Evolution Mining to Acquire Carnaby Resources for A$213 Million in All-Share Deal

Evolution Mining Secures Strategic Control of Carnaby’s Greater Duchess Copper Gold Project

Evolution Mining's acquisition of Carnaby Resources marks a major consolidation in Australia's junior exploration sector, giving Evolution control over one of the nation's most advanced undeveloped copper-gold projects. The Greater Duchess Copper Gold Project, situated in Queensland’s Mount Isa inlier, encompasses multiple camp-scale Iron Oxide Copper Gold deposits across 1,900 square kilometres. Key deposits include Mount Hope, Trekelano, Nil Desperandum, and Lady Fanny, with recent exploration success at Trekelano underscoring the project's development potential.

This acquisition offers Evolution a de-risked development opportunity within a tier-one mining jurisdiction. Carnaby’s Mineral Resource Estimate at Greater Duchess totals 29 million tonnes at 1.5% copper equivalent, containing 441,000 tonnes of copper equivalent metal. The project also includes a Probable Ore Reserve of 8.4 million tonnes at 1.9% copper equivalent, equating to 164,000 tonnes of copper equivalent. Evolution’s operational expertise and strong financial position enable advancement of these assets, with potential synergies from processing ore at Evolution’s nearby Ernest Henry operation.

Premium Offer Highlights Market Confidence in Greater Duchess Project

The implied valuation of A$0.772 per Carnaby share delivers significant premiums over recent trading prices, reflecting strong market confidence in the Greater Duchess development and its value creation potential. The offer is a 60.4% premium to Carnaby’s last closing price of A$0.48 on 24 July 2026, a 46.2% premium to the 15-day volume-weighted average price of A$0.53, and a 31.4% premium to the 30-day volume-weighted average price of A$0.59. These premiums underscore Evolution’s assessment of the project’s intrinsic value and their confidence in its successful development.

The A$213 million fully diluted equity value includes Carnaby’s 276.1 million shares at the implied price plus cash consideration for cancelling 5.52 million unlisted options via a private arrangement. The scheme consideration, set at 0.0682 Evolution shares per Carnaby share, is based on Evolution’s closing price of A$11.29 on 24 July 2026. Carnaby shareholders gain immediate value certainty from the all-scrip offer while retaining exposure to future upside in Greater Duchess and Evolution’s broader portfolio.

Carnaby Board Endorses Scheme, Subject to Standard Conditions

The Carnaby Board unanimously supports the proposed scheme as the most attractive risk-adjusted option for shareholders after a detailed strategic review of various development scenarios, including standalone options. The recommendation is contingent on no Superior Proposal emerging and an independent expert concluding the scheme is in shareholders’ best interests. Directors holding about 7.3% of Carnaby shares have committed to vote in favor, subject to these conditions.

Managing Director Rob Watkins highlighted that the transaction reflects Carnaby’s seven-year journey from the 2021 Nil Desperandum discovery to recent Trekelano exploration successes, offering a de-risked path to developing a high-grade mine leveraging Evolution’s operational expertise. Strategic benefits include a substantial immediate premium, de-risking of development and funding via Evolution’s strong balance sheet, exposure to dividends under Evolution’s policy, and access to Evolution’s world-class assets. Shareholders also maintain potential upside from Greater Duchess, including synergies from ore processing at Ernest Henry.

Scheme Implementation Schedule and Regulatory Approvals

The transaction will be executed through a court-approved scheme of arrangement under Part 5.1 of the Corporations Act 2001 (Commonwealth). A Scheme Meeting is anticipated between late October and early November 2026 to secure shareholder approval. The scheme is subject to customary conditions including regulatory and Court approvals. Notably, clearance from the Australian Competition and Consumer Commission (ACCC) under the Competition and Consumer Act is required to ensure no competition concerns arise.

Additional conditions include no material adverse effects on Carnaby, no prescribed events, and that Carnaby’s representations and warranties remain materially accurate at implementation. The Scheme Implementation Deed details comprehensive terms governing the transaction. Upon completion, Carnaby shareholders are expected to hold about 0.9% of pro-forma Evolution shares, based on the exchange ratio and prior to shares issued to Glencore.

Carnaby’s Strong Financial Position Supports Transaction Value

Carnaby Resources entered the transaction from a position of financial strength, with a streamlined capital structure and A$13.0 million cash as of 31 March 2026. This supported ongoing exploration and development while maintaining flexibility. With 276.1 million shares outstanding, Carnaby’s market capitalization was approximately A$133 million at the A$0.48 closing price before announcement, reflecting investor recognition of its exploration success and project potential.

