Resolute Mining Ltd

ASX:RSG

Earnings Call Analysis

Strong Gold Production and Financial Growth in Q2

The company achieved strong operational and financial performance in the second quarter, producing nearly 91,000 ounces of gold. First-half production totaled 167,000 ounces, aligning with expectations despite a Q1 stoppage. The company maintained its annual production guidance of 345,000 to 365,000 ounces at a cost of $1,300 to $1,400 per ounce. All-in sustaining costs decreased to $1,402 per ounce, with cash flow from operations reaching $47 million. Net cash jumped to $97 million, bolstered by the Ravenswood deal's proceeds. The company remains unhedged and forecasts continued production growth and cost improvements in the latter half of the year.

Strong Operational Performance

In the first half of the year, the company produced 167,000 ounces of gold, aligning with expectations despite a two-week operational stoppage in Q1 at the Syama Gold Mine. The company remains optimistic about a strong second half, with guidance restated at 345,000 to 365,000 ounces for the year, at a cost per ounce expected to remain between $1,300 and $1,400. This shows resilience and effective management of operational challenges.

Declining Costs and Increasing Cash Flow

The All-In Sustaining Cost (AISC) has improved significantly to $1,402 per ounce, a decrease from previous costs, implying better operational efficiency. The company is targeting to lower the AISC further in coming quarters. Operating cash flow reached $127 million in H1, alongside a cash position of $143 million which reflects a robust financial standing. With an increase in EBITDA to $160 million for the half-year (up from $101 million last year), the financial health is promising, suggesting potential for future profitability and reinvestment.

Expanding CapEx and Project Developments

Capital expenditures are projected to ramp up significantly, expected to double in H2 to approximately $80 million, driven primarily by the Syama project investments. This increase is aimed at enhancing production capabilities, specifically moving toward a higher grade sulfide ore processing capacity aiming for 250,000 ounces per year by mid-next year. The company is also pursuing exciting exploration projects in Senegal and Guinea, which could further improve their resource profile and production capabilities.

Exploration and Resource Growth

The exploration budget, initially pegged between $15 million and $18 million, is now anticipated to exceed $20 million, as the company intensifies its search for additional resources. Drilling at the Tombo project has shown promising results, potentially adding to the mineral resource base. Additionally, there are efforts to restate resources in Mali and explore new prospects at Syama, indicating a proactive approach to maintain and possibly expand the reserve base.

Cash Management and Shareholder Considerations

With $97 million in net cash at the end of June, the company has strategically paid down debts, leaving room for accumulated cash reserves. Despite a current focus on growth, there are discussions regarding shareholder returns, including dividends or share buybacks, a decision expected by Q4 as the company evaluates cash flow needs for ongoing projects. This consideration reflects conscientious capital management and sensitivity to shareholder interests.

ESG Commitment and Sustainable Operations

The company continues to enhance its ESG performance, reporting significant time without Lost Time Injuries (LTI). Their commitment to safety in operations is highlighted by their prolonged LTI-free periods. The overall focus on ESG is expected to enhance the company's reputation and operational viability, crucial in today's investment landscape where responsible mining practices are increasingly prioritized.

Conclusion: Positive Outlook with Strategic Growth Plans

The company is navigating through a successful turnaround phase, focusing keenly on productivity improvements, capitalizing on high gold prices without hedging, and making strategic investments to support growth. The proactive management approach, coupled with a strong cash position and a clear pathway for expansion in exploration and production capacity, positions the company favorably in the gold mining sector for upcoming years.

Earnings Call Transcript 2024-Q2

[Terence Holohan, executive]

Good morning, ladies and gentlemen. This is Terry Holohan. I have on the line with me, Chris Eger, our CFO. And we'd like to take you through our quarterly results for Q2 and obviously, H1 of 2024. We do have a presentation online. It's as of 29 July 2024. It's loaded up on our website, so you can follow that. And I will be talking to the slides as I click forward, so you can follow me.

Just moving on to Slide 2. There, we've got the normal disclaimer, which does have our guidance for the year, which is unchanged at this stage.

Looking forward to Slide 3, just a reminder for everybody, we are a West African gold company. We operate at the Syama Gold Mine and the Mako Gold Mine in Senegal, but we've also got exploration projects on both of these operations and in Guinea and all 3 are in an exciting phase at this point in time.

