Resolute Mining will acquire privately-owned Toro Gold for $US274 million ($400.2 million) in a bid to capitalise on the Mako gold mine in Senegal, West Africa.
The acquisition of Mako will expand Resolute’s existing African portfolio, which includes the Syama gold mine in Mali and the Bibiani gold mine Ghana.
Mako is a conventional truck and shovel open pit mining operation, which last year produced 156,926 ounces of gold at an all-in sustaining cost (AISC) of $US655 an ounce.
The mine’s average production over a seven-year mine life is estimated to be 140,000 ounces per annum at an AISC of $US780 an ounce.
Resolute commented that Mako would expand its “production base, strengthen operational cashflow, increase revenues to which shareholder dividends are linked, and provides a strong platform for future growth.”
Subsequently, Resolute has revised its 2019 financial year (December 31) production and cost guidance with Mako included to 400,000 ounces of gold at an AISC of $US960 per ounce.
Resolute managing director and chief executive officer John Welborn confirmed the acquisition of Toro Gold was consistent with the company’s ambition to create a “multi-mine, low-cost, African-focused gold producer.”
“The Mako gold mine is a high quality, strongly cashflow generative producing asset which complements our existing portfolio of large-scale, long-life mines,” Welborn said.
“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.”
Resolute has produced more than eight million ounces of gold from nine mines over the last 30 years, with the Mako gold mine being its tenth.
Toro Gold chief executive officer Martin Horgan highlighted the benefits of combining with the Australian-based gold miner.
“Resolute’s acquisition of Toro Gold provides Toro Gold shareholders with the unique opportunity of realising immediate value for their Toro Gold shareholding in the form of partial cash considering while becoming part of a premier African gold producer as shareholders of Resolute,” he said.
Under the deal, Resolute will acquire all of Toro Gold’s shares for $US274 million, comprising $US130 million of cash and 142.5 million of its shares valued at a 30-day volume weighted average price of $1.45 (equating to $US144 million).
The cash component has been fully funded through a finance facility provided by Taurus Funds Management, upon completion Toro Gold shareholders will own 15.8 per cent of Resolute.
Resolute reported that its largest shareholder, ICM Limited, is supportive of the transaction, while 94 per cent of Toro Gold shareholders have signed commitments to accept the takeover offer with all required regulatory approvals being secured.
A three-step process to complete the deal is expected to close on August 12.