Resolute Mining Ltd

ASX:RSG

Earnings Call Transcript 2024-Q3

[Terence Holohan, executive]

Good day, ladies and gentlemen. This is Terry Holohan, the CEO and MD of Resolute Mining.

I am joined today by Chris Eger, our CFO, and we will take you through our Q3 '24 activities, which you should be able to see on the webcam.

If I jump forward on Page 2, that does have our guidance on there, which we have not at this stage changed.

Then Slide 3 just gives you the overview of the company. Remember, we are a multi-asset gold producer. We are operating in West Africa, and we're in the organic growth phase at this point in time. We have a mine in Mali, the Syama gold mine and the Mako gold mine in Senegal. And the exploration now we've extended. Last quarter, you remember, I said I'm hoping to put a fourth flag on the presentation, and you can see the Cote d'Ivoire is now on there. So we're really happy to say we're expanding now organically on the exploration side. We are listed on the ASX and the LSE, and we've raised to now $1.2 billion market cap recently. And we have -- if I go into a little bit of detail on the 3 main areas, Syama, remember, it's got 10 million ounces in the ground. By far the majority of that is sulphide. We have ore reserves of 4 million ounces there. We have an oxide plant at 1.6 million tonnes, which we're presently converting to a sulphide plant, and we have an existing sulphide plant, which we've perfected over the last 2.5 years and is performing exceptionally well at 2.4 million tonnes per annum. We're expecting to produce somewhere between 205 koz and 215 koz. I would suggest towards the higher end of the scale there at around about $1,500 an ounce this year from Syama, which is a lot better than the last couple of years. Mako, if you remember, that is coming to the end of its life. We've got about 12 months of mining left. We have got a mineral resource of 0.9 million ounces or reserves of 0.4 million, oxide plant capacity 2.1 million. We put out guidance saying 140,000 ounces to 150,000 ounces. I'll come back to that in a moment, but our costs are definitely going to remain somewhere between $1,100 and $1,200 per ounce. And as I mentioned, on exploration, now we are exploring on 4 fronts quite aggressively. We'll probably spend about $20 million this year on that. Mali, greatly underexplored across our 85 kilometers of Greenstone Belt. Senegal, we've made some significant progress with Tomboronkoto, which we'll go into shortly, which is a potential extension of the Mako mine. Guinea, we put out our first initial mineral resource recently. And the Ivory Coast, I hinted at that last time, we've signed a joint venture, and we're expecting to start drilling in early 2025. And then just a quick reminder that we still do have a stake in the Loncor project in the Democratic Republic of Congo, which has just recently started drilling again.

So turning to Slide 4. If you look at the operations, we produced 85,000 ounces, a little bit lower than the previous quarter. As you know, it's the rainy season in West Africa. We expect it to be slightly lower. We did have a little bit more rain impact at Mako, which we'll go into a little bit later, which has significantly impacted the operation there. And nowadays, now we're expecting to produce about 130,000 ounces from Mako this year. As a result of this slightly lower than we expected production, our AISC went up $1,452. Some of that is due to the Mako lower production, but also the sliding scale, higher royalties in Mali where the gold price went significantly above $2,500 per ounce. As a result of the numbers to-date on the 3 quarters, we are expecting our AISC to be at the upper-end of the guidance, mainly as a result of the higher royalty rates that we're experiencing because of the high gold price. If you look at cash flow, we think this is a big win. We're starting to generate significant amounts of cash now. Year-to-date, $188 million. It was a particularly good -- last 2 quarters have been particularly good because we were unhedged. And going forward, we're unhedged. And some of the capital was not spent this year. That doesn't mean to say we are not doing the jobs. We're getting the work done. That's a difference between the committed money and the actual spent money. That is the difference. So some of those monies are getting pushed forward to next year. It is worth mentioning on cash flow, we are in discussions with both governments in West Africa. We're going through audits on the historic operations, and there could be some adjustments later on, and Chris will actually talk to that a little bit later in his section.

