RSG - Resolute Mining

[Spaghetti]

jman

No I meant extraction cash costs.

Hedging policy concerns some and probably will for a while yet. Not up to speed on their latest policy but believe they are increasing the ounces delivered to speed up elimination of hedgebook. Will take time and be a bit of a cross to bear until increased production.

 

[jman2007]

jman

No I meant extraction cash costs.

Hedging policy concerns some and probably will for a while yet. Not up to speed on their latest policy but believe they are increasing the ounces delivered to speed up elimination of hedgebook. Will take time and be a bit of a cross to bear until increased production.

Yes fair point,

Hedging for forward contracts accounts for around 15% of reserves atm. No requirement to increase hedging position under terms of new $50M credit facility. Targeted extraction costs at Syama will undoubtedly provide some fiscal relief.

Although it seems a little strange that management didn't allow for certain capex items in the redevelopment...such as the $US20M Power station, I would have thought securing a supply of power would have been an integral part of any redevelopment, unless the one placed in care and maintenance was beyond repair?

jman

 

[jman2007]

This has been bludgeoned in the last 2 days

I'm still watching this from the sidelines, I've noticed over the last 2 days that on the few occassions this has slipped below 2.00, there is ususally a brief 'mini-rally' which pushes it back up to 2.05-2.06, but probably far too early to try and predict support here, as much will depend on events in the US tonight.

jman

 

[Spaghetti]

This has been bludgeoned in the last 2 days

I'm still watching this from the sidelines, I've noticed over the last 2 days that on the few occassions this has slipped below 2.00, there is ususally a brief 'mini-rally' which pushes it back up to 2.05-2.06, but probably far too early to try and predict support here, as much will depend on events in the US tonight.

jman

I am surprised how much it has gone down so even more glad I picked the high! I can only assume the hedging maybe affected negatively by the reduced value of the USD. Not sure I have my head around hedging. Cannot understand the logic of hedging a commodity in USD when costs are in AUD. Do they take out some currency hedging as well?

 

[jman2007]

I am surprised how much it has gone down so even more glad I picked the high! I can only assume the hedging maybe affected negatively by the reduced value of the USD. Not sure I have my head around hedging. Cannot understand the logic of hedging a commodity in USD when costs are in AUD. Do they take out some currency hedging as well?

Got crunched again today...

But then again, what didn't? Lol... Fell through 2.00 rather alarmingly if you were a holder of this. It's extremely difficult to predict where this may find support considering the current volatility. There still appears to be some capex risk exposure for investors considering the rather problematic Syama development, although I feel if they can control capex here, or at least not let it blow out too much, the market will respond favourably. Considering the ore is mostly refractory and potentially complex to process, the successful commissioning of the mill will be key.

I'm not too sure whether they have implemented currency hedging Spag.

My
jman

 

[Spaghetti]

jman

I am back in, fingers crossed. I believed Syama was free milling. Doesn't that mean it is not refractory nor complex to mine?

Cheers

 

[jman2007]

jman

I am back in, fingers crossed. I believed Syama was free milling. Doesn't that mean it is not refractory nor complex to mine?

Cheers

Have just double-checked the Resolute website,

And the Syama ore is definitely refractory. Here is a good definition of "free milling" that I found on e-goldprospecting.com:

"Free milling ores are defined as those from which Cyanidation can extract approximately 95% of the gold when the ore is ground to size 80% < 75 µm, as commonly applied in industrial practice, without incurring prohibitively high reagent consumptions".

In Resolute's case, if they persisted with grinding this ore to a much finer grind to try and expose more of the gold to the cyanide solution, the milling costs would be prohibitive, mill throughput would drastically drop, and the entire operation would rapidly become uneconomic. Hence the introduction of the roasting circuit.

Without being overly knowledgeble regarding metallurgical process flow-sheets, their circuit might look something like this:

A.) Refractory ore passed through a series of crushers ie. primary, secondary etc to reduce bulk grain size.

B.) Sulfide Flotation circuit as a pre-concentration step, to remove as much of the sulfide matrix as possible.

C.) Concentrate passed through a Roasting circuit, ore heated to over 1000 deg Farenheit to drive off remainder of sulfides.

D.) Conventional Carbon-in-Leach step, to absorb gold to activated carbon.

E.) Gold-loaded carbon transferred to vessel where it is chemically stripped and the carbon recycled.

