From today's Australian.

Resolute weighs up Ravenswood spin-off

Resolute Mining CEO John Welborn says the miner is considering acquisitions as it focuses on Africa. Picture: Richard Waugh.

• EXCLUSIVE

  PAUL GARVEY

  RESOURCES REPORTER

  @PDGarvey

  
• 12:00AM JANUARY 8, 2019
• NO COMMENTS

Resolute Mining will weigh up a spin-off or sale of its Ravenswood gold mine in Queensland as it looks to reposition itself as a London-listed, Africa-focused gold play.

The decision on Ravenswood comes at a time when the Australian dollar gold price is trading near its highest level on record, with many local gold stocks trading at significant premiums and on the hunt for potential acquisitions.

Resolute chief executive John Welborn told The Australian the company was set to make a decision on the future of Ravenswood in the first half of this year.

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Resolute has been mining the underground Mt Wright deposit at Ravenswood for several years, but that mine is set to close in coming months. Instead, Resolute is planning to develop Ravenswood as a larger, low-grade open-pit mine that will produce about 140,000 ounces a year over a forecast 14-year mine life.

The scale of the forecast output at Ravenswood, together with its comparatively long life, means it is likely to appeal to a host of cashed-up local gold miners hunting for assets that will grow their output and extend their forecast operating lives.

“The future we’ve created for that asset is compelling,” Mr Welborn said.

“We love the asset but it’s in the wrong continent for us.”

The potential disposal of Ravenswood comes at a time when Resolute is preparing to take up a dual listing in London and focus its attention purely on Africa. The company is cranking up production from its flagship Syama gold mine in Mali, where it has unveiled its new fully automated sub-level cave, and is investing in and assessing a host of exploration and development assets across the continent.

Yesterday, the company said it had lifted its December quarter gold production by 33 per cent to 73,691 ounces as the Syama underground, which is the world’s first fully automated underground gold mine, continued to ramp up.

Mr Welborn said selling or spinning off Ravenswood could generate value for Resolute not currently reflected in its valuation.

He noted that the most recent study into Ravenswood’s expansion calculated a net present value for the project of just under $500 million. That compared to Resolute’s current market capitalisation of about $900m, which he said almost entirely represented the value of its Syama mine.

“Clearly there’s an opportunity of potentially separating Ravenswood out through a spin-off to our shareholders or something like that, and that’s something we’re looking at,” he said.

Resolute’s 2019 transformation plans are also set to see it step up its scrutiny of potential acquisition opportunities.

The recent merger of global heavyweights Randgold Resources and Barrick Gold is expected to see a host of non-core assets put up for sale by the enlarged entity, particularly in Africa.

Mr Welborn said the company was actively looking at potential acquisitions, but said it had historically generated the most value by buying deposits it could then develop into mines, rather than established operations. The Randgold-Barrick deal, however, showed that there were smart deals to be done in the industry. “In the end it’s about (mining gold) more efficiently and making more money for our shareholders, paying bigger dividends and having greater capital growth. That’s what will drive acquisitions,” he said.

Shares in Resolute closed steady at $1.20 yesterday. The shares have jumped 31.1 per cent since November.

PAUL GARVEY

RESOURCES REPORTER

Paul Garvey has been writing about the resources industry for more than 14 years. Prior to joining The Australian's Perth bureau, he spent two years writing for the paper out of Hong Kong. He has also been a mi... Read more

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