Okay. On the exploration front, we added significantly to Tomboronkoto ounces and to the Mansala project in Guinea, extra 900,000 ounces on the books over the last 2 quarters. This is quite a significant step, especially on the Tomboronkoto side, now where we had 85% conversion of our inferred to indicated over this last quarter. As I mentioned, this La Debo project, we're quite excited about this. This has essentially walk up and drill targets given that it has an NI 43-101 inferred resource of about 400,000 ounces. And this is a project that we tried to get involved in 3 or 4 years ago, but we didn't have the wherewithal at the time to take it on.

So in terms of balance sheet, we think it's extremely positive. We added almost $50 million to net cash, and that was helped by receiving the second tranche from Ravenswood as we expected. And we've also secured an external debt facility with Nedbank and Citibank for M&A projects. But at this stage, we don't have any use of that as yet. And Chris will go into that again in a little bit more detail.

In terms of ESG, we believe we're still hitting our targets there. We're still LTI-free. And that represents Syama, 5.5 years. Mako, 3.5 years. These are significant time frames now to be LTI-free. But also with the focus on safety, our injury frequency rate has significantly dropped over this quarter to 1.37 from 2.1, and that's against an industry average of about 2.6. So as you know, we're doing lots of audits against the World Gold Council, Responsible Mining Principles, ISO, et cetera, and continuously improving our numbers or matrices on ESG.

Moving on to Slide 5. You've seen this slide before. We just need to update it now to add the Cote d'Ivoire, but the oxide plant is still on-track for middle of next year to convert to sulphides. That, if you remember, we'll be replacing 1.3 gram a tonne oxides with 2.6 gram a tonne sulphides. That's going to have a significant boost to the operation over the next 30 years, we believe, given the size of the deposit there. And we're also looking at the Syama Phase 2 growth, which is the original 400,000 ounce project that we were talking about from day 1. We are presently in our budgeting phase as we speak at the moment, and we'll give a little bit more color on these over the next quarter.

So if I go into the operational overview, taking me to Slide 7, let's just focus a bit on Syama. The Syama sulphide operation, we believe, is operating exceptionally well. We did have heavy rains in, as I mentioned, in -- as the rest of Africa has suffered, especially Central and Northern Africa suffered recently with heavy rains. And if you look at the ore mined on the sulphide, you can see we had some stoppages there. We didn't mine as much tonnes there or the grade at 2.5 gram a tonne. But if you remember in the last quarter, I did say we've stockpiled some high-grade materials for this situation, and we managed to treat 622,000 tonnes of 2.63 gram a tonne material through the plant. That was our target to get it above 2.6 and to push those tonnages. And as you'll see, we are systematically increasing the operation on the tonnages through the sulphide plant due to all the work we did previously at the end of last year and early this year on the crushing plant. So we're now starting to make those mills operate well. The oxide plant, we had a few problems again with the rain in the oxides, but we swung a lot across the stockpiles. So therefore, the process grade is only 1 gram a tonne there. However, I will mention that since the rains are stopping now in Syama, we're getting back into the higher-grade materials, and we should have a stronger quarter in Q4 here, which will catch-up a lot of this metal that we're presently behind. As I mentioned, we spent a little less capital, but we did spend about $22.6 million capital, a lot of that on the SSCP.

Moving over to Slide 8. If we talk about the oxide plant conversion, you can see the diagram there showing the infrastructure that we've put in place now. If you remember, I reported last quarter that we managed to finish all the concrete work before it started raining and we haven't put all the high steel work in place while it was raining. So from a safety point of view, we've had no accidents or LTIs on those areas, and the project is progressing well. All the long lead items are now ordered, and we're waiting for those. The mill has virtually arrived now in various boxes, so we'll start assembling that in Q4. And as I mentioned, the project is on track to commission in mid-2025 when we're going to see high-grade sulphides replacing the lower-grade oxides.

