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Ladies and gentlemen, thank you for standing by, and welcome to the Resolute Mining Limited investor conference call. [Operator Instructions] I'd now like to hand over to the Managing Director and CEO, John Welborn. Thank you. Please go ahead.
Thanks very much, Tara, and welcome, everyone, to today's Resolute investor conference call. This conference call is to cover the quarterly activities report for the December 2019 quarter. And as part of that, I'll be very pleased to talk about the divestment of our Ravenswood gold mine under commercial terms that we're very pleased with and obviously also today's news where Resolute is currently in a trading halt, pending an equity raising of up to AUD 196 million to be used almost exclusively for the repayment of Toro Gold bridge acquisition facility and significantly strengthen the company's balance sheet. Furthermore, I'll talk about our December quarter, one that was dominated by repairs -- the unscheduled repairs conducted to Syama roaster. That has been covered by a number of announcements. But I remain incredibly proud and appreciative of the significant efforts that Jon Gaunt, our General Manager at Syama, and John Wheeler, Director of Projects, and others who completed a significant repair of the entire sulfide circuit, and we were very pleased to bring that back online at the end of December and ramp it up to nameplate capacity, which has allowed us to start 2020 at full speed.We summarized in our quarterly activities report published last week on the 17th of January our performance in the December quarter, obviously affected by the fact that the sulfide circuit was -- the roaster was down, the majority of the circuit. Despite that, we produced 105,293 ounces of gold across our portfolio. And that resulted in annual production for FY '19 of 384,731 ounces, and that was against gold sales for the 12 months of 2019 of 394,920, both of those numbers compared to our guidance, which we have maintained despite the roaster issues at Syama at 400,000 ounces of gold. And a transitional year that is now completed. And we also, obviously, as part of the December quarter, published that all of our assets that are operating, Ravenswood, Mako and Syama, started 2020 cash flow positive, and we significantly reduced capital demands during 2020.Mako delivered another excellent quarter of low-cost production. In addition to the significant repair work on the sulfide circuit at Syama, we also announced during the quarter a deal with Aggreko for the construction of the world's largest mine site-based solar hybrid power station, something we've been working on for a number of years and is going to be very significant in achieving our stated life of mine DFS cost for the Syama Underground at USD 746 an ounce. That power plant is a significant driver, along with automation, in our ability to achieve those life of mine costs and will result when it comes online, in incremental stages starting the end of this year, in a significant cost reduction of Syama.At Ravenswood, in addition to progressing the strategic review and ultimately announcing the sale of that asset to a consortium headed by EMR Capital, we also successfully, during the December quarter, completed the mill expansion to 5 million tonnes per annum and achieved the key environmental approval for the Ravenswood expansion plan. I was on-site at Ravenswood last week, along with EMR Capital to discuss the transaction with our staff and local stakeholders, including Queensland government, and I passed on how proud we are of our achievements at Ravenswood over 15 years. We've mined 40 million tonnes of ore, and we've poured almost 2 million ounces of gold. Having acquired that asset in 2003 for just under AUD 60 million, we've generated a huge amount of value for Resolute shareholders. And we're very pleased to have sold that asset in commercial terms, which align ourselves with our development outcomes. We received $100 million of value immediately: $50 million in cash and $50 million in the form of an interest-earning promissory note. And then we're exposed to the upside of the Ravenswood expansion plan committed to by the purchasers, EMR Capital and GEAR, in a $50 million gold plus contingent payment and up to $150 million in upside sharing, which aligns us with EMR Capital's investors in terms of expected outcomes. So while we're exiting the Ravenswood asset, we remain very committed to the value creation opportunities, and our modeling would indicate that the EMR Capital will be successful in paying us the maximum value of $300 million over that development. Significantly for Resolute, it removes the significant capital amount of the Ravenswood Expansion Project, which we estimated to be a minimum of AUD 150 million. And it also removes the development obligations related to that asset from Resolute and allows us to continue the strategy that we have been clearly articulating to our shareholders and to the market, that our ambition is to become a multi-mine, low-cost, African-focused gold producer, intrinsic in dual listing in London, and our increasing focus in exploration and development of both our existing assets in Africa and looking for new opportunities.In mentioning exploration, we