The Resolute Mining Limited (ASX: RSG) share price has come under pressure on Wednesday and is dropping lower.
At the time of writing, the gold miner's shares are down 1% to 97.5 cents.
This appears to have been driven by a sizeable pullback in the gold price overnight, which has offset a positive announcement.
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What did Resolute announce?
This morning Resolute Mining released an updated mineral resource estimate for the Tabakoroni underground deposit at its Syama operation in Mali.
According to the release, ongoing exploration success at Tabakoroni has enabled the completion of a Pre-Feasibility Study (PFS) to assess the potential for a new underground gold mine to augment gold production from the Syama Gold Mine.
This has led to the Tabakoroni mineral resource being upgraded to 7.4 million tonnes at 4.4 grams per tonne gold, with a 1.5 grams per tonne gold cut off for a total of 1.04 million ounces.
This is an increase of 22% over the previous estimate in April of last year.
Gold production is expected to average approximately 80,000 ounces per annum over an initial four-year mine life. The All-In Sustaining Cost (AISC) is calculated to be US$974 an ounce.
Strong future production potential.
The company's Managing Director and CEO, John Welborn, believes this study provides support for the its ambition of establishing underground operations at Tabakoroni. Operations of which he expects to enable total production from Syama to be sustained at approximately 250koz per annum going forward.
He commented: "Tabakoroni has been a highly successful Syama satellite open pit oxide mining operation for Resolute, producing approximately 400,000 ounces of gold over the past three years. We expect our ongoing exploration success and feasibility studies will confirm a future underground operation at Tabakoroni."
What now?
Resolute still has a lot of work ahead and will continue its exploration and evaluation of the Tabakoroni underground mine potential into 2021.
Until then, further details on its plans for the Syama operation will be published in an updated Syama Life-of-Mine plan. This is expected to be completed during the current quarter.
