Investors will be watching Resolute Mining Limited (ASX: RSG) shares today after the company provided an update on its Bibiani Gold Mine last night. The gold miner's shares have been in a trading halt since yesterday morning pending a company announcement. Following last night's update, it's most likely shares will resume normal trading today.
The Resolute share price last traded at 63 cents at Tuesday's market close.
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What did Resolute announce?
The Resolute share price could be under pressure today as investors weigh up the company's shock announcement.
According to its release, Resolute has received notification from the Ghanaian Minerals Commission that its mining lease for the Bibiani Gold Mine has been terminated. All activities and operations at the site have been instructed to cease immediately following the decision.
It will be interesting to see how the Resolute share price responds this morning after the company said the action is unexpected and it will seek clarification from the Minister's office for the reason behind the termination. Furthermore, legal advice is being taken on the validity of the notice, the company's rights of appeal, and a potential recourse.
Late last year, Resolute entered a binding agreement to sell the Bibiani Gold Mine to Chifeng Jilong Gold Mining Co. Ltd (Chifeng). The $105 million deal was expected to be finalised during the first quarter of 2021. However, with the latest roadblock, it seems Resolute may have to review its options.
More on the Bibiani Gold Mine
Located in Ghana, the Bibiani Gold Mine was acquired by Resolute in 2014. Since then, the company has run two surface and underground resource drilling programs to re-assess the mine's potential.
Its most updated feasibility study found that the Bibiani Gold Mine contains 2.5 million ounces of mineral resources. In addition, the project could produce approximately 100,000 ounces over a 10-year mine life at an all-in sustaining cost of US$764 per ounce.
About the Resolute share price
The Resolute share price has lost around 28% of its value in the past 12 months. Year to date, the company's shares have not fared much better, down roughly 25% on the back of the falling gold spot price.
Based on the current share price, Resolute commands a market capitalisation of about $695 million, with 1.1 billion shares outstanding.
