- Evolution Mining (EVN) is selling its Mt Carlton gold mine to fellow ASX-listed Navarre Minerals (NML) for $90 million
- Navarre is set to pay $40 million upfront and $50 million in contingent payments to be made based on production and price milestones
- Roughly half of the $40 million upfront fee will be issued to Evolution as shares in Navarre, meaning Evolution will remain exposed to Mt Carlton
- EVN Chair Jake Klein says now is the right time to hand Mt Carlton over to an “emerging gold producer” who can focus on extending the project’s mine life
- Shares in Evolution Mining are up 2.21 per cent and trading at $3.70 each at 3:02 pm AEDT
Australian gold mining giant Evolution Mining (EVN) is selling its Mt Carlton gold mine to fellow ASX-listed Navarre Minerals (NML) for $90 million.
Evolution said it was selling the Queensland project as part of its corporate strategy to upgrade the quality of its portfolio, with a stronger focus on growth projects.
The ASX 200-lister will handball the gold mine to Navarre for a mix of cash and scrip, with $40 million to be paid by NML upfront and another $50 million worth of contingent payments to be made based on gold production milestones and future gold prices.
Roughly half of the $40 million upfront fee will be issued to Evolution as shares in Navarre as part of a capital raise launched today to support the Mt Carlton buy.
This will give Evolution a maximum interest of 19.9 per cent in NML, meaning EVN will remain exposed to the Mt Carlton project even after its sale.
Following the upfront fee, Navarre will pay Evolution $25 million based on gold production from the Crush Creek zone of the Mt Carlton mine: Navarre will pay $5 million after Crush Creek produces 50,000 ounces of gold, another $5 million after 100,000 ounces, and $15 million after 175,000 ounces of gold.
The final $25 million will be paid as a five-per-cent production royalty whenever the average spot price of gold is higher than $2250 over a quarter. The royalty is payable from the start of July 2023 for up to 15 years.
Evolution Chair Jake Klein said Mt Carlton had generated “excellent returns” for EVN shareholders since it was first commissioned back in 2013.
“With the company focussed on the 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,” Mr Klein said.
“The exposure we have retained will enable Evolution shareholders to benefit from the future success of the operation.”
According to Evolution, the Mt Carlton mine represented around 1.5 per cent of the company’s total mineral resources and 1.7 per cent of its ore reserves.
The mine was forecast to produce between 45,000 and 50,000 ounces of gold during the 2022 financial year at an all-in sustaining cost (AISC) of between $1650 and $1700 per ounce.
As such, Evolution has had to revise its 2022 total production guidance to between 670,000 ounces and 750,000 ounces of gold. The Mt Carlton sale also lowers total AISC by $40 per ounce to between $1180 and $1240 per ounce.
Evolution said it expected the sale to officially close during the December 2021 quarter.
Shares in Evolution Mining were up 2.21 per cent and trading at $3.70 each at 3:02 pm AEDT. The company has a $6.8 billion market cap.