We have quite a large resource and reserve, and this is growing because of the work we've been doing over the last 3 years. And as I said, our guidance, we are maintaining this at somewhere between 345,000 and 365,000 ounces at a cost of $1,300 to $1,400 an ounce, and we'll go into that in a little bit more detail shortly.

Going forward to Slide 4. If you look at the quarter highlights, we had a very good operational quarter, almost 91,000 ounces. This was a good clean run for all operations. This following on from in Q1, if you remember, we did stop the Syama operation, the sulfide circuit for 2 weeks. And now we're at 167,000 ounces for the half year, which is exactly where we expected to be. And that's why we're restating our guidance. We've always said that the first half of the year will be a bit shy because of the stoppage at the Syama planting in Q1, and we expect to have a good run now in the second half of the year.

One of the very exciting point is our group AISCs of $1,402 an ounce. If you remember, not too long ago, it was up at 15. Over the last couple of years, we brought this down aggressively. And in June, actually, we broke through comfortably the $1,400 an ounce level. And going forward, that's why we're really comfortable stating that we think we're going to be in the $1,300 to $1,400 an ounce for the calendar year.

Cash flow, if you remember, we finished our syndicated debt in Q1, and we've got cash flow from operations of $47 million, which is quite an aggressive number now. Obviously, gold price is helping, but also all our work on the operating cost is coming exactly at the right time.

Exploration, as I've mentioned, we are still pursuing the Tomboronkoto project in Mali. We've got some really good drill hits that are coming through as we speak. And we expect to give you an upgrade on that in Q3. And also on the Guinea where we're just about putting together our first Mineral Resource Estimate.

So as a result of the -- all the operations in this half year, our net cash has now jumped to $97 million at the end of June. It also helped by the deal at Ravenswood where they hit their targets of 500,000 ounces, and they gave us a first tranche of AUD 30 million, about USD 20 million, [ with net ] payment coming in this quarter, which will total altogether about AUD 50 million.

So as a result, at the end of June, we had a very healthy balance sheet with cash and bullion at $143 million, and you'd have to go a few years back to see that on our balance sheet. We've essentially come through now what I consider 3 years of turnaround and now we can really focus on growth, especially the organic growth that we've got in front of us over the next 2 years.

In terms of ESG, we're still picking boxes there. LTIs at Syama's over 5.5 years LTI-free. Mako is at 2.8 years LTI-free. We did have some recordable injuries, but these are minor injuries, cuts to hands, sprains, et cetera, nothing majorly that we should be concerned about. But obviously, we're certainly pushing hard on the safety.

We move on to Slide 5. We still are comfortable with our growth. We're just restating this now again. If you remember, we've been talking like this for quite a while, we can see -- this year, our guidance we're comfortable with. I think the important thing. Our costs are coming back down. You can see where we've been recently. We are pushing hard now with the Syama sulfide conversion plant. If you remember, that project will take us on Syama up to 4 million tonnes of sulfide ore. Essentially, it's going to replace the 1.6 million tonnes of oxide that we're treating at the moment at an average of about 1.3 gram a tonne with sulfides that are going to be about 2.9 gram a tonne. So that should comfortably take us from the middle of the next year up to 250,000 ounce per year production levels.

As I mentioned, at Mako, we've now got 5 drill rigs there. We've got 3 potential satellite deposits that we're focusing on. Tombo is storming ahead. We've got some, as I mentioned, some really good drill results coming through. We'll put out a separate announcement in later this month, this quarter, give you a full update not only on Tombo but on the other side as well.

Phase 2 expansion at Syama. If you remember, we've always said this is a Tier 1 mine in waiting. We started the scoping study, and we'll actually give you some updates later this year. And then as I mentioned, the Guinea exploration. We've got some exciting prospects out there. We will issue a first Mineral Resource Estimate sometime this quarter.

