Newmont Goldcorp reaches agreement to sell Red Lake complex to Evolution Mining
Newmont Goldcorp Corporation has continued to streamline its asset base by entering into a binding agreement to sell the Red Lake complex in Ontario, Canada to Evolution Mining Ltd. Upon closing of the transaction, expected in the first quarter of 2020, Newmont will receive $375 million in cash and contingent payments of up to an additional $100 million tied to new resource discoveries.
“This transaction both strengthens our balance sheet and provides ongoing exposure to new discoveries at Red Lake,” said Tom Palmer, president and chief executive officer said in a statement. “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 terms of the $100 million contingent payment, Evolution will pay Newmont $20 million for each one million ounces 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 five million ounces of new resources.
“Red Lake is an under-capitalized asset which, through a committed investment in development and exploration, is intended to become a cornerstone asset in the Evolution portfolio,” said Jake Klein, Evolution’s executive chairman.
Reuters reported that the deal follows the top global gold miners Newmont and Barrick Gold Corp’s decision to focus on their best performing mines, which had prompted expectations of mine sales around the world.
These expectations have materialized in a chain of recent investments by Australian miners into gold mining including BHP’s recent stake acquisition in SolGold Plc and Saracen Mineral Holdings Ltd acquiring Barrick’s 50 percent stake in Super Pit gold mine in November.
Evolution has also made a commitment to spend $100 million on existing operations and an additional $50 million in exploration at Red Lake over the first three years after the completion of the deal.
Newmont intends to use proceeds from the transaction to support the company’s capital allocation priorities of returning cash to shareholders, maintaining an investment-grade balance sheet, and investing in a world-class portfolio.
Evolution Mining is a leading, growth-focused Australian gold producer. Evolution operates five wholly-owned mines – Cowal in New South Wales, Cracow, Mt Carlton and Mt Rawdon in Queensland, and Mungari in Western Australia.