(Alliance News) - Australia's Resolute Mining Ltd has agreed on the sale of the Ravenswood gold mine in Queensland, the company announced on Wednesday.
The sale announcement comes after Resolute on Monday confirmed it was in negotiations with private equity firm EMR Capital Management Ltd over the disposal of the mine. Ravenswood is being sold to a consortium including EMR Capital and energy-and-mining company Golden Energy & Resources, known as GEAR.
Resolute said EMR is a "leading" resources-focused private equity company with "outstanding" credentials. Singapore-listed GEAR has coal assets in Indonesia as well as investments in two Sydney-listed miners, Westgold Resources Ltd and Stanmore Coal Ltd.
Resolute will get AUD100 million in cash and promissory notes upfront for the sale, and potentially a further AUD200 million based on future gold production and gold prices. The AUD300 million figure is equivalent to around GBP158.7 million.
Resolute began a review of Ravenswood in 2019, with an expansion project currently underway at the mine. Resolute hopes the mine will produce 200,000 ounces of gold for 15 years from 2022, compared to just under 55,000 ounces in 2019.
Since acquisition in 2004, Resolute noted, Ravenswood has produced nearly two million ounces of gold.
"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," said Resolute Managing Director & Chief Executive John Welborn.
"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."
Resolute's remaining assets include the Syama mine in Mali, which makes up the majority of production, as well as Mako in Senegal.
Shares in Resolute were 0.8% higher in London on Wednesday morning at a price of 63.20 pence each.
By George Collard; georgecollard@alliancenews.com
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Resolute Mining (RSG)