Evolution Mining to buy Cowal Mine from Barrick
As Barrick Gold Corp. works to reduce billions of dollars of debt it will look to sell of some of its assets. In May, the world’s largest gold mining company announced that it will sell its Cowal Mine in Australia to Evolution Mining for US$550 million.
Barrick said it expects that by October, the Cowal gold mine in New South Wales state will be run by Evolution, which is Australia’s fourth-largest listed gold miner and aims to become a globally known producer of the precious metal.
Barrick has been working to strengthen its balance sheet and previously outlined plans to cut debt by US$3 billion by the end of this year, The Wall Street Journal reported.
In addition to Cowal, it has been looking for buyers for a mine in Papua New Guinea and a stake in the Zaldivar copper mine in Chile. The mining company is also considering the sale of a nickel project it co-owns with Glencore PLC, according to people familiar with the matter.
“The sale of Cowal is consistent with the strategy we have outlined to create long-term value for our owners, making a significant contribution to our debt-reduction target while further focusing the geographic footprint of our portfolio,” said Barrick Co-President Kelvin Dushnisky.
The company has sold six mines for a total of US$1.3 billion since 2012, five of which are in Australia, the largest gold-producing nation after China.
Its 50 percent stake in the Kalgoorlie Super Pit operation is Barrick’s only remaining Australian gold-mining interest.
Apart from reducing debt, The sale of the mine will also help Barrick trim costs as the company closes its Australian office in Perth.
Evolution said it would fund the deal through a roughly 248 million Australian dollar (US$194 million) entitlement offer and refinanced corporate credit facilities.
Newcrest Mining Ltd. , Australia’s largest listed gold-mining company, remains the biggest shareholder in Evolution even after it halved its stake to 15 percent earlier this year to help shore up its own balance sheet. It has been Evolution’s top shareholder since the company was formed in 2011 through a merger of Catalpa Resources Ltd. and Conquest Mining Ltd., and the concurrent acquisition of Newcrest’s interests in the Cracow and Mt Rawdon mines in Queensland state.
The acquisition will turn Evolution into Australia’s second-largest listed gold-mining company. Evolution also intends to acquire the Australian mines of La Mancha Group International BV, which operates the Frog’s Leg and White Foil mines in Western Australia state.
La Mancha had agreed to provide Evolution with as much as A$100 million to pursue other growth options., as Evolution, in its own words, aims to become a “globally relevant, Australian-focused, midtier gold producer.”
“This is a truly transformational acquisition for Evolution,” Executive Chairman Jake Klein said of the Cowal mine takeover. The open-pit mine produced 268,000 troy ounces of gold last year.