CHINA’S Chifeng Jilong Gold Mining Co. has withdrawn from an agreement to buy the Bibani gold mine in Ghana after conditions were imposed on the award of its mining lease, held by Resolute Mining.
Resolute last year agreed to sell Bibiani to Chifeng for $105m. However, the transaction was stymied after Ghana this month suspended Resolute’s mining lease.
Then, on April 14, the mining lease was reinstated provided Resolute Mining ran a report in which the compliance of the mine’s environmental, social and governance-related standards was tested by the government.
Another of the conditions imposed by the Ghana government – apparently critical in the light of today’s development – is that it required any future sale to Chifeng, or a third party, win its “the express prior approval”. Ghana had said that it objected to the sale of the mine to Chifeng.
Resolute is required to refund a $5m deposit to the Chinese firm within five business days following termination of the sale agreement.
“Resolute will continue to consider all options for the successful development or sale of Bibiani and will provide further information in accordance with continuous disclosure requirements, as required,” the company said in an announcement to the London Stock Exchange.
Shares in the company fell 5.75% in mid-afternoon trade on Monday.
Proceeds from the sale to Chifeng would have accelerated plans by Resolute to deleverage the firm’s balance sheet.
Resolute said in March that it expected to generate sufficient operating cash flows to support debt repayments of $50m in 2021. This included the early repayment of $25m above the minimum debt repayment obligations of $25m due in September 2021.
Net debt as of December 31 stood at $230m, a 28% year-on-year reduction, after taking into account cash and bullion of $106m.
On April 7, Resolute unveiled an increase in its eight-year gold output outlook of 250,000 to 300,000 ounces. This compares to 2020 production of 214,360 oz at an average AISC of $1,203/oz.