The $400 million price tag will be financed through a fully underwritten institutional placement, accompanied by a non-underwritten share purchase plan.
The acquired assets — 100% of Kundana, 50% East Kundara joint venture, 100% of the Carbine project and 75% of West Kundara — are located just 8km from Evolution’s Mungari operation and mill, which produced 120,943 ounces of gold last financial year.
As at March 31, the assets being acquired by Evolution had a total ore reserve of 579,000oz gold, grading 4 grams per tonne, along with a mineral resource of 2.44Moz of gold grading 4.1g/t.
The placement is being underwritten by JP Morgan.
The deal delivers for both sides.
Evolution to up gold output, extend mine life
For Evolution, its consolidated Kalgoorlie operation will produce 200,000oz per annum and, for Northern Star, it frees up money for its key projects.
Northern Star managing director Stuart Tonkin said the sale represents “an opportunity to liberate value from a package of assets that were no longer required for delivery of the company’s strategic objectives”.
Meanwhile, Evolution’s executive chairman Jake Klein described the Mungari add-ons as pivotal and a new cornerstone in the company’s portfolio.
“It presents a unique strategic opportunity for Evolution to consolidate the eastern goldfields region given our existing presence at Mungari, resulting in Evolution being one of the largest tenement holders in the Kalgoorlie region,” he added.
That tenement position will now stand at 1,027 sq km.
Will develop an integrated operation
Moreover, the deal more than doubles Evolution’s resource and extends the mine life.
Evolution says it plans to consolidate all the projects into an integrated operation.
Instead of Northern Star transporting ore to its own Kanowna Belle mill (more than 52km away), the ore will now go to the mill at Mungari, which is within 8km.
In addition, Evolution states Mungari’s processing costs are “materially” lower than those at Kanowna Belle.
The Kundana operations consist of the Millennium, Pope John and Moonbeam underground workings.
The amalgamation of the Carbine project with Evolution’s nearby Castle Hill deposits will allow the company to develop four open pits across both properties.