Golden Energy teams up with private fund to buy Australia gold mine for up to A$300m

Singapore

GOLDEN Energy and Resources and mining private equity fund EMR Capital will buy a gold mine in Australia for up to A$300 million (S$278.8 million).

The mainboard-listed thermal coal miner on Wednesday said its wholly-owned subsidiary had formed a joint venture (JV) with Raven Gold Nominee, which is the trustee of investors managed or advised by EMR.

The JV, named Mining Gold Group, will acquire the Ravenswood gold mine from Carpentaria Gold and its parent Resolute Mining.

Ravenswood is about 130 kilometres south of Townsville in Queensland. It is an existing operation with "significant" expansion potential to become a large scale, low cost and long life producer, Golden Energy said. The mine's resource base includes 5.9 million ounces of gold as at June 30, 2019.

The deal is expected to be completed by March 31, 2020, Golden Energy said in its filing.

It is subject to regulatory approvals, ministerial consent and the removal of existing security interests and mortgages over the Ravenswood assets held by Resolute Mining's lenders.

The potential A$300 million consideration consists of A$50 million payable in cash, a promissory note with a face value of A$50 million and interest of 6 per cent per annum, and up to A$200 million in contingent instruments linked to the average gold price and the investment outcomes of Ravenswood.

In a filing to the Australian exchange, Resolute Mining said the deal has been structured to maximise its exposure to the future success of a Ravenswood expansion project while transferring capital funding and development obligation to the JV.

The project would open up mining at Nolans East, Sarsfield, and Buck Reef West.

The book value of the gold mine is about A$90.8 million, and its net tangible asset value is A$61 million. No independent valuation was conducted by Golden Energy on the assets for the purposes of the JV.

Golden Energy will contribute up to A$70 million in capital to the JV.

Through the JV, it is looking to diversify and expand its product suite and geographical presence to include cash flow streams from counter-cyclical precious metals.

Golden Energy also currently has investments in gold and coking coal producers in Australia.

It acquired a 10 per cent stake in Australia-listed gold miner Westgold Resources in 2018. It also owns about 28 per cent of Australia-listed coal producer Stanmore Coal.

Golden Energy shares closed down S$0.01, or 4.65 per cent, at S$0.205 on Wednesday.