Firefinch accelerates new mine plan for Morila Gold Mine in Mali

“Morila is a world-class gold deposit with extensive operational infrastructure and which has produced over 7.5 million ounces of gold and has a current resource
of 2.5 million ounces,” said chairman Alistair Cowden.

Firefinch Ltd (ASX:FFX) is setting the stage for an immediate improvement in gold production after implementing significant changes to its mine plan at the Morila Gold Project in Mali.

As part of the changes, the company undertook cost-saving initiatives and enhanced financial controls as a measure to improve cash flow at the project.

A review of operations, mine plan and schedule and capital and operational expenditures are well underway with an upgrade to Morila's resource and reserve estimates anticipated during the current quarter.

Looking ahead, the updated resource and reserve estimate will feed into a new mine plan, production and cost outlook and forward capital requirements.

“Pivot in mining strategy”

Firefinch executive chairman Dr Alistair Cowden said: “A confluence of events, including cost inflation, ECOWAS sanctions and contractor performance has resulted in underperformance at Morila.

“The board has acted decisively to address this with management changes, cost cutting, a pivot in the mining strategy and the acceleration of a new mine plan to inform the way ahead.

“I also want to make it clear that the orebody has not underperformed, rather production has not ramped up as fast and as cost effectively as planned.

“Morila is a world-class gold deposit with extensive operational infrastructure, and which has produced over 7.5 million ounces of gold and has a current resource of 2.5 million ounces

“This asset, together with our stake in Leo Lithium, provides a solid underpinning to the company.”

Immediate actions

Combined, these factors have led to a reduction in Firefinch’s working capital position, prompting the following actions to increase gold production and improve cashflow:

• Mining (largely pre-stripping) at the N’Tiola Satellite pit will cease after the extraction of available ore on the pit floor.
• The N’Tiola mining fleet is being relocated to the Viper pit and mining equipment from Viper has been relocated to the Morila Super Pit resulting in a single mining contractor and larger fleet at each site.
• A new mine plan is being designed to target 8,000-9,000 ounces of gold production per month in the short term and to move the operation to positive operating cash flow.
• Capital projects, including tailings repatriation, tailings dam construction and exploration drilling have been put on hold in the short term.
• A comprehensive plan for immediate cost saving at Morila is being implemented.
• A new regime of financial and operational controls has been instigated at Morila to ensure strict cost and commitment control.
• The company has resumed offsetting its royalty and certain tax payments against its VAT credit.
• Experienced operational and financial managers have been appointed to key roles at Morila to bolster the existing team and drive the planned ramp-up in production.
• The board has been reduced in size with two recent appointments resigning and Dr Michael Anderson leaving by mutual agreement. Andrew Taplin has been appointed acting chief executive officer and Dr Alistair Cowden as executive chairman.

Forward plan

Firefinch will provide updated production guidance when the review is completed.

New mining equipment is arriving at the site and the company has been advised that more equipment is en route,

A material improvement in mining productivity is expected to follow and material movements have already improved since the mining fleet at the Morila Super Pit was expanded.

In the September quarter, the company expects to release the following updates:

• Recent drilling results.
• Updated near-term production plan.
• A likely material upgrade to the Morila resource estimate incorporating almost 40,000 metres of drilling over the last nine months.
• An update to ore reserve estimates based on the new resource estimate.
• A new Life of Mine Plan, production schedules and mining strategy including bringing forward underground mining in the mine plan.
• A capital investment profile is required to continue to expand production to a long-term sustainable and profitable operation.