The Resolute Mining Limited (ASX: RSG) share price is surging today, with a combination of a galloping gold price and news of an acquisition pushing the RSG share price up. RSG shares were placed in a halt after trade on Tuesday pending the announcement and fell on Thursday, closing at $1.68 per share. However, with the gold price jumping overnight to its highest level ever in Australian dollars, the Resolute share price opened this morning at $1.81 and is now hovering around the $1.87 mark, an 11.31% gain.
What has Resolute acquired?
Resolute announced on Wednesday that it has acquired the private miner Toro Gold Limited for US$274 million (comprising of US$130 million in cash and 142.5 million Resolute shares). 94% of Toro shareholders approved the acquisition and Resolute is taking immediate control as of today.
Toro Gold's 'flagship asset' is the Mako gold mine in Senegal, a 'low-cost, high-margin' mine which produced 156,926 ounces of gold at an all-in sustaining cost of US$655/oz in 2018. Toro also owns the Syama mine in Mali and the Bibiani mine in Ghana.
What's happening with the gold price?
The gold price has had a turbulent week, to say the least. On Thursday (AEST), gold prices collapsed (in US dollar terms) after the US Federal Reserve announced that its rate cut was unlikely to be the first in a series and was more of a 'one-off' event. This evidently disappointed investors – gold prices collapsed from the US$1,430 level back towards the US$1,400 level.
This was quickly forgotten when US President Donald Trump announced that the US-China trade war ceasefire was over and the US would be slapping additional tariffs on Chinese goods. Gold prices spiked back up to over US$1,440 on the news and pushed over the A$2,100 per ounce level in Australia for the first time ever. As an Australia-domiciled miner, Resolute sells its gold in US dollars, but banks its profits in Aussie dollars.
Today's gold prices make for a fortunate time to announce the acquisition of additional gold assets and explains a significant factor behind Resolute's surging share price.
