Resolute Mining agrees to buy out Toro Gold

Resolute Mining has signed a binding agreement with Toro Gold, it announced on Wednesday, under which it would acquire all of the shares of Toro.

The London-listed firm said Toro Gold's flagship asset was the low-cost, high-margin Mako Gold Mine in Senegal.

In 2018, Mako produced 156,926 ounces of gold at an all-in sustaining cost of $655 per ounce.

It said the addition of Mako would expands Resolute's existing portfolio, comprising the Syama Gold Mine in Mali, the Bibiani Gold Mine in Ghana, and the Ravenswood Gold Mine in Australia.

Mako would expand Resolute's production base, strengthen operational cash flow, increase revenues to which shareholder dividends were linked, and provide a “strong platform” for further growth, the board explained.

Resolute had revised its 2019 production and cost guidance to 400,000 ounces of gold at an all-in sustaining cost of $960 per ounce, which included production from Mako from acquisition.

Under the terms of the implementation agreement, Resolute would acquire all of the shares of Toro Gold by way of a takeover for $274m, comprising $130m of cash and 142.5 million freely tradeable Resolute shares valued on its 30-day volume weighted average price of AUD 1.45 per share, equating to $144m.

The cash component was being fully funded through a finance facility provided by Taurus Funds Management, and on completion of the transaction, Toro Gold shareholders would own 15.8% of Resolute.

Resolute's largest shareholder, ICM Limited, was said to be “strongly supportive” of the transaction, with 94% of Toro Gold shareholders also signing commitments to accept the takeover offer, and all required regulatory approvals confirmed as secured.

“The Mako Gold Mine is a high quality, strongly cash flow generative producing asset which complements our existing portfolio of large-scale, long-life mines,” said Resolute managing director and chief executive officer John Welborn.

“The Toro Gold team discovered the Mako orebody in 2010 and have successfully developed a high value gold mine.

“We are delighted to combine our businesses.”

Welborn described Senegal as an “attractive” investment jurisdiction for mining, adding that Resolute was “looking forward” to working closely with the government of Senegal - the 10% partner at Mako - to maximise the value within Toro Gold's portfolio.

"”Resolute has produced over eight million ounces of gold from nine mines over the last 30 years.

“The Mako Gold Mine will be our tenth operating mine and one which forms an important part of our next phase of growth.”

The acquisition also confirmed the company’s commitment to creating a “leading” African gold producer, Welborn explained.

“Mako's additional low-cost gold production provides a solid growth foundation that will enable us to deliver compelling value for our shareholders.”