ACN 097 088 689 01 DEFINITIVE FEASIBILITY STUDY SUPPORTS A MAJOR EXPANSION OF THE SYAMA GOLD MINE Definitive Feasibility Study completed for multifaceted expansion of Syama operation confirms its technical and economic viability The Study investigated an expansion of the current Syama sulphide open pit and establishment of a parallel 1Mtpa oxide processing circuit Total Proved and Probable Reserves at Syama will increase to 3.68Moz of gold including 557,000oz of oxide material An expansion of the open pit will extend the project life to 15 years with potential for further extensions through an underground operation Post expansion annual production is estimated to average 270,000oz at cash costs of US$720/oz over the first nine years of operations Life of Mine Pre-Tax Net Cash Flow for expansion estimated at US$1,902M with payback period less than 30 months at US$1,650/oz gold price Initial Capital for the expansion is estimated at US$241M including the oxide plant, additional infrastructure, pre-production mining costs and construction of the High Voltage Grid Power Interconnection Potential for numerous further improvements in expansion economics from various areas including; operating cost reductions from further optimisation of mine design, metallurgical/processing enhancements and likely future additions to Resources/Reserves Prompt consideration by the Resolute Board could see the project completed as early as June quarter 2014 Commenting on the DFS outcome Resolute Chief Executive Officer Peter Sullivan said: The extremely robust results of the expansion DFS confirm Syama as a highly profitable, long-life operation. We look forward to presenting the Board with this compelling and fully funded growth option for consideration later this month, Mr Sullivan said. The information in this report that relates to the Mineral Resources and Ore Reserves is based on information compiled by Mr Richard Bray who is a Registered Professional Geologist with the Australian Institute of Geoscientists and Mr Iain Wearing, a member of The Australian Institute of Mining and Metallurgy. Mr Richard Bray has more than 5 years experience relevant to the styles of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Person, as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Richard Bray is a full time employee of the Resolute Mining Limited Group and has consented to the inclusion of the matters in this report based on their information in the form and context in which it appears.
02 Resolute Mining Limited (ASX:RSG) ( Resolute ) is pleased to provide the details of the Definitive Feasibility Study for the expansion of its flagship Syama Mining Gold Operation in Mali, West Africa. The Syama Expansion Definitive Feasibility Study (DFS), which was managed on behalf of Resolute by GR Engineering Services ( GRES ), considered two major elements: 1. Establishment of a new parallel 1Mtpa oxide processing circuit, and 2. Infrastructure upgrades required to support the oxide processing plant and the expansion of the Syama open pit to maintain current levels of gold production from the existing sulphide processing operations for the next 10+ years. Addition of Oxide Circuit Resolute s 675km 2 landholding surrounding Syama contains substantial near surface Oxide Gold Resources with excellent potential to expand the existing inventory with future exploration. Infill drilling north and south of the Syama mine has led to the completion of a number of new pit designs and Oxide Ore Reserves which total 8Mt grading 2.2g/t Au for 557,000oz (Table 1 and Figure 1). OXIDE ORE RESERVE INVENTORY Tonnes Grade(g/t) Ounces Gold SYAMA Probable (Stockpile) 1,400,000 1.2 54,000 A21 Proven 916,000 2.2 64,000 Probable 2,273,000 2.2 157,000 Alpha Proven 14,000 1.4 600 Probable 204,000 1.7 11,000 Beta Proven 131,000 2.3 10,000 Probable 555,000 2.4 43,000 Tabakoroni Proven 993,000 2.8 89,000 Probable 1,521,000 2.6 128,000 TOTAL OXIDE RESERVES (Proven +Probable) 8,007,000 2.2 557,000 Table 1 Oxide Ore Reserve Inventory The ore reserves support the establishment of a new parallel oxide circuit incorporating a single stage jaw crusher and SAG mill designed to process a nameplate 1Mtpa of oxide ore. This conventional CIL plant would be commissioned in the June quarter 2014 and deliver approximately 65,000oz per annum for an estimated eight year mine life at average cash costs of US$575/oz. Start-up capital of US$123.1M (Table 2) will be required to establish the oxide circuit including US$23.5M for pre-strip mining costs. The DFS has estimated the project will generate pre-tax net cash flow of US$394M assuming a gold price of US$1,650/oz which equates to a payback period of 2.4 years.