We'll jump forward to Slide 7. Let's go into a bit of detail, Syama. If you remember, this last year, we've been ramping up the mine to get it up to 2.4 million tonnes. It was originally designed on 2.1 million tonnes. As we were ramping up last year, remember, we had a few wobbles with the grade. You can see now the grades have settled down. We're comfortably at those sort of levels. And if you look at the sulfide ore process, you can see that this last quarter, we started stepping that up. And this is because of all the work that we've taken on the crushers, replacing all the crushers out systematically over the last 9 months, which has now allowed us to push more through the mill. And the big exciting thing there, as I mentioned, is a grade. If you look at the grades, we're getting back to where we think we should be. And even with the increased throughput on the sulfide plant, you can see we're holding the gold recovery numbers. So the sulfide circuit is really operating well. And then the oxide plant also operating well. We are now in a mixture of materials coming from mines round about 1.56 grams a tonne, and we're using lots of stockpiles, which we've built up over the years, which these days with 1 gram a tonne is worth $75 a tonne. So it's certainly worth processing it and making money from it.

So the Syama operations, we're excited with. We're expecting a run free H2, so we should see some good performance out of Syama over the next 6 months.

I talk about the conversion project. As I mentioned, this is where we're going to be -- this is the oxide plant that we're looking at on Slide 8 with the photograph. You can just see the oxide bill in the left-hand picture on the right, the large slab of concrete next to it. That's the mill foundations, that's usually the critical path on an expansion project with the mill. They are almost complete as we speak now. These photographs are a few days old. And then you can see the flotation section foundations in the foreground on that picture. This is all going ahead to plan. The mill, that parts are starting to arrive on site, and we're on track for commissioning in first half of next year. So by Q3 next year, we should be putting through that mill and the mill next to it. That's going to be put there shortly. We're going to be putting 2.9 gram a tonne material through that mill instead of the on average about 1.3 that we're putting at the moment. So this is really exciting for the future of this operation. This should take it comfortably up to the 250,000 ounces per year, considering we're about 210,000 ounces per year at the moment from Syama.

Then moving on to Slide 9, which is Mako. Mako, as we've been alluding to for quite some time. We did that huge strip last year, $25 million, which we finished off in Q1. And this has allowed us now to get access to higher grade ores. We have been mining slightly larger tonnages of ores for 2 reasons. First of all, so we -- as you know, we've got a rainy season coming up. We want to make sure we've got plenty of material on the ground, so we don't have to slow down in the mill. And also, it gives you a better chance of being -- putting the higher grade material through the mill. What we'll also note is the recoveries are maintaining at 93%. This is based on -- due to our oxygen plant that we put in place last year, still performing exceptionally well and is also adding to the reduction in the cost of the plant. Our operating costs at Mako have come down to $1,100 an ounce and as we expected, and we expect to maintain this now going forward. As I mentioned, we will have a slightly softer Q3 in terms of mining, we're anticipating being able to maintain the production through the plant. And then Q4 should be a bit more solid, a bit more like this quarter.

As I mentioned, group exploration, we will give you an update shortly. Senegal, Tombo and Bantaco, we're operating on 2 of our 3 satellite areas now starting to the Tombo numbers, as I say, we're going to be looking at adding numbers to the mineral resource there of 400,000 ounces with some infill and some extensional drilling. So that's going to increase. We're just starting to hit the mineralization at the Bantaco, that took us a bit of time to get in there. We're actually on site now, and we're just starting to see mineralization coming out of the ground. So we're getting quite excited about the potential extension of the Mako operation.

In Mali, we're also doing some work again on the Syama North. We're now going to restate that resource shortly. We're also getting excited about some underground shoots that we're picking up from that Syama North area. There are several shoots coming off that large 3 million-ounce ore body. And they are higher grade higher than the 3-gram a tonne. So they look like they will be economically mined from underground at some stage in the future. It's just exploratory at this stage, but we'll give some color on that later in the quarter.

And we're also looking at some other prospects south of the main Syama complex that we picked up on our geophysical work over the last 3 years. And we're looking, again, we think we might be able to find some more oxides going forward. This is the excitement about Syama. We'll have that oxide plant having the ability to treat either oxides or sulfides depending on the margins that they will give us.

And then as I mentioned, the Mansala project, we're actually modeling that at the moment, and we will release a mineral resource shortly.

And with that, I'll now hand over to Chris, so he can take us through the financials and the bottom line.

