Resolute Mining Limited (ASX:RSG) has signed definitive agreements for the sale of the Ravenswood Gold Mine in Queensland to a consortium comprising private equity manager EMR Capital and Golden Energy and Resources Ltd (SGX:AUE).
The sale proceeds of up to $300 million in cash will be received by Resolute comprising:
- $100 million of upfront value consisting of $50 million of cash and $50 million in promissory notes;
- up to $50 million linked to the average gold price over a four-year period (gold price contingent payment); and
- up to $150 million linked to the investment outcomes of Ravenswood for the EMR Fund (upside sharing payment).
EMR Capital, led by executive chairman Owen Hegarty and chief executive officer Jason Chang, is a specialist resource-focused private equity group with a track record of achievement as a developer and operator of Australian-based mining assets.
Golden Energy and Resources (GEAR) is an energy and resources company in Asia Pacific with producing coal assets in Indonesia and strategic stake investments in two ASX-listed mining companies.
No change to mine development plans
EMR Capital and GEAR are committed to progressing the Ravenswood Expansion Project with no immediate changes to Ravenswood Gold Mine employment or contract relationships, with current mine plan and development plans to continue.
The divestment provides strategic clarity and is consistent with Resolute’s ambition of being a low-cost multi-mine Africa-focused gold producer.
Importantly, the transaction terms maximise financial returns for Resolute from the Ravenswood Gold Mine with no future capital or funding requirements.
Completion of the transaction is targeted to occur prior to March 31 2020 subject to the satisfaction of conditions precedent (financial close).
Immediate cash and potential future upside
Resolute managing director and CEO John Welborn said: “The sale of our Ravenswood Gold Mine on the terms announced today provides the opportunity for exceptional value for Resolute shareholders.
“We have strengthened our balance sheet with a combination of immediate cash and the potential for future upside as well as removing the requirement of a large near-term capital investment.
“The divestment has strong strategic merit for Resolute.
“We have delivered on our objective of ensuring a new long-life future for Ravenswood under a world-class operator and can now focus our attention and energy on our African portfolio and the abundant opportunities our experience provides for further growth and value creation.
“The transaction delivers a fair share to all parties from the future value of the Ravenswood Expansion Project and effectively balances risk and reward.
Ravenswood expansion project to unlock value
“Our modelling at current gold prices demonstrates the expansion project at Ravenswood will be highly successful for EMR Capital and GEAR, and that the maximum value of A$300 million will be generated for Resolute.
“Ravenswood has been a consistent performer for Resolute for more than 15 years.
“Since acquisition in 2004, Resolute has mined and processed over 40 million tonnes of ore and produced almost two million ounces of gold.
“We are confident Resolute’s legacy, and the interests of all stakeholders in Ravenswood, will be protected and enhanced by the new consortium.”