NEWMONT Goldcorp has continued to streamline its asset base, selling its Red Lake complex in Ontario, Canada, to Evolution Mining.

As part of the binding agreement, Newmont will receive $375m in cash as well as contingent payments of up to an additional $100m tied to new resource discoveries.

Newmont president and chief executive Tom Palmer said the transaction both strengthens the company’s balance sheet and provides ongoing exposure to new discoveries at Red Lake.

“Evolution is a highly respected and responsible gold producer who is committed to the success of Red Lake and who we believe will prove a great partner for surrounding communities and stakeholders,” Mr Palmer said.

Under terms of the $100m contingent payment, Evolution will pay Newmont $20m for each 1m oz of new gold resources added to the existing Red Lake resource base over a 15-year period.

The contingent payment is applicable to the first 5m oz of new resources and Newmont intends to use proceeds to support the company’s capital allocation priorities of returning cash to shareholders, maintaining an investment-grade balance sheet, and investing in a world-class portfolio.

Evolution executive chairman Jake Klein said the company was excited to add Red Lake, a high-grade long-life gold asset, to its portfolio.

“We have been actively looking at assets in Canada since 2017 as we believe it is a country with low geopolitical risk, high geological prospectivity and a strong mining culture,” Mr Klein said.

“Red Lake is an undercapitalised asset which, through a committed investment in development and exploration, is intended to become a cornerstone asset in the Evolution portfolio.

“We have identified a range of opportunities to deliver an operational turnaround of the asset which is expected to create significant value for our shareholders and improve the quality of our portfolio.

Mr Klein said the camp has significant exploration potential which, coupled with its relatively unexplored recent past, provides significant upside potential for Evolution to extend the longevity of the operation well beyond its current 13-year life of mine plan.

“We are confident that Evolution will be an excellent and committed steward of Red Lake and look forward to continuing Newmont Goldcorp’s track record of safe and sustainable operation for the long-term benefit of a broad range of stakeholders including the local workforce, regional communities and the Lac Seul and Wabauskang First Nations Groups,” he said.

The transaction is expected to be finalised in the first quarter of 2020.