Barrick Gold announced an agreement on May 24 to sell its Cowal gold mine in New South Wales, Australia to Evolution Mining for $550 million in cash.
For Evolution, the Cowal purchase agreement was the second in a little more than a month. On April 20, the company agreed to an all-share purchase of La Mancha’s Frog’s Leg and White Foil mines and Mungari processing plant near Kalgoorlie, Western Australia in a transaction having an estimated value of about A$370 million. Evolution expects the La Mancha assets to add 130,000 to 160,000 oz/y to its gold production.
Assuming completion of both the Cowal and La Mancha purchases, Evolution expects its gold production to grow from a current range of 400,000 to 440,000 oz/y to a range of 760,000 to 860,000 oz/y.
Evolution was created in late 2011 through a merger of Catalpa Resources and Conquest Mining and the concurrent acquisition of Newcrest Mining’s interests in the Cracow and Mt. Rawdon mines. Evolution’s current production derives from five mines: Cracow (about 95,000 oz/y), Mt. Rawdon (about 105,000 oz/y), Pajingo (about 70,000 oz/y), and Mt. Carlton (about 70,000 oz/y) in Queensland, and Edna May (about 85,000 oz/y) in Western Australia.
In conjunction with Evolution’s announcement of the Cowal transaction, Executive Chairman Jake Klein commented, “This is a truly transformational acquisition for Evolution. From day one, more than three-and-a-half years ago, we set out to create a globally relevant, mid-tier Australian gold producer. We have consistently communicated a very clear strategy of our intention to leverage our operating success to upgrade the quality of our asset portfolio. With all five of Evolution’s existing operating assets performing well and generating strong cash flows, we are in an ideal position to grow our business at a time in the cycle where asset prices are attractive.
“Very rarely does an opportunity arise to acquire a high-quality asset like Cowal. This is an asset that has a long history of stable, large-scale, low-cost production. It is also an asset that we believe provides us with an attractive range of upside opportunities.
“Only last month, we announced the acquisition of La Mancha, which both improved the quality of our portfolio and aligned us with a strategic partner willing to support the acquisition of Cowal with a commitment to fund an additional equity contribution of $112 million. This support was critical in enabling us to submit an offer for the Cowal acquisition.
“The addition of Cowal to our asset portfolio is an exciting step forward for Evolution and provides us with a cornerstone asset of the highest quality which we will shape our future around.”
In Barrick’s announcement of its sale of Cowal, the company said it will use the proceeds from the sale to pay down debt, and also that it will reduce general and administrative costs by closing its office in Perth, Western Australia.
