Its latest acquisition deal continues its diversification trend, which started two years ago, away from thermal coal.

In Dec 2017, Indonesian coal miner Golden Energy & Resources (GEAR) bought a 10% stake in a top ASX-listed gold miner, Westgold Resources. 

In Nov 2018, Singapore-listed GEAR followed up with a takeover offer for 100% of ASX-listed Stanmore Coal, a coking coal play. It managed to garner a 28% stake.

Now, GEAR is on the brink of becoming a joint owner of the Ravenswood Gold Mine in Australia. 

Ravenswood1.20Ravenswood gold mine is located in north-east Queensland, Australia.
Photo: https://www.rml.com.au/ravenswood/target="_blank"


GEAR and specialist resources private equity manager, EMR Capital, formed a consortium and signed an agreement to acquire Ravenswood, some 130 kilometres south of Townsville in Queensland, Australia. 

The vendor is ASX-listed Resolute Mining Limited.

Ravenswood is an existing operation with "significant expansion potential to become a large scale, low cost and long life producer," according to GEAR.

The resource base includes 5.9 million ounces of gold as at 30 June 2019.

GEAR
stock price 

21 c

52-week range

15–26 c

PE (ttm)

57

Market cap

S$482 m

Shares outstanding

2.35 b

Dividend 
yield 
(ttm)

1.38%

1-year return

-3%

Source: Bloomberg

The consortium has agreed to an upfront consideration of A$100 million comprising A$50 million of cash, A$50 million of deferred consideration via the issue of a promissory note which attracts interest at 6% per annum.

In addition, there is up to A$200 million consideration in contingent upside instruments linked to the average gold price and the investment outcomes of Ravenswood for the consortium.

The effective economic interest will transfer to the consortium from the completion date, which is expected to be before the end of March 2020.

This will be EMR’s third mining operation in Queensland.

EMR owns the Capricorn copper mine near Mt Isa and, with partners Adaro and Mitsui, the Kestrel coking coal mine near Emerald in the Bowen Basin.

Jason Chang, Chief Executive Officer of EMR, said the purchase reflected EMR’s positive view on the future prospects for Ravenswood as one of Australia’s high potential gold mines with scale, strong production and reserve/resource expansion upside, and located within one of the Australia’s most prospective regions for gold.

MarkZhou3.18“Ravenswood has a rich mining history and this acquisition provides GEAR with an opportunity to own an established gold producing asset with great potential in scalability, exploration and aggregation upside.

"After Westgold, this will be GEAR’s second gold investment in Australia diversifying its revenue streams to include that of counter-cyclical precious metals.


“Similarly, GEAR is delighted to invest alongside EMR which has extensive operational experience in this sector. GEAR is looking forward to working closely with EMR to develop and continue to grow a strong partnership with the government and the local workforce as well as the community.”

-- Mark Zhou (photo),
Senior Head of Investments at GEAR


More info can be found in SGX filing here. 


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