Resolute Mining Outlines Strategy for Becoming Leading African Gold Producer

• Resolute Mining, an Australian gold mining company, has been operating in Africa for over 20 years. They currently have four gold mines, with three in production, and aim to be an African-focused multi-mined gold producer.
• The company boasts the world's first fully automated underground gold mine. This includes automated drilling, loading, and haulage, meaning the mined rocks travel from underground to the ROM pad without human intervention.
• Resolute Mining aims to keep costs low, targeting an all-in sustaining cost (AISC) of $750 over the next few years. They emphasise the importance of producing gold at a lower cost, rather than focusing strictly on the quantity of production. This strategy enables them to pay dividends to shareholders and generate substantial profits.
• They are committed to utilizing technology and fostering local talent to run mines. Their focus remains on producing gold at a lower cost, ensuring a profitable and sustainable business model.

About Resolute Mining

Resolute Mining is an experienced gold mining company with over 30 years of operations across Africa and Australia. The company has produced over 8 million ounces of gold to date. Resolute's flagship asset is the Syama mine in Mali, which can produce over 300,000 ounces of gold per year. The company is commissioning the world's first fully automated underground mine at Syama, which will ensure low costs and a long mine life.

Resolute also owns the low-cost Mako mine in Senegal, the Ravenswood mine in Australia, and the Bibiani mine in Ghana. Together, these assets provide the potential to increase annual gold production to over 500,000 ounces. With a global resource base exceeding 18 million ounces of gold, Resolute is positioned for significant production growth in the years ahead. The company is dual-listed on the Australian and London Stock Exchanges under the ticker RSG.

In an interview, CEO John Welborn laid out plans to cut costs, pay dividends, and create value. However operational issues have impacted production, requiring caution on the outlook.

Interview with CEO John Welborn

Key Strategic Objectives

• Become a leading low-cost gold producer in Africa
• Leverage African experience and exploration potential
• Operate 4-6 diversified mines to capture synergies
• Reduce all-in sustaining costs to $750/oz across the portfolio
• Pay dividends linked to gold production in cash or gold
• Create value by acquiring low-cost ounces and building efficient mines

Progress and Challenges

When Welborn joined 4 years ago, Resolute had balance sheet issues. Since then, the company has made progress:

• Invested in Syama automation and metallurgy
• Acquired low-cost Mako mine in Senegal
• Guiding to reduce portfolio costs to $750/oz
• Currently paying gold-linked dividend
• Delivered strong share price growth

However, production shortfalls at Syama after a roaster crack requires caution. Operational excellence and flawless execution are needed to demonstrate Syama's potential. Do not take fixing the roaster for granted.

Key Projects Driving Value

Syama Mine

Syama is Resolute's cornerstone asset. The company invested in automation and processing upgrades to extend mine life and reduce costs. Key features:

• World's first fully automated underground gold mine
• Automated drilling, loading, hauling
• Upgrades to improve complex ore recoveries
• Feasibility showed automation lowered costs to $747/oz

Automation is complete, but roaster issues have hampered production. Fixing the roaster and optimizing Syama is critical.

Mako Mine

Resolute acquired the low-cost Mako mine in Senegal for $274 million in 2019, boosting cash flow. But Mako does not compensate for Syama risks, yet.

Exploration Upside

Satellite deposits offer potential growth. But this depends on strong and consistent cash flows from Syama and Mako.

Funding Growth

Resolute is focused on internal cash flow funding. Higher gold prices support borrowing capacity. Equity and partnerships may help fund larger initiatives. But balance sheet strength depends on operational execution.

Focus on Costs, Safety, People

Key focus areas:

• Reducing costs through technology and efficiency
• Protecting the workforce through rigorous safety procedures
• Developing local workforce through training
• Building partnerships with stakeholders

Consistent execution of this strategy is not guaranteed, given recent operational issues. Cost goals are ambitious in the current environment.

Market Dynamics

Share price has lagged due to Syama roaster issues and negative sentiment. Management aims to fix the roaster and demonstrate Syama's value. However operational excellence is paramount to building market confidence.

The longer-term outlook is optimistic, with production growth and development projects on the horizon. Management aims to reward loyal shareholders. But investors should not underestimate risks.

Conclusion

Resolute Mining has a clear strategy to become a leading, low-cost African gold miner. But the company has stumbles to overcome. Syama's potential is not guaranteed until operational issues are resolved. While upside exists, investors should exercise caution given execution risks. Resolute must demonstrate consistent operational excellence before its ambitious goals can be considered achievable. Fixing outstanding issues and optimising Syama is critical to maintaining a strong financial footing. The company's future depends on flawless execution from here. Resolute offers leveraged upside if successful, but still has much to prove. Caution warranted.