published some details in the quarterly activities report on the exciting exploration we're doing. Most of our expenditure in exploration is centered around the Tabakoroni deposit, which is 30 kilometers south of our main Syama processing complex. We continue to get excellent results from that drilling campaign. In hole number 729, we had 12 meters at 93 grams per tonne. The results from this exploration program are simply phenomenal. They'd been somewhat ignored by the market, while we focus on the operational outcomes at Syama. But we are completing a feasibility study for a future underground mine at Tabakoroni. And increasingly, we're seeing the Syama complex as consisting of very long-term production from the fully automated Syama Underground Mine and equally long-term production from a very high-grade underground mine at Tabakoroni. In preparing for that, increasingly also, the 2 independent processing circuits we have developed at Syama, being the oxide circuit and the sulfide circuit, are increasingly being used as 1 processing center. So the market will be aware that during the roaster downtime, we repurposed elements of the sulfide processing circuit to process oxide ore. And equally, some of the transitional material from the Tabakoroni open pits and particularly the future Tabakoroni underground ore is likely to be processed through a combined oxide and sulfide circuit. One of the things we published in the quarterly, and it's part of our guidance, which I'll come to in a moment, is that we are guiding Syama as one production center, and that is because increasingly that is what the cost and management structure is motivated and is most appropriate to look at. When we originally commissioned the oxide circuit in 2014 and '15, we were mining a discrete satellite northern pit ore bodies in completely separate mining operations. And the oxide circuit as it was then configured was completely independent from the sulfide circuit. Now that is no longer the case. And so the cost split between the oxide and sulfide circuits are increasingly a financial exercise and an arbitrage exercise rather than a management operating exercise. So the decision, as announced in the quarterly, to cease reporting the oxide and sulfide circuit separately directly relates to the operational improvement on site. And the reality is that, in fact, we are increasingly looking at Syama as 1 production zone. And over the next 2 years, we'll bring those 2 circuits together into 1 unified processing operation. The ambition of that processing operation as clearly identified in the market is to produce 300,000 ounces of gold at an all-in sustaining cost of USD 750 an ounce. Intrinsic in that ability is the fully commissioned Syama Underground Mine and its full automation and power project. And the second key part of that is the feasibility study we're working on, on the Tabakoroni underground, which I'll be delighted to update the market on towards the middle of 2020. Moving on to Ravenswood. The asset had a very strong end to the year in what has been a difficult transition. While we were running the Mt. Wright underground, Ravenswood produced cost effectively 100,000 ounces or more of gold. As we have been scaling down and ultimately successfully closing the Mt. Wright underground during 2019, that production has really dropped off, and the market will be aware that this year, we produced less than 60,000 ounces at Ravenswood. During that period of time, though, we have completed all of the approvals required, the expansion plan that has been adopted by EMR Capital and GEAR, and that project is now ready and significantly needs to be developed quickly. And we were delighted during the quarter to work on and early in January announce a binding transaction with EMR Capital, as previously described. Resolute is proud of our achievements at Ravenswood. We're confident the commercial terms are very positive for shareholders and particularly pleased to effectively from a commercial sense been partnering with such a strong counterparty with EMR Capital and GEAR. We're very confident in their ability to deliver the project, their financial capacity to do so as well as their operating capacity. They have significant credibility globally, but particularly in Queensland, with their acquisition and development of the Kestrel Coal assets from Rio Tinto as well as Capricorn Copper. They have a very strong operating team. And in addition to the commercial outcomes, we're very pleased that, that will continue our strong community focus in and around Ravenswood and the legacy of our operations. I've mentioned previously the Mako gold mine in Senegal that we acquired during 2019 as Resolute's 10th gold mine. And on-site last week, I was very pleased with the feedback we received from Resolute's history at Ravenswood, and it will continue to be a strong part of our legacy as we increasingly move into being a more African-focused company.Talking of the Toro Gold acquisition, that asset continues to perform superbly. When we acquired that mine in the middle of 2019, we did so through the use of an acquisition bridge finance facility of USD 130 million provided by Taurus Funds Management. That acquisition facility had a 6-month term, extendable by 1-month periods for up to 