Moving on to Slide 9. As I mentioned, Mako, during the month of September, we had a 1 in 1,000-year rainstorm, which has a significant impact on our pit. If you remember, we're in the last 2 years of mining this pit. So we're down at the bottom. And we had what a 1 in 1,000 year rainstorm means we had about 250-odd millimeters of rain on a couple of days. But if you look at the graph on the left there, you can see that even though we haven't finished the year yet, we are well over the 1.1 meter of rain that we normally get in a year. In fact, over the month of September, we got 569 millimeters. The mines of these types, you always design in for 1 in 100 year. 1 in 1,000 year is exactly double what you actually have designed in for. So the 2 pumps that the contractor had to pump water out just could not cope. To get additional pumps normally takes you 6 months, but we managed to find pumps from other mines, and we managed to get those on site during September. So we believe, as we sit now during October, we've recovered most of that position. And it's also worth noting that given that we'll be finishing mining in mid next year, this will be the last rainy season this pit actually has to handle. But the big lesson here, not only for us, but the mining industry is we need to focus on wanting 1,000-year rainstorms going forward. So we don't hit these issues again.

Moving to Slide 10. If you remember last quarter, I said I expected to be putting 2 gram a tonne through the mill, and you can see we didn't quite make that. And that was a combination of not being able to mine the bottoms of the pit there, which are the higher-grade sections. But also, we found that some of the material coming out of the size of the pits was 15% lower in grade than we expected. And when I say expected, this compared to the resource model that we did in 2021, our grade control is showing it's about 15% lower. So as a result of this, we managed to use a lot of our stockpile material to put through the plant. So we didn't lose out on tonnage. We lost a bit on grade, but we didn't lose on recovery. But obviously, we were slightly down on gold poured. Given the slightly lower grade material, and we're back in the bottom of the pit now, we are saying that we think we are going to -- this 15% lower grade could continue. So we're forecasting at this stage a lower-than-expected guidance for Mako. If you remember, we said we thought Mako could originally produce about 145,000 ounces. We're conservatively saying now 130,000 ounces. So if we add the 130,000 ounces to the Syama's 215,000 ounces, this takes us to our guidance level of 345,000 ounces. It is the lower end of the guidance level, but we think we're comfortable of meeting that at this stage. Given the 145,000 ounces, we think that this will put a little bit of pressure on our costs. We think we'll be at the higher end of the cost, the AISC. And this is essentially because of a new headwind there, which is the extra royalty that we're paying in Mali, given that our gold price now has increased above the $2,500 an ounce. There is good news, however, still on the capital side, we think we're going to be well under on our capital because of the deferral of capital for next year. So we think it's going to be a good year all-in and a good from a cash flow point of view.

Moving on to Slide 11, the exploration update. As I mentioned, this is getting very exciting now. The Mali extension project, that is our #1 exploration project, as you all know. The Mako pit, as I've mentioned, is finishing up in the middle of next year on the mining. We have 2.5 years of stockpile and the plan is to turn this Tomboronkoto project into a mine. The challenge is obviously to turn that pit to account before we finish the stockpile. And I'm really excited about the progress we've made. We've declared a resource there of 571,000 ounces. This is a mine. If I look at the strip ratios there, they are low, less than 3:1. It's reasonable grades. The material is friable, so it doesn't need a lot of energy to break it down in the mill. And we've only drilled at this stage down to about 150 meters depth. We know it's extending and we're drilling it as we speak now to below 200 meters to actually increase this resource. We are bringing this project to a decision-making point, an investment decision, hopefully, by Q1 because we are running the engineering in parallel with the drilling. So we've actually started our geo-tech drilling already on this project. In Mali, we're still doing a lot of exploration there. We are looking both for further oxide for looking for upgrading a lot of our sulphides and this all really to underpin the new Phase 2 project that we've talked about for 400,000 ounces, which I still believe is on the cards later on in this decade. And then at Guinea, exciting work there, found this resource of 343,000 ounces. We have stopped work there really to focus on Tomboronkoto. However, we will be gearing up in the new year to extend that. And we believe that's a really exciting frontier for us to move into.

