THE BOURSE WHISPERER: Evolution Mining (ASX: EVN) announced a new hedging deal, under which the company has sold forward 300,000 ounces of gold at an average price of $1,638 per ounce with scheduled deliveries out to 31 December 2019.

According to Evolution the new hedging deal includes 100,000 ounces of gold for delivery in FY16 with the remaining 200,000 ounces scheduled for delivery during the January 2018 to December 2019 period.

The hedge contracts have been entered into with Evolution’s banking syndicate.

The company’s total gold hedge book now stands at 821,311 ounces of gold at an average price of $1,590 per ounce.

Evolution outlined the objective of the additional gold hedge, explaining it is to take advantage of the recent rally in the Australian dollar gold price to further protect the company balance sheet.

Evolution is now finalising the Cowal and Mungari acquisitions, after which it anticipates to have a gearing ratio of approximately 27 to 28 per cent.

The company believes the additional hedging underpins cash generation from its production portfolio to ensure its gearing levels remain well controlled. 

“We saw this as an opportune time to lock in additional hedging with the Australian Dollar gold price trading close to three year highs,” Evolution Mining finance director and CFO Lawrie Conway said in the company’s announcement to the Australian Securities Exchange.

“Evolution remains strongly leveraged to any potential upside in the gold price with the hedge book accounting for less than 25 per cent of the company’s expected production over the next five years.

“The additional hedging for FY16 locks in a higher level of near term cash flow which will be used to pay down debt at an accelerated rate.”

Website: www.evolutionmining.com.au

THE BOURSE WHISPERER: Doray Minerals (ASX: DRM) announced it has secured debt and equity funding for construction and development of the company’s 100 per cent-owned Deflector gold project, located in the southern Murchison Region of Western Australia.

The financing comprises new corporate finance facilities with Westpac Banking Corporation, a recently completed equity placement of $13.8 million and a fully underwritten non-renounceable entitlement issue to raise approximately $12.9 million.

Doray said Westpac had confirmed credit approval totalling $90 million (including a $5 million contingency facility).

The company explained the balance of its existing project finance facility will be rolled into the new facilities.

This results in the new corporate finance facility providing debt funding of approximately $60 million to $65 million (including the contingency facility) to fund construction and development of Deflector.

Doray went on to acknowledge the new corporate finance facilities offer the company greater flexibility for the movement of cash between its operations and exploration programs as required.

“With existing cash reserves, projected cash flows from Andy Well over the next 12 months, and the proceeds from the Westpac facility and equity raising announced today, we are now fully-funded for all construction, development and working capital expenditures to bring Deflector into production,” Doray Minerals managing director Allan Kelly said in the company’s announcement to the Australian Securities Exchange.

“We can now focus on growing the company through the development and commissioning of our second high-grade, low-cost gold operation at Deflector.”

Email: info@dorayminerals.com.au

Website: www.dorayminerals.com.au

THE BOURSE WHISPERER: Evolution Mining (ASX: EVN) has made its position clear in regards to the proposed take-over of Phoenix Gold (ASX: PXG) by Zijin Mining Group Co., Ltd.

The Jake Klein-led gold producer has shown its hand by announcing it intends to pick up all of the ordinary shares of Phoenix Gold it doesn’t already own.

Evolution currently holds approximately 19.8 per cent of the shares in Phoenix.

Should they opt for the Evolution deal Phoenix shareholders will receive 0.06 Evolution shares and six cents cash for each Phoenix Share, placing a value of 12 cents on each Phoenix share and valuing the equity in Phoenix at approximately $56.4 million.

This ups the ante by a 20 per cent premium to the current Zijin offer of 10 cents per Phoenix share.

That Evolution has an eye on Phoenix is no surprise, especially since the company’s announcement in April this year that it has entered into a binding agreement with La Mancha Group International to acquire 100 per cent of the latter’s Australian operations.

These include the Mungari processing plant, the adjacent high-grade Frog’s Leg underground gold mine and the White Foil open-pit gold mine.

