Senegal. It continues to deliver consistently month-on-month and quarter-after-quarter. Clearly, we had some challenges at Syama with the industrial activity, and that put us into a position where we were some 15,000 ounces short of production that have been guided for the period. The industrial action had a fairly significant impact throughout August and into September. And as outlined in the quarterly, we were in extensive negotiations with the union and various government officials to reconcile the position and ultimately entered into a conciliation agreement, which has canceled any further planned strike action. And that was completed at the end of September. I'd like to thank the key negotiating parties from our team at Syama who did a fantastic job under very trying circumstances during that period. Also, I'd like to just touch on very briefly the Mali political situation. It was obviously very pleasing to see a resolution of the political issues in Mali, again, towards the end of the quarter, on the 25th of September. And a transitional government was established in Bamako following a coup, which took place on the 18th of August. The interim government, importantly, has the support of ECOWAS, who have now lifted all of the sanctions that have previously been imposed on Mali. And the key thing from us -- from our perspective is that all of the supply links into Mali have now reopened, and transportation of key consumables to Syama has been reestablished. From a safety perspective, the teams have continued to perform really strongly from a safety perspective. Our TRIFR was consistent at 1.12 with previous quarters. And that's a really good outcome, particularly when you think about the circumstances that we experienced during the quarter, a couple of which I've just touched on. But of course, we've also been continuing to manage the COVID-19 pandemic and the issues which that brings in terms of travel restrictions, social distancing and so on. I'd like now just to hand over to Dave. But before I do, just to touch on very briefly the operations in the month of October. What's been really important to date is that we've been achieving our mining, processing and production targets for the first few weeks of this quarter, which sets us up, I think, very well to deliver on our December quarter forecast. So with that, Dave, I'll hand over to you.
Thanks very much, Stuart, and good morning, everyone. As discussed, obviously, the September quarter was down on what had been a very solid quarter in June. Our expectation going into that quarter was that the production would be a little lower, primarily because of lower oxide grades into the plant at Syama. As you would be aware, in May, we completed mining of the Tabakoroni complex, at least the first stage of oxide mining at Tabakoroni complex. And it was our plan to then process stocks through the September quarter and then develop the Cashew pit in the October through the December quarter, which is what's occurred. So we're always expecting a somewhat lower output in the September quarter as a consequence of that reduced grade. However, the industrial dispute at Syama was, in fact, the single largest cause of the reduction we did see both relative to June and to our own expectations. The industrial action particularly affected the sulfide plant because of the manner in which it was shut down on one occasion. This meant that we had to slowly reheat and restart the roaster, which meant that we -- that a relatively brief period of industrial disputation led to more extensive and lingering effects on the sulfide gold production, and that's reflected in the numbers that we generated for the quarter.There were some other minor operational interruptions. We had a couple of planned mill relines at both Mako and on the sulfide plant that ran slightly. But far and away, the primary cause of the reduced production was the industrial disputes that we have with the union, which, as Stuart has mentioned, have now been resolved.On a more positive front, with that dispute behind us, in October, we're going strongly at both mines, and we are confident of a good quarter. All 3 plants are operating according to internal forecast and consistent with our revised guidance. The roaster is running at design throughput, and both the underground mine and sulfide mill are running actually slightly above nameplate at this stage. So all of the key drivers of gold production for the quarter are looking well. All grades from the underground mine, which had been down a little in the September quarter, have returned to levels just under 3 grams per tonne, consistent with the sort of full year expectations. So again, that will be reflected in production over the course of the quarter.Pleasingly, I think in the sulfide mill, despite some of the issues we had and challenges that we had, including the slightly lower grades that were fed to the mill and the disruptions that we experienced, the recovery was consistent with that of the June quarter. And already in this new quarter with higher grades and more consistent throughput and without the interruptions that we had to suffer in the September quarter, we're seeing recoveries, in fact, above that which we achieved in both the September and June quarters. So that's very encouraging.So in summary, I think we're well set for a solid quarter, which we think will be more akin to that which we achieved in June. And I don't intend to add any further other than to answer questions later in the course of the conference, so back to you, Stuart.
