Newmont Goldcorp entered into a binding agreement to sell the Red Lake underground gold mining complex in Ontario, Canada, to Australia-based Evolution Mining Ltd. for $375 million in cash and contingent payments of up to an additional $100 million tied to new resource discoveries. The transaction is expected to close in the first quarter of 2020.

“This transaction both strengthens our balance sheet and provides ongoing exposure to new discoveries at Red Lake,” President and CEO of Newmont Goldcorp Tom Palmer said. “Evolution is a highly respected and responsible gold producer who is committed to the success of Red Lake and who we believe will prove a great partner for surrounding communities and stakeholders.”

Under the terms of the $100 million contingent payment, Evolution will pay Newmont $20 million for each 1 million ounces (oz) of new gold resources added to the existing Red Lake resource base over a 15-year period. The contingent payment is applicable to the first 5 million oz of new resources.

“We have been actively looking at assets in Canada since 2017 as we believe it is a country with low geopolitical risk, high geological prospectivity and a strong mining culture,” Evolution Executive Chairman Jake Klein said. “Red Lake is an undercapitalized asset which, through a committed investment in development and exploration, is intended to become a cornerstone asset in the Evolution portfolio.

The operation includes the Red Lake and Campbell complexes, each consisting of an underground mine and associated processing facility, and the Cochenour mine. In 2018, the mine produced 276,000 ounces of gold.

Evolution Mining is an Australian gold producer that owns five wholly-owned mines: Cowal in New South Wales; Cracow, Mount Carlton and Mount Rawdon in Queensland; and Mungari in Western Australia.