NewG-Resources shares close up 2.8 per cent on US$775 million gold mine sale
Shares gained as much as 16.5 per cent in morning after deal for Indonesia business was announced
Shares of G-Resources gained as much as 16.5 per cent on Monday after Australian private equity group EMR Capital, chaired by G-Resources deputy chairman Owen Hegarty, and US-based private equity manager Farallon Capital Management joined two Chinese-Indonesian tycoons in a US$775 million purchase of G-Resources’ entire gold mining business in Indonesia.
However, they ended the day up just 2.8 per cent at 18.1 HK cents, after trading as high as 20.5 HK cents at one point.
G-Resources operates the profitable Martabe gold mine in western Sumatra that began production in 2012, almost a year after the price of gold hit an all-time high of US$1,888 on ounce in September 2011.
It has recently fallen to the lowest in almost six years and traded at around US$1,075 in the spot market in Asia on Monday morning.
“While the mining business has continued to achieve positive financial results ... the significant volatility and downward movement in spot gold prices in recent months has directly affected profitability,” G-Resources said in a filing to the Hong Kong stock exchange. “The directors believe it is an opportune time and in the best interest of the shareholders to dispose of the [mining business] ... and pursue a diversification strategy in order to broaden its revenue base and achieve more consistent returns.”
Firms owned 61.4 per cent by EMR, 20.6 per cent by Farallon, 11 per cent by Martua Sitorus and 7 per cent by Robert Hartono and his family have agreed to buy 95 per cent of the mining business for US$775 million.