03 OXIDE AREA Table 2 Oxide Circuit Capital Costs Total US$M TREATMENT/ INFRASTRUCTURE 60.4 PRE-STRIP MINING COSTS 23.5 OWNERS COSTS/ EPCM 31.3 CONTINGENCY 7.9 TOTAL 123.1 Syama Pit Expansion The results of the DFS confirm Resolute s view that significant value can be created through the expansion of the existing sulphide open pit, extending Syama s life to 15 years and capturing additional ounces. An updated mine design and schedule was completed for a proposed cut back and deepening of the Syama open pit in 2012. Under the proposed expansion the current Syama open cut will be deepened to an overall depth of 400m in two further stages (Figure 2) with an overall strip ratio of 8.9:1 : Stage 2; 110mRL to 70mRL Stage 3; 70mRL to 0m RL Figure 2. Proposed Syama Pit Expansion and Underground Potential
04 This will increase the sulphide ore reserves to 33.6Mt at an average grade of 2.9 g/t and extend the operations life to 15 years. In order to optimise the mine s future development and maximise reserve recoveries, the existing refractory crushing circuit located on the north-eastern side of the pit needs to be replaced outside of the pit development exclusion zone. The capital costs for a new three stage crushing circuit, related infrastructure works, establishment of mining infrastructure and fleet mobilisation for the pit development and associated owners costs is estimated at $55.3 million (Table 3). SULPHIDE AREA Total US$M SULPHIDE CRUSHING 17.7 INFRASTRUCTURE 11.5 MINING 12.4 OWNERS COSTS 7.0 CONTINGENCY 6.7 Table 3. Syama Pit Expansion Capital Costs TOTAL 55.3 This investment will deliver an additional 21.6Mt grading 2.7g/t Au for 1.88Moz above the original Stage 1 pit design. As a result the open cut alone will produce on average 210,000oz per annum for the next ten years at cash costs of US$811/oz. Table 4 provides details of the sulphide ore reserves. SULPHIDE ORE RESERVE INVENTORY Tonnes Grade Oz Gold SYAMA Proved + Probable 31,294,000 2.9 2,907,000 A21 Proved + Probable 617,000 3.1 60,000 Alpha Proved + Probable 877,000 2.2 63,000 Beta Proved + Probable 222,000 1.7 12,000 Tabakoroni Proved + Probable 642,000 3.8 79,000 TOTAL SULPHIDE (Proved +Probable) 33,652,000 2.9 3,121,000 Table 4. Sulphide Ore Reserve Inventory Other Key Syama Project Infrastructure The High Voltage Grid Interconnection from Sikasso to Syama will replace onsite diesel power generation and significantly lower cash costs. Operating cost savings using conservative tariff assumptions, are estimated to be in the order of US$75/oz. This equates to a payback period of less than 30 months. A significant amount of the water required for the Syama operation is delivered by a pipeline from the Bagoe River in accordance with the conditions of a water permit negotiated with the State of Mali. This pipeline, built in the early 1990s by BHP, will not meet forecast requirements because of its relatively small diameter and poor condition in some sections. To meet forecast requirements a new purpose built pipeline will be installed.
05 OTHER AREA Total US$M BAGOE PIPELINE 13.6 POWERLINE 48.9 TOTAL 62.5 Additional Opportunities Table 5 Other Infrastructure Capital Costs A number of opportunities exist to enhance the already robust economics of the proposed expansion. Resolute intends to explore the full range of opportunities including: A significant decrease in mining costs through refinements to the DFS mine design and scheduling of the expanded Syama pit High potential for further oxide and sulphide discoveries within the 70km strike extent of the Company s permits surrounding Syama Potential to produce additional gold from the oxide circuit by exceeding the conservative oxide milling schedules incorporated in the DFS Potential to lower processing costs and improve sulphide ore recoveries by replacing the sulphide crushing circuit, upgrading the floatation plant and further debottlenecking of the circuit Potential for down-dip extensions to support a future underground operation with previous drill intersections of 105m @ 3.65g/t Au and 140m @ 3.43g/t Au within and below the expanded pit Future Goals The Resolute Board will meet before the end of the June quarter to consider the results of the DFS and make a final decision on the Expansion. Figure 3. Syama Expansion Proposed Project Schedule Subject to Board approval Resolute will proceed with design engineering and procurement activities leading to construction and practical completion as early as the
06 June quarter 2014 (Figure 3). Orders for certain long-lead items of equipment including a SAG mill have already been placed. A new mining contract is proposed to be awarded in October 2012. Further details will be provided in due course. Resolute has the capacity to internally fund an expansion of Syama from its existing cash and bullion holdings (A$116 million at 31 March 2012) and future cash flows from its three existing operations. The proposed expansion has been designed to be executed without disrupting ongoing operations at Syama. The operation produced a record 41,823oz at an average cash cost of US$836/oz in the March quarter 2012. Resolute remains confident of breaking this record in the June quarter as plant reliability and throughput continue to improve. PETER SULLIVAN Chief Executive Officer About Resolute: Resolute is an unhedged gold miner with three operating mines in Africa and Australia. The Company is the second largest gold producer by volume listed on the ASX. Resolute is targeting an increase in production from its flagship Syama project in Mali to 250,000oz of gold a year after an extended ramp-up and commissioning period. Resolute is currently investigating a number of opportunities to add value by increasing gold production and lowering operating costs at Syama and its Ravenswood operations in Queensland. The Company controls an extensive footprint along the highly prospective Syama Shear and Greenstone Belts in Mali and Cote d Ivoire. Resolute has also identified a number of highly promising exploration targets at its Ravenswood operations and holds a number of exploration projects in Tanzania surrounding its Golden Pride mine.
07 Figure 1 Syama Deposits, Tenements and Simplified Geology