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Welcome to the Resolute Mining Limited quarterly conference call for the period ended 30 September 2021. [Operator Instructions] I'll now hand over the conference to Mr. Stuart Gale, CEO. Please go ahead.
Thanks, Rory, and good morning, everyone. Thank you very much for joining us for September 2021 quarterly results call. I'm joined on the call by Terry Holohan, our Chief Operating Officer; and Doug Warden, our CFO; and very pleased to have Doug on board for his first quarterly conference call. Both Terry and I are in Dakar at the moment. I've been in Senegal now for a little over a week and had an opportunity to visit the Mako mine site earlier this week. So obviously a very positive visit. Great to get down to the site and speak to the people and see how things are going. The team at Mako doing wonderful job there and as you can see from the quarterly continue to hit all of their production targets as we'd expect. I've also spent a couple of days in Dakar with Terry, and we've met various officials in the government here to just present the case for Mako and Resolute more broadly. What we'll do today is I'll just give a quick introduction and then hand over to Terry and Doug to run through the operations, financials and balance sheet components of the results and then we can hand over -- go to questions from there. Look, I guess as we look at the quarter all up, it was very consistent with the previous quarter. We produced a little over 76,000 ounces of gold during the period. Our all-in sustaining cost was higher than we'd anticipated or expected. And as noted in the quarterly, that was driven very much by a well above average rain period in Mali, and that had some significant impacts particularly on our oxide performance and resulted in the drawdown of some higher value stocks, which flow through into our all-in sustaining costs. We were also [ hit ] a little bit by some ongoing maintenance issues, and we see those flowing through just into the October period, with a shut coming up. There's a 7-day shut coming up really shortly, and I'm sure that will resolve some of those things. The gold sales and our average price, I'm sure Doug will touch on, but continues to improve so that overall hedge book is looking pretty reasonable at the moment. And as we announced, it was very, very pleasing to conclude the sale of Bibiani during the quarter. We received $30 million of cash for that, and there's another $60 million, which is receivable on Bibiani in February and September next year. With that, net debt was reduced during the quarter to $213 million, and we continue to be very focused on our balance sheet and how we manage that. You'll note, couple of weeks ago we also announced that the shutdown of the roaster would be deferred. We've got confidence in the deferral of that shutdown because we've deployed a number of monitoring technologies across the plants. Those -- the information from that technology is certainly pointing to the fact that the roaster is working very well. And we can see from the processing performance of the roaster that things are still progressing -- things are progressing well through that. From an exploration side of things, we continue to be very near-mine focused. And we had some really, really very good drill results, particularly Tabakoroni underground and also in a couple of the northern areas for oxides, and we're [indiscernible] have started stripping at the Beta satellite deposits. So that's actually a fairly recently identified oxide satellite deposit, has good grades, low strip ratio. So we're looking forward to getting into that. And before I hand over to Terry to walk us through the operations, I think it's really important just to highlight that we continue to work really well with the governments in both Senegal and Mali to vaccinate our workforce and our contractors. And we've delivered over 1,600 doses -- well in actual about 1,600 people had double dose vaccinations and another 300 or so on single. So that's progressing well, and it's good to ensure we have people vaccinated so they can get to work and keep things moving along. So with that, I'll hand over to Terry for an update on the operations.
