Firefinch unveils Morila woes

Firefinch says a review into its Mali operations is underway after withdrawing production guidance entirely citing sanctions in West Africa and swelling cost pressures. 

The gold producer outlined a string of issues facing its flagship Morila gold mine in Mali to investors via an ASX release this morning after spending over a week in a trading halt ahead of a looming operational update.

That week saw the resignation of its managing director Michael Anderson and two non-executive directors, who all made abrupt exits from the business prior to today’s announcement.

In a statement, Firefinch said production from its flagship Mali asset for the June quarter would total 13,300 ounces compared to a 17,000 ounces to 20,000 ounces range it had anticipated.

Further, it said that previous full year production guidance estimates had been withdrawn and would be provided when available following a review.

Firefinch said the underperformance was largely in part due to low equipment availability stemming from Economic Community of West African States sanctions imposed on Mali.

This had in turn put production ramp-up behind schedule.

The company also pointed to significant cost pressures that had driven up diesel prices and explosives costs.

Firefinch said it had approximately $35.8 million in cash and was in discussion with a number of parties to “address the company’s current working capital position.”

Firefinch chair Alistair Cowden said his board had acted decisively to address problems at Morila.

“A confluence of events, including cost inflation, ECOWAS sanctions and contractor performance has resulted in underperformance at Morila,” Mr Cowden said.

“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.”

Firefinch is still in a trading halt and last traded at 20 cents.