Interview with John Welborn, CEO of gold producer Resolute Mining (ASX/LSE: RSG)
Not sure Welborn answered too many of our questions, and machine gun fired off well trodden PR messages which suits his narrative. The share price is telling a different story, one of a company struggling to balance the books, and make a step change from large Junior to Mid-tier producer. The onset of autonomous mining may allow Resolute Mining to improve margins at Sayama, if things go according to plan, but we wait to see how the rest of the portfolio develops. That said Welborn demands a lot of himself and his team and we also look forward to seeing if he can deliver his vision of being the next Rand Gold.
Resolute Mining is an ASX/LSE listed dividend-paying (cash/gold) gold mining company with over 30-years of experience exploring, developing, and operating gold mines in Africa and Australia. Resolute Mining's gold projects have produced more than 8Moz of gold. The company owns 4 gold mines, 3 of which are in production.
Resolute Mining decided to complete a dual listing on the Main Market of the London Stock Exchange. Welborn said the move was intended to enhance Resolute Mining's growth pathway, with the vision of becoming a low-cost, long-life, 500,000oz per annum gold producer. Share price performance across both markets has been stagnant and somewhat disappointing, especially considering how good a year it has been for Resolute Mining's commodity of choice, gold. Resolute Mining has a market cap of AUS$1.04B. The share price started at AUD$1.15, rose to a peak of AUD$2.06 in August, before falling back down to today's price of AUD$1.16. On the LSE the share price started towards the end of June at £0.66, rose to a peak of £1.17 in August, before falling back down to £0.61 today.
Welborn cites one reason for this performance as general mining themes rather than independent company failings. He states there has been a general liquidity flow out of mining, which has affected gold prices towards the end of this year. However, Welborn is honest enough to admit a large part of the drop-off has been caused by "operational issues" at The Syama Complex in Malia, West Africa. In September, a crack in the plant's roaster affected production. Repair work is currently ongoing and the roaster should be operational by mid-December.
Resolute Mining is in the process of developing the world’s first custom-built, fully automated underground gold mine; it will have low-cost, large-scale capabilities, a mine life beyond 2032 and life-of-mine AISC of US$747 per ounce. This is exciting news for any prospective investor. Resolute Mining is a mining company that belongs in the future and is looking for new, innovative solutions to revolutionise conventional gold-mining systems. The primary driver of this decision is the economic benefit; a previously conducted PFS on a manually operated mine generated an AISC of US$881. There will be concerns from the market regarding Resolute Mining's level of experience in dealing with automation, but Welborn is insistent the company has done its research, and all equipment being employed has been used before across the gold mining world. Resolute Mining's experienced management team is backing themselves to be the first, and they are hoping we will appreciate their bravery and ambition by investing ourselves.
Welborn says he is pleased with the listing decision Resolute Mining made. He thinks it gets more eyes on the Resolute story, and that the London market appreciates the favourable mining jurisdiction of Africa more than most. The market doesn't look like it agrees as liquidity and volume of trading has deteriorated.
What did you make of John Welborn? Are automated gold mines the way to go? Does Resolute Mining have the know-how to pull this off? Comment below, and we may just ask your question in the near future.
00:00 - Introduction
1:01 - Company Overview
2:23, 17:42 - Growth Story and Business Plan: What Does Their Future Look Like?
6:51, 16:32 - Financing the Project: Who's Supporting Them? How Has Listing on the LSE Helped the Matter?
8:13 - Drop in Share Price: What's the Reason?
11:12 - Insight into Automation: Do They Know What They're Getting Themselves Into?
14:01 - Gold Prices and How They Affect Further Business Decisions
Company page: https://www.rml.com.au/
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