Edna May is 350km east of Perth, WA. Image: Evolution Mining.
BY ELIZABETH FABRI
AUSTRALIA’S second largest gold miner Evolution Mining has agreed to sell its Edna May project in WA to Ramelius Resources for up to $90 million.
After months of speculation, Evolution confirmed rumours in September that it would be offloading the WA mine to improve the quality of its asset portfolio.
Ramelius’ annual group production will increase by an estimated 54 per cent to between 195,000oz and 205,000oz.
The sale involved an initial $40 million cash payment, and an additional $20 million in cash or Ramelius shares upon a board approved decision to mine the Edna May Stage 3 open pit.
Evolution will also receive royalty payments of up to $30 million payable at $60 per ounce from gold production of more than 200,000oz, or up to $50 million payable at $100 per ounce if Stage 3 is not mined.
Evolution Mining executive chairman Jake Klein said Edna May, which represented 8 per cent of the company’s total gold production in FY17, was “no longer a core asset” for the company.
“Edna May was a founding asset of Evolution and its predecessor company Catalpa Resources,” Mr Klein said.
“It formed an important part of the development of both companies [and] we thank everyone at Edna May for their important contribution to Evolution.
“In line with improving the quality of the portfolio, the decision to sell Edna May will lower our All-in Sustaining Cost by approximately A$30 per ounce in FY18 and A$40 – A$50 per ounce on an annual basis.
“Our average mine life based on reserves will increase from 8.3 years to 8.7 years.”
Ramelius managing director Mark Zeptner said the acquisition represented a step change in the company’s overall production profile to build on the strength of its existing WA operations, Mt Magnet and Vivien.
“Upon completion, we become a 200,000 ounce per annum gold producer, with all operations within a one hour flight from Perth,” Mr Zeptner said.
“Not only does this acquisition drive a significant increase in group Mineral Resources and
Ore Reserves, as a going concern it also delivers excellent returns on our initial A$40M investment with minimal capex imposts.
“We are also particularly excited about the potential for Edna May to significantly increase both its Ore Reserves and annual production via further extensions which represent huge optionality for Ramelius in the future.”
The transaction is expected to be complete on 3 October.