Resolute Mining has begun construction of a major expansion of its flagship Syama gold mine in Mali, including an expansion of the existing sulphide open pit and establishment of a parallel 1-million mt/y oxide processing circuit. The expansion will increase average annual production at Syama to 270,000 oz/y at cash costs of $720/oz over the first nine years of operation and will extend Syama’s mine life to 15 years.

                Syama produced 85,362 oz of gold during its 2011 fiscal year ended June 30, 2011, and 102,932 oz during the nine months to March 31, 2012.

                Initial capital for the Syama expansion is estimated at $241 million, including the oxide plant, additional infrastructure, pre-production mining costs, and construction of a power grid connection to replace current on-site diesel power generation. The project will be fully funded from current Resolute cash and bullion holdings and future cash flows and could be completed as early as the second quarter of 2014.

                As of early July 2012, negotiations were in progress for the awarding of an EPCM contract for the Syama expansion. Orders for major items of equipment were to be placed over the next four months, and work on the demolition of redundant equipment was scheduled for later in the quarter. Building of the new construction camp began in early July. A new mining contract was under negotiation, with an expanded mining fleet expected to be in place to increase mining rates later in 2012.

                Resolute’s announcement of the expansion at Syama followed by about a month the company’s report of the details of the definitive feasibility study (DFS) for the expansion. The DFS includes an updated mine design and schedule for a proposed cutback and deepening of the existing Syama sulphide open-pit, with the pit to be deepened to an overall depth of 400 m in two further stages at an overall strip ratio of 8.9:1. The deepening will increase the project’s sulphide ore reserves to 33.6 million mt at an average grade of 2.9 g/mt.

                The Syama oxide project is based on drilling north and south of the current mine that has identified oxide ore reserves totaling 8 million mt, grading 2.2 g/mt gold and containing 557,000 oz of gold. A number of pits have been designed to extract these reserves. The DFS calls for construction of a 1-million-mt/y oxide circuit incorporating a single-stage jaw crusher, SAG mill, and conventional CIL plant. The plant could be commissioned in the second quarter of 2014 and deliver approximately 65,000 oz/y of gold over an estimated eight-year mine life at average cash costs of $575/oz.