Value Accretive, High Quality, Low-Cost Gold Production

 

31 July 2019: Resolute to acquire Toro Gold

31 July 2019: Acquisition of Toro Gold Investor Presentation

31 July 2019: Implementation Agreement – Acquisition of Toro Gold

31 July 2019: Offer Document – Acquisition of Toro Gold

31 July 2019: Acquisition of Toro Gold Announcement Webcast

On 31 July 2019, Resolute announced that it has signed a binding agreement (Implementation Agreement) with Toro Gold Limited (Toro Gold) pursuant to which Resolute will acquire all of the shares of Toro Gold.

Toro Gold’s flagship asset is the low-cost, high-margin Mako Gold Mine (Mako) located in Senegal. In 2018, Mako produced 156,926 ounces (oz) of gold at an All-In Sustaining Cost (AISC) of US$655/oz. The addition of Mako expands Resolute’s existing portfolio comprising the Syama Gold Mine in Mali (Syama), the Bibiani Gold Mine in Ghana (Bibiani), and the Ravenswood Gold Mine in Australia (Ravenswood). Mako will expand Resolute’s production base, strengthen operational cashflow, increase revenues to which shareholder dividends are linked, and provides a strong platform for further growth.

Resolute has revised its FY19 (31 December) production and cost guidance to 400,000oz of gold at an AISC of US$960/oz which includes production from Mako from acquisition.

Under the terms of the Implementation Agreement, Resolute will acquire all of the shares of Toro Gold by way of a takeover under the Companies (Guernsey) Law 2008 for US$274 million comprising US$130 million of cash and 142.5 million freely tradeable Resolute shares valued on Resolute’s 30-day volume weighted average price (VWAP) of A$1.45 per share equating to US$144 million (Transaction). The cash component has been fully funded through a finance facility provided by Taurus Funds Management Pty Limited (Taurus). On completion of the Transaction, Toro Gold shareholders will own 15.8% of Resolute.

Resolute’s largest shareholder, ICM Limited, is strongly supportive of the Transaction. 94% of Toro Gold shareholders have signed commitments to accept the takeover offer and all required regulatory approvals have been secured.

Transaction Highlights

  • Strategic Acquisition: the acquisition of Toro Gold enhances Resolute’s portfolio and delivers on Resolute’s ambition to be a multi-mine, low-cost, African-focused gold producer.
  • Cash Flow and Value Accretive: Mako is a high-quality asset and the acquisition of Toro Gold is cashflow and net asset value accretive for Resolute shareholders.
  • Production and Margin Growth: Mako contributes immediate production of 160koz per annum and at an AISC of US$800/oz (FY19 annualised) and strengthens Resolute’s operating margins, with limited future capital expenditure requirements.
  • Revenue and Dividend Growth: the addition of high-margin ounces from Mako will increase Resolute’s revenue base to which shareholder dividends are linked; Resolute’s Dividend Policy seeks to pay a minimum dividend equivalent to at least 2% of its annual gold sales.
  • Diversification of African Production Base: high-margin production at Mako, complements long-life, large-scale production at Syama and expands Resolute’s African footprint into Senegal, a stable, mining friendly jurisdiction.
  • Expansive Growth Platform: strengthens Resolute’s organic growth profile; three producing assets (Syama, Mako, and Ravenswood), near term development opportunities at the Ravenswood Expansion Project and Bibiani, and a highly prospective and expansive exploration portfolio including Toro Gold’s substantial African exploration tenement package covering over 2,800km2 across Senegal, Cote d’Ivoire and Guinea.
  • Value Additive Integration Opportunities: the combination of Resolute’s operations with Toro Gold’s production and exploration assets provides the potential for synergies and cost savings in Africa.
  • Enhances Resolute’s Investment Case: Resolute is a unique and highly attractive investment proposition for investors seeking exposure to a dividend paying gold producer with multiple long-life, high-margin assets, and a strong platform for growth.

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