Australian gold mining company Evolution Mining has agreed to acquire an 80% stake in the Northparkes copper-gold mine from CMOC Group, for a total of up to $475m.
Evolution will acquire CMOC’s subsidiary, CMOC Mining, which indirectly owns 80% of the Northparkes mine, in exchange for a $400m upfront payment and up to $75m contingent consideration.
Sumitomo Metal Mining and Sumitomo Corporation will retain their 20% interest.
In addition, Evolution will also sign an offtake agreement with IXM, a subsidiary of CMOC.
IXM will purchase copper concentrates produced from the Northparkes mine, equal to Evolution’s 80% attributable interest, over the life of the mine’s existing Ore Reserves.
Evolution will fund the transaction through an A$525m ($345m) fully underwritten institutional placement and a new A$200m Debt Facility for a term of five years.
In addition, the Australian mining company will implement a non-underwritten share purchase plan to support the integration costs related to the transaction and general working capital.
The transaction is expected to be completed before the end of December 2023.
Evolution Mining executive chair Jake Klein said: “The acquisition of Northparkes represents a unique opportunity to add another quality asset to our portfolio, strengthening our positioning as a business that prospers through the cycle.
“Following a long period of a successful ownership, CMOC has decided to exit the asset in pursuit of other strategic initiatives more aligned to CMOC’s objectives.
“Ultimately, this is a mutually beneficial outcome for both parties and an opportunity for Evolution to continue delivering on the successful track record of the operation.”
In July 2020, an affiliate of CMOC entered into a streaming agreement with Triple Flag Precious Metals (TFPM), making TFPM entitled to both gold and silver production.
Evolution will accept the obligations of CMOC as guarantor under the Triple Flag Metal purchase and sale agreement (Triple Flag stream).
The Australian mining company will deliver a percentage of its attributable gold and silver production from Northparkes to Triple Flag over the operation.
Evolution Mining managing director and chief executive officer Lawrie Conway said: “Positioned in the Lachlan Fold Belt, one of Australia’s most prospective Copper-Gold belts, Northparkes has a long history of Ore Reserve replenishment and growth, increasing Reserves by 49% since 1994, with a current Ore Reserve of 101 million tonnes.
“In addition, the asset is favourably located close to well-capitalised infrastructure, featuring concentrated mining options with five deposits situated within a two-kilometre radius.
Northparkes copper-gold mine is located 27km north-west of Parkes, in the central west of New South Wales, Australia, and has been in operation since 1994.
It was Australia’s first mine to use the block cave mining method, with underground mining operations highly automated with E48 block cave achieving 100% mining automation in 2015.
Currently, mining production is sourced from the E48 block cave, the E26 lift 1 block cave and the E26 sub-level cave supplemented by stockpile ore feed and open pit mining.
Northparkes also has an onsite processing plant that produces a copper-gold-silver concentrate trucked and railed to the Port of Newcastle before being shipped to international clients.
Conway added: “Following a period of higher capital investment, the asset is now entering a cash flow generation phase, aligned with our strategy to continue to deleverage our balance sheet while delivering returns to our shareholders.
“Notably, the transaction funding structure reflects our commitment to balance sheet management with no debt repayments due under this facility until the third quarter of FY25,’ Mr Conway added.”
