Resolute’s Mali Mining Code Transition Raises Costs Amid Production Slowdown

Strong Operational Year Despite Challenges

Resolute Mining Limited (ASX/LSE: RSG) closed out 2024 with a robust operational and financial performance, highlighted by a full-year gold production of 340,000 ounces. This was a modest increase over 2023’s 331,000 ounces but fell just short of the company’s initial guidance range of 345,000 to 365,000 ounces, primarily due to lower-than-expected grades at the Mako mine in Senegal.

The Syama Gold Mine in Mali continued to underpin Resolute’s production strength, delivering a strong fourth quarter and maintaining near nameplate capacity at both oxide and sulphide operations. Syama’s operational improvements over recent years have clearly paid dividends, with 2024 gold poured at Syama rising 2% year-on-year to 215,934 ounces.

Cost Pressures and Regulatory Impact

However, the company’s All-In Sustaining Costs (AISC) edged higher to $1,476 per ounce, slightly above 2023’s $1,470/oz and above the original guidance of $1,300 to $1,400/oz. This increase was largely driven by the implementation of Mali’s 2023 Mining Code, which introduced higher corporate taxes, royalty rates, and the removal of fuel duty exemptions. Resolute estimates these changes add approximately $250 per ounce to Syama’s AISC, a significant cost headwind that will persist into 2025.

In addition to cost pressures, Resolute made a substantial $160 million settlement payment to the Malian government in Q4 2024, resolving outstanding fiscal claims and securing the company’s operational future in the country. This settlement followed a tense period in November when three Resolute employees were detained during government discussions, underscoring the complex political and regulatory environment in Mali.

Capital Expenditure and Project Timing

Capital expenditure for 2024 reached $96.3 million, including $31.9 million invested in the Syama Sulphide Conversion Project (SSCP). This project, designed to increase sulphide processing capacity by 60%, is critical for the mine’s long-term viability as oxide resources deplete. Notably, the SSCP completion has been deferred from 2025 to the first half of 2026 to prioritise processing remaining oxide ore and optimise near-term cash flows.

Exploration spending rose to $20 million in 2024, exceeding guidance due to accelerated drilling at key satellite deposits such as Tomboronkoto in Senegal and Bantaco, as well as new drilling activities in the Ivory Coast’s La Debo project. These efforts reflect Resolute’s strategic focus on extending mine life and diversifying its asset base across West Africa.

2025 Outlook: Lower Production, Higher Costs, Strong Cash Flow Focus

Looking ahead, Resolute projects 2025 group gold production of 275,000 to 300,000 ounces, down from 2024, reflecting the cessation of open pit mining at Mako by mid-year and a shift to lower-grade stockpile processing thereafter. The company anticipates a higher group AISC of $1,650 to $1,750 per ounce, driven by the ongoing impact of the Mali Mining Code and increased royalties.

Syama is expected to produce between 195,000 and 210,000 ounces at an AISC of $1,700 to $1,800 per ounce, while Mako’s output is forecast at 80,000 to 90,000 ounces with a lower AISC of $1,300 to $1,400 per ounce. Capital expenditure guidance for 2025 is $109 to $126 million, with the majority allocated to Syama and exploration activities.

Despite the challenges, Resolute’s management remains confident in the company’s ability to generate strong operating cash flows exceeding $200 million annually, supported by disciplined cost management and strategic project sequencing. The deferral of the SSCP completion is expected to enhance near-term cash generation, providing financial flexibility amid a complex geopolitical landscape.

Navigating Political and Operational Complexity

Resolute’s experience in Mali highlights the increasing complexity mining companies face in jurisdictions with evolving regulatory frameworks. The company’s proactive engagement with the Malian government and the signing of the Protocol to migrate assets to the new Mining Code demonstrate a pragmatic approach to securing long-term operational stability. However, the elevated costs and political risks underscore the need for ongoing vigilance and adaptive strategy.

Exploration remains a key pillar of Resolute’s growth strategy, with promising resource expansions at Tomboronkoto and Mansala in Guinea, alongside new ventures in the Ivory Coast. These initiatives could provide valuable extensions to mine life and production profiles beyond the current asset base.