Evolution has agreed to sell the Pajingo Gold Project in North Queensland to Chinese company Minjar Gold for up to A$52 million. The unconditional sale, which includes the surrounding exploration tenements, will close on September 1.
The sale consists of a $42 million up-front cash payment and a 1% net smelter return royalty up to $10 million for gold production above 130,000 ounces.
Evolution’s executive chairman Jake Klein says, “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.”
Evolution announced its intention to divest Pajingo last week, stating, “Evolution has consistently stated that a key object of its business strategy is to improve the quality of its asset portfolio over time. This includes continuously evaluating a wide range of acquisition and divestment opportunities that Evolution believes are in the best interests of shareholders. A sale of Pajingo gold mine would be consistent with this strategy.”
Following the announcement of the sale, Jake Klein thanked the team at Pajingo, saying it “had made a very important contribution to our business over the last six years”.
As a result of the sale, Evolution has cut its production guidance from 800,000-860,000 ounces of gold down to 745,000-800,000 ounces at an all in sustaining cost of $970-$1030 per ounce.
Minjar is a wholly-owned subsidiary of Shandong Tyan Home Co Ltd, a publicly listed company with a current market capitalisation of approximately A$2.6 billion. Tyan Home is involved in property and mining, and is 29.45% owned by the Shandong Tianye Group (STG), which was founded in 1999 and is a private Chinese company based in Jinan, capital of Shandong province.
Minjar owns the Minjar mine, 550km northeast of Perth. It acquired the mine in 2009 and delineated a resource base to support recommencement of mining and milling operations in 2013. The operation annually produces approximately 35,000 ounces of gold.
In 2015 Minjar Gold also acquired the Kirkalocka Gold Project, 70km south of Mount Magnet, Western Australia. Minjar is seeking to further grow its production profile with acquisitions within Australia.
The sale announcement came a day after Northern Star Resources signed a legally-binding conditional agreement with Canada’s Billabong Gold to sell its Plutonic mine in Western Australia.
The deal with Billabong is potentially worth up to $37.5 million, with $12.5 million to be paid in cash and a further $25 million to be paid in either shares or cash.
Northern Star expects a further $28 million down the road, subject to certain milestones and royalty arrangements. The sale also includes Northern Star’s Hermes mine, which it purchased last year.