Evolution shareholders appeared to be on board with that transaction with 99.6 per cent of shareholders who voted at an Extraordinary General Meeting held on 30 July 2015 voting in favour of the transaction. The La Mancha transaction remains subject to FIRB approval.

The Phoenix tenement package is a good fit for Evolution in that it adjoins La Mancha’s Australian operations while covering a substantial strike length of the prospective Zuleika Shear and the Kunanalling Shear.

Evolution considers a number of the exploration targets Pheonix has already developed to be geologically similar to the Frog’s Leg mine and the White Foil mine.

The company believes the proximity of the Phoenix tenements to the newly built 1.5 million tonnes per annum Mungari processing plant creates the opportunity for numerous synergies.

There is a bit of history here as well with an approach by Evolution in May 2015 to Phoenix, which resulted in an agreement regarding a strategic investment and partnership.

Under the agreement Evolution subscribed for 44 million fully paid ordinary shares in Phoenix at an issue price 7.5 cents per share, which it stumped up later on with the purchase of an additional 49 million Phoenix shares at 12 cents per share taking its shareholding in Phoenix to its current level of 19.8 per cent.

“There is clear commercial logic in combining the Phoenix assets with the Mungari project which we are acquiring from La Mancha,” Evolution Mining executive chairman Jake Klein said.

“Evolution is committed to building a long-term presence in this exciting region of Western Australia and our intention to make this compelling bid for Phoenix is the next step in our strategy.”

THE BOURSE WHISPERER: Potash West (ASX: PWN) advised the market of a binding term sheet executed between East Exploration Pty Ltd (EE) and Davenport Pty Ltd, a wholly owned subsidiary of Arunta Resources (ASX: AJR).

Potash West own 55 per cent of EE, which is the registered owner of the South Harz project, comprising two exploration licences, Küllstedt and Grafentonna, in Thuringia, Central Germany.

All owners have agreed to the sale, in return for shares in Davenport, which is to list on the Australian Securities Exchange via the raising of $4 million that is intended to be spent on drilling targets Potash West has already identified from a Geological Review.

EE will receive $250,000 as non-refundable option and exclusivity fees, approximately 36.46 million fully paid ordinary Davenport shares at listing price of 20 cents per share, plus just over 67.7 million performance shares, which will convert to ordinary shares on achieving pre-determined project milestones.

At listing, Potash West will receive 19.25 million shares, which it expects to be around 28 per cent of the issued capital of Davenport.

Email: info@potashwest.com.au

Web: www.potashwest.com.au

THE BOURSE WHISPERER: Red River Resources (ASX: RVR) has completed a regional exploration potential review for the company’s 100 per cent-owned Thalanga zinc project in Queensland, in preparation for a Re-Start Study.

Red River acquired the project in October 2014, since when it has expanded the tenement package – most recently via a joint venture with Natural Resources Exploration Group (NRE JV).

Red River currently holds approximately 210 square kilometres of exploration permits in the Mt Windsor Belt.

It has a further 30sqkm in applications, and an exposure to a further 180sqkm through the NRE JV (total area of 420sqkm).

The Belt contains multiple high grade Volcanic-Hosted Massive Sulphide (VHMS) deposits, of which three; Liontown, Thalanga and Highway-Reward have been mined to date.

Red River said it had completed the recent review to prioritise future exploration work.

From the review Red River has identified groups of deposits and prospects, including:

Thalanga Group (hosting West 45, Far West and Orient among others);

Highway-Reward Group (hosting Truncheon and prospects within the NRE JV, including Snake Oil);

Liontown-Waterloo Group (hosting Liontown, Liontown East and Waterloo among others); and

Ermine Group (hosting the Ermine, Ermine North and Echidna prospects).

“This Review highlights that we have abundant exploration potential across a region which has demonstrated an exceptional capacity to host high-grade zinc and copper VHMS mineralisation,” Red River Resources managing director Mel Palancian said in the company’s announcement to the Australian Securities Exchange.

“Considering that our Thalanga plant is already paid for, any exploration success is very valuable.”

Website: www.redriverresources.com.au