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ADU PReVIeW

Firefinch is facing production
and cost issues at its Morila
operation in Mali

Firefinch

under fire

irefinch Ltd’s growth plans hang by a dress this with management changes, cost cost effectively as planned,” he told the
Fthread after the company lost its man- cutting, a pivot in the mining strategy and market. “Morila is a world-class gold de-
aging director and two newly appointed di- the acceleration of a new mine plan to in- posit with extensive operational infrastruc-
rectors following a major production down- form the way ahead.” ture which has produced over 7.5 moz of
grade from its Morila gold mine in Mali. The underwhelming production figures gold and has a current resource of 2.5
The company caught the market by sur- for the June quarter came after the com- moz. This asset, together with our stake in
prise on June 27 when it requested a trad- pany posted 10,874oz in the March quarter Leo Lithium [Ltd], provides a solid under-
ing halt “in relation to an update regarding and 1,115oz in the December period, both pinning to the company.”
operational performance and production within guidance. The stake in Leo Lithium – spun out of
guidance” for Morila. A day later, newly ap- Speaking to Paydirt in May, Anderson the gold miner in June – was reduced on
pointed directors Liz Wall and Naomi Scott said the company was well aware of the July 5 when Firefinch sold 28.6m shares
stepped down and on June 29, manag- challenges of ramping up at Morila. at 45.5c/share to raise $12.9 million. The
ing director Michael Anderson departed “We are taking material movement tak- remaining 210.9 million shares it holds in
with only a single sentence from chairman ing that movement on a path from closure Leo are subject to escrow until June 2024.
Alistair Cowden thanking him for his ef- to going back up to 25 mtpa, including 4 The share price had already taken a hit
forts. mtpa of ore,” he said. “That’s a steep ramp as a consequence of the Leo spin-out,
By July 4, Cowden was announcing June up we’re meeting and doing it safely is the dropping from a high of $1.22 in early
quarter production of 13,300oz had fallen challenge. The intensity of that creates risk April to 20c at the time the trading halt was
short of the 17-20,000oz forecast due to in itself. called.
operational underperformance. It was “The June quarter is when we will start Redemption may come from a mix of the
Cowden’s last announcement as chairman to access the Morila ore and we are on the shovel and drill bit. The July 4 announce-
as he resigned from the position on July 11 brink of a significant ramp up in tonnes and ment included details about a change in
with the company still in suspension. ounces which we need if we are to hit our plans which will see mining in the N’Tiola
That underperformance was blamed on forecast 90,000oz for the calendar year.” satellite pit stopped with the mining fleet
poor equipment availability, itself a result It is now clear those levels were not being relocated to the Viper pit and the
of sanctions imposed on Mali by the Eco- reached, with contractor problems ac- existing equipment at Viper moved to the
nomic Community of West African States centuating the difficulties in getting equip- Morila Super Pit to ensure a single contrac-
(ECOWAS), restricting the movement of ment into a country which has been heavily tor at each site.
goods such as mining equipment and con- sanctioned as a result of a second blood- Firefinch is now targeting 8,000-9,000oz
sumables. less coup in the space of two years in May gold production a month and has post-
Financial performance was also ham- 2021. poned exploration and tailings construction
pered by the inflation being experienced Prior to his resignation, Cowden was projects to conserve cash.
throughout the mining sector and perfor- confident the former Barrick Gold Corp It said a new near-term production
mance of the Australian dollar. mine – picked up for just $26 million in plan would be released in the September
“A confluence of events, including cost 2020 – can deliver on Firefinch’s goal of quarter, as would an updated resource
inflation, ECOWAS sanctions and contrac- 200,000 ozpa production. and reserve statement, largely based on Alternatively, to present, exhibit or attend as a delegate
tor performance has resulted in underper- “I also want to make clear that the ore- 40,000m of drilling undertaken in 2022.
formance at Morila,” Cowden said on July body has not underperformed, rather pro- – Paydirt staff with Reuters please contact Angelique Julien directly
4. “The board has acted decisively to ad- duction has not ramped up as fast and as
on (+61) 8 9321 0355 or angelique@paydirt.com.au

Page 30 aUgUST 2022 aUSTRaLIa’S PaYDIRT