Evolution Mining to enter into a joint venture with Enterprise Metals for Murchison Project


Evolution Mining Limited (ASX: EVN), a growth-focused Australian gold miner, announced on 1st April 2019 that the company entered into an earn-in joint venture with Enterprise Metals Limited (ASX: ENT). The company entered into an agreement over the Murchison exploration project, which is an early-stage gold exploration project.

The project covers an estimated area of approximately 750Km square in the Murchison region of central Western Australia. It also hosts multi-million ounces of gold deposit though Achaean greenstone gold deposits and encompasses of a continuation from Big Bell gold deposit and Cuddingwarra Shear Zones, which remains poorly tested.

As per the company’s Vice President of Discovery and Business Development, Glen Masterman, the project is in a well-endowed district of gold and is engrossing as most prospective areas in the district are poorly tested under shallow cover.

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As per the agreement, Evolution can earn an 80% interest in the project after fulfilling the initial requirements under the agreement. The company can earn an 80% stake by spending A$6 million on exploration activities, that would be undertaken by the joint venture, over a tenure of four years and by making an initial cash payment of A$150,000, upon signing the contract, to the Enterprise Metals Limited. Besides, the company would make an additional payment of A$150,000 if the agreements remain in place after two years, to acquire the 80% interest.

As of now, the completion of the decided agreement remains subjective to the conditions of standard regulations and the company will operate at the project site during the earn-in period.

The company recently acquired a stake in Kundana project of Tribune Resources and is moving progressively over the acquisition and joint ventures front, which in turn might place the company in a better position to produce more gold and take advantage of a high commodity price scenario.

A significant concern of any gold miner is to replenish the mined ore, which can be done either by expanding exploration of current operations or by acquisition of high prospective to improve the ore grade. The company is steadily moving over both fronts and expanding its capacity for gold production.

However, a recent downward bolt in gold prices has exerted a pressure on the company’s share prices on the Australian Stock Exchange and the share prices of the company fell from a recent high of A$3.745 (Day’s high on 29th March 2019) to the present level of ~A$3.6 (as on 1st April 2019).

It is axiomatic that the gold prices move strings of gold miners’ stocks, but it should not be considered as the only factor to judge a gold miner, as high commodity prices only support miners to realise high prices in terms of high sales proceeds, but it does not move a company all alone. To reckon direction of such companies, the investors should also take a look over an entire stream of operations along with the skills of the management and their risk and reward taking capabilities.


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