6 further months. And that original term falls due at the end of this month, January 2020. And this morning, we've entered into a trading halt and have announced an equity raising of up to $196 million, the proceeds of which will be used exclusively to repay that acquisition bridge facility. The capital raising has 3 components: a fully underwritten tranche 1 institutional placement book run and managed by Canaccord and Berenberg and that is live today. Also a trench 2 placement of AUD 25 million to be taken up exclusively by myself and my fellow directors and Resolute's largest shareholder, ICM Limited, as well as a share purchase plan to enable our eligible Australian and New Zealand resident shareholders to participate in what we believe is a very value creative and opportunistic capital raising. We are very pleased with the very strong support we are receiving from our top shareholders, including ICM Capital and others in the top 40. And while this is an institutional placement, the share purchase plan and the method of the placement is very much aligned to seeking the support of our existing shareholders and resetting the capital base of the company.Operationally, during the December quarter, as described, we repaired the Syama roaster and are very confident that operationally we started the year in a very strong cash flow generative position at all of our assets. And today's step in terms of the capital raising completes the financial aspect in preparing us for a very strong year. We will come out of this with our net debt reduced by approximately AUD 200 million, a greatly simplified capital structure. We have the key support of our banks in terms of the proposed expansion of our low-cost senior debt revolving credit facility. We have very low capital amounts during 2020. And this will greatly reduce our gearing and put us in a very strong financial position to continue to produce gold for the benefit of our shareholders.With that brief description, obviously, there's been a lot of information published in both the quarterly activities report, details of the Ravenswood sale that I'm very happy to discuss and obviously also today's equity capital raising. And so I'll pass back to you, Tara, for any questions.
[Operator Instructions] Our first question comes from the line of Matthew Frydman from Goldman Sachs.
John, good to see you've got Stuart Gale working pretty hard already of -- hitting the ground running obviously there. You talked a bit earlier on the call about the consolidation at Syama going forward, particularly now that the Syama sulfide circuit is obviously ramping up towards your nameplate production levels. So I guess, going forward, it seems like the oxide operation will probably likely be the more variable element of the operation as a whole. And clearly, the December quarter, not necessarily a strong result for the Syama oxides, with costs up pretty significantly. So I guess just trying to better understand what the outlook for the oxide asset is. Maybe perhaps you can elaborate on what the drivers behind that cost result in the December quarter were and what directionally is going to be improving on this heading into CY '20?
Yes. Thanks very much, Matthew. And I was going to discuss in summary a few other things that are obviously relevant looking forward. And one of those is how pleased we are that Stuart Gale has joined Resolute effective yesterday, the 20th of January, as our Chief Financial Officer. As you would know, Matt, Stuart joins us from a very strong and successful period at Resolute, both in the Finance and Investor Relations department and previously was a senior executive and Chief Financial Officer at Wesfarmers, in some of their own businesses. And as you point out, Stuart's been very effective in the last 48 hours in putting together the complete restructuring of our finances and having some more time to play with. But he will be a key part of the team. He joins obviously a very hard-working Resolute executive, including David Kelly, our Chief Operating Officer; Amber Stanton, our company Secretary and General Counsel; Jeremy Meynert, who's here in Sydney with me today as our General Manager of Business Development and Investor Relations; Bruce Mowat, our General Manager of Exploration; and the operating team consisting of Brett Ascott, our Technical Services Manager; I mentioned John Wheeler, our Project Director; and our General Managers, at Syama, Jon Gaunt; at Ravenswood, Dave Mackay; and at Mako, Russell White. So I'm really pleased with the team, we've got the bench strength, and Stuart will form a key part of that hard-working executive during what is going to be a very exciting 2020 for Resolute.Talking about the consolidated Syama production. I'll answer your last question first, which is the unusually high cost result in December. With -- the issues we had with the sulfide circuit are well documented. We have also disclosed some -- the unfortunate parallel circumstances we had in our oxide mining and processing in the December quarter, which placed us under significant further pressure. We had a minor pit wall failure in the Namakan pit, which resulted in a change in the mine plan and reduced the expected grade we were processing and hauling from Namakan during the quarter. It was