Navarre Minerals moves into ranks of gold producers with $90m purchase of Mt Carlton mine
Around 22,180oz of gold was produced from Mt Carlton in the June quarter, with the mine expected to generate 45,000-50,000oz in the current financial year.
Victoria gold explorer Navarre Minerals (ASX: NML) is buying the operating Mt Carlton mine in Queensland in a cash and equity deal with mid-tier producer Evolution Mining (ASX: EVN).
Evolution will become a significant shareholder in the Stawell-based junior with a potential 19.9% stake.
The deal also includes Evolution’s Crush Creek gold deposit, 30km from Mt Carlton, acquired in 2020. Mt Carlton is located 130km south of Townsville.
Navarre entered a trading suspension on Tuesday morning as it undertakes an institutional bookbuild.
It is a big deal for Navarre — which has been focused on exploration in the gold rich Stawell corridor in Victoria — and also allows Evolution to divest a minor operation, with Mt Carlton representing only 1.5% of the latter’s mineral resources.
With its planned 19.9% stake in Navarre, however, Evolution not only retains an interest in Mt Carlton but gains first time exposure to the Victoria gold revival story.
‘Proven’ high-margin operation
In the June quarter Mt Carlton produced 22,180oz of gold.
Evolution had given guidance that in the current financial year the mine will produce between 45,000oz and 50,000oz at an all-in sustaining cost of between A$1,650 and A$1,700 per ounce. The gold price in Australia dollars is now sitting around A$2,425/oz.
Crush Creek was acquired by Evolution because of its epithermal gold mineralisation which the company said at the time has “significant” potential to provide extensions to Mt Carlton’s mine life.
Navarre managing director Ian Holland described the deal as a “truly transformational transaction”.
“Mt Carlton is a proven, high-margin operation and an attractive vehicle for Navarre to transition from gold exploration company to producer — particularly given the Mt Carlton operation’s successful history of production and its potential for significant mine life extension.
Navarre will inherit a well-established operation and a highly experienced site operating team and workforce which we are confident will fit in with Navarre’s own culture,” he added.
Initial payment of $40m, deal includes royalty
The agreement provides for an initial $40 million payment, comprising a mixture of equity and cash.
Evolution has agreed to take up to $20 million of that in shares and can move up to a 19.9% stake in the Victorian company.
The deal also involves a $25 million contingent amount payable on cumulative gold production milestones from Crush Creek in three stages, beginning at $5 million for 50,000oz.
There is another contingent payment whereby Navarre will also pay a 5% royalty from Mt Carlton when the spot gold price is greater than A$2,250/oz in a given quarter.
The royalty is payable from both Mt Carlton and Crush Creek for 15 years beginning in October 2023.
Navarre will be looking to increase resource
The Mt Carlton tenement package covers 815sq km.
Mr Holland said there will be a focus on further discovery and resource addition at Mt Carlton.
Evolution commissioned Mt Carlton in 2013, with the operations comprising both an open pit as well as an underground mine.
The processing plant has an annual ore capacity of about 950,000t.
Navarre’s interest in Mt Carlton began on Friday 1 October, with completion of the deal expected within the December quarter.