Thanks, Dave. I'll just really quickly touch on some exploration activity. And you'd all be aware that we released the Tabakoroni underground potential development update earlier in the month. This saw an increase in the resource to 1 million ounces. We continue to work at Tabakoroni underground, and we expect to continue to develop that resource base. But that is certainly an option that we'll be looking to develop once we completed from the oxide activities at Syama.And on oxide activities, it's pleasing that we've been able to start production at the Cashew satellite pit. We will continue to look for oxide opportunities in and around Cashew and other parts of the operations, specifically the Splay pit. So as we've flagged previously, we'll be looking to release an update on the ongoing oxide potential at Syama.Bibiani, we continue to work through that process, the strategic review process. It's continuing and has gathered and maintains momentum. So we're hopeful again to have a resolution by the end of this year on Bibiani.Just turning to the finances quickly. We have a cash and bullion balance of $106 million at the end of September. Page 9 of the ASX release sets out a cash flow waterfall chart, which summarizes the allocation of cash during the quarter. I think fairly clearly, we can see a couple of key impacts from here. As we flagged, we paid $17 million worth of tax in relation to the 2019 year and makes up a good portion of that VAT and tax payments in [ bar ]. We have also drawn down on debt during the period. So we've fully drawn the revolver, which is the $45 million. We did that to repay some high-cost overdraft facility, which is the $15 million repayment. And then in addition to that, we drew down the balance of the revolver as a form of security as we entered into some political unrest in Mali during that period of time.Key, obviously, is the management of the tax activity in Mali. We continue to work with the Malian government around resolving that position. And importantly, we have commenced offsetting the VAT receivable by Resolute with royalty and other taxes, which are paid. So that commenced in August this year. Of course, unfortunately, it's a slow progress in terms of the discussions with the government in Mali. But obviously, with the establishment of a new government, we're hopeful that we can continue our positive discussions and come to a resolution on that relatively shortly. Page 10 sets out our hedging position, and we can see the balance of the forward contracts, which we have in place. So we're currently sitting at 153 ounces (sic) [ 153,000 ounces ] of forward contracts hedged, which is down significantly from the June quarter. We've also taken the opportunity during the quarter to put in place some 0 cost collars, which have the effect of setting a minimum price of $1,600 an ounce and capping the maximum price of $2,300 an ounce for those 20,000 ounces that we put in place during the period. I think this is a positive way to go. We obviously need to maintain our obligations within our hedging requirements for the debt documents, and we're trying to minimize the upside impact that those hedges will have on future gold price.So we've reinstated guidance for the calendar year 2020. That guidance was reinstated at between 400,000 and 430,000 ounces at an all-in sustaining cost between $980 and $1,080 per ounce. As we've noted, we're likely to be -- we will be at the lower end of that production guidance and at the higher end of the cost guidance, and that's really reflective of the impacts of the September quarter.So just to summarize, look, it's been a challenging September quarter. There's no doubt about that. We've come through a number of issues the quarter, and we're in a good position now to capitalize at our operations. And certainly, the first 3-or-so weeks of the October month give us a strong indication that we will be in a position to capitalize on our position. We remain absolutely focused on delivering on those targets and in simplifying our operations.So that's it for me. I will hand back to Rachel now for some Q&A.
[Operator Instructions] First question comes from Andrew Bowler with Macquarie.
Just after a little bit more detail on the real impact of that industrial action at Syama. Obviously, you talked about 15,000 ounces short in that previous release. But how long was the plant down for at -- with the roaster in particular? I mean you talked about one occasion at least that the plant went down. And also, what sort of impact did that have on recovery? It's been obviously pretty good flat performance quarter-on-quarter, all things considered. And then I guess also just a bit of an indication of the recovery run rates that are apparent so far in the quarter.
Yes. Thanks, Andrew. Look, I'll hand over to Dave to work through the detail around that. But I think the important thing to understand with all of this is it's not straightforward with the roaster. It needs to be managed very carefully. And that's certainly the focus of the team, to manage it very carefully. But during industrial dispute, it leaves it open for some less-than-optimal management outcomes. What has been important, though, I think, is that we've been able to maintain those recovery rates pretty much through the quarter despite some of those challenges.But Dave, I'll hand over to you just to talk in more detail on that.
