Evolution Mining is the latest Australian gold miner to target North America for expansion after securing a deal to acquire the Red Lake Gold Complex in Canada from Newmont Goldcorp.
Sydney-based Evolution has agreed to pay Newmont Goldcorp US$375 million ($553 million) in cash for Red Lake, with an additional US$100 million also payable upon discovery of a new resource.
Evolution is the fourth major Australian gold miner to pursue assets in North America in the past 15 months, following in the footsteps of Northern Star Resources, St Barbara and Newcrest Mining.
Red Lake is an underground gold mining complex in western Ontario that comprises of the Red Lake and Campbell complexes (both consisting of a mine and processing facility), and the Cochenour mine.
In 2018, 276,000 ounces of gold at an all-in sustaining cost of US$988 per ounce was produced at red Lake. The site is forecast to produce 150,000-160,000 ounces of gold at an AISC of US$1600/ounce this year.
Evolution has committed to investing US$100m on existing operations and an additional US$50 million in exploration at Red Lake over the first three-year period following the completion of the transaction.
Evolution chairman Jake Klein was excited about adding Red Lake to the company’s portfolio and providing it with a high-grade, long life gold mine in Canada.
“We have been actively looking at assets in Canada since 2017 as we believe it is a country with low geopolitical risk, high geological prospectivity and a strong mining culture,” Klein said.
“Red Lake is an under-capitalised asset which, through a committed investment in development and exploration, is intended to become a corner store asset in the Evolution portfolio.”
Klein said Evolution had identified a range of opportunities to deliver an operational turnaround of the asset, which he expects will improve the quality of the company’s portfolio.
“The camp has significant exploration potential which, coupled with tis relatively unexplored recent past, provides significant upside potential for Evolution to extend the longevity of the operation well beyond its current 13-year life of mine plan,” Klein said.
“We are confident that Evolution will be an excellent and committed steward of Red Lake and look forward to continuing Newmont Goldcorp’s track record of safe and sustainable operation for the long-term benefit of a broad range of stakeholders including the local workforce, regional communities and the Lac Seul and Wabauskang First Nations Groups.”
Evolution has identified a range of improvement opportunities to reinvigorate the Red Lake Gold Complex with the objective of reducing costs, increasing production and extending mine life.
Newmont Goldcorp president and chief executive officer Tom Palmer said the deal would strength the American company’s balance sheet and provided ongoing exposure to new discoveries at Red Lake.
“Evolution is a highly respected and responsible gold producer who is committed to the success of Red Lake and who we believe will prove a great partner for surrounding communities and stakeholders,” Palmer said.
Under terms of the $100 million payment, Evolution will pay Newmont Goldcorp $20 million for each one million ounces of new gold resources added to the existing Red Lake resource base over a 15-year period.