Evolution Mining divests Mt Carlton gold mine to Navarre

Highlights

  • Evolution Mining Ltd. has signed a binding agreement with Navarre Minerals Ltd. to sell the Mt Carlton gold mine in Queensland for AU$90 million.
  • The pact is in line with Evolution’s corporate strategy to enrich its portfolio through either divestment or acquisition.
  • Evolution has updated the Group-level FY22 Guidance as well as its 'three-Year Outlook' for FY23 and FY24 following the signing of the divestment agreement.

One of the leading gold miners, Evolution Mining Limited (ASX:EVN), has entered into a binding agreement with Navarre Minerals Limited (ASX:NML) to sell the Mt Carlton gold mine, including Crush Creek, for a total consideration of up to AU$90 million. The handover is in line with Evolution’s corporate strategy to enrich its portfolio through either divestment or acquisition.

Commissioned in 2013, Mt Carlton was the first development project of Evolution. The operations have delivered striking returns for the shareholders over the years. The transition of Mt Carlton’s ownership commenced on 1 October 2021 and is expected to finish in the December quarter of 2021. However, through shareholding of up to 19.9%1 in Navarre and contingent considerations, Evolution will retain upside exposure at Mt Carlton.

Divestment of gold mine, Australia

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With completion of the sales agreement, Evolution will have four wholly owned mines, Mt Rawdon in Queensland, Mungari in Western Australia, Red Lake in Ontario, Canada, and Cowal in New South Wales.

ALSO READ: Evolution Mining (ASX:EVN) prices maiden debt placement; key details

Split of the total consideration of the deal:

  • AU$40 million payable upon completion of transaction. Evolution will hold a 19.9% stake in Navarre. The final holding will be fixed after completion of equity raise.
  • Up to AU$25 million will be paid on achieving cumulative gold production milestones from Crush Creek. AU$5 million to be paid upon achieving 50,000 and 100,000 ounces of gold production with A$15 million payable upon achieving 175,000 ounces.
  • Up to AU$25 million contingent consideration payable as a 5% gold price linked royalty where the average spot gold price is more than AU$2,250/oz in a given quarter. The royalty is to be paid on production from both Crush Creek as well as Mt Carlton for up to 15 years commencing 1 July 2023.

Revised Three-Year Outlook for FY23 and FY24
Source: Company release dated 5 October 2021

Revised Group FY22 Guidance

Post completion of this divestment, the All-in Sustaining Cost (AISC) is planned to be reduced to AU$1,180–AU$1,240/oz. A decline in the FY22 production to 670,000–725,000 ounces is also anticipated. The sustaining and major capital will decrease by AU$2–AU$8 million and AU$10–AU$15 million, respectively.

Guidance for fiscal year 2022, FY22

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Prior to its sale, Mt Carlton represented 1.5% of gold mineral resources and 1.7% of gold ore reserves of Evolution Mining. As per the FY22 guidance, it would have contributed between 45,000 and 50,000 ounces at AISC of AU$1,650 to AU$1,700 an ounce.

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