[Christopher Eger, executive]

Thank you, Terry. Moving over to Slide 12 and looking at our financial results. As Terry highlighted, we had a very strong quarter, and we're very pleased with our financial results. Starting first with gold sales. We sold 88,000 ounces, just shy of what we actually produced. Again, at the end of Q2, the quarter ended on a weekend, and therefore, the actual timing of the sales were impacted versus the production. But we expected those ounces to get sold in July, which they did. And what's really important to note here is at this stage, we're fully unhedged and we remain unhedged and we intend to continue to be hedged. Also, as Terry highlighted, the costs have come down very nicely. And so our AISC was at $1,402 per ounce, and we expect the AISC to continue to decrease over the coming quarters.

Our capital expenditures were just shy of $20 million for the quarter, slightly less than Q1, but we are expecting CapEx to increase in the second half of the year as the spend for the Syama project is really going to ramp up, and that's going to be happening in Q3 and in Q4.

Our EBITDA for the half year, which is unaudited, is coming in at $160 million, which is an increase over last year, where we probably produced $101 million EBITDA. I'm expecting the EBITDA for the second half of the year to be substantially higher than the first half. This is really because of the fact that we'll be producing more ounces, and we're also seeing a much higher price environment than we were in Q1. And like I said, CapEx for the first half of the year is at $44 million, which was an increase over last year. But most importantly, we expect CapEx to really ramp up in the second half of the year, and we're still very much comfortable that CapEx will come in within the guidance that we have illustrated at the beginning of the year.

Moving over to Page 13, when we look at cash, and cash is king these days. We're very excited about the cash flow generation of the business. Our operating cash flow was up substantially in this first half of the year versus last year at $127 million and we expect that to continue in H2.

I spoke about CapEx already and the impact to the business and look at exploration was around $10 million for the first half of the year and we are expecting our exploration expense to be at least $10 million in the second half, if not more. This is above our initial guidance of $15 million to $18 million for exploration. The reason for this is that we're very excited with what we're seeing. In Senegal, we anticipate to spend as much as we can in order to really lock in the extension of the Mako mine. So look for the exploration spend to continue to increase throughout the year.

Working capital was a positive impact for the first half of just shy of $2 million. One of the key issues that we are facing, though in the business is not receiving our VAT refunds on time. In Q2, this was negatively impacted our business by about $15 million. We are getting VAT refunds, but they're coming in slow. Historically, we were able to get them quite quickly. And with the changing governments that we're seeing both in Senegal and in Mali, we're seeing an impact on our VAT refunds, which is negatively impacting the business overall.

As Terry highlighted, in the quarter, we received AUD 30 million due to the sale of Ravenswood, which had a very nice positive impact to the business, and we're expecting that remaining AUD 20 million to come in by the end of September. We made our final debt payments for our syndicated senior facility at the end of Q1. That's the $26.3 million that you see on the graph. So we ended the quarter with a very strong cash balance, cash and billing, I should say, of $143.4 million and that related into a net cash position of $96.6 million. We continuously maintain overdraft facilities in both the countries that we operate. We try to keep these levels pretty consistent, just shy of $50 million. Those provide good working capital sort of efficiencies for us, and we'll be looking to do that in the future.

So again, to summarize, a very strong quarter, and we expect cash to continue to build throughout the year.

And with that, I will turn it back over to Terry for some closing remarks.

[Terence Holohan, executive]

Good. Thanks, Chris. And just in conclusion, I think you can see from the numbers there that we've been working smart over the last 3 years, and we've also managed to put stocks in place just in case from the mine in front of the plant just in case we do hit problems with the rainy season. The rains have started. We've had 150-millimeter storms already happening and in a few hours, and we're managing that quite comfortably at this stage. But I'd say we do have stocks in place, which will assist if we have any further storms like that. But what we've got, we are still focused on the operation. We are still pushing the continuous improvement. There's lots of items that we have still got on order that are going to come in to enhance the operations here and there, just on the mills, on the roasters, et cetera. So we are still focused on the continuing improvement and the big plus for us right now is that we are unhedged going forward, and we've paid all our debt off so we can enjoy the prices that we are seeing going forward.

So if you look at what we're focused on, the 3 things that we are focused on is productivities, cost improvement and organic growth. It's as simple as that. So we should see some systematic improvements further over the next 2 years.

