The Morila mine in Mali
The recapitalisation plan that Australia-based Firefinch unveiled last week to put its Morila gold mine, in Mali, back on track has hit a speed bump.
The ASX-listed company on Monday cancelled its proposed placement, citing recent downward movements in the US dollar gold price and the Australian dollar/US dollar exchange rate,
In a statement, Firefinch said its board of directors had determined it not appropriate to complete the proposed placement, which formed part of a broader recapitalisation package.
The recapitalisation includes a proposed A$90-million capital raise, a new agreement with mining services contractor MEIM to convert $23.4-million of outstanding debt into new shares in the company, reducing outstanding debts and strengthening the balance sheet by negotiating settlements with other trade creditors for the conversion of at least $4.89-million of outstanding debt into new shares, and a non-underwritten share purchase plan to raise a further A$10-million.The company says it is now in consultation with the joint lead managers to the placement to consider alternative funding options.
Firefinch will be undertaking further assessment of its funding requirements to successfully execute its medium-term production plan.
The recapitalisation package will have provided the miner with the funds necessary to continue the Morila production ramp up under the company’s Stage 1 and Stage 2 production plan through to 2024.
Firefinch last week set a production target of 180 000 oz for the 18-month period to March 2024, based on the current mineral resources at Morila.
The new mid-term production plan envisages a target production rate of 30 000 oz of gold per quarter on average for the 18-month period via the processing of 4.17-million tonnes of ore at an average grade of 1.54 g/t gold and at a rate of 700 000 t a quarter.
The all-in sustaining cost over the 18-month period is forecast to be between $1 425/oz and $1 475/oz. The project is anticipated to be cashflow positive in the fourth quarter of 2023.