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Evolution acquires La Mancha’s Australian mines

Evolution acquires La Mancha’s Australian mines

Photo by Reuters

20th April 2015

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

  

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PERTH (miningweekly.com) - Gold miner Evolution Mining on Monday announced that it had entered into a binding agreement with private gold miner La Mancha to acquire all of that company’s Australian operations.

The combination of the two companies would result in La Mancha becoming Evolution’s largest shareholder and long-term strategic partner, while allowing Evolution to increase its production to between 530 000 oz/y to 600 000 oz/y.

The combined group would have six operating assets holding a resource estimate of some 3.4-million ounces and a mineral resource of some 8.4-million ounces, over 5 289 km2.

La Mancha’s Australian operations include the high-grade Frog’s Leg underground mine, as well as the adjacent White Foil openpit mine, in Western Australia, and the recently completed 1.5-million-tonne-a-year Mungari carbon-in-leach processing plant.

The private gold miner’s Australian operations produce between 130 000 oz and 160 000 oz gold, at an all-in sustaining cost of between A$950/oz and A$1 000/oz.

“This transaction is a major step towards realising Evolution’s long-standing goal of creating a globally relevant Australian-focused gold producer. The La Mancha Australia assets are an excellent addition to our existing portfolio and exactly the type of high-quality, low-cost producing assets that we have been seeking to acquire,” said Evolution executive chairperson Jake Klein.

He pointed out that the assets were located in a highly prospective and strategically important region in Australia, which offered significant exploration upside potential.

The two companies have also agreed on a long-term strategic partnership, in which La Mancha would support Evolution in the development and execution of its growth strategy.

Consistent with this, La Mancha has provided Evolution with an initial in-principle commitment of up to A$100-million of additional capital, to take advantage of any value accretive growth opportunities which could present themselves.

The additional capital could take the form of a pro-rata contribution to any potential future equity raising by Evolution, or any other form of funding support as may be agreed between the two parties. In addition, La Mancha would also provide Evolution with technical support around operational and exploration activities.

“La Mancha is excited to be entering into a long-term strategic partnership with Evolution. Given our successful track record and confidence in the Australian gold industry, our objective was to maintain our exposure to our operations, diversify our portfolio and identify a management team that could help us expand our footprint in Australia,” said La Mancha CEO Sebastien de Montessus.

“After a careful strategic review, we felt Evolution was best placed to fulfill this ambition and we look forward to supporting the combined entity through the next exciting phase of its development.”

De Montessus said that the establishment of the Australian partnership would allow La Mancha to independently focus its efforts on achieving its strategic objective of creating a midtier producer in Africa.

“This strategy revolves around the expansion of our existing mine in the Ivory Coast, as well as our continued search for regional growth opportunities, where we see attractive value in the current environment.”

Following the transaction, which would give La Mancha a 31% shareholding in Evolution, the company would have the right to nominate the appointment of two representatives to the Evolution board.

La Mancha had also agreed to an equity lock-up on the 322-million Evolution shares that were to be issued as part of the transaction, for a period of 24 months following the completion of the transaction.

The transaction was subject to a number of conditions, including shareholder and regulatory approval. If these approvals were received, the transaction would likely be completed by July this year.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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