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Resolute Mining Announces an Early Redemption of Convertible Notes

Resolute Mining Announces an Early Redemption of Convertible Notes
Syama mine has been developed into a world class ore body, supporting a robust long term underground mine life until at least 2028.
Apr 20, 2016 By Kaivalya Kandarpa Tags: RSG

Gold miner Resolute Mining Limited (ASX:RSG) intends to make an early repayment of the $15 million in Convertible Notes presently on issue.

The unsecured notes, that were issued on 12 December 2014 at $1 each to raise gross proceeds of $15 million, are due to expire in December 2017. Resolute has announced to make the early payment as it has been generating consistent cash flows due to strong operating performance of its mines in Australia and Africa. Additionally, the company has also been focusing on reducing its overall costs.

Resolute aims to use the excess cash to strengthen its balance sheet by reducing its overall debt. Apart from today’s early redemption announcement, the company has made and negotiated several other repayments since the beginning of the financial year. Resolute has repaid its US$ 20 million Gold Repay Loan Facility and has also negotiated an accelerated repayment schedule with its lenders for the total repayment of the US$ 50 million Cash Advance Facility by 30 June 2016.

Resolute’s Managing Director and CEO, Mr. John Welborn stated that the company has achieved significant milestones since the beginning of the year: “Resolute is changing to become a company that is totally committed to rewarding our shareholders. Strengthening the balance sheet by debt reduction has been a priority as we prepare for investments in growth. In this context the ability for our operating performance at Syama and Ravenswood to allow for a rapid debt reduction program is extremely pleasing. Our ambition is that as at 30 June 2016 Resolute will have a strong cash and bullion reserve and total borrowings of less than A$30 million represented by unsecured subsidiary level debt.”

Strong Operations During 1H16

The company expanded its gold production by 11% during the first half of FY16, coupled with gross profit of $67 million. The Ravenswood mine produced 58,000 ounces of gold while the Syama mine in Mali generated 95,000 ounces during the half year.

During the half year, Syama mine has been developed into a world class ore body, supporting a robust long term underground mine life until at least 2028. Recent infill and deep drilling results came in favourable to enhance the existing reserve’s estimate.

The company also aims at expanding its Ravenswood project’s mine life by 10 years and is currently conduction scoping studies to develop its Bibiani mine into production stage.

RSG has surged 10% since the announcement and was last traded at $0.87 as at 10:22am (AEST).

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Kaivalya Kandarpa Author: Kaivalya Kandarpa Apr 20, 2016

Kaivalya is an equity analyst and a client advisor at Wise-owl. She specialises in fundamental and technical analysis for large and mid-cap companies. Having completed her bachelor's degree in Business Administration majoring in Finance, Kaivalya has a comprehensive understanding of international stock market movements. She tracks local and overseas markets and compiles analytical reports for various industries.

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