Consensus community valuation
29-June-2022: We have three main gold producers on the ASX whose gold mines are located in West Africa, Perseus Mining (PRU), Resolute Mining (RSG) and Firefinch (FFX). I have avoided all three due to the West African exposure, even though PRU has actually done very well. RSG has been a basket case, and FFX is turning into one.
Firefinch called for a trading halt before the market opened on Wednesday (June 27th) and today they turned that into a voluntary suspension of trading, with a further announcement now due on Monday morning, if not before, although that could conceivable be pushed out again, as it was today.
Firefinch appear to be in a world of pain over in Mali. After very recently spinning out (divesting) their Mali Lithium assets into a new company called Leo Lithium (LLL), Firefinch is now 100% focused on gold, with their Morila gold mine being their flagship asset, and their only producing mine. However, things are not going well at Morila it seems.
Today they announced that their MD had left, "By mutual agreement" (see here: Firefinch-Executive-Changes.PDF) and that comes after they announced yesterday that their latest two directors (Ms Liz Wall and Ms Naomi Scott) had both quit the company, effective from the previous day (Wednesday), after just 20 days in the job (appointed 07-June-2022, resigned 27-June-2022). (Resignation-of-Non-Executive-Directors.PDF)
And armed thugs have been killing innocent civilians (many being "executed" in cold blood) as well as UN Peacekeepers (via IEDs, i.e. roadside bombs) in Mali - see here: More than 100 civilians killed in Mali attacks: Gov’t | Al-Qaeda News | Al Jazeera
Map of Mali, West Africa.
Firefinch's Morila gold mine is located in Sikasso, about 280km south-east of Bamako (the Mali capital). The most recent killings have been in Mopti, but the murders (for which the Macina Katiba of Amadou Kouffa, an organization affiliated with al-Qaeda is thought to be responsible) has spread down from the north and where they will strike next is unknown and hard to predict.
All of FFX's assets are in Mali. There is plenty of sovereign risk there.
Further Reading: Morila Gold Mine, Mali, West Africa (mining-technology.com)
and Morila Gold Mine – Firefinch Limited (firefinchltd.com)
From that link above (from firefinchltd.com):
Firefinch has an 80% interest in the Morila Gold Mine. The Morila Gold Mine is one the world’s great open pit gold mines, having produced over 7.5Moz of gold since 2000 at grades that were among the highest in the world, earning it the moniker “Morila the Gorilla”.
Firefinch acquired Morila for just US$28.9m in late 2020 with the strategic intent to rapidly increase production; initially targeting 70-90kozpa of gold from a combination of satellite pits, stocks and tailings. Thereafter, growing production to 100kozpa of gold in 2022 by mining the Morila Super Pit and ramping up to be a 200kozpa gold producer by 2024. Morila’s current Global Resource is 2.43 million ounces of gold.
Morila’s geological limits have not been tested. Exploration is therefore a major focus at the existing deposits, with multiple high-priority targets on the 620km2 of surrounding tenure.
Morila Super Pit signals a return to its high-grade heyday delivering 10.5 metres at 30.4g/t gold from the first diamond hole (MRD0001).
KEY ADVANTAGES
- World Class: Cash generating asset
- Producing Gold Now: Targeting annualised production of 100koz in 2022
- Leverage Sunk Capital: US$300 million plus to replicate infrastructure and drilling
- Near Term Production Growth: Mining of satellite pits. Mining operations commenced at N’Tiola deposit on 31 March 2022: the fourth mining area opened by Firefinch
- Long Mine Life Possible: : Morila’s current Global Resource is 2.5Moz of gold (Indicated: 27.4Mt at 1.49g/t gold for 1.3Moz and Inferred: 23.2Mt at 1.56g/t gold for 1.2Moz)
- Excellent Exploration Upside: A decade since last major drilling effort at Morila and adjacent targets. Morila Super Pit signals a return to its high-grade heyday delivering 10.5 metres at 30.4g/t gold from first diamond hole (MRD0001); New high grade eastern zone identified 5 metres at 30.3g/t gold incl. 1 metre at 128g/t
- Funded: Funded through to positive cashflow in H1/2023
- Experienced Team: : Full operating team in place. 99% of the 2,200 strong workforce are Malian.
See website for more. It's a BIG operation. 2,200 workers. Annualised production target of 100 thousand ounces (100koz) in 2022, guidance that I'm sure is about to be reduced. But it's in Mali. Huge risks.
2019: Mali’s Morila gold mine: “not everything glitters” | Joan Baxter
I hope this works out OK for all who hold, but I fear, based on my experience to date, that it's going to be bad.
Firefinch went into a trading halt yesterday pending release of an operational update. Today they announced the resignation of two directors - both of who started less than a month ago. I'm sure its all fine...
[Not held]