Yes. Look, thank you for the question. In respect to the shutdowns, there was one particular period where the workforce departed our operations for a few days. As a consequence of that, there was a pretty hard crash shutdown of the mill and the roaster, which was something we were anxious to avoid. Reviving the roaster and bringing it back to heat and bringing it back into production ended up taking us about 10 or 12 days. So that was the biggest single effect on poured gold. As you're aware, every ounce that comes out of the sulfide plant has to go up the roaster and then through the calcine CIL circuit. And so that has an immediate effect on the capacity of that processing plant to generate gold. So that was the biggest single effect, bearing in mind that also throughput was cut off for a few days, again, on the oxide plant, which further reduced production there.Our estimate, and it's obviously not a perfect estimate, it's probably 70% to 80% of the reduced ounces relative to where we had expected to be, could be ascribed to the industrial disputes we were having. And certainly, the nature of those disputes were both rapid and unexpected. The fact that we resolved them is really gratifying, but it was something that probably came a little out of left field in terms of its speed and the effect that it had on us. But we've actually achieved a lot in our relationships with the workforce over the course of the last few months, and I think we're actually set for a good and stable relationship from hereon in. But it was a disappointing contributor to the performance in the quarter.On the recovery front, I'm actually reasonably gratified with the recovery we achieved last quarter, which is consistent with the prior quarter and obviously a significant improvement of those achieved earlier in the year and reflects the sort of consolidation of the gains we've made. What probably drove, if anything, the recoveries down was the fact that we encountered some lower grades in the underground mine, which was just the sequencing issues associated with establishing the cave on the newest production level and the fact that, that material, which comes from the slot firings on the hang wall, is a bit lower grade than normal. And that had an effect on the overall production grades. What we're seeing is that now that head grades in the mill have reduced -- have returned to sort of the high 2 grams, just under 3 grams per tonne, we're seeing the recoveries in the low 80s, 81%, 82% typically of what we've seen so far. So -- and that's where we would hope and expect it to be at this stage of the game.So so far, the key drivers of gold output from that processing plant, which are roaster tonnes, feed tonnes, feed grades and overall recovery, are all very much in line with our expectations and consistent with our guidance expectations. So so far, that's returned to operations very strongly. And the rest of the business is operating as per plan.
And I guess just a follow-up question on that. I mean obviously, a bit of a change of the leadership recently. I remember John talking before about the potential to forego some of those recovery improvements over the next year or so with some increased throughputs. Is that still the strategy moving forward? Or is it just a bit more of a wait-and-see game, get to the back end of this CY?
It's fair to say that we're looking at the value benefits of those 2 approaches. And they're not necessarily mutually exclusive, i.e., higher throughput and higher recovery. But what we are seeing at the moment is daily throughput rates that are consistent with a slightly higher mill processing rate at about 2.6 million tonnes a year, which is really roughly around 10% over what we have historically been targeting from the plant. And obviously, the forgone recovery is 1% or 2%. So clearly, there's more gain in terms of gold production to be made at this stage from throughput than recovery. But we continue to work on incremental improvements to recovery in the circuit. And we think there are still some available to us. We're doing some work in the -- particularly in the flotation plant to bring out -- to improve our control of that float plant, putting in an on-stream analyzer and doing other bits and pieces, reinstating cleaner cells, just aimed at getting 1 or 2 more percent out of that circuit and also ensuring we sustain the necessary concentrate specs to ensure optimal operation of the roaster.So we certainly haven't given up on that opportunity, but I think we can see now that there's also a throughput gain that we would like to consolidate if we can next year. So when we provide, ultimately, guidance and budgets and forecast for next year, we'll have made a decision as to how we intend to operate the plant in informing that guidance.
Yes. And Andrew, if I can just add, from our perspective here, it's really important for us that we optimize production. And however we're able to do that, whether it's through recoveries or whether it's through throughput, we'll be taking action on that. I think what's pleasing is that we're getting a better understanding of how that plant operates. And we're working on continuing to improve that understanding and, I guess, implement technology, which allows us to be able to monitor things in a more real-time way. So they're the important things. But it's all about optimization, right?
And maybe just one more quick one. Are we still expecting an updated mine plan at Syama reasonably shortly?
Yes, absolutely. We're working through the oxide component of that. Obviously, it's been a fairly busy time over the last week or so. So we'll be coming back to the market fairly shortly. And what that will do is set out that -- our oxide production levels over the next few years. And then obviously, that leads quite neatly into Tabakoroni underground. So based on that, we obviously know from an underground perspective where we stand at Syama. We know the Tabakoroni underground opportunities, and we'll complete that piece of the puzzle by updating you around the Syama oxide opportunities as we move forward.
