Resolute sells Ravenswood 
to focus on Africa

Resolute Mining (LSE: RSG) is selling its Ravenswood gold mine in Queensland — its only Australian asset — to private equity firm EMR Capital Management for US$207 million in cash.

Resolute signed the definitive sales agreement in mid-January with a consortium led by Melbourne-based EMR that included Singapore-listed Golden Energy and Resources.

The underground mine, 65 km east of Charters Towers in northern Queensland, produced 54,486 oz. gold last year at all-in sustaining costs (AISCs) of US$1,356 per ounce.

Selling Ravenswood is in line with Resolute’s strategy to become the next mid-tier, Africa-focused gold producer, and will help pay down debt from a series of acquisitions on the continent.

“The divestment has strong strategic merit for Resolute,” John Welborn, managing director and CEO, said in a statement. “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.”

Resolute’s African portfolio consists of two producing gold mines — Syama and Mako — and the Bibiani development project.

Resolute bought Syama from Randgold Resources for US$13 million in 2004. At the time, the open-pit mine, 300 km southeast of Bamako in Mali, had been closed for two years due to low gold prices that made processing its carbonaceous and refractory ore uneconomic.

Resolute restarted the mine in 2008 and closed it in 2015, although previously stockpiled sulphide ore is still being processed and the oxide circuit continues to be fed from five satellite deposits on the property: BA-01, Nafolo, Beta, Alpha and Tabakaroni.

Resolute completed a definitive feasibility study for an underground mine at Syama in June 2016. Underground development work started in September 2016 and mining began in December 2018.

Underground at the Ravenswood gold mine in Queensland, Australia. Credit: Resolute Mining.

Last year, Syama’s oxide circuit produced 180,534 oz. gold and its sulphide circuit 62,524 oz. — missing its guidance of 300,000 oz. due to a crack in the roaster. The roaster is now fully operational.

Resolute poured first gold at Mako, its open-pit gold mine in eastern Senegal, in January 2018, and last year the mine produced 87,187 oz. gold at AISCs of US$687 per ounce.

Resolute produced 384,731 oz. gold last year at AISCs of US$1,090 per oz., and is forecasting 2020 production of 500,000 oz. gold at AISCs of US$980 per ounce.

Resolute’s Bibani project, a historic underground gold mine it bought in 2016 from the government of Ghana, is 75 km northwest of AngloGold Ashanti’s (NYSE: AU) Obuasi gold mine. According to an updated feasibility study in July 2018, Bibiani could produce 100,000 oz. gold a year over a 10-year mine life at AISCs of US$764 per ounce.

Resolute is assessing whether it should recommission the mine and has hired Cutfield Freeman and Treadstone Resource Partners to conduct a review, which is expected to be completed in the first half of 2020. The advisory firms will examine options, including off-balance sheet financing of the company’s proposed recommissioning plan, joint ventures, and partial or 100% divestment of the asset.

Workers at Resolute Mining’s Ravenswood gold mine. Credit: Resolute Mining.

The company also has stakes in a number of junior gold companies with assets in Africa, including Loncor Resources (TSX: LN) (27%), Manas Resources (25%), Orca Gold (TSXV: ORG: US-OTC: CANWF) (16%), Mako Gold (15%) and Oklo Resources (9%). The companies have projects spanning the continent, from Sudan to the Democratic Republic of the Congo.

To accelerate interest in the company and its African assets, Resolute listed its shares on the London Stock Exchange in June 2019. Its shares on the LSE traded at £0.62 ($1.07) apiece at press time, down from their peak in August of £1.17 ($2.02) per share.

Resolute has a history of operating in Africa.

In 1996, the company acquired BHP Group’s (NYSE: BHP; LSE: BHP) mothballed Golden Pride open-pit gold mine in Tanzania, 65 km from Buzwagi, the country’s largest open-pit gold mine.

Resolute started production at Golden Pride in February 1999 and operated the mine until it was decommissioned in 2014, producing a total of 2.2 million oz. gold.

Resolute also operated the Obotan open-pit mine in Ghana from 1997 to 2002. The company mined 730,000 oz. gold at a grade of 2.2 grams gold before closing the operation for economic reasons in 2002. The claims were released and returned to the government after rehabilitation. PMI Gold acquired the project in 2006.

Asanko Gold (TSX: AKG) acquired PMI and the Obotan gold project in 2014 in an all-share deal valued at $183 million to complement the development of its Esaase gold project, 15 km from Obotan’s Nkran deposit. Obotan is now part of the Asanko gold mine complex, which hosts the Nkran and Esaase deposits, and nine satellite deposits. Gold production began in January 2016.

At the end of December 2019, Resolute had cash, bullion and listed investments worth US$127 million, and US$267 million in debt.

The company recently announced a financing of up to US$134 million to repay debt.