Evolution Mining agrees to sale of Pajingo gold mine

THE BOURSE WHISPERER: Evolution Mining (ASX:EVN) has entered into a binding agreement with Chinese company Minjar Gold Pty Limited to sell the company’s Pajingo gold mine and surrounding exploration tenements in North Queensland.

The total proceeds from the deal will be up to $52 million, consisting of a $42 million upfront cash payment and a 1 per cent NSR (net smelter return) royalty of up to $10 million for gold production above 130,000 ounces 

Minjar Gold has met all the requirements in relation to Chinese approvals and FIRB approval for the transaction.

Evolution explained it has consistently stated a key objective of its corporate strategy is to improve the quality of its asset portfolio over time adding the sale of Pajingo is consistent with this strategy.

“Pajingo has made a very important contribution to our business over the last six years,” Evolution Mining executive chairman, Jake Klein said in the company’s announcement to the Australian Securities Exchange.

“Evolution has grown significantly in the past 18 months and it now makes strategic sense for the asset to be operated by an emerging gold producer that can provide the right level of focus on further extending the mine’s operating life.

“We thank all of our team at Pajingo for their contribution to Evolution.

“Their level of focus and commitment has ensured Pajingo continues to be a profitable gold mine 30 years after commencing production.”

As noted in an earlier the ASX release, Evolution will book a loss on the sale of $77.3 million based on the carrying value of the asset, which is expected to close on 1 September 2016.

Evolution said it was committed to assisting Minjar Gold to ensure an orderly transition of ownership at the Pajingo operations.

As a result of the sale, Evolution has revised its FY17 gold production guidance to 745,000 to 800,000 ounces (from 800,000 to 860,000 ounces) at an AISC5 of $970 to $1,030 per ounce (from $985 to $1,045 per ounce).

Website: www.evolutionmining.com.au