Evolution Mining has agreed to sell the Cracow gold mine in Queensland to junior producer Aeris Resources in a deal worth up to $125 million.
This is part of Evolution’s portfolio assessment and goal to hold six to eight assets with an average mine life of 10 years at minimum.
The Cracow gold mine has a mine life of up to 2023.
Evolution claimed that Cracow would hold more value in the hands of Aeris than in its portfolio.
Under Aeris’ ownership, the mine is forecast to deliver over $100 million of net cashflow in the first two years, at an average gold price of $US1721 ($2491) an ounce.
The acquisition includes a tenement package covering 903 square kilometres, which Aeris also intends to aggressively explore.
“Cracow was acquired in 2011 as part of the formation of Evolution and has been a reliable asset within the portfolio,” Evolution executive chairman Jake Klein said.
The mine has produced more than 1.4 million ounces since 2004, and is on track to produce 82,500–87,500 ounces of gold in the 2020 financial year, generating a net mine cashflow of $84–89 million.
Aeris executive chairman Andre Labuschagne said that this was a truly transformational transaction for the company.
“Aeris inherits a well-run, proven operation which has been a consistent performer for Evolution,” he said.
“Our immediate focus will be on transitioning Cracow into the Aeris culture and aggressively investing in the mine life extension opportunities we have identified.”
This includes an aggressive investment in brownfield and greenfield exploration to grow the mine resource base of the mine.
Aeris has budgeted around $13 million for two years of exploration, with key priorities including underground near mine extensions (Killarney) and nearby open pit deposits (the Golden Plateau and Roses Pride).
Aeris will pay Evolution $60 million in cash upon the close of transaction; a deferred payment of $15 million in June 2022; and a 10 per cent royalty from July 2022 to June 2027, capped at $50 million.
The sale is expected to be completed this month, with Evolution intending to assist Aeris during the transition process.
The Cracow mine was supported by around 220 full-time employees and 45 contractors in May.