Small but growing Australian gold producer Evolution Mining (ASX:EVN) has taken a bite out of its much larger, dual-listed rival, Newcrest Mining (ASX:NCM, TSX:NM)
The Sydney and Perth-based company is about 1/16th the size of Newcrest by market value, but is paying Newcrest up to AUD$10 million for its Marsden copper-gold project located in central New South Wales. The deal specifies an up-front payment of $3 million, and another $7 million if it decides to go ahead with mining the site.
“The Marsden project provides long term optionality to our nearby Cowal operation and has the potential to further extend the life of what is already a long-life operation,” said executive chairman Jake Klein.
Evolution is clearly trying to leverage the exploration potential of Marsden due to it being in close proximity to its Cowal gold mine, which in 2016 produced 238,000 ounces.
“Marsden is the nearest known sizeable mineral deposit to the Cowal operation outside the Cowal tenement package and as such has strategic value to Evolution’s exploration activities in the region,” Evolution Mining says in a press release posted on Monday.
The deposit hosts 180 million tonnes of indicated and inferred resources containing 1.1 million ounces of gold and 670,000 tonnes of copper. According to Evolution, it is possible to mine the deposit using its milling circuit and associated infrastructure at Cowal, although ore from Marsden could not be treated concurrently with material from Cowal until the end of Cowal’s life, the company states.
Evolution currently operates six mines – Cowal in New South Wales; Mt Carlton, Mt Rawdon, and Cracow, in Queensland; and Mungari and Edna May in Western Australia. In August, Evolution announced that it was acquiring an economic interest in the Ernest Henry copper-gold operations in Queensland. Under the deal, Evolution paid Glencore (LON:GLEN) AUD$880 million up-front, to acquire all the gold, and 30% of the copper and silver produced from an agreed-upon life of mine area. In return, Evolution must contribute 30% of future production costs.