Evolution Mining, an Australia-based gold mining company, has signed a binding deal to acquire an 80% stake in the Northparkes copper-gold mine from CMOC Group for $475m (A$722.35m) in cash.
Of the total consideration, $400m will be paid upfront and the balance of $75m will be payable on a contingent basis.
The remaining 20% interest in the mine will be retained by Sumitomo Metal Mining and Sumitomo Corporation. Evolution will acquire the interest from CMOC’s Australian subsidiary, CMOC Mining.
Evolution also agreed for an offtake agreement with IXM, a subsidiary of CMOC, which will see it purchase the copper concentrates produced from the mine.
The company plans to fund the transaction through a A$525m fully underwritten institutional placement and a new A$200m five-year-term loan.
It will also undertake a non-underwritten share purchase plan for its retail shareholders.
For the placement, the company will issue 138.2 million of its shares, each priced at A$3.8, to raise A$525m. The issue price marks an 8.2% discount to the stock close of A$4.14 on 4 December 2023.
The amount raised will be used for the transaction as well as for its general working capital needs.
Evolution managing director and CEO Lawrie Conway said: “Positioned in the Lachlan Fold Belt, one of Australia’s most prospective copper-gold belts, Northparkes has a long history of Ore Reserve replenishment and growth, increasing reserves by 49% since 1994, with a current ore reserve of 101 million tonnes. In addition, the asset is favourably located close to well-capitalised infrastructure, featuring concentrated mining options with five deposits situated within a two-kilometre radius.
“Following a period of higher capital investment, the asset is now entering a cash flow generation phase, aligned with our strategy to continue to deleverage our balance sheet while delivering returns to our shareholders. Notably, the transaction funding structure reflects our commitment to balance sheet management with no debt repayments due under this facility until the third quarter of FY25 [fiscal year 2025].”
Northparkes is situated 27km from Parkes in New South Wales and has been operating since 1994.
As of last year, the reported mineral resources for the mine were 526.9 million tonnes (mt) of copper at 0.55%, 0.19 grams per tonne (g/t) gold and 1.87g/t silver. The ore reserves were estimated at 101.4mt of copper at 0.53%, 0.27g/t gold and 1.87g/t silver.
Last month, the company secured an option to acquire a 75% undivided stake in the October gold project in Ontario, Canada, from Northern Superior Resources.
The company had spent a total of C$7m ($5.12m) and made cash payments totalling C$1.1m to Northern Superior to secure the option.
The October gold project features 1,284 claims covering an area of 265km².
