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- Red 5 (RED) divests its interests in Philippine-based Greenstone Resources, including the Siana Gold Project, to TVI Resource Development (TVIRD)
- The divestment allows RED to focus on its Western Australian gold portfolio
- TVI has paid RED $25.8 million and will contribute a net smelter return royalty of 3.25 per cent for up to 619,000 ounces of gold when production restarts in 2023
- Shares are down 2.33 per cent at 21 cents at 12:46 pm AEST
Australian gold miner Red 5 (RED) has divested its interests in Greenstone Resources to TVI Resource Development (TVIRD) for more than $25 million.
Based in the Philippines, Greenstone holds the Siana and Mapawa gold projects, which are also located in the South East Asian country.
TVIRD is an affiliate of Canada’s TVI Pacific and owns two operating mines, as well as a number of other development projects in the Philippines, with interests in gold, nickel and copper.
The sale follows an announcement by RED in July that it will focus on the King of the Hills and Darlot gold mines in Western Australia in a bid to become a mid-tier Australian gold producer.
Notably, the company suspended mining operations at Siana back in 2017 following delays in securing approvals required to build a tailings storage facility.
The recent sale saw Red 5 handover Greenstone to TVI, including the processing plant and all infrastructure at Siana, for US$19 million (A$25.8 million).
TVI will also pay RED a net smelter return royalty of 3.25 per cent for up to 619,000 ounces of gold, with a future face value estimated at US$36 million (A$48.9 million), based on a set gold price.
This royalty will be payable from first production of gold at Siana following the restart of operations, targeted in the first half of 2023.
To this end, TVIRD is reportedly in the “advanced stages” of securing funding to restart the processing plant, using existing operating cash flows and potentially debt funding.
Commenting on the sale, Red 5 Managing Director Mark Williams said the company thanked TVIRD for a smooth transition during the divestment process.
“We look forward to maintaining a long-term relationship with TVIRD and wish them well with their plans to restart the Siana Gold Project for the benefit of all key stakeholders in the region,” he said.
“From a Red 5 perspective, the transaction streamlines our portfolio and removes the annual holding cost of approximately $6 million.”
Mr Williams said the divestment crystallised a combination of cash value for shareholders while maintaining future exposure to the upside at Siana through the above capped net smelter return royalty.
“We are now well established on our growth trajectory to becoming a mid-tier Australian gold producer with the construction of the King of the Hills gold mine now in full swing and first gold production on track for the June quarter, 2022,” he said.
Shares were down 2.33 per cent at 21 cents at 12:46 pm AEST.
