LONDON: Resolute Mining Limited has entered into definitive transaction documentation to sell the Ravenswood Gold Mine in Queensland to a consortium comprising a fund (EMR Fund) managed by specialist resources private equity manager EMR Capital Management Limited, and Singapore-listed mining and energy company, Golden Energy and Resources Limited for A$300 million.

The transaction has been structured to maximise Resolute’s exposure to the future success of the Ravenswood Expansion Project while transferring the capital expenditure funding requirements and development obligation to a highly credentialed and experienced consortium with a strong relevant track record in successful project development.

During 2019, Resolute undertook a comprehensive strategic review of Ravenswood focused on maximising returns from the Ravenswood Expansion Project and evaluating development scenarios and funding requirements. The sale terms agreed with the EMR Capital and GEAR consortium ensure that Resolute retains upside exposure with no requirement to fund the future capital expenditure associated with the Ravenswood Expansion Project.

A summary of the key terms of the transaction is included as an appendix to this announcement. Completion of the transaction is subject to standard conditions precedent for a transaction of this nature including approvals from Australia’s Foreign Investment Review Board, indicative Ministerial approval for the transfer of mining tenements, Ministerial consent for the transfer of a project specific environmental approval, approval from Resolute’s existing lending bank syndicate and execution of deeds of assumption in relation to third party contracts.

Based on the current carrying value of the Ravenswood assets, Resolute will record a gain on the sale of Ravenswood in the Company’s accounts for the 12 months to 31 December 2020 (FY20). Resolute does not expect the transaction will create a tax liability in the current tax accounting year.

Cash received from the transaction will be used to reduce debt and strengthen the Company’s balance sheet.

Resolute is committed to ensuring an orderly transition of ownership at Ravenswood and given the commitment of EMR Capital and GEAR to rapidly proceed with the Ravenswood Expansion Project, the transaction is not expected to result in any immediate material changes to employment or contract relationships at Ravenswood. Progression of the Ravenswood Expansion Project development will continue to provide positive economic benefits for the local community and suppliers as well as the Queensland Government.

Completion of the transaction is targeted to occur prior to 31 March 2020 subject to the satisfaction of conditions precedent (Financial Close). Resolute intends to revise its current year production and cost guidance based on Ravenswood gold production attributable to Resolute for FY20 as at Financial Close.

Resolute’s Managing Director and CEO, Mr John Welborn, was delighted with a strongly value accretive transaction:

“The sale of our Ravenswood Gold Mine on the terms announced today provides the opportunity for exceptional value for Resolute shareholders. We have strengthened our balance sheet with a combination of immediate cash and the potential for future upside as well as removing the requirement of a large near-term capital investment. The divestment has strong strategic merit for Resolute. We have delivered on our objective of ensuring a new long-life future for Ravenswood under a world-class operator and can now focus our attention and energy on our African portfolio and the abundant opportunities our experience provides for further growth and value creation.

“The transaction delivers a fair share to all parties from the future value of the Ravenswood Expansion Project and effectively balances risk and reward. Our modelling at current gold prices demonstrates the expansion project at Ravenswood will be highly successful for EMR Capital and GEAR, and that the maximum value of A$300 million will be generated for Resolute. EMR Capital and GEAR are world-class mine developers and operators with outstanding track records of value generation. The EMR Capital and GEAR consortium are ideal parties to undertake the development of the Ravenswood Expansion Project. The upside sharing arrangement we have agreed aligns the interests of Resolute shareholders with those of EMR Capital and GEAR.

“Ravenswood has been a consistent performer for Resolute for more than 15 years. Since acquisition in 2004, Resolute has mined and processed over 40 million tonnes of ore and produced almost two million ounces of gold. I congratulate the Resolute team, both past and present, for our performance at Ravenswood. We are proud of our achievements at Ravenswood and the significant economic benefits we have provided to the local community, the Queensland Government, and Resolute shareholders. We are confident Resolute’s legacy, and the interests of all stakeholders in Ravenswood, will be protected and enhanced by the new consortium.”