syama go-ahead, page-13

re: syama go-ahead - from the net Tuesday April 4, 7:42 AM
Australia's Resolute Mining Considers Selloff, Merger
SYDNEY (Dow Jones)--Australia's Resolute Mining Ltd. (RSG.AU) said it will consider selling uranium assets and merging as ways to finance its third and largest gold mine.

The board has approved a US$120 million redevelopment of the Syama gold mine in Mali for which the company is studying financing options.

Board approval is seen as a soft go-ahead for the project with a final commitment expected in six months.

"Over the next six months we'll start to crank the project up to a full development and that will also be the fund raising period," Chief Executive Peter Sullivan told Dow Jones Newswires Monday.

Besides the more traditional equity and debt raising financing options, he said the company will consider offloading its stake in Australia's Valhalla Uranium Ltd. (VUL.AU) or merging with a North American or European gold producer.

As Australian uranium equities rallied Monday on the signing of an agreement paving the way for exports to China, the value of Resolute's 100 million Valhalla shares rose to A$138 million.

While the Valhalla shareholding is still in escrow, Sullivan said an eventual unloading of the stake was "one of the alternatives we have to raise funds."

Merging is another, he said.

"I'd say with an offshore entity (since) the arbitrage into the North American and London markets means there's much more potential for one of those parties to view us positively than an Australian listed entity because their multiples are much higher."

"While both the asset sales and the corporate activity to some extent are outside our control, those sectors are quite lively now so the possibilities are not quite as outlandish as you might otherwise think," he said.

Once financing is in place, Syama is set to become the company's third and largest mine when it starts producing at an estimated 250,000 troy ounces of gold a year from mid 2008. That would consolidate Resolute's position as the Australian stock exchange's third largest gold miner behind Newcrest Mining Ltd. (NCM.AU) and Lihir Gold Ltd. (LHG.AU).

Eventually, Syama would exceed combined output of Resolute's existing two mines, Ravenswood in Australia's Queensland state and Golden Pride in Tanzania, and take companywide output beyond the 500,000 ounces a year level.

While current quarter-century high gold prices add to the project's appeal, its cost has swelled US$20 million on previous estimates and the development timetable has been pushed out another six months.

Updated cash cost estimates are also up to US$336 an ounce from previous estimates of US$291.

"The market at the moment is pretty hot in this development construction sector and it's just hard to get engineers and builders and hard to get the gear," Sullivan said.

Over the next six months Resolute plans to wrap up fiscal terms with the government, recruit key staff, finalize power supply and a revised environmental impact statement, and appoint an open pit mining contractor.