Thanks very much. And with that, Chris and I will now take your questions.

[Unknown Attendee]

Thank you very much, Terry and Chris. That's great. We have quite a few questions over the webcast today. The first question says, can you provide a sense of how the CapEx profile compares in H2 to H1?

[Christopher Eger, executive]

Terry, maybe I'll grab this one. So look, I think you can see in the results that we spent, I think it was $45 million in H1 in CapEx. With the ramp-up in the Syama project, we're expecting that to double. So look, we expect to be on guidance. So I'm expecting CapEx in H2 to be around $80 million, that's roughly how the numbers work.

[Unknown Attendee]

Right. The next question is, now you are building cash, do you have any plans to buy back shares or start paying a dividend. Further, you are now getting cash from the Ravenswood sale. Have you considered whether these funds should be directly returned to shareholders?

[Terence Holohan, executive]

Yes, Terry here. I think as we said previously and shortly and previously on this call, we do continue and get excited about our organic pipeline of projects. And I'm thinking at the moment is by the end of the year, we will fully understand what sort of cash flow we'll need going forward for our Mako operation, potentially the Phase 2 Syama and with a bit of luck the Guinea project. So we'll be able to give some more color on this towards the end of the year. But make no mistake, we're very sensitive to this, and a lot of people are asking the same question at this point in time, but we will address it in more in full, I would suggest by about Q4 of this year.

[Unknown Attendee]

Great. And the final question from the webcast is, can you provide any more details around the mining code that was signed?

[Terence Holohan, executive]

I think the key thing is that we didn't actually sign a new mining code. We have a mining code in existence, and we got agreement with the government in Mali to honor this. And this runs out at the stage on revising in 2029. So at this point in time, we've got a good run forward, and it's business as usual.

[Unknown Attendee]

Brilliant. Thank you so much. That's all the questions on the webcast. So I'll hand over for any conference call questions.

[Operator]

Thank you, Rachel. [Operator Instructions] Our first telephone question comes from Justin Chan from SCP Resource Finance.

[Justin Chan, analyst]

Chris, congrats on all the progress you've made. It's great to see. Just 1 on the working capital side of things. You mentioned that had a $15 million impact in Q2. I guess maybe just holistically, how do you expect -- or sorry, how do you expect working capital, the trend in H2. I know there's a lot of areas you're looking to kind of pick up some cash from reducing your stock levels, but also does that VAT impact, if it's -- assuming the rates are the same going forward, presumably that number will stay the same, so there won't be any more VAT impact? Or am I reading that wrong?

[Christopher Eger, executive]

Justin, maybe -- it's Chris. I'll take that one. look, a couple of points. We are expecting to have more, call it, benefits of working capital because we do see additionally $10 million to $20 million in inventory reductions and we are also looking to work with our vendors to extend payment terms. VAT is a bit more tricky because we typically with VAT refunds to offset against other taxes that are due. And that number is traditionally about $5 million per month across the board. So we have seen a slowdown in getting our VAT refunds. If we don't get any more VAT refunds, you would expect a negative impact on cash of $5 million per month. But we are anticipating that the VAT refunds will start up again. And therefore, we're hoping to catch up on what was lost in Q2, if that makes sense.

[Justin Chan, analyst]

That's very helpful. And then just on -- just 1 more financial question and then a big picture one. But the financial question is just on tax and timing. So I guess the cash that you're paying now is that relating to last year? So I mean the increased earnings you're getting now will come through in tax next year?

[Christopher Eger, executive]

Just that's a bit -- that's complicated because look, we pay some cash taxes relating to the current period. We pay some cash taxes related to future anticipated periods. So it's a bit of a mix of all of them. And then like I said before, sometimes, we actually minimize our cash tax payments because we use VAT mandates to offset cash taxes that are due. So it's all of the above. So it's not 1 that I can give you 1 clear answer on, if that also makes sense. It's a complicated one.

[Justin Chan, analyst]

Yes. I see. I guess from a modeling perspective, is that -- is the safest thing then to just kind of model it in line with the actual underlying earnings?

[Christopher Eger, executive]

Yes, that's going to be the easiest.

