A binding agreement entered into by Evolution Mining will see the company acquire an 80 per cent interest in the Northparkes Copper-Gold Mine from CMOC Group for a total cash consideration of up to US$475 million.
Evolution will acquire Northparkes, located in New South Wales, for a cash consideration comprised of:
- Upfront cash consideration of US$400 million
- Contingent consideration of up to US$75 million
Sumitomo Metal Mining and Sumitomo Corporation will retain their 20 per cent interest in the Northparkes Joint Venture. Under the transaction structure, Evolution will acquire all the shares in CMOC’s Australian subsidiary, CMOC Mining, which will not trigger any preemptive rights.
Evolution has also agreed to enter into an offtake agreement (on market equivalent terms) with IXM S.A. , a subsidiary of CMOC, under which IXM will purchase copper concentrates from Evolution produced from the Northparkes mine equal to Evolution’s 80 per cent attributable interest over the life of mine’s existing Ore Reserves.
In addition, Evolution will assume the obligations of CMOC as guarantor under the Triple Flag Metal Purchase and Sale Agreement, under which Evolution will deliver a percentage of its attributable gold and silver production from Northparkes to Triple Flag over the operation.
The transaction will be funded by a AU$525 million fully underwritten institutional placement and a new AU$200 million five-year Term Debt Facility. In addition to the placement, Evolution will also undertake a non underwritten share purchase plan for its eligible retail shareholders, which will be used to assist with integration costs related to the transaction and general working capital.
Completion of the transaction is expected to occur before the end of December 2023.
Key transaction highlights include:
- Cash flow generation mode, benefiting from significant investment to date and delivering immediate cash flows to support current balance sheet deleveraging
- Upcoming low capital intensity profile with pipeline of projects, providing mining method optionality
- Multiple large-scale porphyry copper and gold deposits, suitable for bulk cave mining operation in an area well-known to Evolution
- Significant mineral resource base with potential to increase mine life via conversion to ore reserves
- Increases portfolio diversification and provides an attractive exposure to copper, which is expected to increase to approximately 30 per cent to total revenue in 2024
Evolution’s Executive Chair, Jake Klein, said that the acquisition of Northparkes represents a unique opportunity to add another quality asset to Evolution’s portfolio, strengthening its positioning as a business that prospers through the cycle.
“Northparkes is a day-one cashflow producing asset with an approximately 30-year mine life, considerable upside and a well-established team that has a great track record and technical experience at the operation,” Mr Klein said.
“Following a long period of 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.”
Evolution’s Managing Director and CEO, Lawrie Conway, said that, 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 per cent 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 2km radius,” Mr Conway said.
“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 the 2025 financial year.”