This disciplined capital management made Carnaby an attractive acquisition target, with sufficient liquidity for operations but requiring external funding for major development. Evolution’s acquisition provides the balance sheet capacity to advance Greater Duchess from development to production, addressing a key funding risk for junior explorers. Carnaby’s experienced management team, led by Managing Director Rob Watkins and Non-Executive Chairman Peter Bowler, has delivered significant shareholder value through exploration over seven years.

Operational Synergies with Evolution’s Ernest Henry Mine

A strategic advantage of Evolution’s acquisition is the potential to achieve operational and cost synergies by integrating Greater Duchess ore processing with Evolution’s Ernest Henry operation, located in the same Mount Isa inlier region. Evolution’s expertise in gold and copper production and existing infrastructure at Ernest Henry enable development of Greater Duchess with lower capital intensity and potentially improved margins compared to standalone development. Proximity allows for optimized ore logistics and shared processing, unlocking significant value.

As an ASX-50 gold and copper producer, Evolution’s technical and operational capabilities provide confidence in advancing Greater Duchess to commercial production. This integration opportunity offers Carnaby shareholders ongoing participation in value creation beyond the immediate scrip consideration through their Evolution shareholding post-scheme.

Carnaby’s Exploration Success and Long-Term Development Vision

Carnaby Resources developed Greater Duchess primarily through exploration success rather than acquisitions, identifying multiple high-grade copper-gold deposits over seven years. The Nil Desperandum discovery established the exploration model for Iron Oxide Copper Gold deposits in the Mount Isa inlier. Further exploration uncovered Mount Hope, Trekelano, and Lady Fanny deposits, demonstrating significant geological potential across 1,900 square kilometres.

Recent exploration at Trekelano has reinforced Greater Duchess’s importance within Australia’s copper-gold pipeline, attracting Evolution’s interest. The Mineral Resource of 29Mt at 1.5% copper equivalent and Probable Ore Reserve of 8.4Mt at 1.9% copper equivalent reflect extensive systematic exploration. The transaction acknowledges both the intrinsic value created and the substantial expenditure needed to advance the project to production, which Evolution’s financial strength and expertise can efficiently support.

Gold Exploration Assets Adjacent to Northern Star’s Hemi Project

In addition to Greater Duchess, Carnaby holds 397 square kilometres of gold exploration tenure adjacent to Northern Star Resources Limited’s Hemi Development Project in Queensland. This positions Carnaby within one of Australia’s most significant recent gold discovery regions. Proximity to Hemi, which has revealed substantial gold mineralisation, indicates strong gold prospectivity across Carnaby’s holdings.

These gold exploration assets diversify Carnaby’s portfolio and represent upside beyond Greater Duchess. Through the scheme, Evolution gains access to these gold prospects, complementing its world-class gold and copper portfolio. This combination supports a portfolio approach to value creation, enabling Evolution to prioritize assets with superior economic returns within its medium-term plans.

Dividend Benefits for Carnaby Shareholders Post-Acquisition

Evolution Mining’s established dividend policy provides additional value to Carnaby shareholders beyond the immediate premium of A$0.772 per share. Upon scheme completion, Carnaby shareholders become Evolution shareholders and participate in Evolution’s dividend framework, subject to board discretion. This offers anticipated cash returns during Greater Duchess’s transition from development to production, delivering a de-risked income stream during a typically capital-intensive phase.

The dividend aspect enhances risk-adjusted returns compared to Carnaby’s prior status as a development-stage explorer without dividend capacity. Investors gain certainty from Evolution’s consistent dividend track record, improving overall shareholder value compared to standalone development scenarios where capital would be fully absorbed by project funding prior to cash generation.

Regulatory and Scheme Conditions Pose Completion Risks

Although the scheme is binding, completion depends on satisfying multiple customary conditions. ACCC approval is critical to ensure the deal does not breach competition laws by increasing market power in relevant sectors. Given both companies’ activities in Australian gold and copper markets, the ACCC will assess potential competition impacts, particularly in copper exploration, development, and production.

Other conditions include Court approval under the Corporations Act, ensuring fairness to shareholders and procedural compliance. Shareholder approval at the Scheme Meeting, expected late October to early November 2026, requires specified majorities. Additional conditions require no material adverse effects, no prescribed events, and that Carnaby’s representations and warranties remain materially true. These standard conditions represent potential risks that could delay or prevent completion if unmet or not waived by Evolution.