Thank you, Stuart, and good morning, everybody. Just as a -- I will take you through the Syama underground, Syama open pit on the Mako mine key highlights from an operations point of view. Before I start, I would like to make a mention of the fact that we have managed to fill by far the majority now of our key positions in both the operational and the technical support roles and teams. We've got some good people brought in, and we're starting to see the benefits of those people already. At this point in time, there are 2 positions vacant, but we will expect to fill them in the next 6 weeks. Beginning with the Syama underground. As we previously mentioned, we backed off a little bit on tonnage compared to the previous half year. The grade, as a result, did improve to 2.46 from the 2.33, and it's mostly because we opened up more drawpoints and it gives us a lot more flexibility and a lot more grade control went in there so we could actually control the grades coming out. And with that improvement, we expect to continue over the next 6 to 9 months. This material, we did mix with about 10% of our stock material. That is typically ranging from 2.3 to 2.5 grams a tonne, and we maintained that grade at 2.46 through the plant. And you noticed we did have slightly better recoveries, but generally the performance was reasonable on that side. We are continuing with our cave modeling. The cave modeling is going to be completed early next week. And this will be able to put -- give us our outlook and underline our budget going forward for the next couple of years. So we should be able to, first of all, predict the grade more accurately going forward and put our budgets together with a lot of confidence over the next 2 weeks. We did consolidate the owner operator of the underground, and we are improving the mining techniques going forward. And this is driven by the fact that we've got 3 new caving experts within the teams, 1 on site and 2 in support now. So we're actually improving the techniques underground, monitoring the caving in close -- far closer detail. On the surface infrastructure, we did hand over the new power plant to the operations. We fixed all the bugs in the system. There were lot of bugs originally causing stoppages. This was in the SCADA system. We did parachute a couple of people in there and we fixed that. And now that plant is operating reasonably well. We've also completed the construction of the new cleaner cells and the on-stream analyzer for the float plant. This is designed to give us fine sulfur control in the feed to the roaster, but we also are expecting slightly improved recoveries going forward and a slight decrease in tonnage as a feed to the roaster. Traditionally, we feed about 7% of our mill feed to the roaster. We're expecting that to come down to 6% or even 5%, which is significant given that the roaster is the bottleneck in the circuit, and should give us opportunity to squeeze more material through that. Going forward now, we are focusing on the scheduled maintenance and improved productivity on the plant. As Stuart has highlighted, the roaster area is the work -- the area that we're putting a lot of work into but we're also working on the crushing and the milling circuit. We do have a short 7-day stoppage, as we mentioned, because of the improved condition monitoring on the roaster. We've delayed that to February. And we've got a major shut in February, and we're doing some of the tie-in work right now as we speak with the short 7-day shut. So October will be a busy month for us. We'll be commissioning the new float cells, the OSA. And as I mentioned, we expect to see benefits of that over the quarter with a slightly improved roaster throughput. And then again, when we do the shut in February, we're expecting another significant step-up in roaster performance. So if you look at the sulfide circuit, we would see this as a quarter of consolidation. If I move to the open pit operations, this is one that caught us. Remember last month -- last quarter, I did mention that we shut down the Cashew pit. And we are moving all our equipment to the Tabakoroni area. Unfortunately, this is not a good time to move equipment to Tabakoroni. We're operating in laterite, so we had to get down to the bottom of the pit. And unfortunately, we had significant rains. It's not the first time it's rained, obviously. We do operate open pits in this type of weather. But normally, we have plenty of planning time so we can operate around the peripherals of the pits and the sizes of the pits during the rainy season and new stockpiles. However, we have to try and get some of the material out of the bottom of the pit, and this proved very difficult. So as a result, we did mine and hold some materials from the Tabakoroni pit, typically at about 1.8 gram a tonne. But we also had to use some of our stocks, which are typically 0.8 gram to 1 gram a tonne close to the oxide plant, and this gave us about an average grade of about 1.2 gram a tonne. Not where we want to be; however in that same time, we followed up with some recent discoveries at the Beta pit with a lot of grade control drilling. If you remember last time, I said that we were looking for flexibility and having several pits available to start with all grade control drilling. We've done a lot of that. And the Beta pit we started last week stripping, and we're expecting to start taking ore out of that over this weekend. So we are expecting our grades in the oxide circuit to start climbing up back to the 2 grams a tonne in the new future -- in the near future, sorry. So the oxide circuit has been a tough quarter, but again we do expect significant improvements going forward. If we move to Mako, Mako is operating very well. We've almost finished the cutback on schedule. While we are cutting back, we had to treat some expected lower grade material, but we're now moving back into the higher 2-gram a tonne ores. We have improved the mill control and as I previously mentioned, the mill typically ran at 6.9 to 7.1 megawatts. We're now in the range of 7.1 to 7.5 and expecting to go into the mid-to-high 7s . We have commissioned a mill slicer, which is a virtual window into the mill. And this has given the operators the ability to control far better the loadings inside the mill and the power usage. So we're expecting systematic improvements from that circuitry. And in Senegal, despite the heavy rains there, there was no material impacts on the mine despite the fact that the pit is now a net water collector as it's for the first time below ground level. And just on an environmental note, just as I say, Mako is ticking all the boxes. We are very happy to catch on film chimpanzees for the first time walking through our waste dumps since construction. So Mako, again, performing as planned, and we expect more of the same going forward. So in summary, it's been a very busy quarter for us, and we think that we're going to see significant improvements going forward over the next 2, 3 quarters. Thank you, Stuart. I'll hand that back to you.