Your next question comes from Reg Spencer with Canaccord.
First one on just understanding or reconciling production in terms of throughput grade, reported recoveries in gold poured, any variants on that simple [ CAC ] can we put down to a gold in circuit drawdown?
In the last quarter, the overall GIC movements were relatively modest. So while in times past, we've often had -- we've often had quite large buildups in concentrate volumes and then drawdowns, in the last quarter, they were fairly small movement. So it's not a big contributor to the overall number. And recovered versus poured is slightly -- is about 4,000 difference and of which part of that was at Mako where we had a bit of a drawdown in GIC. And similarly, in the oxide circuit, we were more or less level recovered versus drawdown, slightly higher poured than produced. So normal movements, one might describe, occurred in September quarter. And increasingly, I suppose we're trying to run the business that way rather than build up large volumes with stock of concentrate, which create a GIC movement that then at some point gets drawn down. We're trying to run [ at that site ] more like an ordinary gold mine where what goes in the front end, largely subject to recovery, is what comes out the back.
Yes. Reg, I think -- and you can see that in the appendix, right? If you have a look at the appendix to the quarterly and when you look at the September Quarterly Production and Costs as titled, you can see that drawdown that occurred through gold in circuit. So that's what we would expect, with the previous 2 quarters we've been building gold in circuit, so it's now appropriate that we draw that down.
Yes. And the year-to-date numbers, as Stuart points out, it's -- we're 305,000 produced and 309,000 recovered. So there's a very minor difference, not atypical of what you'd see in any other operating gold mine.
Okay. Understood. You've made some comments around the tax situation. Can you just remind me the income tax for the 2019 year that was flagged in terms of the expected cash outflow this quarter? That applied to, I presume, profits from the oxide operations last year. That's that difference in the VAT. And how should we think about any major payments relating to that going forward, notwithstanding that you mentioned that you might be looking at lowering royalty payments? Should we be expecting any major cash outflows from that over the next -- over the near term?
Yes. Reg, look, certainly, just to touch on the tax piece, so it's been reasonably well flagged, I think. And we paid $20 million worth of tax in relation to the 2019 oxide operations at Syama. So that's now done and dusted. We paid $3 million in the June quarter and the $17 million in this quarter just gone. So that's complete.The VAT payments that we make in Mali are no different to the GST payments that we make here. We have a supplier who provides us good -- with goods or services in Mali for $100. They give us an invoice for $100 and add $18 worth of VAT onto it. We pay the supplier $118. Simplistically, that's how it works. These are actually payments that we make to our in-country suppliers. And then the idea is that we recover that VAT from the government. So that's broadly how it works. That's how it should work anyway.Obviously, unfortunately, we've been building our VAT balance in-country because there's been some, obviously, some political challenges in country. And we're working to offset that VAT balance with our Syama royalties and any other taxes, which we pay from those operations moving forward. The challenge though is that this is in relation to our sulfide operations, which are absolutely distinct from the oxide operations, which we paid the $20 million on. So just in terms of reconciling that, why didn't we offset the $20 million? Because we just couldn't do it because it's a totally different entity. Does that make sense?
Yes, Stuart, appreciate that. And are you expecting a resolution on the other tax issue at some point now that we have more of a settled down political situation in Mali?
Yes, we are, Reg. We've been having ongoing discussions with the tax department and Ministry of Finance. They have been going well. But of course, the government has really only just been reestablished. So I'm hopeful that we'll have all of that complete, certainly during the course of this quarter, and we'll let everyone know when that occurs.
Okay. Just one very last quick question. Can you just outline the actual sustaining capital split between sulfide and -- actually, I can get that from the back of the -- okay. No, that's all fine for me.
Your next question comes from David Radclyffe with Global Mining Research.
First question on Tabakoroni and the study that came out recently. Could you maybe just give us a little bit more of an indication here of how that mill changeover would actually work and how long conceivably that mill would be producing no material from?
