Evolution Mining, a prominent Australian gold miner, announced on Tuesday its plans to raise AUD 525 million ($348 million) through equity funding. The objective is to purchase an 80% stake in the Northparkes copper and gold mine, located in New South Wales, Australia, from China's CMOC Group.

Acquisition Details

The deal involves the acquisition of the Northparkes operation for a total cost of up to $475 million. This includes an upfront payment of $400 million and additional payments of up to $75 million, which are linked to market prices.

To finance the transaction, Evolution Mining will partially rely on a new AUD 200 million five-year debt facility.

Growing Deal-Making Trend in the Mining Sector

Currently, the global mining sector is witnessing an unprecedented wave of deal-making activity, unlike anything seen in years. This fervent trend contrasts with a relatively subdued level of overall global M&A activity. The surge in deals is mainly driven by mining companies vying to secure reliable sources of commodities that are crucial to the global energy transition. Copper, for instance, plays a vital role in the production of electric vehicles and renewable energy infrastructure.

Within the gold industry, U.S.-based Newmont recently acquired Newcrest, Australia's largest listed miner. This strategic move by Newmont was aimed at increasing its exposure to the lucrative copper market.

Evolution's Strategic Advantage

The acquisition of the Northparkes mine will not only bolster Evolution Mining's position within the industry but will also support its production of copper. The company projects that copper production will account for approximately 30% of its total revenue by fiscal 2024.

Evolution Mining is poised to tap into the growing demand for copper as it becomes an integral component of the global energy landscape.

Northparkes: A Key Asset for Evolution Mining

Evolution Mining is excited to announce its acquisition of Northparkes, a well-established mine located in the mineral-rich region. With a processing plant on-site, Northparkes produces high-quality copper, gold, and silver concentrate. This concentrate is then transported via trucks and rail to the Port of Newcastle for export.

The recent capital investment in Northparkes positions it for a phase of cash flow generation. This aligns perfectly with Evolution's strategy of deleveraging their balance sheet while maximizing shareholder returns. Chief Executive Lawrie Conway expressed his satisfaction with this development, emphasizing the importance of this asset.

To support this acquisition, Evolution will issue approximately 138.2 million new shares under a fully underwritten placement, valued at A$3.80 per share. This represents an 8.2% discount to Monday's closing price, ensuring an attractive investment opportunity.

Additionally, Evolution will launch a non-underwritten share purchase plan for eligible retail shareholders, with a value of up to A$60 million. These funds will be utilized for integration costs and working capital, further enhancing the smooth transition of Northparkes into Evolution's portfolio.

In a separate agreement, Evolution has partnered with CMOC, providing them with copper concentrate from the Northparkes mine. This collaboration highlights the trust and reputation Evolution has built within the mining industry.

We are pleased to confirm that Sumitomo, a leading Japanese company, will maintain its 20% interest in Northparkes. Their continued involvement speaks to the quality and potential of this operation.

The Northparkes acquisition is expected to be finalized before the end of the month, showcasing Evolution's commitment to swift execution. This strategic move will further strengthen Evolution Mining's position as a key player in the mining sector.

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