Great. Thanks for the update, Terry, and I'll hand over to Doug now to run through the financials and balance sheet. Thanks.
Thanks, Stuart. I'll just take a few minutes to walk you through the cash flow for the quarter, the net debt position at 30 September and a brief update on the hedge book. So starting with cash flow, the waterfall chart I'd refer to on Page 5 of the quarterly. So operating cash flow for the quarter of $43.6 million benefited from a $23.3 million drawdown in bullion which helped drive strong gold sales for the quarter of 89,326 ounces. Royalties were higher than previous quarters at $5.5 million due to the stronger sales. VAT and taxes there of negative $9.1 million, some of which was due to a legacy tax payment in Mali, with the majority of that relating to that leakage during the quarter. Fairly capital-intensive quarter, so it is up on our previous quarters in terms of that VAT leakage. CapEx of $11.5 million, which was largely sustaining capital of about $7 million and underground development for Syama of about $4 million. Exploration at $3.7 million related to the resource drilling at Tabakoroni underground as well as oxide exploration drilling at Syama North. And Stuart has already mentioned this, and you would have seen the results of these drilling programs in the late August announcement. Working capital, just slightly negative at $2.6 million with a small reduction in creditors during the quarter. The Bibiani sale proceeds, we've talked about the reason it's not quite $30 million as we actually received $1 million in the previous quarter and $29 million in Q3, with the balance being around USD 0.75 million from the sale of our tenements to Taruga Gold in Côte d'Ivoire. Debt repayments of $53.6 million comprised $25 million for the first installment of the term loan and $30 million paid off the revolver from the Bibiani proceeds with the small difference being a small drawdown in local overdraft facilities. Interest of $3.1 million, fairly self-explanatory. The government dividend and withholding tax of $8.2 million. That's comprised of a dividend installment payment of $2.4 million to the Senegalese government for their 10% stake as we dividended cash flow out of Senegal and the balance is withholding tax of 10% on the payment of that entire dividend. So turning to net debt, after taking into account cash and bullion in balances, net debt reduced by $6.9 million for the quarter to $212 million -- $212.9 million, sorry, at 30 September. And finally, just to touch on the hedge book. A reminder that under our banking facilities, we are required to have a minimum of 30% of the next 18 months forecast production hedged at 30 September. We had a total of 176,000 ounces hedged comprised of 123,000 ounces of U.S. dollar gold forwards at an average price of $1,783 an ounce. 23,000 ounces of euro gold forwards at $1,501 an ounce average and 30,000 ounces of zero-cost collars with an average put price at $1,700 and an average call option at $2,059 an ounce, which expire over the course of the final quarter of this year. That's it really for me, and I'll hand back to Stuart to wrap up.
Great. Thank you very much, Doug. So look, just before we get into the Q&A, there are a few questions that have flowed through. As the guys have alluded to on the call, it's great now to have what we think is a pretty full complement of people on board. So clearly, with Doug joining, we've rounded out our executive team. But I think just as importantly, we've been able to get those key management representatives and technical expertise into our site-based businesses over the last 3 to 6 months or so. So feeling pretty comfortable that we've now been able to round out the people side of things. There's still 1 or 2 key roles, but we're in much better shape now than what we were on our last quarter. So our focus continues to remain on the systems and process that help to give us productivity and efficiency gains. And there are a number of initiatives that have just started to take hold, and it will take hold over the next 3 to 6 months. So we are expecting to see improvement from a cost and production perspective. And I'll just touch very briefly on exploration. And again, no change there. From an exploration perspective, it's around near mine. It's around making sure that we capitalize on the Syama gold legacy, and we're looking for other opportunities at Mako to extend the mine life there. So they're key things for us as we look to the future.