Looking at Slide 12. This is the Ivory Coast project, La Debo project. This is a private company. As I mentioned, we've always been very keen on this project, and we've managed to put a deal together. Very excited about this. It's in the right part of the world. It's on the Birimian sediments, and they do have an inferred mineral resource of 400,000 ounces. They also have a lot of upside potential that we recognized several years ago. So we're very excited to be moving into this one next year. And at the next meeting, I will be reporting on the progress that we will be making on the Cote d'Ivoire.

Thank you. And with that, I will hand over to Chris, who will take you through the financials.

[Christopher Eger, executive]

Thank you, Terry.

And now moving on to Slide 14. Look, we're really excited about the operational performance of the business and thus the financial results of the company. For Q3, we sold 95,000 ounces of gold, an increase of 10,000 ounces versus what we actually produced. The reason we sold more gold than what we produced is because at the end of Q2, we're sitting on about 10,000 ounces of stock because in Q2, the quarter ended on a weekend, and therefore, we were not able to sell all the gold that we had made. But more importantly, looking at the full year numbers, we think we're going to produce and sell about 345,000 ounces of gold, which is at the very bottom end of the guidance, but we're still very pleased with this performance because the difference is really due to Mako as a result of the rains in Q3. When looking at our cost, AISC in Q3 was at $1,452, an increase over Q2. But also, as Terry highlighted, a big driver of the increase in AISC is a result of the higher royalty rates that we're seeing in Mali as a result of the higher gold price. But then when looking at the full year guidance, we're likely also to be at the very upper-end of the guidance for AISC at around $1,400, which is in line with expectations due to higher royalty rates. When looking at CapEx for the quarter, we spent $26.6 million, an increase over Q2. But again, when thinking about the full year numbers, we're likely to be at the very bottom-end of the range at around $115 million of total CapEx spend or even $110 million. On the exploration side of the equation, we spent a little bit less in Q3 versus Q2, $6.3 million versus $7.6 million, but we do expect on exploration spend will be $20 million, slightly higher than the guidance for the year.

So moving over to Slide 15, we'd like to talk to you about some of the substantial free cash flow generation of the business. Year-to-date, we've generated $188 million of operating free cash flow. This is a substantial increase versus last year, where at the same time, we had only generated $105 million. This increase was driven predominantly by the gold price environment, but we are working hard to reduce our costs across the business. Notwithstanding today's environment, we are paying higher royalty rates as a result of the higher gold price environment. So if you look at the cash flow waterfall chart on the top right, moving from left to right, I spoke about the operating cash flows. As you can see, CapEx today is at $71 million, a substantial increase over last year. But again, this is a result of the increase in CapEx related to the expansion project at Syama. And as I mentioned before in the previous page, we do expect full year CapEx to be around $110 million. Exploration year-to-date, $16.2 million. But like I said, for the full year, we're expecting that number to be about $20 million.

On the working capital side of the equation, you can see a positive working capital number of $16.5 million for the year-to-date number, and this reflects a lot of hard work that we've been putting through the business in reducing our inventory levels and increasing accounts payables to industry standards. However, one very negative impact to the business, which is reflected in all of these numbers, relates to tax leakage that we were seeing across the company as a result of the increased fiscal pressures that we see both unfortunately, in Mali and in Senegal. Both countries are economically struggling and therefore, have been slow in returning our VAT refunds, and we've seen increased numbers of tax audits across the board.

When looking at banks and repayments of debts and also receipt of payments for the Ravenswood sale, we've generated substantial cash across all these elements. So we paid back our financing facilities in Q1, and then we worked hard with EMR to get AUD 50 million into the business in order to settle the Ravenswood payments. So at this stage, when we look at our cash balance, we're sitting today at $188 million of gross cash on our balance sheet. So what does this all mean? When looking at the net cash progression on the bottom right, you can see that since the beginning of the year, the business has generated well over $110 million of cash since the beginning of this year. So today, with our gross cash of $188 million and our availability in our financing facilities, the company is sitting with excess liquidity of over $250 million, which gets us very excited in being able to attract both organic and inorganic growth opportunities.

So with this, I'll hand it back over to Terry for some concluding remarks.