F.) Gold is precipitated from solution by electrolysis, or by the substitution of an appropriate chemical.

Another thing to consider here, other than the reagent costs which will be significant, is that the wet sulfur dioxide scrubbers required for the roasting circuit are very expensive to maintain and replace, and can frequently cost more than the roaster. So yes, this ore could be considered complex to process. For these types of operations, grade is king, and higher grades and/or higher mill throughput are required to offset the higher processing costs.

Still just watching atm though :

jman

 

[Spaghetti]

You are correct when I read more (can you ever do enough reading) I do see they will use a roasting circuit. So free milling doesn't mean what I thought. Back to school for me. Still cash costs are quite low at $370usd.

edit.

Actually just read back and it seems they have both refractory and free milling so part of the resource should be cheaper to mine even though the grade is lower. The "free milling" tag was only used to describe a couple of hundred thousand ounces.

 

[jman2007]

You are correct when I read more (can you ever do enough reading) I do see they will use a roasting circuit. So free milling doesn't mean what I thought. Back to school for me. Still cash costs are quite low at $370usd.

edit.

Actually just read back and it seems they have both refractory and free milling so part of the resource should be cheaper to mine even though the grade is lower. The "free milling" tag was only used to describe a couple of hundred thousand ounces.

Yep right you are Spaghetti,

This from the RSG Dec07 quaterly:

"Exploration work on the Syama tenure over the last two years has defined a potential free milling resource of 260,000 ounces (1.5g/t cut-off grade). The Syama plant has an established, but idle, free milling circuit of approximately 1.0 million tonne per annum capacity".

Sounds like it is well outside the main optimized pitshell, although the ownership of the free-milling circuit could turn out to be a considerable bonus, since the reburbishment costs will represent a considerable capex saving compared to installing an entirely new circuit.

This also from the same quaterly:

"This circuit requires some modification and refurbishment before it could become operational. The Feasibility Study will consider the mining and treatment of free milling ore, in parallel with the sulphide circuit".

So I'd expect the feasibility study to be out around Sept-Oct this year, potentially thay could have both the free-milling and roasting circuit operating in tandem!

jman

 

[jman2007]

Well 12 months ago if someone had told me a company with 12Moz in Resources would be trading at 65.5c, I would have laughed. Now no-one is laughing, as it has actually happened.

No doubt RSG's announcement on the 09/10 that it needed another $55-60M with a 1:3 renounceable rights issue at 55c to complete its development at Syama was the worst,and I mean the absolute worst possible timing ever! I think last time I wrote on this thread, RSG were looking at shelling out an extra $20M for a power station on site, and now they are saying in the last 6 months that the capital costs have increased for the project by $23!Whether this includes the power station I don't know.

I would sincerely doubt that anyone would want to underwrite this issue, I wonder if we're looking at another SBM here? Looks like a scary ride at the moment.

jman (DNH)

 

[jman2007]

No doubt RSG's announcement on the 09/10 that it needed another $55-60M with a 1:3 renounceable rights issue at 55c to complete its development at Syama was the worst,and I mean the absolute worst possible timing ever!

Perhaps not so resolute at the moment,

Gone into trading halt after trading price fell below rights issue price yesterday, pending a reassesment of funding options by the company. Perhaps a major shareholder will emerge as a white knight? With Syama on the verge of fully fledged production, I would be a little surprised to see it fail now.

jman

 

[barrett]

Perhaps not so resolute at the moment,

Gone into trading halt after trading price fell below rights issue price yesterday, pending a reassesment of funding options by the company. Perhaps a major shareholder will emerge as a white knight? With Syama on the verge of fully fledged production, I would be a little surprised to see it fail now.

jman

I thought it more than a little pathetic that the share price fell by more than 70% when the company had simply announced they needed to raise a bit of capital to finish off the very last bit of a mine that's ready to roll. I haven't done the sums, and the partial hedging is a headwind, but with gold at A$1200, $1300, $1400/oz, surely RSG's margins at Ravenswood/Mt Wright (and Golden Pride) would bring in enough cash before long to cover this cost at Syama anyway. It would be nice to see them announce something like that and then tell the market it can go blow itself.

 

[jman2007]

I thought it more than a little pathetic that the share price fell by more than 70% when the company had simply announced they needed to raise a bit of capital to finish off the very last bit of a mine that's ready to roll. I haven't done the sums, and the partial hedging is a headwind, but with gold at A$1200, $1300, $1400/oz, surely RSG's margins at Ravenswood/Mt Wright (and Golden Pride) would bring in enough cash before long to cover this cost at Syama anyway. It would be nice to see them announce something like that and then tell the market it can go blow itself.

