As a mining professional and non-holder, here's my reaction to the first quarterly report, for what it's worth.
The first thing I'll note is the somewhat unusual language used around the reporting of the gold production for the quarter, and some of the apparent inconsistencies in the wordings.
The company said the mill production for the quarter was strongly positive against the ore reserve for fresh rock in areas unaffected by artisinal mining:
That's a lot to unpack in one sentence, but essentially what they are saying is that they produced more gold than predicted by the ore reserve in areas away from the artisanal workings.
But if you look at the average mill head grade for the quarter of 0.55 g/t, this is well below the probable ore reserve grade of 1.30 g/t quoted in the DFS. Granted, some of the ore reserve blocks will be above or below 1.30 g/t, which is the average, but to claim positive reconciliation against the ore reserve at a milled head grade of 0.55 g/t is an unusual claim imo, especially compared against the DFS parameters.
The fact that they also mention the artisanal workings could suggest they may not have been aware of the full extent of them.
Artisinal workings from surface and historic underground voids etc. are quite common. Because they represent a volume, usual practice is to deplete this volume from the Resource model so that you do not report a Mineral Resource for a portion of the model that has in fact already been mined (called depletion).
Depletion requires knowledge of the voids beforehand, usually from modern surveying methods or hardcopy records in older mines. Artisanal workings in Africa would be notoriously difficult to produce accurate records for, so it is conceivable that some Reserve blocks nearer surface that were assumed to be in-situ (i.e. not mined) could actually have already been depleted. This would obviously negatively impact the quarterly production.
This is purely speculation on my part, but it is a possibility nonetheless.
On the other hand, it is only one partial quarter of production, and as the open pit gets deeper the density of the shallower artisanal workings will reduce. In tandem with this, if there are other issues with the Resource model accuracy near surface, it may improve with depth also.
However, I would be keeping a very close eye on the milled head grade in the next quarter with the expectation that it MUST begin approaching parity with the ore reserve grade of 1.30 g/t. Another quarter of sub-1.0 g/t production would be a cause of definite concern.