[Terence Holohan, executive]

Thank you, Chris. And in summary, I think this is going to be a great year for us. We've had 3.5 years of tough decision-making, and we've actually got through and we're in a position where we can truly benefit now from the gold price. We are fully focused on the organic growth of this business as we've outlined here. And that's all about the Syama expansion, the Mako extension and the increased jurisdictions for exploration. And I certainly believe that we've got the team in place now that can deliver on all these major objectives for us. Thank you.

[Operator]

[Operator Instructions] Our first question comes from the line of Justin Chan from SCP Resource Finance.

[Justin Chan, analyst]

Just maybe 1 on Mako. For your -- I guess, with the lower grades, how are you viewing that into, I guess, next year? Is your expectation for it to be kind of similar to this year grade-wise or at least your Q4 run rate or kind of in that maybe 1.5 to 1.7 range, something like that?

[Terence Holohan, executive]

Justin, Terry here. Yes, at this stage, I think you can appreciate we're right at the bottom of the pit, and we'd love to get in there and do a whole bunch of grade control drilling just to get down and look at that. And unfortunately, we can't get in. We're just starting to mobilize now given the waters are receding. There's not a lot of space in there. So we are drilling 1.5 bench at a time with the grade control because you can push down a bit further. But we are reviewing that as we speak, and we'll put a bit more color on that as part of our budget process now. If you talk to the geologists, they still stand by the ['21] model. It was well done. It was 40-meter spacing across the ore body. So they say, don't worry, it will come back, but we're engineers and we're just a bit more cautious at this stage.

[Justin Chan, analyst]

Got you. Very prudent. And then maybe on Syama and the expansion or the Phase 1 expansion. In terms of kind of seeing it in your numbers, do you expect material impact for next year? And when do you think we'll start to see it in terms of tonnes?

[Terence Holohan, executive]

I think we're going to start putting ore -- we're going to start mining the ore in the first half in sort of reasonable amounts, first half next year. And when it comes on, my experience of bringing new mills in, it takes 3 months to ramp it up to sort of full production. You get up to 70% production pretty quickly. But I would say in Q3, you should see it ramping up and in Q4, we'll actually see what it can do. Again, we're on track with the project. We're quite excited the way it's going. Things are going to plan. We've got a great team on the ground there. Most of the equipment has arrived or are on the water. So I would suggest, again, as part of our budgeting process that we're involved in now, we'll put a bit more color on it over this quarter and early next year.

[Justin Chan, analyst]

Got you. And just in terms of the numbers, I guess, will that express itself primarily in kind of more numbers out of the Syama sulphides in terms of tonnes or higher grade or I'm just trying to model it properly in terms of how it will expect there.

[Terence Holohan, executive]

In my thinking, the thing is when you start a pit like this, it's a large pit. It's part of a 3 million ounce ore body that we're attacking here. You're going to -- we know that in some areas, it's over 3 gram a tonne fairly close to surface, but it's also close to surface 1.5 gram a tonne. So we've got to model this very, very carefully. Some of it's oxide, so we'll put it to one side because it's patchy. So I think it will be a sort of an up and down start. But once it sort of gets into 9 months of operation, then you'll be able to see steady flow. So I think '26 will be a fantastic year out of it, but it will be an interesting and sort of bit of a stop-start operation for the second half of next year. But we will put some numbers out shortly. Yes. I'm confident that sulphides-wise, we should be able to take up from the 215 to sort of 240, 250. So certainly by '26, but it will be sort of a steady ramp-up over the second half of next year.

[Justin Chan, analyst]

Got you. And then just maybe one last one on -- just looking ahead because we're close to the end of the year now. For CapEx next year, I realize you haven't finished all your budgets, but just to get a high-level sense, so $20 million comes over, do you expect to be around like the $100 million, $110 million level for next year as well or yes, just wondering if that's the right range or maybe somewhere lower or even higher?

[Christopher Eger, executive]

Justin, it's Chris here. No, we'll be lower. We should be sub $100 million as I'm just sort of ballparking it with what we've done historically because there's not a lot of CapEx at Mako, as you can imagine with the end of mine. Look, it's too early to tell, but we will be sub-$100 million.

