It’s been a slog for Terry Holohan, CEO of Resolute Mining. After two-and-a-half years of his leadership, shares in the Sydney-listed firm are only modestly higher compared to a 31% increase in the gold price.
Slim pickings for those shareholders who took their company’s name to heart and remained loyal.
They can, however, extract some comfort from Holohan, an enthusiastic miner who also seems to follow the advice of investment guru Warren Buffett which is to be unafraid of “burping at the table”. Holohan is critical of former management which has required a lot of ceaseless moil. Syama, Resolute’s flagship in Mali, was “mining in the wrong direction”, he says. Resolute’s other mine – Mako – was prepared for closure. Exploration work subsequently undertaken by Holohan’s team may have found 400,000 ounces in life extension. Given that Mako has only 18 months left of reserves, and contributes an all-in sustaining cost of $1,100-$1,200/oz compared to Syama’s $1,400-$1,500/oz, it’s critical that the Senegal mine remains in production.
A third step taken by Holohan is to finally tackle Resolute’s processing issues at Syama, sometimes with surprising results. As part of maintenance work at the mine’s roaster, Resolute rescued 22,000 oz of gold that had become trapped in bricks. “It was because that piece of equipment had been abused,” Holohan says. Meanwhile, 100,000 tons of gold-bearing slimes (grading at about 17g/t) are also to be extracted from Syama’s tailing dams. The remediation of processing equipment and the tailings project will help reduce another of Resolute’s long-standing problems which is its gold inventory – its cash lockup, effectively.
There have been many things to fix. The firm’s headquarters were relocated from Australia to London. The bullion dividend scheme – when dividends are eventually resumed – will be dispensed with in favour of actual money, he says. Promisingly, the company posted its first net cash position in the first quarter. Net debt was once $229m. Finally, the hedge book has been removed. The opportunity losses weren’t “too bad” in the end as most of the book had been closed prior to the $2,000-plus/oz gold price.
“We have had a lot of tough meetings with shareholders but we’ve managed to bring a lot of them online,” said Holohan in an interview in June. Perhaps his message is beginning to register because shares are 27% higher year-to-date. “We are telling everybody that significant cash flow will start from the second quarter, so people are anticipating it now.”
Crucially, Holohan is expanding Syama via a $52m refit of its processing facilities to process sulphides. He is chasing a production forecast of 345,000 to 365,000 oz (from 331,000 oz last year). If there’s one thing Resolute has consistently failed to do in the past, it’s meet its promises. Longer term, Holohan is targeting 400,000 oz/year – and even to half a million oz annually – if an drilling prospect in Guinea works out.
Resolute is also fishing for M&A. “We’ve been laughed at a few times,” Holohan says of various undisclosed pitches for assets in West Africa. “As you know the explorers are desperate for cash at the moment. They are finding it hard so we think we’re in a good position, not only to grow organically but to look at the inorganic growth as well,” he says.
Holohan joined Resolute in 2021 as its chief operating officer. He was appointed CEO about a year later. Prior to Resolute he worked in a number of company wheelhouses, many in South Africa including Gencor, Impala Platinum (once a Gencor company), and its rival Anglo American. He’s also worked with Robert Friedland at Ivanhoe Mines. After 40 years in the industry Resolute is his first as boss of a listed company. It could be a crowning achievement.