The Resolute Mining Limited (ASX: RSG) share price will be one to watch on Thursday after a late announcement out of the gold miner.
What was announced?
After the market close Resolute announced that it has signed a binding agreement to acquire Toro Gold for US$274 million. This comprises US$130 million cash and 142.5 million Resolute shares.
Toro Gold owns the low-cost, high-margin Mako Gold mine located in Senegal. In 2018, the mine produced 156,926 ounces of gold at an all-in sustaining cost (AISC) of US$655 an ounce.
This acquisition appears highly complementary to the company's existing portfolio which comprises 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 operational cashflow, increase revenues and dividends, and provide a strong platform for further growth.
Resolute's managing director and CEO, John Welborn, believes the acquisition of Toro Gold is consistent with the company's ambition to create a multi-mine, low-cost, African-focused gold producer.
He said: "The Mako Gold Mine is a high quality, strongly cashflow generative producing asset which complements our existing portfolio of large-scale, long-life mines. 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. Senegal is an attractive investment jurisdiction for mining, and we look forward to working closely with the Government of Senegal, our 10% partner at Mako, to maximise the value within Toro Gold's portfolio."
In light of this acquisition, management has revised its FY 2019 production and cost guidance to 400,000 ounces of gold at an AISC of US$960 an ounce. Previously it had guided to production of 330,000 ounces at an AISC of US$990 an ounce.
It won't be just Resolute that is on watch on Thursday. With the U.S. Federal Reserve expected to announce a rate cut before the market open, gold miners such as Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could be on the move.