[Operator]

The next question comes from the line of Reg Spencer from Canaccord.

[Reg Spencer, analyst]

Just a follow-up question on the adverse tax challenges in Senegal and Mali. Just to clarify that, that relates primarily and only to the issues with the VAT refund and there's nothing else that might be attached to proposed changes in mining codes or any fiscal changes?

[Christopher Eger, executive]

It's Chris here. No, unfortunately, it's not just VAT. So we are getting, call it, having a timing impact on getting our VAT refunds, which is probably the bulk of the issues that we have. But look, in Senegal, for example, there's a new government that was put into place early this year. As typical, new governments will then start up a new phase of audits. So we've had a number of, what I call, tax audits on historical performance. This goes back to 2017, '18, '19, '20. And through some of these audits, we've had to pay a number of additional monies to the government. And so that is happening, which is pretty typical. But like I said, 2/3 of the issues are around VAT refunds, but we are getting an increased number of tax audits, which cover -- sorry, a whole host of topics in our business.

[Reg Spencer, analyst]

That's not expected to continue for much longer, Chris. Is that a fair question? Obviously, once you go through the process of these audits and for lack of a better term, square everything away with the Senegalese government, that's it. And are you able to tell me what the quantum of that might be?

[Christopher Eger, executive]

Yes. Look, we would hope they would slow down, but it's very common in where we operate that these happen every year with all mining operators. So it's a common occurrence. It's just we're seeing, call it, an increased number of audits versus what we typically see. So as we go through the audits, we learn, we develop relationships, we adjust. But look, a lot of times, the rules are not written that specifically on purpose. And so there's a lot of interpretation and there's a lot of resi building. But then when you get a whole host of new people that come into government, you have to restart that process. So based off the history, we should expect to see things slowing down as we work through these audits, but I can't promise you that it's going to come to a stop.

[Reg Spencer, analyst]

Problem there seems to be a bit of a way going through West Africa mining code changes and tax changes and settlements and things like that. It doesn't seem to be isolated to any particular country.

[Christopher Eger, executive]

Yes. I think, unfortunately, that's the case. We're seeing it across Africa, specifically in West Africa. And yes, it's unfortunately the environment that we're living in. As we're generating a lot more cash because of the gold price environment, one of the, I think, unfortunate byproducts of it is that people are looking for possibly a bigger piece of the pie.

[Reg Spencer, analyst]

Yes. No, that's fair. Last question from me, maybe one for Terry. Tomboronkoto, I note in your announcement of that maiden resource in September, you showed an aerial image overlaying the deposit. It looks like a village. So I presume that there will have to be some kind of relocation take place there. And that sort of maybe think about what the likely or possible time line for development might be. Sorry, what was that? A question around time lines for development, Terry. Given that you've got reasonably limited runway with stockpiles and in-pit ore at Mako, is there any risk that this thing can't be permitted, relocation completed and everything associated with opening that up in time? And would there be any risk of stoppage in order to allow that?

[Terence Holohan, executive]

Reg, there is a village there. We are working very, very closely with that village. 10% of the people do actually work on the mine. So they've got a vested interest. That's why they've allowed us to drill virtually in their backyards right next to the houses there. We've got a good relationship with them. They're very enthusiastic. We've got local politicians. We've got politicians in Dakar, very excited about. Everybody sees the need for it in the country. I think on permitting, as you know, in Africa, you tend to get permits very quickly. The government has gone into cabinet elections now for 4 weeks. So while we were looking to post our ESIA in December, I would suggest it will now be Q1. So we think that there could be delays more because it's a change in government than anything else. We do have very good relations with the environmental department there. But moving a village is always quite tricky. I've done 3 of those, and we've hired the people that were involved with the previous village removal in the country. We've got a high road and low road there, but I would suggest that we've got 2.5 years of stockpile. It will be moved in that time frame. And there is a potential chance of starting in one side of it where we can actually -- because we don't have to blast, we can actually -- and it's viable material, we can actually free dig some of it. So we think we've got options, but we're trying to pull it all together as we speak. The engineers are working flat out on it as we speak there. We all went to -- I took the whole Board to have a look at it last weekend, and they got a great view of it. We also looked at the other operation, Bantako. And it's early days there, but we believe that, that could come in to fill a gap. We think, ultimately, my personal view is that I think Bantako is possibly the larger pit, but needs a lot more work. But if we could delineate 200,000 ounces that quickly where there's no village, then we could sort of lift that and put it in the gap if there's a gap going to be there. So we've got plenty of options. As I've said, the Tombo is a mine, and you can see that it's going to happen. We want to have that other option Bantako, but we're just a bit behind on the drilling at the moment for lots of reasons because of all the focus on Tombo. But certainly, I don't think the mill will stop. I think that's a key thing. The mill will keep going, but the mining will have a gap. And that's not always a bad thing. It gives you an option to renegotiate your rates, et cetera.

