Resolute moves to slash debt through A$140m share deal with institutions

RESOLUTE Mining aims to raise as much as A$200m ($128m) in an equity raise which it will use to reduce debt and part finance the possible expansion of its Syama mine in Mali.

The Australian-listed firm today announced details of a fully underwritten A$140m ($90m) equity placement as well as a 1:1.11 institutional “entitlement offer” which is an offer of shares that cannot be sold to another party. A further A$60m ($38m) will be raised if there is an over-subscription for the initial offerings.

The shares are being issued at 16 Australian cents a share which represents a 23% discount to the five-day trading average of Resolute Mining shares.

Terry Holohan, CEO of Resolute, said the equity raising was “the final step” in the company’s “transition to a sustainable gold producer with a de-risked balance sheet”.

The upshot if the $140m capital raise is a success is that Resolute’s net debt will be reduced to $65m from $156m with a further $84m remaining on the firm’s syndicated loan facility due in March 2024. Net debt will be reduced further if the over-subscription allotment is completed.

Said Holohan: “The company is now in a strong position to pursue a new open pit operation at Syama North, together with low capital expansion options for the Sulphide circuit”. The company said earlier that some two million ounces in mineral resources were discovered at Syama North – a 40% increase – at about $10/oz.

A feasibility study of the North Syama project is due in the first quarter with the start of a definitive study due to start in the second. The aim of the project is to provide ore for a low capital expansion of the mine’s sulphide circuit which will be margin-enhancing.

Shares in Resolute have been temporarily suspended on the Australian Securities Exchange and in London where it has a main board listing.

Resolute operates at Syama mine in Mali and the Mako in Senegal. Whilst the latter has been a solid performer for Resolute since its purchase from Toro Gold, Syama has been problematic.

Holohan, Resolute’s former COO, took the reins from Stuart Gale, CEO of Resolute since May 2021. Prior to that, Resolute was led by John Welborn who had held the post for five years.

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