Resolute hit by rising costs, lower output in Mali and Senegal

West Africa-focused gold producer Resolute Mining (ASX: RSG) said on Thursday it anticipates reduced production and higher costs in 2025 as its Mako mine in Senegal nears depletion and fiscal changes in Mali drive up expenses.

The Australian miner has set its production guidance for the year at 275,000-300,000 ounces, with all-in sustaining costs (AISC) projected at $1,650-$1,750 per ounce. This marks a significant shift from 2024, when Resolute produced 340,000 ounces at an AISC of $1,476/oz, driven by output from its flagship Syama mine in Mali, which accounted for 216,000 ounces at $1,497/oz.

The company faced major setbacks in late 2024 after the military-controlled government in Mali imposed sweeping fiscal changes. In November, Resolute’s chief executive officer Terry Holohan, along with two other executives, was detained by Malian authorities amid a tax dispute. The executives were released about 10 days later after Resolute agreed to pay $160 million in tranches to settle the matter. Acting CEO Chris Eger said on Thursday that Holohan, who has been on leave since December, is expected to announce his future with the company by next week.

Resolute’s financial position has also been affected. Following the final payment of $30 million to Mali’s government in December, the company reported cash and gold holdings of only $101 million. 

The company disclosed that the agreement with Mali would add $250 per ounce to its AISC, reflecting the increased fiscal burden.

Resolute acting chief financial officer Dave Jackson attributed the cost per ounce rise to increased royalties (from 6% to 10%, amounting to $100 per ounce), a 4% foundation payment ($100 per ounce), and the loss of a fuel tax exemption.

West Africa squeeze

The Malian government, under military control since a 2021 coup, has pressured international miners, including Barrick Gold, B2Gold, Allied Gold, and AngloGold Ashanti, to contribute more under a mining code introduced in 2023. The code grants the government preference shares in mining projects and mandates an annual “foundation payment” to fund community development. 

Despite these challenges, Resolute remains focused on optimizing operations. In 2024, the company ramped up production at Syama and initiated the second phase of the mine’s development, which is expected to come online this year. 

The Malian government holds a 20% stake in the project, which processes approximately 2.4 million tons of ore annually. However, Resolute has delayed some planned investments, including a $100 million sulphide conversion project aimed at doubling processing capacity from 2.4 million tons per annum (Mtpa) to 4Mtpa.

“Mine sequencing at Syama has been optimized for near- and medium-term cash generation while the company assesses its longer-term capital plans,” Resolute said in a statement.

Beyond Mali, Resolute is giving priority to opportunities in Guinea and the Ivory Coast, while navigating the increasingly complex political environment in West Africa. The company stated that its priorities for 2025 include “creating value in Guinea and the Ivory Coast and actively managing an increasingly complicated political landscape.”

Shares in Resolute closed 3.6% lower on Thursday at 41 Australian cents, giving the company a market capitalization of A$862 million ($537 million). The share price has more than halved since October 2024, when the fiscal landscape in Mali began to deteriorate.