Evolution Mining has signed an agreement to acquire a stake in Glencore's Ernest Henry Mine (EHM) in Australia in a A$880m ($671.9m) deal.

Under the agreement, Glencore will remain operator of EHM and continue to manage day-to-day operations.

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Evolution will purchase a majority stake in the gold output, in addition to copper production from the mine.

The company will receive a 30% economic stake and be entitled to 100% of gold production from EHM, subject to an agreed life of mine and block model.

"Evolution Mining will also pay ongoing monthly cash contributions equal to 30% of production and capital."

Upon closing the deal, Evolution Mining will also pay ongoing monthly cash contributions equal to 30% of production and capital costs associated with copper concentrates to Glencore.

Glencore said that the transaction forms part of its debt reduction plans that were announced on 7 September last year.

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Subject to customary regulatory approvals, the deal is expected to close by the end of this year. 

The deal will see Evolution receive the equivalent of 30% of copper and silver payable and 100% of gold payable production from EHM. 

Glencore will purchase the copper and silver payable delivered to Evolution for cash at market value.

The company owns 100% of Ernest Henry Mining, which owns and operates EHM.

EHM is a copper-gold-silver operation located near Cloncurry in north-west Queensland and currently produces around 60,000tpa copper and 80,000ozpa of gold in copper concentrate.

The current life of mine extends to 2027.