Australia’s move into the North American gold mining industry continues with Evolution Mining revealing a $US375 million ($A553 million) deal with the world’s biggest gold miner, Newmont Goldcorp, to buy the latter’s Red Lake gold mining complex in Canada.
Under the terms of the deal revealed on Tuesday, Evolution will also pay a further $US100 million upon the discovery of new resources at the gold mine.
As well, Evolution has committed to invest $US100 million on existing operations and an additional $US50 million in exploration at Red Lake over the first three-year period following completion of the purchase.
“Evolution is excited to be adding Red Lake to its portfolio, providing the company with a high-grade, long-life gold mine in Canada,” Evolution executive chairman Jake Klein said in yesterday’s statement.
“Red Lake is an under-capitalised asset which, through a committed investment in development and exploration, is intended to become a cornerstone asset.”
Red Lake is an underground gold mining operation in western Ontario, Canada. Its mines produced 276,000 ounces of gold in the year to December 2018.
Evolution’s acquisition, to be funded through a $A600 million loan facility, adds to the company’s five wholly-owned gold mines in Australia at Cracow, Mount Carlton and Mount Rawdon in north Queensland, Cowal in central-western NSW, and Mangari in Western Australia.
Mr. Klein said Evolution had identified a range of opportunities to deliver an “operational turnaround” of the Red Lake complex. The company has committed to invest $US100 million on existing operations and a further US$50 million in exploration at Red Lake over the first three-year period following the finalisation of the sale.
The deal is the latest in a recent run of Australian gold miners buying up assets in Canada. Newcrest acquired a 70% stake in Imperial Metals’ Red Chris mine in Canada’s British Columbia and St Barbara acquired Atlantic Gold in Nova Scotia. And in August last year Northern Star Resources bought the Pogo gold mine in Alaska from the Sumitomo group of Japan for $US260 million.
And earlier this month in an investment the other way, Saracen Resources revealed it will pay $1.1 billion for the 50% of the Super Put open cut in WA from Barrick Gold of Cadia and a rival to Newmont Goldcorp (in fact Barrick last year tried to block the Goldcorp takeover by Newmont by trying to buy Newmont). Seeing Newmont owns the other 50% of the Super Pit, a sale of that interest could come shortly.
Evolution shares rose 2.3% to $3.90.