The ASX-listed Evolution Mining Limited (AU:EVN) has agreed to acquire an 80% stake in Northparkes copper-gold mine to strengthen its portfolio. The acquisition includes securing a stake in the mine situated in New South Wales, Australia, from China’s CMOC Group for up to AU$717 million ($475 million). It includes an initial payment of $400 million and the potential for additional payments of up to $75 million, contingent on market prices.
Details of the Transaction
Evolution Mining stated that it would raise AU$525 million in equity to fund the acquisition. Moreover, a portion of the funding for the acquisition will be sourced through a newly established AU$200 million five-year debt facility.
As part of the deal, the company has also signed an agreement with IXM SA, a subsidiary of CMOC, to purchase copper concentrates generated at the mine, corresponding to Evolution’s 80% ownership interest. Japan’s Sumitomo Corporation and Sumitomo Metal Mining will hold the remaining 20% of the mine.
The Deal Rationale
The acquired mine is projected to generate 25,000mt (metric tonnes) of copper and 38,000 troy ounces of gold in the Fiscal 2024.
With this acquisition, Evolution Mining is expecting a significant increase in its future gold production. Moreover, it enhances the company’s exposure to copper, a metal in high demand due to the ongoing energy transition. The company anticipates its copper revenues to contribute around 30% to its total revenues in FY24 as a result of this strategic move.
The transaction is expected to be completed by December 2023.
What is the Forecast for Evolution Mining?
Evolution Mining voluntarily initiated a trading halt for its stock on Tuesday in connection with the deal announcement. Year-to-date, the stock has gained over 35% in trading.
According to TipRanks’ consensus, EVN stock has received a Hold rating based on a total of 12 recommendations from analysts. This includes five Buy, five Hold, and two Sell recommendations. The Evolution Mining share price forecast is AU$3.66, which is 12% below the current trading levels.
