Evolution Mining Limited (ASX:EVN) has entered into an agreement with Newmont Goldcorp Corporation to acquire 100% of the Red Lake underground gold mining complex in western Ontario, Canada.
The operation comprises the Red Lake and Campbell complexes, each consisting of an underground mine and associated processing facility, and the Cochenour mine. In the 2018 calendar year the mine produced 276,000 ounces of gold at an All-in Sustaining Cost of US$988 per ounce.
In CY2019, Red Lake is forecast to produce 150,000 – 160,000 ounces of gold at an AISC of approximately US$1,600/oz. Since production commenced in 1949, Red Lake has produced more than 25 million ounces of gold at an average grade in excess of 20g/t.
Evolution’s Executive Chairman, Jake Klein, said the company has agreed to pay Newmont Goldcorp US$375 million in cash upon closing of the transaction, and up to an additional US$100 million payable upon new resource discovery.
Evolution has committed to invest US$100 million on existing operations and an additional US$50 million in exploration at Red Lake over the first three-year period following completion of the transaction.
The transaction and associated costs will be funded by a new five-year A$600 million Senior Unsecured Term Loan through Evolution’s syndicate of lending banks.
Evolution is excited to be adding Red Lake to its portfolio, providing the Company with a high-grade, long life gold mine in Canada,” Mr Klein said.
“We have been actively looking at assets in Canada since 2017 as we believe it is a country with low geopolitical risk, high geological prospectivity and a strong mining culture. Red Lake is an under- capitalised asset which, through a committed investment in development and exploration, is intended to become a cornerstone asset in the Evolution portfolio.
“We have identified a range of opportunities to deliver an operational turnaround of the asset which is expected to create significant value for our shareholders and improve the quality of our portfolio. The camp has significant exploration potential which, coupled with its relatively unexplored recent past, provides significant upside potential for Evolution to extend the longevity of the operation well beyond its current 13-year life of mine plan.
“We are confident that Evolution will be an excellent and committed steward of Red Lake and look forward to continuing Newmont Goldcorp’s track record of safe and sustainable operation for the long-term benefit of a broad range of stakeholders including the local workforce, regional communities and the Lac Seul and Wabauskang First Nations Groups.”
Highlights of the transaction include: