Evolution Mining has finalised its acquisition of the Red Lake gold mine in Ontario, Canada from Newmont for a total consideration of $US375 million ($612 million).
It plans to recapitalise the asset and reduce the cost base of the operation, backing this up with significant investment in capital development and exploration over the next three years.
The Red Lake workforce acknowledged that change was required to secure the long term future of the operation, according to Evolution.
Evolution has commenced planning Red Lake’s turnaround strategy since acquisition was announced in November last year. The company commenced its search for a Canadian operation in 2017, according to Evolution chairman Jake Klein.
“Following an extensive review and several detailed due diligences, we identified Red Lake as an ideal, deep value opportunity,” he said.
“The driver for our interest was both the outstanding potential for the discovery of new, high grade mineralisation and clear turnaround opportunity to restore it to being a safe, efficient, long life, low cost operation.
“We thank Newmont for the supportive, open and transparent relationship we have developed through the negotiation and the integration phase.”
Newmont began its execution of Red Lake’s transformation program last month, increasing Red Lake’s development rates and mobilising four drill rigs underground.
Evolution also reduced the Red Lake site leadership team from 12 to 7 people to streamline the management of the business.
The company plans to rapidly scale up its Red Lake drilling program in the 2021 financial year off the back of a $20–25 million exploration budget.
Evolution considers Red Lake as an undercapitalised asset with a 13-year mine life, holding exploration potential in the Archean greenstone gold geology familiar to the company.
Evolution intends to continue accelerating the Red Lake underground development to over 1000 metres a month, a 50 per cent increase on the monthly average (668 metres) achieved in the December 2019 half year.
The company expects to achieve the ramped up rate by the December 2020 half year.
While less than 10 per cent of the Red Lake workforce are unable to work due to travel restrictions caused by the coronavirus pandemic, Red Lake’s production and mine development had not been materially impacted.
Evolution maintains its 2020 financial year group guidance of around 725,000 ounces at an all-in sustaining cost (AISC) of $940–$990 an ounce, excluding the Red Lake mine.