Battle North Gold owners greenlight $274m Evolution buy

Bateman gold project Credit: Battle North Gold.

The owners of Canada’s Battle North Gold (TSX: BNAU) have approved the proposed C$343-million ($274m) takeover by Australia’s Evolution Mining (ASX: EVN) as the latter continues to consolidate its landholdings in Ontario’s storied Red Lake Gold Camp.

Evolution first announced the deal in March to acquire Battle North’s revamped Bateman gold project, which is considered one of the jewels of the resurging exploration and mining activity in the century-plus-old mining district.

Evolution said Wednesday its acquisition proposal attracted votes from 65% of the issued capital of Battle North, with 99.8% voting in favour of the transaction.

Battle North’s revamped Bateman gold project is considered one of the jewels of the resurging exploration and mining activity in the century-plus-old mining district

Evolution has agreed to acquire all of the issued and outstanding shares of Battle North for C$2.65 a share in cash. The offer reflects a 46% premium over Battle North’s closing price on March 12 and a 54% premium to the company’s 20-day volume-weighted average share price.

“It’s pleasing to see the overwhelmingly positive support for the transaction from Battle North shareholders. This acquisition provides Evolution with an opportunity to expand our footprint in the Red Lake region and create value by leveraging the infrastructure of the two operations,” said Evolution executive chairperson Jake Klein in a media release on Wednesday.

“The additional processing capacity from the new Bateman mill will also accelerate our ability to achieve our objective of producing more than 300,000 oz. per year of gold from Red Lake.”

The Bateman property covers about 28,000 hectares of prospective Red Lake real estate which overlays most of the district’s significant gold deformation zones. It includes a new 650,000 t/y mill. The project is currently permitted for 450,000 t/y and can be expanded to 900,000 t/y via low capital investment.

The higher potential throughput is essential because it would open the door to incorporating additional material from Bateman’s satellite deposits, including McFinley and Pen, Evolution said.

The project hosts estimated compliant reserves of 3.5Mt, grading 5.54 g/t gold for 635,000 oz. of contained metal, and has a resource base of 1.71Mt grading on average 7.09 g/t for 390,000 oz. of contained gold.

An October, 2020 feasibility study had defined a 7-year, 1,315 t/d underground operation able to generate an average of 79,308 gold oz. annually, at all-in sustaining costs of $865 per oz. 

Battle North, formerly known as Rubicon Minerals, unveiled a circa one-million-ounce updated resource for Bateman in July last year. It renamed it as part of “a new era” for the company at the previously mined operation, which was shuttered soon after its first gold pour in 2015.

The transaction between Evolution and Battle North remains subject to Supreme Court of British Columbia approval, with a hearing scheduled for May 17. If approved by the court, the transaction will be settled on May 19. There are no other regulatory approvals required.

Evolution first got a foothold in the Red Lake Camp when it reached an agreement with erstwhile Newmont Goldcorp in November 2019 to acquire the Red Lake gold complex for $375million in cash, and a contingency payment of another $100-million should Evolution make a discovery on the property. Evolution has also partnered with explorer Pacton Gold (TSX-V: PAC) to undertake expansion drilling at the nearby Sidace Lake exploration property.

In Canada, Evolution is working to ramp up production from its Red Lake asset to the 300,000 to 500,000 oz. per year level with a shorter-term goal of 200,000 oz. annually at all-in sustaining costs of less than $1,000 per oz. by 2023. 

Battle North shares have gained about 43% since the deal was announced on March 12, last trading in Toronto at C$2.65 apiece, which capitalises it at $341.8 million. Evolution shares have also been on the up, gaining as much as 29% in Sydney since the deal was announced. Shares last traded at A$4.98, which capitalises it at A$8.5 billion.