[Justin Chan, analyst]

Okay. Okay. And then just -- maybe the big picture question is I mean, you're generating quite healthy cash now. Also the gold price is at quite a high level. However, on the other end, I think your mining convention is until '29. Just curious what your thoughts are on debottlenecking the roaster in that and really unlocking Syama? I mean, all these factors I mean the price in your cash balance really kind of leaning forward in favor of bringing that forward, but then the convention side of things. Just curious what your current thoughts are on that and where the engineering is at?

[Terence Holohan, executive]

Sorry. Justin, Terry. I think going forward, we're very excited. We're working very, very closely with the governments, specifically Mali's you're talking [ there now ]. They are very excited with the idea that we're expanding our operations. They'd like to see investment and they're giving us a lot of support there. And I think that does help with getting things like VAT back, et cetera. But we're still very optimistic with Syama. We think we've got a good working relationship now with the new government and the new ministers. I'm going in again next in 2 weeks' time to meet them. And we talk about the investment. Obviously, the key thing is for us, we still need to do a lot more work on the Phase 2. We expect we're only at scoping study level at the moment, but we're going to -- we have advised the government. They are very excited about that. They've known this mine, Syama, as you know, since the '90s, and we've really been waiting for this for quite a long time. So it's exciting for them as well. So we think we've got a good working relationship, and we just have to continue. And both sides have to work hard on this. We all see that it's a large project when we all want to realize it. We've got a common goal there.

[Justin Chan, analyst]

Got you. And what do you think is the realistic time line, at least on the engineering side for having kind of a firm estimate of CapEx and time line, do you think, like end of '25 is realistic?

[Terence Holohan, executive]

Yes. End of '25 is realistic, and I think sort of construction, you're going to be '27, somewhere around there. So obviously, you're getting close to renewal of your convention, your mining code. And that will play a part. That's an important asset of that. So we're doing the work early discussing that earlier on. So there's no surprises later.

[Operator]

We will now take our next question from Reg Spencer from Canaccord.

[Reg Spencer, analyst]

Terry and Chris, they keep just going at Syama, congrats on cracking quarter. I've got a couple of questions. Some I could probably take offline actually, I'll just stick to the key one. Just obviously, you're going to have some weather impacts over the coming few months. You mentioned that mining and processing changes will be lower in the September quarter. Are you able to sort of give us an idea of what kind of quantum we're talking about here? And I presume we can assumed growth to remain at current levels, that all year operates.

[Terence Holohan, executive]

Correct. Thanks, Reg. Yes, we normally internally budget around about 10%, but that is really a worst-case scenario, 5% is more probably realistic. And I think this is probably the best year that we are prepared and ready. As we mentioned, we had a sublevel cave is literally like a sieve. So you -- when it rains on the top of it, the water collects at the bottom, you pump to the surface. We've been through a cycle already of that with a 150-millimeter rain, and it's worked exceptionally well. And we built up stocks of high-grade materials in front of plants, so we're ready for it. So we think we're in a comfortable position, but we're just being cautious. We're essentially a bunch of engineers here just sort of looking for worst-case scenarios. So there's no -- hopefully, the surprises will be on the upside.

[Reg Spencer, analyst]

That's very helpful. Next question is just on the expansion. You've mentioned obviously the [ people ] path items being the mill. And just thinking a little bit forward into early next year, can we assume that oxide process units [ can form ] ceases in Q1 or Q2? Is there like a cutover event or a period of time where that switches over? Just trying to understand the transition from the current setup versus what you'd be looking to commission early next year.

[Terence Holohan, executive]

That's a good question. And the key thing is that we're going to have flexibility here because we think sort of Q2 is in our schedule, Q2 next year with the commissioning with a sort of steady state by sort of July sometime. But the key thing is that if we -- and we know some of the -- we start the mining, which we're going to start in Q4, there are going to be some 3-gram a tonne materials coming up out of the ground sulfides. What However, we'd probably do with those rather than wait for the mill at SSCP, we'll probably swing them into the main plant because they'll be cheaper to mine them and be slightly higher grade. So I think the key thing is we're going to have a lot of flexibility from sort of beginning of next year. The original plan is to swing over to sulfides fully Q2, somewhere around there. But if we come across oxides that are good grade and low cost, then we can swing back as we've always mentioned.

