The Firefinch Ltd (ASX: FFX) share price won't be returning to trade on Monday.
This morning the struggling gold miner requested that its suspension continue until the end of July.
What's going on with the Firefinch share price?
The Firefinch share price was halted and then suspended originally while it prepared to release an update on the operational performance and production guidance of the Morila Gold Project in Mali.
However, with that now released, the company has requested that its suspension continue while it seeks to finalise funding.
Management notes that this funding is being designed to place the company in a more robust and sustainable working capital position. It will also support the capital investment required to take the operations to a long term sustainable and profitable operation of scale.
Operational update
In respect to its operational update, things have not been going well for the company and its Morila Gold Project. The release reveals that gold production during the June quarter was estimated to be 13,300 ounces. This compares to guidance of 17,000 ounces to 20,000 ounces.
Management advised that this has been driven largely by poor equipment availability, which has been exacerbated by the delayed delivery of additional mining equipment. This delay is a result of sanctions imposed on the State of Mali restricting the movement of goods.
Unfortunately, this also means that its production ramp up is behind schedule and its calendar year guidance has been withdrawn.
Costs rising
But it gets worse. Firefinch has experienced significant cost pressures in the last quarter. This has included material increases in diesel prices, the cost of explosives, and other consumables
Management is hoping to offset this by creating a new mine plan to target 8,000 to 9,000 ounces of gold production per month in the short term. The company is also cutting costs by reducing its board and putting capital projects on hold. Combined, this is expected to move the operation to positive operating cashflow.
But in order to achieve its goals, it expects to require funding via a capital raising. Firefinch is currently in the process of determining how much it will require and the structure of this capital raising.
Management commentary
Firefinch's executive chairman, Dr Alistair Cowden, remains positive on the company's longer term outlook. He 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.
