Resolute Mining anticipates lower production and higher costs in 2025 due to the nearing depletion of the Mako mine and fiscal changes in Mali. The production guidance is set at 275,000-300,000 ounces, with an AISC of $1,650-$1,750 per ounce. Recent developments include a significant tax dispute and increased government royalties, which have further strained the company’s financial position.
Resolute Mining (ASX: RSG), a gold producer focused on West Africa, announced on Thursday that it expects reduced production and increased costs in 2025. This situation arises as the Mako mine in Senegal approaches depletion and recent fiscal changes in Mali lead to higher expenses.
The Australian miner has set its 2025 production guidance at 275,000-300,000 ounces, with all-in sustaining costs (AISC) estimated to range from $1,650 to $1,750 per ounce. This is a stark decrease from 2024, when Resolute recorded a production of 340,000 ounces at an AISC of $1,476 per ounce, primarily due to contributions from its prominent Syama mine in Mali.
Significant setbacks plagued the company in late 2024 following new fiscal measures implemented by Mali’s military-controlled government. A tax dispute led to the detention of Resolute’s CEO Terry Holohan and two other executives, who were released after agreeing to pay $160 million to resolve the conflict. Holohan’s status is under review, with an announcement expected shortly.
Amid these developments, Resolute’s financial position has been strained, culminating in a reduced cash and gold holding of $101 million after settling $30 million owed to Mali’s government. The new agreement with Mali has added an estimated $250 per ounce to the company’s AISC due to increased fiscal burdens.
Acting CFO Dave Jackson elucidated that the cost per ounce increase is attributable to raised royalties, which increased from 6% to 10% ($100 per ounce), a 4% foundation payment ($100 per ounce), and the cancellation of a fuel tax exemption. Consequently, the Malian government, seizing control post-2021 coup, has intensified pressure on international miners to fulfill obligations under a newly introduced mining code.
Despite significant challenges, Resolute Mining remains committed to optimizing its operations. The production at Syama has been boosted and further developmental phases of the mine are set to commence this year. Notably, the Malian government holds a 20% stake in Syama, which processes roughly 2.4 million tons of ore annually.
The company has, however, postponed certain investments, including a critical $100 million project aimed at doubling processing capacity. Resolute stated, “Mine sequencing at Syama has been optimized for near- and medium-term cash generation while the company assesses its longer-term capital plans.”
In addition to activities in Mali, Resolute is prioritizing ventures in Guinea and the Ivory Coast while maneuvering through a complex political landscape in West Africa. Their strategic focus for 2025 will include enhancing value in these new territories and actively managing political dynamics.
Following these news updates, Resolute’s share price dropped by 3.6% to 41 Australian cents, reflecting a market capitalization of A$862 million ($537 million). The share value has plummeted more than 50% since October 2024 due to the escalating fiscal situation in Mali.
Resolute Mining is an Australian gold producer that primarily operates in West Africa, notably in Mali and Senegal. The company is experiencing difficulties due to political changes in Mali and the impending depletion of its Mako mine in Senegal. Regulatory shifts have significantly impacted their financial framework, compelling the company to reassess production metrics and cost structures. Key actors in the Malian mining sector have faced increased government scrutiny and demands following a military coup, which affects their operational parameters and profitability.
Resolute Mining faces challenging circumstances in the West African gold market, with reduced production forecasts and increased costs projected for 2025. The company’s initiatives are directed towards optimizing existing operations while navigating a complex regulatory landscape in Mali. As it broadens its focus to other nations, the future will depend on effectively managing costs and maintaining production levels against a backdrop of evolving political dynamics.
Original Source: www.mining.com
