RESOLUTE Mining confirmed media speculation in Australia on Monday it was in advanced negotiations to sell its Ravenswood mine to private equity firm, EMR Capital Management, a transaction that would establish Resolute’s 100% African mining credentials.
Depending on how value is agreed between seller and buyer, a deal might also enable Resolute to make in-roads on its total debt number.
The company said last week that it hoped to conclude a refinancing of its balance sheet which, coupled with strong cash flows, would enable it to significantly chip away at the debt pile, last standing at U$394m. Net debt was US$267m.
“Resolute advises that the company has entered into exclusive negotiations with EMR Capital Management Limited … on a potential transaction relating to Ravenswood,” the firm said in a statement. An exclusivity agreement between the parties expires on January 15.
If successful, Resolute will get Ravenswood away for A$300m consisting of A$100m in “upfront value” and up to A$200m in “additional deferred consideration”. Payment of this additional consideration was “… contingent on future gold price outcomes, future production thresholds from the Ravenswood Expansion Project (REP), and the investment outcomes from Ravenswood for EMR Capital,” said Resolute.
Resolute said in December that it was considering its options in respect of Ravenswood, especially capital demands that might arise from its expansion, the REP.
There was certainty a deal would be reached, it said.
Resolute operates the Mako gold mine in Senegal as well as Syama in Mali. It also has an option on the underground develop of Bibiani, an operation in Ghana.
It has targeted some 500,000 ounces in 2020 gold production at an all-in sustaining cost (AISC) of $960/oz.
