Jan 15, 2020

Green light for $300m Ravenswood gold mine sale

Green light for $300m Ravenswood gold mine sale

A $300 million sale deal for Ravenswood gold operations is going ahead, with the new owners committed to an expansion project at the North Queensland mine.

Resolute Mining said it had signed definitive agreements for the sale to a consortium involving private equity manager EMR Capital and mining company Golden Energy and Resources (GEAR).

There would be no immediate changes to Ravenswood gold mine employment or contract relationships, with current mine plan and development plans to continue, Resolute said.

The sale announcement also stated that EMR Capital and GEAR were committed to progressing the Ravenswood Expansion Project.

The deal will see Resolute receive an upfront payment of $100 million and up to $200 million in additional deferred considerations that hinge on future gold prices, production rates and investment outcomes.

EMR Capital already owns the Capricorn Copper operation in North West Queensland and a stake in the Kestrel coal mine in Central Queensland.

Resolute managing director and chief executive officer John Welborn said the Ravenswood transaction provided exceptional value for shareholders as well as strategic advantages.

“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,” he said.

“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 $300 million will be generated for Resolute.”

Ideal drivers for expansion project

Mr Wellborn described EMR Capital and GEAR as world-class mine developers and operators, saying they were the ideal parties to undertake the development of the Ravenswood Expansion Project.

The full project entails development and mining the Buck Reef West and Sarsfield open pits, and expansion of ore crushing and tailing storage facilities. All key approvals for commencement of operations have been received from the Queensland Government.

A strategic review has demonstrated the potential for Ravenswood to deliver about 200,000oz of gold annually for 15 years from 2022.

“Ravenswood has been a consistent performer for Resolute for more than 15 years,” Mr Wellborn said.

“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.”

Resolute acquired Ravenswood gold operator Carpentaria Gold from Xstrata in 2004 for $58 million.