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Resolute Mining reveals exclusive negotiations for Ravenswood sale, shares pop

Resolute is in advanced negotiations with EMR Capital for the sale of the Ravenswood Gold Mine for up to $300 million.

Resolute Mining Limited - Resolute Mining Ltd reveals it is in exclusive negotiations for Ravenswood sale, shares pop
Resolute shares rose as much as 7.3% this morning on the news

Resolute Mining Limited (ASX:RSG) has responded to recent media speculation and revealed it has entered into exclusive negotiations regarding a potential transaction relating to its Ravenswood Gold Mine in Queensland.

The potential buyer is Melbourne private equity firm EMR Capital and the two parties have signed an exclusivity deed expiring 5.00pm WST on January 2020.

Resolute also noted that negotiations are significantly advanced on a Ravenswood sale transaction for total proceeds of up to A$300 million.

This would comprise A$100 million of initial upfront value and up to A$200 million in additional deferred consideration contingent on future gold price outcomes, future production thresholds from the REP, and the investment outcomes from Ravenswood for EMR Capital.

Shorts squeezed as debt risk abates

A Ravenswood sale would further strengthen Resolute’s balance sheet which carried net debt of A$380 million at 31 December 2020.

Using the most recently available data, Resolute had 8.52% of its issued shares sold short, a relatively high percentage.

Today’s sale news has likely caused some short covering in the stock given a sale of Ravenswood would mitigate debt concerns.

On a trading day where nearly all ASX-listed gold producers are down for the day, Resolute is up 5.77% at $1.19.

Targeting 500,000 ounces in 2020

Yesterday, Resolute outlined it is targeting gold production of 500,00 ounces in the 2020 calendar year at an all-in sustaining cost (AISC) of US$980 per ounce.

This represents a 30% increase on unaudited 2019 production of 384,731 ounces at an AISC of US$1,090 per ounce.

The 500,000-ounce target comprises:

  • 260,000 ounces at US$960 per ounce from Syama Gold Mine in Mali;
  • 160,000 ounces at US$800 per ounce from the Mako Gold Mine in Senegal; and
  • 80,000 ounces at US$1,200 per ounce from the Ravenswood Gold Mine in Queensland.

Quick facts: Resolute Mining Limited

Price: 1.14 AUD

ASX:RSG
Market: ASX
Market Cap: $1.26 billion
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