[Operator]

[Operator Instructions] And our next question comes from the line of Cody Hayden from Berenberg.

[Cody Hayden, analyst]

Just a quick 1 from me, and it kind of relates to some of the comments and themes of some of the questions earlier, but there has been some ongoing debate in the press between select miners and the Mali government. And I was wondering if you could just maybe share your views on the situation in country and if you do see any kind of near-term risk aside from like the rise in tax you talked about previously.

[Christopher Eger, executive]

Sorry, it's Chris here. Do you mind repeating your question? The line was not great. I think I heard you were asking about the environment in Mali, but was it a specific area around that point?

[Cody Hayden, analyst]

Apologies. Can you hear me now better?

[Christopher Eger, executive]

A little bit. Yes.

[Cody Hayden, analyst]

Okay. Sorry for that. Yes, just kind of looking at, there's been some ongoing debate in the press between select miners and Mali government. I was just wondering if you could maybe share your views on the situation in country and if you do see any kind of near-term risks aside from the rise in the tax audit that you previously discussed about during this call.

[Terence Holohan, executive]

I think, first of all, from a security point of view, we don't have any concerns. I was there a couple of weeks ago. I'm going in there again next week into Bantako. Security risk, I think there was one activity that happened a couple of weeks ago, and I think that caught everybody by surprise. I can tell you that won't happen again in the city. Where we are down in the sort of very close to the Cote d'Ivoire border, very, very quiet. We just continue as normal. I think in terms of the -- what's happening in Mali from a government perspective, we all know there's a lot of mining companies. They've got their mining codes that are coming to the end of life. There's a lot of negotiations happening there. It's not affecting us at this stage. So we've got our mining code in place, and that's expiring in '29 at this stage.

[Operator]

Your next question comes from the line of Andrew Bowler from Macquarie.

[Andrew Bowler, analyst]

Apologies if this has been asked because I dropped out halfway through the answer to Reg's question. But just for clarity, I think Reg was asking about timing. Just could you give us an indication of how long you expect stockpiles to last? The current macro stockpiles, obviously, you've got 6 months of -- a bit over 6 months of mining to go there as well.

[Terence Holohan, executive]

Yes, we've got 6 months of mining. We're going to finish mining mid next year just before the rain starts. That's all in train at this stage. And then we'll have 2.5 years of stockpiles. So we've got quite a bit of material there. And the major comment I said to Reg one way or another, we do not see that mill stopping because we've got the Tombo, which it could delay. We might be able to start in one area while we're relocating the village, et cetera, but we also expect to bring Bantako on track, but it's very early days in the information coming from Bantako at this stage.

[Andrew Bowler, analyst]

Copy that. And just 1 more on Tombo. I mean, obviously, you've provided 2 different resource estimates, one at a 1 gram cutoff and the other at a 0.5 gram cutoff. Am I reading too much into the sort of grade expectations of that project given that you're quoting the sort of the 1 gram cutoff resource a little bit more frequently in your announcements, for example, in your presentation. Is that the sort of -- is that the resource you're likely to go forward in terms of generating reserves?