Crikey,

This is one of the longest voluntary suspensions I've seen for a mining stock in a while, as a shareholder (which I am not) one would have to be a little nervous. It appears as though Duncan Saville may come through as a white knight for the company, but for management to be at the whim of its largest shareholder is not an ideal place for them to be. Pretty risky play atm imho, considering Syama will no doubt also experience the usual teething commissioning problems that come with ramping a gold mines production up.

jman

 

[jman2007]

Crikey,

This is one of the longest voluntary suspensions I've seen for a mining stock in a while, as a shareholder (which I am not) one would have to be a little nervous.

Yee Gods

RSG shareholders lives may not be long enough to see the outcome of these negotiations.

Pretty hilarious re-re-release from RSG on the 11th, looks like they just copied and pasted the earlier update, changed the date and shuffled a few paragraphs around.

Crazy times we live in

 

[barrett]

Crikey,

This is one of the longest voluntary suspensions I've seen for a mining stock in a while, as a shareholder (which I am not) one would have to be a little nervous. It appears as though Duncan Saville may come through as a white knight for the company, but for management to be at the whim of its largest shareholder is not an ideal place for them to be. Pretty risky play atm imho, considering Syama will no doubt also experience the usual teething commissioning problems that come with ramping a gold mines production up.

jman

I'm a shareholder and actually don't mind this extended suspension at all... just means we don't have to put up with the market's opinion lol! Management unwilling to sell out shareholders cheaply - just to indulge a market that's only interested in shafting stocks anyway? Bravo! ....as long as they get the money

I think RSG's quality was reflected in how well the share price held up relative to other gold stocks - that is until the (bog standard) delays came up at Syama. I should've known RSG wouldn't be spared from the slaughter

Anyway........ Surely there's someone out there ready to fill the large bid I'll be putting in around 30c:evilburn:

 

[inenigma]

???? As I'm still fairly new to reading charts, could someone advise whether this looks like it's nearly on breakout ??? Or was that breakdown ????

 

[Trader Paul]

Hi folks,

RSG ... several positive time cycles due to fall
into place, in October 2009:

05102009 ... minor cycle

09-12102009 ... a positive spotlight on RSG

21102009 ... expecting more positive news, here ... !~!

29102009 ... another positive cycle due ... finances (???)

have a great day

paul



=====

 

[jman2007]

RSG still stuggling to make Syama work after at least a year of stop-start production, mechanical issues and maintenance shut downs. If it ever reaches its nameplate capacity, will be a very big earner for them, but it's more of a gigantic black hole for their cash atm. $2.00 seems like a long way off, probably one for the watchlist for the forseable future. Maybe worth a look in 6 months.

 

[Sean K]

RSG still stuggling to make Syama work after at least a year of stop-start production, mechanical issues and maintenance shut downs. If it ever reaches its nameplate capacity, will be a very big earner for them, but it's more of a gigantic black hole for their cash atm. $2.00 seems like a long way off, probably one for the watchlist for the forseable future. Maybe worth a look in 6 months.

I've been watching this pretty closely and wondering what's really holding them back. Trading at $34 an ounce. That's explorer levels. Going back through the Syama Progress updates each month it seems clear. Shut down, mechanical issues, shut down, low concentrate stocks, shut down, reduction in concentrate stocks, shut down.....hooly dooly!! What did they do, make the plant out of lego? Producing 4-5k oz a month. Was supposed to produce 70k in FY'90 (quoted from AGM last year - obviously something's gone wrong since then), and then 250k in FY'10. Hmm, that seems a way off. Group production 450k pa by FY'11! Cripes, if they manage that, trading at $34 an ounce now looks pretty bloody cheap. That's if they can put this lego plant together properly.

 

[Supra]

RSG - Syama & Golden Pride

The Syama gold mine in eastern Mali, RSG 80% & The Mali Govt 20% is coming on stream with 250k ozs @ US$ 480/oz. 10 year + mine life!
The Golden Pride mine in Tanzania RSG 100% will produce 120k ozs @ US$ 500 for the next 3 years, with good potential for further extensions.

All this plus the Ravenswood mines look good for RSG.

The production should service the debt of around $70M. RSG should not have to come back to the share holders for more money