Australia's Evolution to Raise Equity, Buy Northparkes Copper-Gold Mine — Update
By Rhiannon Hoyle
Evolution Mining said on Tuesday it will raise 525 million Australian dollars (US$348 million) in equity to buy an 80% stake in the Northparkes copper and gold mine in Australia's New South Wales state from China's CMOC Group.
The Australian gold miner said it will purchase the Northparkes operation for up to US$475 million, including an upfront payment of US$400 million and up to US$75 million in combined further payments that are linked to market prices.
The deal will be part funded by a new A$200 million five-year debt facility, Evolution said.
The global mining sector is experiencing a wave of deal making not seen for years, contrasting with a lull in overall global M&A activity. Miners are racing to secure a pipeline of commodities essential to the global energy transition such as copper, which is used to make electric vehicles and renewable energy infrastructure.
Within the gold industry, U.S.-based Newmont recently bought Australia's largest listed miner, Newcrest, in part to increase its exposure to the copper market.
The Northparkes acquisition will help support Evolution's own production of the industrial metal, which is expected to account for roughly 30% of total revenue in fiscal 2024, the miner said.
Northparkes has been operating since 1994, and a processing plant at the site produces a copper, gold and silver concentrate that is trucked and then railed to the Port of Newcastle for export.
"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," said Chief Executive Lawrie Conway.
The mine is located in a region that's well known to Evolution, and it has significant mineral resources, Evolution said.
Roughly 138.2 million new Evolution shares will be issued under the fully underwritten A$525 million placement, at a price of A$3.80 a share. The price is an 8.2% discount to Monday's closing price.
Evolution will also undertake an up to A$60 million non-underwritten share purchase plan for eligible retail shareholders, which will be used to help with integration costs and for working capital.
The company also said it has agreed to a separate deal to supply a unit of CMOC with copper concentrate from the Northparkes mine. It expects the Northparkes acquisition to be completed before the end of the month.
Japan's Sumitomo will keep its 20% interest in the operation, said Evolution.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
December 04, 2023 18:27 ET (23:27 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.-
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