Automated mine pioneer looks set to be a winner

RESOLUTE Mining joined the London market just two months ago, but the firm has been operating in Australia for 30 years, during which time it has mined more than 8 million ounces of gold.

Despite this strong performance, shareholder returns have frequently disappointed. Now chief executive John Welborn is hoping to change that dynamic, creating a mining company that both produces plenty of gold and creates value for investors. The strategy sounds almost stupidly simple, but it is woefully rare in the mining world.

Welborn is doing well so far. When he was appointed four years ago, the business was drifting and the share price in Australia was the equivalent of 18p. Today, the stock is 99p and the group is on track to produce 490 ounces of gold from three mines – in Mali, Senegal and Queensland.

The site in Mali – Syama – is especially noteworthy. It is the world’s first fully automated underground mine so it is safer, more efficient and lower-cost than traditional mines.

The Senegalese site was acquired last month, to widespread approval from City brokers.

Looking ahead, Welborn is keen to buy more in Africa, creating a portfolio of about six mines. Talks are underway but Resolute intends to be patient and highly selective, only doing deals that will genuinely boost shareholder returns.

Profits are expected to more than double this year to more than £150 million and Resolute pays a dividend too, with 1.6p forecast for this year, rising to 2.8p in 2020.