[Terence Holohan, executive]

That's sort of the 1 gram cutoff. That's been a bit conservative. As you know, in the Mako pit now, given it's an ongoing exercise, we're down at 0.7. I would suggest that the grade there, obviously, depending on gold price and where we see going forward would be somewhere around 0.7 is probably the right number.

[Operator]

The next question comes from the line of Justin Chan from SCP Resource Finance.

[Justin Chan, analyst]

Just on the exploration project, maybe could you go into what you think ounce potential and concept is at Mansala in Guinea? And then the line you just picked up in Cote d'Ivoire, maybe if you could just tell us what you're hoping to find there in terms of -- and maybe just what the kind of area geology is? Should we look for a number of pits similar to something like [80] or kind of like one big pit? Just curious what the geology is like.

[Terence Holohan, executive]

I think we'll start with Cote d'Ivoire. I mean this is a project that our geologists got very excited about a couple of years ago. Very little drilling has been done since then. They delineated 400,000 ounces. The grades look good. The area is large. It's all on Greenstone Belt there on the Birimian. So obviously, we're looking to find that initially the 2 million ounce 2 gram a tonne sort of size, but it's far too early to say whether we're going to get that. We're just pleased to be back in that area. It's the right ZIP code. It's the right country. So we're hoping to find something there fairly quickly, but we're also looking at other stuff in Cote d'Ivoire. And I think that's the same thing in Guinea. I mean, Guinea, it's a new province for all of us. Again, we're on great gold belts that have been underexplored. We put that first ore body out. We did some geophysics, and we know that it's extending, it's bifurcating north. So there's a lot of upside potential we think in Guinea. It's just we stopped that work over this last quarter. The rains were pretty heavy there. So we relocated people back to Tombo to actually drive that project a bit stronger. But we're just getting to the stage now where our geologists are remobilizing back to Guinea as well. I'm excited about both areas.

[Justin Chan, analyst]

Got you. And I guess in terms of exploration timing, do you expect to do very -- will either of these projects see much drilling over the next year or given your needs in Senegal, is it more of a slow burn?

[Terence Holohan, executive]

Sorry, I missed that. Chris?

[Christopher Eger, executive]

Yes, Justin, I think I can answer that one. No, I think look, the plan is to really ramp up the development of both those projects next year. One of the areas of additional capital spend next year will be in exploration. Like I said, this year, we spent $20 million. We're looking to do much more next year, but obviously, we'll come out with proper guidance figures in the next couple of months around those points. But we are very excited about both those projects. And yes, we're going to spend some money on it to develop it.

[Terence Holohan, executive]

I think the key thing is in Q1 next year as a Board, we want to be able to make an investment decision in Senegal and Tombo. We really want to keep the foot flat on that because it is a mine. It is going to happen at some stage. So we'd rather want it early than later.

[Justin Chan, analyst]

Got you. And maybe just one last one on kind of capital planning. You've got a strong balance sheet now. I know kind of the next project is probably weighs on your expectations. But any thought towards a buyback or a dividend plan? Maybe where are you and the Board thinking lies on that?

[Christopher Eger, executive]

Yes, Justin, I think, look, it's a real possibility with regards to the cash flow generation. We are in the midst of doing our budget for next year, reviewing the various projects. Obviously, we just talked about additional capital spend for exploration. We're also looking at what else can be done at Syama. We're also obviously navigating difficult governments these days. So there's quite a few factors on the table that we have to think about before we make an affirmative sort of decision on buybacks, dividends, et cetera. But it's not lost to us. So it's definitely something that we talk about. And like I said, in the probably next few months, we'll come out with a more affirmative sort of statement on capital allocation and our strategy around what we do with our money.

[Operator]

We have no further questions on the line. So I will now hand over to [Scott] for some webcast questions.

[Unknown Executive]

Thanks very much for handing over to me. We've got no questions on the webcast at the moment. So Terry, back to you for any closing remarks.

[Terence Holohan, executive]

Thank you very much, everybody. Thanks again for attending. And just to repeat, if you look at our focus right now, it's expansion at Syama, extension at Mako and exploration. We've got 4 flags on the sheet now. We're looking where is #5. Thank you very much.