Barrick Gold Corporation has reached an agreement to sell the Cowal Gold Project in the Central West of New South Wales, Australia, to Evolution Mining for US$550 million in cash on closing. Proceeds from the sale of Cowal will be used by Barrick to pay down debt.

The divestment will also contribute to reduced general and administrative costs as Barrick completes the closure of its office in Perth, Australia.

“The sale of Cowal is consistent with the strategy we have outlined to create long-term value for our owners, making a significant contribution to our debt reduction target while further focusing the geographic footprint of our portfolio,” said Barrick’s co-president Kelvin Dushnisky.

“We are pleased to have achieved a successful outcome following a competitive auction process in the first of several asset sales now under way. We would like to extend our gratitude to our Cowal employees, who have made a significant contribution to Barrick since the mine began production in 2006, and we wish them future success as part of the Evolution team.”

The transaction is expected to be completed in the third quarter of 2015 and is subject to customary closing conditions.

Evolution Mining was created in late 2011 as a mid-tier Australian gold producer through a merger of Catalpa Resources and Conquest Mining. Evolution operates five gold and silver mines in Queensland and Western Australia and for the year ended June 30, 2014 the company produced approximately 428,000 gold equivalent ounces.

The Cowal mine is a large-scale, long-life operation with estimated annual production of 230,000 to 260,000 ounces of gold at an AISC cost of Aus$850-$900 per ounce.

Following completion of the transaction, Evolution will have combined current annual production of 630,000-700,000 ounces. This will increase to 760,000-860,000 ounces post completion of the proposed La Mancha Australia acquisition.

It also represents a significant increase to Evolution’s mineral inventory with mineral reserves of 1.6 million ounces and resources of 3.4 million ounces.

Evolution’s executive chairman Jake Klein said, “This is a truly transformational acquisition for Evolution. From day one, more than three and a half years ago, we set out to create a globally relevant, mid-tier Australian gold producer. We have consistently communicated a very clear strategy of our intention to leverage our operating success to upgrade the quality of our asset portfolio.

“With all five of Evolution’s existing operating assets performing well and generating strong cash flows, we are in an ideal position to grow our business at a time in the cycle where asset prices are attractive.

“Very rarely does an opportunity arise to acquire a high quality asset like Cowal. This is an asset that has a long history of stable, large-scale, low-cost production. It is also an asset that we believe provides us with an attractive range of upside opportunities.

“Only in April we announced the acquisition of La Mancha which both improved the quality of our portfolio and aligned us with a strategic partner willing to support the acquisition of Cowal with a commitment to fund an additional equity contribution of $112 million. This support was critical in enabling us to submit an offer for the Cowal acquisition.

“The addition of Cowal to our asset portfolio is an exciting step forward for Evolution and provides us with a cornerstone asset of the highest quality which we will shape our future around.”