Yes, sure. Effectively, what we would do is add a small flotation circuit to the existing oxide comminution circuit. And that's really the only major change. So the changeover should be relatively rapid because that would be built separate and just tied in, obviously, at the point where you started to introduce the sulfide feed from underground. So the basic flow sheet you're looking at mimics that which we use for Syama, the difference being that we also have a gravity circuit to take off some of the course, visible gold we see at Tabakoroni. But that aside, it's exactly the same scheme. So then the sulfide concentrate would be fed into the same stream that then pass through the roaster and then through the calcine CIL.So flipping over, if you like, to sulfide processing should be a relatively rapid process. I don't -- we haven't yet reached the point where we have precise details over the timing that would take. So I'm hesitant to tell you exactly how long. But it will provide us a lot of operational flexibility because returning to effectively oxide configuration can be done quite quickly also. So for example, we would identify other oxide resources in the lease. We could quite easily return the plant to its previous configuration by bypassing the flotation circuit.
Okay. And then without preempting, obviously, what you're going to come out with shortly, what are the key levers? What would you be thinking that goes into the mix for actually pushing the button on turning that over? If you continue to define reasonable grade of oxide material that you can easily mine, low strip, do you just keep that going? Or what actually triggers your opinion to change it over?
Yes. Well, that's a good point, David. And I think you can see we're operating now in the Cashew pit. We have been operating in the Tabakoroni Splay pit, and we're getting some good drill results, a little bit deeper there at the Splay pit. We have Paysans and Tellem that are identified as opportunities to continue that oxide development. So again, it's difficult, and we don't want to preempt the announcement. But what we want to ultimately achieve with oxides is to be able to keep the oxide production running for the next few years at pretty reasonable levels. So at levels around about where we have been historically, so somewhere between that 80,000 to 100,000 ounces of oxide production, it would be fantastic. And obviously, the longer that we can extend that oxide production life out, then we can -- it gives us the ability to be able to defer Tabakoroni underground. We continue to develop Tabakoroni underground and improve the resource base from there. And it also pushes out any capital expenditure requirements to take Taba underground. So that's the strategy around all of that.And Bruce Mowat and the exploration team are doing a good job just in terms turning over those oxide areas. So that's where we're at. Again, without wanting to preempt what we're going to put out into the market fairly shortly. Did you have anything to add to that?
No. I suppose the only thing I'd add to that is that every year of extra oxide also increases the scale of the likely underground at Taba. So it gives us more time with which to drill that out and to extend the mine life, which obviously enhances the project economic. So adding oxide has intermediate short-term benefit because it generates profitable production without a great deal of capital investment, but it also hopefully gives us time to improve the economic merit of the subsequent sulfide operation at Taba.
Yes. Sure. No, that makes sense. I mean you've got a reasonable good history of virtually converting stuff across. Just then maybe a follow-up on Bibiani. So with the review that's ongoing, I mean the question is, can it actually really be resolved in this half as you go through this management transition phase? And then added to that, what physically is actually happening in terms of this review? So we can understand a little bit better what sort of options you're weighing up given, I guess, that we've been hearing a number of times with this project over the years.
Yes. Look, David, with Bibiani, we continue to have discussions with interested parties. So there's a number of interested parties who are out there who we're speaking with. So yes, I don't want to get into the commercialities. That doesn't make any sense to do that, so other than to say we've got a number of parties who are keen on doing appropriate due diligence on Bibiani. Now of course, part of the challenge and the realistic expectation that you would have from potential acquirers is that they would get to site to actually have a look at the assets. The whole COVID world in which we operate just makes that pretty challenging. In fact, it's made it impossible really up until this last month when Ghana has actually opened its borders up. So yes, look, there's no one at Resolute who wouldn't like to have the process complete. We want to simplify the way that we operate. And this is part of that whole simplification process. So we will continue to work with those potential acquirers around their due diligence. And I can only say that we are hopeful of coming to a resolution on this by the end of the year. But it is a negotiation and a process. So that's where we are.
Your next question comes from Matthew Frydman with Goldman Sachs.
Just firstly, I guess maybe expanding a little bit on the industrial action, I know obviously, you guys did put out a couple of releases on this. But during the call, Dave mentioned the situation did come as quite unexpected to the team at Resolute. Maybe can you expand a little bit, I guess, on the nature of the dispute? What were the key points of contention? And how are those resolved during the process? And I guess why you're comfortable with -- the comment that you made that you're now comfortable with the relationship there going forward and that, that relationship has improved, if you could touch on that.
