Evolution Mining has agreed to purchase Northern Star Resources’s Kundana gold assets in Western Australia for $400 million.
The acquisition includes Northern Star’s 100 per cent interest in the Kundana operations, 51 per cent interest in the East Kundana joint venture (JV), 100 per cent interest in tenements comprising the Carbine project and 75 per cent interest in West Kundana JV.
The assets are located within eight kilometres of Evolution’s Mungari operations.
Evolution executive chairman Jake Klein said the acquisition will transform Mungari into a cornerstone long-life asset.
“This is a pivotal transaction that will transform Mungari to establish the operation as the fourth cornerstone asset in the Evolution portfolio,” Klein said.
“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.”
The Kundana assets produced 120,943 ounces in the 2021 financial year with a combined resource estimate of 2.4 million ounces.
“The acquisition assets are located in close proximity to Mungari’s processing infrastructure, with all key mining operations and identified orebodies located within eight kilometres of the Mungari mill,” Klein said.
“The transaction improves Mungari on a production, mine life and mineral resources basis. We are also excited about the exploration potential that the consolidated land package holds, which represents further mine life extension opportunities for Mungari.”
Mungari produced 133,388 ounces of gold in the 2020 financial year.
Evolution will focus on reducing costs, increasing production and extending mine life at Mungari with the acquisition.
The gold giant will consolidate Kundana into an integrated operating platform including an 85 per cent reduction in haulage distance.
Evolution also anticipates reduced processing costs per tonne and a mill expansion at Mungarri to 4.2 million tonnes per annum and an opportunity to increase Mungari’s mine life with access to high-grade ore sources through the Kundana assets.
The transaction has increased Evolution’s three-year gold production outlook to 700,000-760,000 ounces in the 2022 financial year, 815,000-875,000 ounces in the 2023 financial year, and 940,000-1.01 million ounces in the 2024 financial year.
Northern Star managing director Stuart Tonkin said Mungari is not required for its strategy following its merger with Saracen.
“The sale of these assets is consistent with our strategy to employ capital where we believe it will generate the greatest return,” Tonkin said.
“This is a great outcome for all stakeholders, including all our employees working at these assets, who will be offered continuity under Evolution’s ownership.”
The deal is expected to be completed in August 2021 and will involve a $400 million cash payment that is underwritten by an institutional placement and share purchase plan.