a short-term issue. It was a safety factor that has effectively resulted in an area of the pit being inaccessible during a period of time where we would have liked to have access to it. We also encountered some unexpected transitional low carbon interest material that reduced our recoveries. And both of those factors resulted in an unusually high cost result in the oxide quarter. I also mentioned in my narrative introduction that increasingly, another factor is the somewhat arbitrary cost allocations we're making between the 2 circuits in terms of the oxide material that we're processing with the sulfide circuit, trying to distinguish the resulting sulfide production between what was mined in the sulfide mine and the oxide mine and trying those through with an all-in sustaining cost is becoming an exercise in financial management rather than operating control. And so as discussed, one of the things we're doing is to bring that together to make it more understandable and appropriate, both from an operating perspective for our managers, but also for the markets. One of those factors is the other part of your question, which is the variability of production from the oxide circuit and how you should look at it. And I mean, looking backwards, it's obviously apparent that we completely misguided the sulfide and oxide production out of Syama for 2019, in that the oxide mine through a variety of factors, some of which are under our control, significantly outperformed both in production and cash flow performance, while the sulfide mine, for a number of factors that we've described, and most obviously, the roaster repair requirements, significantly underperformed in production. That answers your question. The reality is that we have a number of leaders in our control on production and how we pull those will depend on circumstances, where we're looking forward, obviously, in making sure that we have a much more stable and consistent operation going forward.To support that, just before coming back to the oxide future and how you should model it and think about it. One thing worth mentioning is we start 2020 with more than 400,000 tonnes of high-grade underground ore on our ROM pad. In fact, when I was on-site at Syama in December, there was no room on the ROM pad. It's completely full, ready to process. And that has allowed us to focus on efficiency and cost and optimization of the automation haulage without any pressure on tonnage. And in fact, we're 100% confident that the ramp-up of the automation haul fleet occurring during 2020 will result in 100% feed at the 2.4 million tonne per annum sulfide mining rate. And so that, the birthday that the entire sulfide circuit has had, and that head start on mining provides us confidence in achieving the expected output from the sulfide operations. In relation to the oxide mine, the reserves and resources we have in front of us at Tabakoroni are clearly apparent. We've got 2 or 3 years of processing from those operations. We've also published some details in the quarterly on our ongoing exploration at a couple of smaller satellite mines closer to Syama at Cashew, Tellem and Paysans. And we'd expect to get more oxide feed from the pure oxide circuit from those operations. But the ultimate intention is, in fact, to transition within the next 2 years to a long-term underground mine at Tabakoroni and therefore potentially displace the need to continue to mine the available satellite oxide resources in and around Syama. And so the way -- to answer your question, the way I would start modeling Syama is not as 2 separate operations with separate mine life futures, but a production base with 2 ore sources, 2 underground mines and a long-term future. And we will look around the middle of the year based on that feasibility study to not only update what we believe are going to be very low capital numbers for the establishment of that underground mining operation, but also -- and in addition to talking about the feasibility study outcomes for purely that underground operation at Tabakoroni, but framing it in the context of the entire life of mine plan for Syama. And that work is ongoing.
No problem. That's great. You preempted my further question on the feasibility study on Tabakoroni as well. So thanks very much for that detail, and congrats on a busy start to 2020.
Thank you very much, Matt.
Our next question comes from the line of Simon Catt from Arlington Group.
John, could you -- I've got 2 or 3 questions, John, if that's all right. And if I can just add them all together, and maybe you can run through them. Firstly, can you comment on the structure of the Ravenswood deal and why you structured it as such, so you have the upfront cash and then the contingent payments that relates to your balance sheet? What does that look like now and assuming gold prices stay where they are through the end of 2020 pro forma this equity raise? And knowing that you're not a guy to let the grass grow under your feet, can you talk about what Resolute looks like having jettisoned Ravenswood, said you're going to sell Ghana, you've got Syama and Mako. What are your sort of acquisition plans? Are there any countries that you would not go to in Africa and maybe in the context of your existing portfolio of strategic investments?
