(Alliance News) - Shares in Australian gold miner Resolute Mining Ltd slipped Tuesday as it announced a fundraise to pay off a loan.
The company will be raising AUD196 million, or GBP103.0 million, broken into three parts. In the first tranche Resolute will place 132.7 million new shares at AUD1.10 each to raise AUD146 million, which is expected to close Tuesday.
Next, Resolute will place 22.7 million new shares at the same price to raise AUD25 million. It will also offer a share purchase plan to shareholders in Australia and New Zealand, with an individual limit of AUD30,000, to raise the last AUD25 million.
The issue price, Resolute noted, is a 6.4% discount to its closing price in Sydney on Monday of AUD1.175. Shares were 3.6% lower in London on Tuesday at 61.78 pence each, having been suspended in Sydney on Tuesday.
The funds raised will be used to repay a USD130 million bridge facility provided by Taurus Funds Management Pty Ltd, which is due for repayment at the end of January. This funding was used to purchase Toro Gold Ltd, which included the Mako gold mine in Senegal.
"The ability to entirely repay the Toro Gold acquisition facility will save Resolute extension fees and interest payments. More importantly, today's equity raising will support and enable the complete refinancing of our debt facilities during the current quarter," said Resolute Managing Director & Chief Executive John Welborn.
"Completion of the equity placement, and the refinancing of our senior syndicated loan facilities, will enable the company to simplify its capital structure and facilitate the retirement of debt facilities provided by Taurus."
"The share purchase plan provides our eligible shareholders, along with the institutional shareholders who are participating in the placement, the opportunity to increase their shareholding in Resolute on attractive terms at a pivotal point in the company's life cycle," Welborn continued.
"Strong production guidance, a significant reduction in capital expenditure, operating assets which are now generating positive cashflows, and a stronger balance sheet with a greatly reduced debt burden, provides Resolute shareholders the opportunity for a positive re-rate."
Resolute last week announced the AUD300 million sale of the Ravenswood gold mine in Queensland. Following this, its main assets will be Mako as well as Syama in Mali.
In 2019, production was 384,371 ounces of gold, short of the 400,000 ounce guidance. Resolute is hoping for 500,000 ounces of gold in 2020, as announced earlier January, though this will be revised now Ravenswood's sale has been agreed.
By George Collard; georgecollard@alliancenews.com
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Resolute Mining (RSG)