Resolute Mining Ltd on Wednesday announced its receipt of A$30 million following the sale of the Ravenswood Gold Mine back in March 2020.
Shares in Resolute jumped 7.6% to 28.19 pence in London on Wednesday afternoon.
The Africa-focused gold miner said the payment, equivalent to around £15.7 million, comes from the mine’s owner Ravenswood Gold Pty Ltd. The Ravenswood project is located in Queensland, Australia.
‘Resolute and Ravenswood have restructured the Gold Price Contingent Promissory Note and Vendor Financing Promissory Note to support the Ravenswood Mine in its financing,’ the company added.
Resolute explained that based on the original deal, it was due to receive a ’Gold Price Contingent Amount’ once Ravenswood produced over 500,000 cumulative ounces of gold over a four-year period. This would have fallen into one of five bands linked to the yellow metal’s average price, from A$10 million if the price exceeded A$1,900 per ounce, to A$50 million if it exceeded A$2,100.
Resolute said it and Ravenswood have agreed to amend the gold price-contingent promissory note, including that the requirements of the clause regarding payment of the contingent amount are deemed to have been met.
It said that accordingly, Ravenswood owes it the maximum payable sum of A$50 million, payable in two tranches. The first A$30 million is the payment received Wednesday, and the remaining A$20 million is due no later than September 30.
Resolute also has amended the A$50 million vendor financing promissory note originally due in March 2027. It said it has increased the principal to A$64 million to account for capitalised accrued interest; will maintain the annual coupon at 6% until June 30, 2025, after which it will rise to 12%; and has extended the note maturity until December 31, 2027.
However, Resolute added that the note may be repaid early depending on Ravenswood’s future financings, liquidity events, and access to excess cash.
The up to A$150 million upside sharing promissory note, linked to Ravenswood’s investment outcomes, is unchanged.
‘This restructuring of the Ravenswood payments is a positive credit enhancing development for Resolute and further strengthens the company’s cash position for our growth projects,’ commented Resolute’s Chief Financial Officer Chris Eger, adding: ‘These payments, along with strong cash generation from our operations, will further bolster our liquidity position and balance sheet in H2.’
Eger continued: ‘This is a great outcome for both companies and demonstrates the good business relationship we have engendered.’
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