Resolute shares plummet after Bibiani gold mining lease is terminated by Ghanaian Govt.

RESOLUTE Mining’s efforts to sell its Bibiani gold mine may have been stymied at the last moment after the Ghana government ordered the termination of the mining lease.

The UK-listed gold producer said in an announcement today that it had been advised to stop all activities and operations at the mine.

Bibiani has been in mothballs ahead of its proposed sale to China’s Chifeng Jilong Gold Mining Company. The sale of the mine is a crucial part of Resolute’s priority to deleverage its balance sheet. Stuart Gale, interim CEO at Resolute since October, told Miningmx he hoped the company would be net cash before December.

A fee of about $105m had been agreed for the sale of Bibiani which would have helped Resolute rein-in net debt to about $80m.

Gale was also hoping for a period of uninterrupted operational delivery at Resolute’s operations in order that its management win over the trust of investors following a difficult year in 2020. Shares in Resolute Mining fell 26% in London today.

Resolute said that it had received a letter dated March 23 from the Ghanaian Minerals Commission ordering for the Bibiani mining lease to be terminated. The letter was on the instruction of the country’s Lands and Natural Resources minister, the company said.

“This action is unexpected and Resolute is seeking clarification from the Minister’s office for the rationale for the termination,” the company said in a statement. 

Resolute added that it was seeking legal advice regarding the validity of the notice as well as its options in terms of launching an appeal. It was also seeking legal advice on its options should the termination of the mining lease torpedo the sale of Bibiani to Chifeng.