Yes, sure. I'll just briefly touch on it and hand over to Dave as well on that, Matt. But look, the -- I guess with all of these sorts of things, just -- it doesn't just spring on you. There's a period of ongoing discussions and developments. And that was something that occurred that we were hoping wouldn't have an impact but ultimately did have an impact. It wasn't through any lack of trying to negotiate our position. The key driver that really sat behind the union's issues with Resolute was around the fact that as we were managing the COVID environment and to ensure that we minimize the flow of people from Bamako into the site, we effectively -- stood down is not quite the right word, but stood down around 100 or so people early in the piece, so sometime in March, April time frame. And look, we stood them down on full pay. So that was -- yes, there was -- that was just part of what we were doing to manage the whole COVID environment. Now the union at the end of the day were demanding that they are -- that we reinstate our workforce back to the pre-COVID environment. And that was really the key demand and the thing that we were in negotiations with, with the union. And look, we worked really hard with the union, and we worked really hard with the labor inspector who is the, if you like, the government representative who adjudicates on these sorts of matters. And we had a team on-site who obviously took up that process. So they did a terrific job in some pretty challenging environments in relation to that activity. Dave, did you want to add anything?
Yes. Look, I think the key thing was that we had a long-standing process that we've been running through the COVID crisis to try and manage and limit inter-regional travel because that was a key way in which we felt we could prevent infections and transmissions, particularly from Bamako to capital where the COVID was occurring in the community quite extensively. And so that was a well-flagged and, I think, appropriate response. And in all our dealings with the union, that was very clear. But they, I think in responding to that long-standing grievance, which we were aware of, rather peremptorily and unexpectedly moved to more significant industrial action. And I think that was the key issue for us. It wasn't the fact that they had disagreement of opinion with us. That happens from time to time. It was more that they rather increased the seriousness of the dispute that we think are disproportionately. And that was really disappointing from our perspective.What has been really encouraging is that there is a process of arbitration via the labor inspector, who has the same function, I suppose, as the Fair Work Commission in Australia. And he has very much recognized that what we did was reasonable, legitimate. And ultimately, he's been a very important interlocutor in getting to an agreement with the union. And there's no doubt in my mind that we've established clearly, both with the union and with the government authorities, the necessity and, in fact, our right to manage the workforce in a manner that's most appropriate for the needs of the operation and to achieve the health and safety outcomes that we're trying to pursue. So at the end of the day, I think, a really important principle have been established, even though it was, frankly, a very painful exercise for us for a period of time.
No, sure. That all seems quite reasonable. So thanks very much for expanding on that. I guess just following that thread in terms of, I guess, the technical challenge that, that presented. Dave, you talked about the hard shutdown of the roaster and the fact that you, I guess, gradually ramped that up over 12 days. Is there any additional integrity monitoring or testing the work that you're doing there? Are you able to do additional work? Or is that necessary given that, clearly, there was some recent crack issue there, and it's obviously a key piece of infrastructure?
Correct. I mean the biggest single thing we've actively sought to do since the experience of last year is to make sure that major thermal shocks aren't imposed on the roaster. So when it was shut, we then very quickly boxed it up to make sure that heat losses were as gradual as we could possibly make them. And then again, we very gently and gradually heated it back up. The drawback with that is that, that takes time. And I think, obviously, it's an investment in the preservation and integrity of the roaster to treat it very gently in these circumstances and to take temperature down and then bring it back up slowly and gradually as we can and to get feet on in a manner that ensures that those thermal shocks are avoided. So there's no doubt there was an abundance of caution in our approach, but that's very much driven by the need to preserve the asset. We have a full planned shutdown probably in April, May of next year, which will obviously be a full inspection. And normally, what occurs there is we will patch up the refractory lining where there's been any deterioration. But from what we've observed so far, we have seen no significant negative effects from that event. But that's partly because we've obviously been almost careful to a fault in bringing it back up to heat. I think one of the key things is that we monitor the temperature across the roaster shell very carefully. So inside the core of the roaster, it's 750 degrees, but you can walk up to the outside and almost touch it. It's at ambient temperature on the outside. So there's a whole series of insulating layers, and it's the integrity of those layers and the thermal profile across those layers that we monitor very carefully. And we have a whole lot of sensors across the roaster to see how the internal temperature then is cooled through the refractory lining, through the shell, through the outer insulation layers and through the outer cladding layer such that we can have confidence that that's not being breached.What happens if you get a big problem with the roaster shell, then you'll see hotspots in the shelf because suddenly, that thermal grade is being adversely affected. We've seen no evidence of that so far. So that's our key source of comfort in that regard.
