Mali: Resolute Mining CEO aims to prove Mark Bristow wrong at Syama gold project

By David Whitehouse

Posted on Monday, 8 August 2022 10:50
CEO of Randgold Mark Bristow poses for a photograph at the London Stock Exchange, London
Mark Bristow decided against gold mining at Syama in Mali. REUTERS/Henry Nicholls

As CEO of Randgold Resources in the 1990s, Mark Bristow decided against trying to mine the gold resource at Syama in Mali, believing that the project was technically too difficult.

Resolute Mining CEO Terry Holohan believes he is close to proving Bristow wrong.

“We thought we could crack the metallurgy,” says Holohan, who took over as CEO in May. “We’ve now ticked the box.” He’s looking forward to seeing Bristow, now CEO of Barrick Gold, and updating him on the project’s progress. “That conversation will happen.”

The Syama gold mine is in the south of Mali, 300km southeast of the capital Bamako and about 32km from the border with Côte d’Ivoire. The mine has a life of about 35 years at current production rates, Holohan says. Profitability remains a challenge. Resolute had a net loss of $367.5m in 2021, versus a profit of $5m a year earlier, as it was hurt by an extended wet season and unplanned maintenance issues at Syama.

The company has also struggled with its balance sheet. Net debt stood at $229m at the end of 2021. The company in March deferred up to $100m in capital expenditure to develop the Tabakoroni sulphide deposit near Syama. Resolute also extended a credit revolving facility for 12 months to March 2024. The shares have lost about 48% of their value over the last year.

  • Resolute was “over-promising and under-delivering,” Holohan says, and the result is that the balance sheet is “pretty beaten up” with debt.
  • The company has now completed four quarters of doing what it says it will do, and needs to complete eight such quarters before confidence is rebuilt, he adds. “We’re starting to regain credibility.”

Merger exit ?

Resolute operated as a gold miner in Australia for about 30 years before gravitating towards West Africa. The shares trade on the London and Australian stock exchanges. The company is moving its headquarters from Perth to London, which will provide easier access to North American investors and West African mining operations, Holohan says. Resolute will keep its Australian listing, he adds.

The company stopped losing money in December 2021 and a debt-reduction plan is awaiting approval by the board. Resolute has financial investments in Oklo Resources and Loncor Gold, which Holohan says there is no need to sell. He sees scope to save on internal fixed and variable costs. Greater efficiency at Syama will reduce working capital requirements and generate positive cashflow, he says.

The company also controls the Mako gold mine in eastern Senegal. Holohan says the mine is in year six of a ten-year life span. The absence of any further discoveries at Mako would leave Resolute as a single-project company, which Holohan wants to avoid.

  • He is keen to find further projects to diversify the company’s exposure when finances allow. There are lots of exploration companies without mine operation capability, he says. “We hope to be that buyer.”
  • A merger might be one way to secure the company’s future, Holohan says. “If anyone came to us, we would seriously consider it.”
  • He believes that the work of restoring credibility needs to continue first, and that the debt will have to be reduced. “Then we’ll be able to talk a bit more seriously. We need some more runs on the board.”

Bottom line

Holohan still needs to complete Resolute’s financial turnaround to win his bet with Bristow.

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