So with that, I'll just jump across into the questions. And our first question is around cost savings potential from the switch to owner operators and any other opportunities to save costs on that. So yes, look, we are. We haven't seen the full cost savings initiatives -- sorry, the cost savings benefits from that switch come across. But it's a reasonable amount of money. And I'm not going to go into it in too much detail, but it's part of a process of looking how we can be more cost effective in the way that we run our business. And that does just translate to the actual dollar value of the cost savings initiative. It also has an impact from a VAT perspective as well because, as we've discussed on these calls previously, every time we have an invoice that we get from a consultant or a contractor or we buy supplies, we get VAT added to that invoice in Mali. So we [ talked ] with our employees. So that's 18%. So to the extent that we can look through our operations and see where we can take service in-house, that's what we should be doing. And that's what we've done in this case. And there's a couple of other areas, particularly from a maintenance standpoint that we think we can also get benefits from in terms of that transition. [ Terry says ], when are we going to get 80% recoveries through the sulfide circuit? Are we nearly there? I think we are pretty close, [ Terry ]. We were at 79.5%. So getting pretty close. You could have just rounded that up, but the number was 79.5% for the quarter, and that's obviously an improvement from the previous quarter, which I think was around 77%, 78%. So pleasing to see the performance through there. And as we continue to tick off on a number of these initiatives that we're speaking about, then I would expect we will continue to see improvements in recoveries. But I should stop talking about that and ask Terry to give his comments on.
Yes, certainly. Thanks, Stuart. Recovery is something that we're doing a lot of work on. Recovery doesn't seem to be a -- in the sulfide circuit it doesn't necessarily seem to be a function of grinds too much. But what seems to be very important is obviously stability in the whole circuit. Something that we're spending a lot of time on right now focusing on that. But what will improve is when we put the cleanest circuits in there because what will happen is we can actually -- as a classic flotation circuit, we can pull harder, get a higher initial pull and then clean it back down to lower. With anything that's rejected, swing it back to the mill, because obviously coming across with some gang material on it, let's give it a chance to remill it, and then when it comes and presented the second time, it will come through cleaner. So we are expecting an uptick over the next couple of weeks as we commission and get to know that circuit. I remember it is linked to the OSA, so it won't be an operator-intensive operation. It will be the automatic system. So we've got 3 or 4 experts on site as we speak now, working on that to show us how to optimize that circuit. So I'm looking at an improvement there with the lower throughput going then through the roaster and then going through the leaching circuit in the -- after the roster, again, that's going to improve residence time. So I'm expecting systematic improvements going forward.
Excellent. Thanks, Terry. And then I guess, in keeping with the efficiency initiatives, our next question is around the mill slicer and what benefits that will bring and whether we have any scope to improve the throughput and the mill's performance. So I can say that we had a really good opportunity to have a look at the output from the mill slicer when I was at Mako a couple days ago. It delivers a really good visual for someone like me to understand the importance of how we manage that particular mill. So I think we'll continue to get benefits from that as the team get better at monitoring and managing that. But again, Terry, would you provide some comments on the output from the slicer?
Certainly, the mill slicer is a huge improvement on any site milling operation. Obviously, what you do need is a variable-speed motor, and we do have that on the Mako mill. So that is allowing us to throw the balls and the rocks. If you look at a cross-section of the mill and think of it as a clock and rotating clockwise, the balls normally fall on the wall somewhere between 4 o'clock and 6 o'clock. If they throw at 4 o'clock then [ power ] is wasted because metal is just hitting the metal wall of the mill. But what we're able to do is control the speed of the mill. And as a function of the wear on the line is those balls between 5 and 6 o'clock, which is where you need it. So we're not -- so we're starting to absorb more power into the ore, which is where you want to put it, instead of throwing it into these sidewalls. And we're already seeing improvements on that. It is a manual system at this stage because we're determining all the algorithms, but we are installing the control system, which is called MillStar. That's being commissioned as we speak. And then that will go into automatic mode probably in about another 3, maybe 4 weeks. So we're expecting big things from that. And what I'm really keen on is the mill was originally running around about normally 7 megawatts with some wasted power. And what we're looking to do is get it close over time to 8 megawatts, which is a significant step-up with more efficient use of power. So I'm hoping for some significant increases in throughput as a result of that.
All right. Thanks very much, Terry. I think with that, it's probably time to wrap up the call. So many thanks for everyone for joining the call today. Hopefully, it's given you a little bit more of an insight into how things are going at Resolute, particularly through the September quarter, and where our vision is as we look forward. If there are any other questions, please feel free to reach out to James Virgo at any stage, and we will attend to them. In the meantime, look forward to catching up with you all at some stage in the near future. And with that, I'll sign off. Thanks very much.