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the Resolute Mining Limited The share price (ASX: RSG) will be watched on Thursday after a late announcement by the gold miner.
What has been announced?
After the market closed, Resolute announced the signing of a binding agreement to acquire Toro Gold for $ 274 million. This includes $ 130 million in cash and 142.5 million Resolute shares.
Toro Gold owns the low-cost, high-margin Mako Gold mine in Senegal. In 2018, the mine produced 156,926 ounces of gold at a total maintenance cost (AISC) of 655 USD an ounce.
This acquisition appears to be very complementary to the company's existing portfolio, which includes the Syama gold mine in Mali, the Bibiani gold mine in Ghana and the Ravenswood gold mine in Australia.
Management expects it to expand Resolute's production base, strengthen operating cash flow, increase revenues and dividends, and provide a solid base for growth.
Resolute chief executive and chief executive John Welborn says the Toro Gold acquisition is in line with the company's ambition to create an African, multi-mine, low-cost gold producer.
He said: "The Mako Gold Mine is a high-quality, cash-generating productive badet that complements our existing portfolio of large-scale, long-lived mines. The Toro Gold team discovered the Mako deposit in 2010 and has successfully developed a valuable gold mine. We are delighted to combine our activities. Senegal is an attractive investment jurisdiction for the mining sector, and we look forward to working closely with the Government of Senegal, our 10% partner at Mako, to maximize the value of Toro Gold's portfolio. "
In light of this acquisition, management has revised its production and cost forecast for the 2019 fiscal year to 400,000 ounces of gold for an AISC of $ 960 / ounce. Previously, it had produced 330,000 ounces for an AISC of $ 990 an ounce.
It will not be only Resolute who will be at the clock on Thursday. While the US Federal Reserve is expected to announce a rate cut before the opening of the market, gold mines such as Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could be moving.
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