Ann: Sale of Ravenswood Gold Mine, page-48

AFR article.

EMR plots expansion plan at Ravenswood mine.

Acquisitive private equity firm EMR Capital believes its plan to raise production rates at Queensland's Ravenswood mine will allow it to be profitable even if gold prices retreat below $US1300 per ounce. An EMR-led consortium was officially announced as the new owner of Ravenswood on Wednesday, under a deal that will see existing owner Resolute Mining paid $50 million of cash upfront. Resolute could yield as much as $300 million from the sale over the next decade, depending on the trajectory of gold prices, the level of success EMR has at the mine and the timing of any future ownership changes.

Each ounce of goldproduced at Ravenswood cost more than $2000 to produce in the first half of2019, meaning the mine is a marginal producer in its current format even whilegold prices are near record highs. But Resolute has been developing animprovement plan for the mine that could see production volumes increase andunit costs decline to around $1000 per ounce, and EMR managing director JasonChang said his firm would leverage much of the work done by Resolute.

EMR's modus operandi is to buy assets then increaseproduction volumes and improve operational efficiency, meaning it can makereturns even if commodity prices decline after an acquisition.

The approach means EMRis willing to acquire assets at what appears to be cyclical highs in commodityprices, such as its acquisition of Rio Tinto's Kestrel coking coal mine in2018. Gold prices have this month risen to the highest levels since April 2013, and the yellow metal was fetching $US1551 per ounce on Wednesday. Prices in Australian dollar terms remain close to record highs above $2200 per ounce.

''We are confident wecan achieve higher production in coming years which means unit costs comedown,'' said Mr Chang.

''Our model has to beable to make money even at $US1300 and $US1400 per ounce and we are comfortablethat we can.''

Mr Chang said theRavenswood processing plant would likely be expanded from about 5 milliontonnes per year capacity to 7 million tonnes.

''This has potentialto be a long life, low cost, low risk gold mine in a great jurisdiction in agreat country, so it ticks most of the boxes for us," he said.

EMR will be joined inthe Ravenswood acquisition by Singapore's Golden Energy and Resources, whichowns almost 29 per cent of ASX listed Stanmore Coal.