Evolution offloads Mt Carlton for $90m

Gold mining company Evolution Mining (ASX: EVN) has finalised the sale of Mt Carlton gold mine to Navarre Minerals (ASX: NML) for $90m.

Both Evolution and Navarre shares were down by low single-digits in early trade following this morning’s announcement.

Executive chairman, Jake Klein claimed that with Evolution now focussed on growth projects at the cornerstone assets in the portfolio, now was the time to hand Mt Carlton over to a gold producer that can focus on extending the operation’s mine life.

“The exposure we have retained will enable Evolution shareholders to benefit from the future success of the operation,” Klein noted.

An established gold operation located 150 kilometres south of Townsville, Mt Carlton has been operating continuously since 2013, producing gold, together with copper and silver by-product credits.

The acquisition includes a highly prospective tenement package covering 815km2, for which Navarre intends to leverage its exploration expertise to target high-grade, near mine ore sources to grow the mineral inventory and mine-life.

Transaction details

Navarre has agreed to pay Evolution $40m in cash and shares upon closing of the transaction.

Then there’s up to $25m payable upon the realisation of certain agreed gold production milestones from future development of the Crush Creek project.

The details of this payment include $5m payable upon achievement of 50,000 ounces, $5m payable upon achievement of 100,000 ounces, and $15m payable upon achievement of 175,000 ounces.

A further $25m is payable in the form of a 5% gold price linked royalty when the average spot gold price is greater than $2,250/oz in a given quarter.

This royalty is payable on production from both Mt Carlton and Crush Creek from 1 July 2023 for up to 15 years.

Free cashflow

Meantime, to ensure an uninterrupted transfer of ownership, Evolution plans to continue providing transitional support services to Navarre for the next three months.

Mt Carlton is forecast to deliver significant free cashflow over the first year of Navarre ownership at the current gold price.

Navarre has funded the transaction through a fully underwritten $36.8m equity raising.

It’s understood that the $40m in ‘up front’ consideration comprises $26.8m in cash, with the $13.2m balance being satisfied by the issue of Navarre shares, giving Evolution a 12.9% shareholding in Navarre.

Commenting on the transaction, Navarre’s managing director Ian Holland said:

“The Mt Carlton operations are an excellent fit for Navarre… and look forward to unlocking this value over the coming years for all stakeholders.”