PERTH (miningweekly.com) – Gold miners Evolution Mining and Northern Star has struck a A$400-million agreement under which Northern Star would sell its Kundana assets, in Western Australia, to Evolution.

The Kundana assets include the Kundana operations, a 51% interest in the East Kundana joint venture (EKJV), full interest in certain tenements making up the Carbine project, and a 75% interest in the West Kundana joint venture (WKJV).

In the 2021 financial year, the Kundana assets produced some 12 943 oz of gold, hosting a combined resource estimate of 2.4-million ounces, including reserves of 579 000 oz.

The assets are located some 8 km from Evolution's Mungari operations, representing a strategic opportunity for Evolution to consolidate the region, optimise the value of its existing infrastructure, and capture significant operational synergies, the miner said on Thursday.

“This is a pivotal transaction that will transform Mungari to establish the operation as the fourth cornerstone asset in the Evolution portfolio. It presents a unique strategic opportunity for Evolution to consolidate the Eastern Goldfields region given our existing presence at Mungari, resulting in Evolution being one of the largest tenement holders in the Kalgoorlie region,” said Evolution executive chairperson Jake Klein.

“The acquisition assets are located in close proximity to Mungari’s processing infrastructure, with all key mining operations and identified orebodies located within 8 km of the Mungari mill. This unlocks the ability to capture valuable unique synergies and provides significant operational flexibility for the combined operations.

“The transaction improves Mungari on a production, mine life and mineral resource basis. We are also excited about the exploration potential that the consolidated land package holds, which represents further mine life extension opportunities for Mungari. It also improves the overall scale, quality and mine life of the portfolio, which continues to operate exclusively in Tier 1 mining jurisdictions,” said Klein.

Evolution told shareholders that as a result of the transaction, the company’s three-year production outlook has increased to between 700 000 oz and 760 000 oz for 2021, between 815 000 oz and 875 000 oz for 2023, and between 940 000 oz and 1.01-million ounces in 2024.

This represented a 30 000 oz increase in production for 2022, a 65 000 oz increase in production for 2023, and a 60 000 oz increase in production for 2024.

All-in sustaining costs for the group during this period remained unchanged, at between A$1 220/oz and A$1 280/oz in 2022, between A$1 125/oz and A$1 185/oz in 2023, and between A$1 170/oz and A$1 230/oz in 2024.

Newly appointed Northern Star MD Stuart Tonkin said on Thursday that the sale represented an opportunity to liberate value from a package of assets that were no longer required for delivery of the company’s strategic objectives, after an intense period of growth including the merger with Saracen and the recent Kalgoorlie Consolidated Gold Mines-led increase in resources and reserves.

“The sale of these assets is consistent with our strategy to employ capital where we believe it will generate the greatest return. This is a great outcome for all stakeholders, including all our employees working at these assets, who will be offered continuity under Evolution’s ownership,” Tonkin said.

Evolution will be offering employment contracts to and assuming liabilities for all of Northern Star’s transferring employees.

Proceeds from the sale will be invested in advancing Northern Star’s pipeline of growth projects, the company told shareholders.

Completion is subject to Ministerial consent to the transfer of six mining tenements, and the transaction is expected to be completed in late August 2021.