Evolution Mining Expands Copper Footprint with $720M Northparkes Acquisition

Evolution Mining Expands Copper Footprint with $720M Northparkes Acquisition

Acquisition Details and Future Expectations

Evolution Mining has announced its acquisition of the Northparkes copper and gold mine in NSW from China Molybdenum Company (CMOC) for $US475 million (approximately $720 million). The deal involves an upfront payment of $US400 million and potential additional payments up to $US75 million over the next three years, contingent on copper prices. Northparkes is expected to yield 25,000 tonnes of copper concentrate and about 38,000 ounces of gold annually for Evolution.

Partnership and Streaming Agreement

Japan’s Sumitomo will maintain its 20% stake in the mine. However, under a streaming agreement with Triple Flag, Evolution will yield 67.5% of the gold’s value and all silver produced. This streaming right was initially sold by CMOC to Triple Flag in 2020 for $US550 million.

Financial Strategy for Acquisition

To fund this acquisition, Evolution Mining plans to raise $525 million from shareholders through an institutional placement priced at $3.80 per share, representing an 8.2% discount on its last trading price. Additionally, the company will incur $200 million in debt to cover the remainder of the transaction cost.

Operational and Financial Benefits

Executive Chairman Jake Klein stated that Northparkes would generate cash from day one under Evolution’s control. Combined with a June debt restructuring, this acquisition is expected to bolster Evolution’s financial position without necessitating asset sales.

Portfolio Strategy and Expansion

Klein highlighted Evolution’s long-standing interest in Northparkes and detailed the company’s 10-month negotiation process for the acquisition. He also downplayed the likelihood of pursuing further deals, reflecting on lessons learned from previous acquisitions, like the Red Lake gold mine in Canada.

Technical Advantages and Future Plans

The acquisition brings additional technical expertise to Evolution, notably in the area of underground block caving – a mining method pioneered by Northparkes’ engineers. This expertise is particularly valuable, as demonstrated by Newcrest and OZ Minerals’ utilization of block caving in their operations. icon

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