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- Resolute Mining (RSG) has locked in the $300 million sale of its Ravenswood Gold Mine
- Media speculation surfaced on Monday suggesting Resolute was planning on selling the mine off to EMR Capital
- Today, Resolute said EMR and mining company Golden Energy and Resources will be taking control of Ravenswood
- The $300 price tag, however, is subject to the four-year-average price of gold and other conditions
- Resolute said it expects the sale to be completed before the end of March
- Resolute shares have gained 1.88 per cent today, currently trading for $1.20 each
Confirming the media speculation from earlier this week, Resolute Mining (RSG) is selling off its Ravenswood Gold Mine to EMR Capital.
The Australian Financial Review (AFR) speculated on Monday that Resolute had been looking to divest the mine for quite some time, and EMR was closing in on the sale. Resolute confirmed the initial street talk yesterday, and today told shareholders the sale has been locked in.
EMR Capital and energy and mining company Golden Energy and Resources (GEAR) will be taking Ravenswood off Resolute’s hands.
The AFR suggested that though Resolute may be seeking $300 million for the mine, the asset is expected to trade for “considerably less”. Nevertheless, in Resolute’s announcement to the market today, it confirmed EMR and GEAR would be forking out the full $300 million for the mine.
However, the hefty sum is subject to certain conditions.
Resolute said EMR and GEAR have agreed to pay $100 million upfront for the mine, but the remaining $200 million is dependent on future gold prices, future gold production from Ravenswood, and investor outcomes from the mine for the EMR Fund.
More specifically, $50 million is linked to the average price of gold over the next four years, while the remaining $150 million is linked to the EMR investor outcomes.
As such, though Resolute is touting the $300 million price tag, the media speculation may have within it a hint of truth.
Still, Resolute Managing Director and CEO John Welborn said the Ravenswood sale 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,” John said.
“The divestment has strong strategic merit for Resolute,” he said.
John said the sale conditions effectively balance risk and reward. The company’s modelling at current gold prices, he said, suggests the maximum $300 million value is imminent.
“We are confident Resolute’s legacy, and the interests of all stakeholders in Ravenswood, will be protected and enhanced by the new consortium,” he said.
The sale is set to be completed before the end of March.
Investors have taken well to today’s news, with Resolute shares gaining 1.88 per cent by early afternoon trade. Currently, RSG shares are worth $1.20 each. Since the media speculation first dropped on Monday, shares have gained 4.6 per cent.