Simon, happy new year and thanks for your questions. So I'll talk all about your first question in terms of the structure of the Ravenswood deal but, first of all, would correct the language you used in your third question, whereas -- I would argue that we haven't jettisoned Ravenswood, but more that we've divested it. And I'll talk through that structure with a little bit more detail. So the acquisition by EMR Capital and their partners, the Singapore-listed GEAR, is structured as $100 million upfront consisting of $50 million of cash that we will receive on financial close as well as a promissory note that has a coupon of 6% and then a $50 million gold price upside, which actually has a maximum gold price threshold of AUD 2,100, which looks very modest in today's very strong U.S. and Australian dollar gold price environment. And then an upside sharing payment of about $150 million, which is -- and to discuss why we've chosen that structure, I'll just talk a little bit about how that upside payment is, which is obviously the most significant portion of the potential AUD 300 million in consideration and how and why the deal is structured as it is. EMR Capital are a very successful resource basis private equity group. This investment is in their second fund, and they're busy looking for opportunities in their third fund. They have been involved in 8 resources projects and have been very successful across all of their activities. They generally market to the investors that they're looking to have a multiple on their equity invested of at least 3x, on a 5-year investment horizon. And obviously, they were very strongly supportive of the Ravenswood expansion plan that we've identified and have adopted that as part of their acquisition and obviously are looking to deploy very effectively equity funds, leverage those up, develop Ravenswood and then look for opportunities to liquidate, divest or dispose of that asset and return those funds to their investors. So Resolute, in structuring this transaction and the upside sharing payment, have effectively aligned ourselves with their investors and their interest. We believe in our modeling, that, that model is very well suited to Ravenswood. A well-resourced, highly effective and focused private equity group taking control of the project in its fully permitted form, deploying capital and expertise and ramping that project up, we think, gives the best possible outcome for the project and all of its stakeholders. And from a Resolute's perspective, we had that opportunity to do it ourselves. We would have obviously had to find the $150-odd million to develop it, and we would have had to deploy our project team in the East Coast of Australia on what is a very intense project. I would also point out from a global portfolio perspective from Resolute, Ravenswood represents our lowest-grade ounces and our highest-cost ounces. And in terms of development risk, our high -- we would assess our highest development risk. Increasingly, we have spent 20 years building partnerships and operations in Africa, and we believe we have a strong skill set and base there. All of that drives into answering your question as to how we structured this deal, we were not looking necessarily to exit Ravenswood. We have belief in our plan there. We've got a great team on the ground, and we're very comfortable with the operation. What this deal does, it allow us to immediately receive some value from the transaction. But more importantly, it removes the overhang of the capital development, and the time frame required on that development should really need to start very quickly. And we've managed to do it in a way that doesn't completely remove us from the upside of that success. And so the transaction is structured so that we have no capital risk, no ongoing fund obligations, but we are aligned with the success in the work that effectively the Resolute team, both at Ravenswood and corporately, have outlined for that project, in securing all of the required approvals and outlining a pathway that we ultimately think is successful. And as I said, on our modeling and our belief in the EMR Capital and GEAR team, we're very, very confident that we will receive towards the top end of that contingent consideration, and we'll be able to do that while we're focused on other things. And so that hopefully explains your first question. Moving then on to the balance sheet, Raven -- and just discussing in the context of the Ravenswood sale. Clearly, in looking at those terms of Ravenswood, we have maximized the commercial outcome. We haven't sought necessarily to restructure our debt obligations or repair our balance sheet through a Ravenswood sale. We've actually structured the Ravenswood sale purely looking at how we can maximize return for our investors from our investments in exploration, project development, ultimately, operation and pouring gold. And we believe we've done that in the commercial terms. In relation to the balance sheet, today's activity and the equity raising, all 3 of its components, are actually around strengthening our balance sheet as well as providing our senior shareholders and our retail shareholders, the opportunity to carry their interest at a pivotal time in the company. And I would encourage any shareholders, whether institutional or retail, to contact Canaccord or Berenberg and/or look very closely at the share purchase plan documents when they arrive because, along with your directors of this company who are participating either in the share purchase plan or in tranche 2, we would encourage you to see the opportunity of leveraging our investment in Resolute at a time where we believe that the operational performance and strengthening your balance sheet will drive a re-rating of the company.I think Simon, your specific question around what this transaction does to the balance sheet, along with the announcement today, we've also published the presentation. So the key information there is on Slide 3; 4 runs through the time line; Slide 5 talks about the sources, which, as I've said, pretty much allocates the entire raising to the repayment of