Yes. Fantastic. And then I guess just finally for me and rounding back to some of the questions on Tabakoroni underground. Clearly, the recent release around an upsized resource there of 1 million ounces, the PFS, I guess, only seems to be using part of that in terms of the 4- or 5-year mine life that you outlined there. Dave, you did touch on this in terms of your ability to be able to do more drilling work and grow that resource base and potentially grow the reserve base. But can you, I guess, just give us an update on the time line of thinking around Tabakoroni underground and presenting a reserve? And will that be, I guess, bundled as part of the DFS process? And I guess just what your time lines are there around doing that additional work.
Yes. Look, as we alluded to before, Matt, I think the important thing is that we carry on with our oxide production and the development of that oxide portfolio because what that then allows us to do is just to continue to improve our understanding of what's going on from a Tabakoroni underground perspective. And we think -- we're obviously very positive around that. Otherwise, we wouldn't have released the prefeas. So I think that's -- it's important that we're able to expand our footprint, and that's what we'll be working on over the next little period of time. But let's keep oxides going -- the objective is to keep oxides going for at least another couple of years. That allows us to expand that footprint and get a better understanding, and it also extends out any capital expenditure required.
Yes, sure. So I guess the key there is that you guys do expect that, obviously, the underground resource and reserve will continue to grow with more work done and more drilling as you fuel that buffer from extending the oxide life.
Well, yes, we're pretty confident about it, Matt, because we're continuing to drill there. I mean if we weren't confident, we wouldn't be drilling.
[Operator Instructions] Your next question comes from William Morgan with Intrinsic Investment Management.
Stuart, just a question about medium-term objectives. There's a lot of money going to drill bits in your region at the moment and quite a bit of heat coming up. Clearly, Board's deliberating over how to think about the future with respect to operations. I'm interested in your perspective on your drilling versus other discoveries that are getting done out there that -- and what the risk is of things passing you by or whilst operational issues are sorted out.
Yes. Thanks, Will. And look, our focus, I think, which has been there for a while, is to capitalize on the asset, which we have at Syama. So we own a significant footprint, and we continue -- we own a significant footprint in a very prospective area, and we want to make sure that we capitalize on that. So we have all of the infrastructure that's there. We're in a position to be able to utilize that infrastructure. And to me, that's the best use of our drilling budget, is to make sure that we continue to drill within and around that area. So that's a focus. We're obviously continuing -- we have a few small investments in a couple of junior exploration companies. We maintain those because we think that there's opportunity potentially for them to have positive results, and therefore, we're involved within those companies. But in terms of our own drilling and in terms of our own outlook, then let's make sure we utilize the existing assets, which we have. And we're also doing that, by the way, at Mako just in terms of continuing to do some work around some of the areas that we have within that broader Mako tenement portfolio.
There are no further questions at this time. I'll now hand back to Mr. Gale for closing remarks.
Great. Thanks, Rachel, and thank you, everyone, for joining us on this call. Look, I'd just like to wrap things up by just summarizing it and repeating. We are really focused on delivering from an operational perspective. That's both from a gold production, a lowering of our cost base and then ultimately, generating cash. And from those stronger cash flows, we want to strengthen our balance sheet. And from strengthening our balance sheet, that gives us more of a license to look at how we can grow our company. So it's pretty straightforward. It's a pretty simple approach, but that's how I'd like to characterize things moving forward. We want to simplify Resolute, and we want to make it very clear and very transparent to everyone who's out there in the market. I'd just like to wrap it up by thanking all of our employees and our contractors, both in the Perth office but particularly on site. It's been a challenging period of time during the September quarter. And everyone stood up and performed really well over that period. So I'd just like to congratulate them and thank them. So with that, I'll hand back to you, Rachel, to wrap it up.
Thank you. That does conclude our conference for today. You may now disconnect.