[Reg Spencer, analyst]

That's very helpful. Not many operations at that kind of flexibility. Okay, just last 1 on costs, maybe 1 for Chris. Just that inventory adjustment in Mako. Obviously, you've built up a bit of a stockpile there to deal with the wet season. Given the material movements, your waste and ore, I thought some of that inventory adjustment might have been a bit larger than what we saw on your all-in sustaining costs. So I was just wondering how we should think about the stockpiles at Mako as we move through the wet season and what the potential impact might be on your all-in sustaining costs in the second half. Obviously, you haven't changed your guidance, but just trying to get a little bit more granular on that.

[Christopher Eger, executive]

Reg. Look, so yes, we do expect greater, call it, stockpile adjustments to work its way through the system in Q3. Looking at our budgets and our numbers and the forecast, I do expect AISC to continue to really wrap down at Mako over the year, not only from just, call it, stockpile inventory adjustments, but also from all savings on people and contracts as we are looking to, call it, ramp down the mining into next year. But I need to talk probably a little bit more into the numbers and work with your numbers to see exactly what you're modeling versus what we have to try and help you out. But we probably should do that offline.

[Reg Spencer, analyst]

That would be excellent. That would be excellent. That's all for me. Guys, again, congrats on a great quarter.

[Terence Holohan, executive]

Thanks, Reg.

[Operator]

And we will now take our next question from Richard Hatch from Berenberg.

[Richard Hatch, analyst]

Congratulations on a nice quarter. Just a couple of clarification ones from me. Just the first one, Chris, just on that $80 million of CapEx in the second half, is there much split quarter-on-quarter on that? Or should the best just to split down the middle?

[Christopher Eger, executive]

No, I probably would put 60% to 65% of that in Q4 and the remaining obviously in Q3. It's going to be much more back-end loaded with the Syama project.

[Richard Hatch, analyst]

Okay. Very helpful. And then the second 1 is just on recoveries at the sulfide. I mean they've been nicely sort of ticking around that sort of 79% level last couple of quarters better than perhaps on average sort of historical years. I think you have previously talked about wanting to get sort of above 80%. Is that still the target? And if that is the case, then with the sort of the time frame to get there?

[Terence Holohan, executive]

That's a good question, Rich. What we've done, if you remember, we took the roaster offline, and we did some work last year and a little bit this year, and that's allowed us to take the temperature up only a small amount up to about 750 degrees from about 720. And that's actually helped us with the carbon burn in there. So what that means is that the leaching now is actually creeping up. The leaching recoveries at the back on 91 plus. However, with the increased throughputs at the front, the flotation recoveries have come down slightly. So we're putting a lot of work into the flotation side at the moment. We just refurbished all our tanks. We're looking at recommissioning the cleaners. But I would suggest it will be through the end of the year and early next year. But there's a lot of focus, a lot of work there. I think longer term, we certainly see that we can put extra flotation cells into the front end of the plant and creep those up. We should be at 80% -- in laboratory, I've always mentioned in laboratory, you can get 81%. It's easy there. You normally discount that by 2% when you start up the plant, so at 79%. That's where we are now. But given the experience -- and that's really when you're in steady state but I think that we'll be -- you'll see some creep up to the 80% dramatically over time, rest of the year in Q1.

[Richard Hatch, analyst]

Okay. Very helpful. And sorry, just last one, just on the expansion at Syama. Just with the wet season coming up in mind, you're confident you've got all of the kind of critical items that you need to get done before the rain starts to pour and it become more tricky to operate?

[Terence Holohan, executive]

Correct. The biggest issue on plant is getting that concrete poured, which we've done. We obviously pushed hard to get that done before the rain started and so we think that we're in a really good position there.

[Operator]

There are currently no further questions in the phone queue. With this, I'd like to hand the call back over to Terry for any closing remarks. Over to you, Terry.

[Terence Holohan, executive]

Thank you very much. Okay. Thanks, folks for listening today. As I mentioned, it's all -- we've had a 3-year turnaround, but make no mistake, we're really focused on improving the situation. It's all about productivity, cash flow and organic growth. That's what we're focused on. We look forward to talking to you later in the year. Thank you very much.