Evolution Mining plans to enhance its portfolio by selling the Mt Carlton gold mine in Queensland to Navarre Minerals for $90 million in a transformational deal for the buyer.
According to Evolution, the sale of Mt Carlton fits into its strategy of divesting and acquiring assets to bolster its portfolio.
Evolution’s group AISC will be reduced by $40 per ounce to $1180/ounce following the sale, which will also lower production to between 670,000 to 725,000 ounces.
The agreement consists of a $40 million upfront payment in cash and equity once the sale is finalised.
It also includes up to a $25 million contingent consideration that is payable on gold production milestones and up to $25 million payable through a five per cent gold price royalty when the average gold price is higher than $2250 per ounce.
Navarre has labelled the acquisition as transformational as it will turn the company into a gold producer.
The company will make Mt Carlton a cornerstone asset and will look to expand the resource through nearby mine and greenfield exploration.
“Mt Carlton is a proven, high-margin operation and an attractive vehicle for Navarre to transition from gold exploration company to producer – particularly given the Mt Carlton operations’ successful history of production and its potential for significant mine life extension,” Navarre managing director Ian Holland said.
“Under the transaction, Navarre will inherit a well-established operation and a highly experienced site operating team and workforce which we are confident will fit in with Navarre’s own culture and focus on potential for further discovery and resource addition.”
Evolution has also agreed to participate in Navarre’s equity raise of up to a 19.9 per cent share holding, which is equivalent of around $20 million. This will allow Evolution shareholders will retain exposure to Mt Carlton.
“Mt Carlton was Evolution’s first development project and has generated excellent returns for shareholders since it was commissioned in 2013,” Evolution executive chairman Jake Klein said.
“With the company focussed on delivery of growth projects at the cornerstone assets in the portfolio, we believe now is the time to hand Mt Carlton over to an emerging gold producer who can focus on extending the operation’s mine life.
“The exposure we have retained will enable Evolution shareholders to benefit from the future success of the operation.”
Mt Carlton’s guidance in the 2021-22 financial year was between 45,000 and 50,000 ounces with an AISC of $1650 to $1700 per ounce.
“We are confident that Navarre will be a great partner for those stakeholders in the future,” Klein said.
The transaction is anticipated to close in the December 2021 quarter with Navarre’s economic interest to begin from October 1.