an acquisition bridge facility. And before I talk about the pro forma balance sheet position, the timing of this transaction allows us to avoid the significant fees of extending that transaction. It removes the 9% coupon we're paying on almost AUD 200 million and allows us to restructure our other debt obligations with confidence, and we expect to do that both -- before the end of February. On Slide 6 is -- to answer to your question about what this does to our balance sheet. And in the December quarterly, we reported total debt numbers as well as a net debt figure of AUD 387 million. And you can see how the pro forma position, following the equity capital raising and the refinancing, will see us with a net debt position below AUD 200 million. And if you look at our guidance, which across the portfolio is set at 500,000 ounces at USD 980 an ounce, and if you adjust that for a quarter of production of Ravenswood, you assume that we will end up guiding around 440,000 ounces of production at a slightly lower cost than what we've guided across the whole portfolio without Ravenswood. And you'll see that, that net debt position, potentially as at the end of March of less than AUD 200 million, has the potential to be completely reversed by the end of the year. That's what we'll be working on. That leads then to the answer to your third question about what does all of this mean for Resolute.We haven't changed our strategy. I outlined it in the preamble. We have clearly identified we want to be an African-focused, low-cost, multi-mine gold producer. We're running a strategic review of the Bibiani gold mine in Ghana, which we also described -- announced separately at the end of the December month and also covered briefly in our quarterly. So you can assume that we are focused on continuing very strong operating performance at the Mako gold mine in Senegal, demonstrating the value of the investments we've made in Syama, both in the immediate March quarter, the June quarter and then identifying during the course of the year that life of mine plan for Syama as a flagship project and we believe a very sustainable, low-cost 300,000 ounce a year mine, and delivering that not just in expectation but in reality for our investors. And that is the #1 focus of our business.Separately, obviously, we will continue to look for opportunity, and we'll have a balance sheet that allows us to explore with confidence and also look at new opportunities, subject to that #1 priority of continuing to demonstrate operational strength. And then where will we look for, the last part of your question is are there parts in Africa we won't go. We've operated in parts of Africa for more than 20 years. We've built the Obotan gold mine in Ghana. We currently own the Bibiani gold mine in that country. We poured 2.2 million ounces in Tanzania with Golden Pride before exiting the country in 2015. We've been operating in Mali for more than a decade. We're now in Senegal. We've been exploring in Cote d'Ivoire for 10 years. That region in West Africa that I've described is the francophone countries of Mali, Senegal, Cote d'Ivoire, we would be very comfortable in operating with, as well as Ghana and potentially other stable jurisdictions and jurisdictions where we have a direct relationship with government and a belief in the rule of law and a mining code that we think supports both our own investments and the ultimate return to our shareholders.
Our next question will come from the line of Warren Edney from Baillieu.
I just wonder if you could give us a bit more guidance for sort of maybe over the next couple of years of what's happening with Toro. I certainly wasn't expecting the issue with the stockpile reduction to have such a -- sort of a dramatic impact on production levels.
Warren, I think you're talking about golden circuit changes, so happy to talk about that in more detail. It's a fairly detailed explanation of Cote d'Ivoire, I think, in terms of the oxide-sulfide trade-off.
No, sorry, sorry. Was it -- is it just the golden circuit at Mako that's an issue? Or was it the stockpile feed? So just from -- obviously, it was early days when -- after the acquisition in terms of your initial guidance. So I just wondered if you could sort of firm up what the grade profile looks like from there now that you've had a few months of operating it.
Yes, sure. Look, that's been a very stable operation. I think what you're referring to in Mako is some of the impacts of our acquisition accounting treatment in terms of the timing of our acquisition and gold pours in terms of changes in golden circuit being adjusted at the point of acquisition, which was obviously during the course of the year. And we can discuss that, and you'll actually see a lot more detail, obviously, when we publish our full annual report, which we expect at the end of February. In terms of expectations from Mako, we've obviously guided 160,000 ounces this year, which is consistent with the very strong operations last year. If you look forward into 2021, at this stage in the mine plan, there is some extra stripping that will be required, and we would expect it still continues to be a very strong operating performance, but perhaps slightly less than 160,000 in '21 at this stage. But obviously, we'll be working during the course of this year on opportunities. And another thing that I didn't cover in any detail that we put in the December quarterly and was published during that quarter was the really exciting exploration results we're receiving down deep into the hill at Mako, where we do believe there will be mine life extensions. So when we announced the transaction, we announced it as a 7-year mine life. We actually think we'll accelerate the existing mine profile. So that probably comes down about 6, but we believe that there is the potential for longer mine life extensions. And obviously, we've got significant runway in front of us to add on that. So the short answer to your question is that we're very confident that Mako continues to produce for the seeable -- for the foreseeable future, similar production to last year and this year going forward.
[Operator Instructions] Our next question comes from the line of Kate McCutcheon from Citi.
You guided 250,000 ounces at 960 for Syama in total. How should we think about the contribution of the cave or more specifically the ramp-up of the underground? And when are you looking to hit that 2.4 million tonne haulage run rate?
Thanks very much for your question. So first of all, talking about the cave, and it's an aspect that I haven't actually discussed on any of these calls, we are absolutely delighted with the geotechnical properties of the Syama Underground Mine. One of the things we've reported in the quarterly is how much ore we're blasting. And anyone who's familiar with the mining methods, our dynamics, particularly the sub-level cave, would know how important that is. We're at a point where we have significant development demands and significant capital demands in effectively overmining, creating an ore blanket, which will then collapse through the cave and results in overdraw.So if you're following the Mt. Wright underground mine performance, over the last 3 or 4 years, we have had significant overdraw because we were at the bottom levels of the sublevel cave that we've commenced many years before, and the cascading nature of that cave meant that we actually ended up drawing significantly more than our reserve model through the lower levels of the cave. We're in the opposite position at Syama, where these early levels, we actually had significant underdraw. So while we're blasting a lot of ore, that ore effectively stays as an ore blanket in the draw points and then cascades down to the lower levels of the mine when and if we get there. And that's why it is appropriate for us to actually disclose and cover how much ore we're blasting and then how much ore we're hauling. The dynamics of that cave are working absolutely perfectly. The draw points are operating as we expect. The grade profile is exactly matching what we expected in the mine plan. And we're very comfortable with the dynamics of the cave, which are the most important driver, ultimately, of the Syama Underground Mine, is our ability to be confident on dilution, on grade and on the availability of ore. And so that is an aspect that is very significant and is probably been underreported due to our focus on haulage and processing. Moving on to the haulage, I mentioned earlier in the call that we actually maxed out the available area on the ROM pad. That has taken the pressure off significantly our previous #1 KPI, which was to ramp up the mine as quickly as possible to 2.4 million tonnes per annum. Anyone following Resolute over the last couple of years would know that the operating team at Syama have had a significant challenge in handling very different types of ore source through the sulfide circuit as we've depleted stockpiles and had to process transitional ore and development ore from the underground mine. That period is now behind us, and we are now processing 2.4 million tonnes per annum and expect to do so for a very, very long time to come. In terms of when do we expect the underground mine to be at 2.4 million tonnes per annum, obviously, the processing is now at 2.4 million and will remain at 2.4 million. The focus on the underground mine is now on efficiency and cost, and we've taken the opportunity to back off the speed of that ramp-up in order to focus on some infrastructure developments and communication systems and additional passing bays and maintenance areas. And we would expect to work with our partner, Sandvik, on efficiency outcomes, such that we will be at a sustainable rate of 2.4 million tonnes per annum or 200,000 tonnes a month by around the middle of the year, well before we need to be with that available stockpile at surface.
That was our final question, so I'll now pass back to John for closing comments.
Thanks very much, Tara, and thanks very much to everyone who's listened. It's been a very busy period for Resolute during 2019. We've faced some challenges. I believe we've met those challenges operationally. Today, we're announcing an equity raising. I'm very pleased with the very strong support we've received from shareholders. I would encourage any other shareholders to consider the opportunity to participate along with your directors in this company. We believe there's a very strong chance to participate, along with the strengthening of our balance sheet, re-rate of the company. We will continue to work as hard as we possibly can on delivering on our expectations and our ambitions at Syama, at Mako and in all of our projects. Thank you very much.
Thank you very much. Ladies and gentlemen, that does conclude the call for today. Thank you so much for your participation. You may all disconnect.