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Evolution completes $375M Red Lake acquisition

Apr 14, 2020

Evolution is pleased to announce that the acquisition of Red Lake has been completed following all conditions precedent having been satisfied. Evolution announced on 26 November 2019 the agreement with Newmont Corporation to acquire 100% of the Red Lake Gold Mine for US$375 million.

Red Lake is a high grade, long life gold mine in Ontario, Canada. It is an undercapitalised asset which provides an attractive opportunity to leverage Evolution’s successful track record in asset optimisation by investing capital, improving the engagement of the site team, and changing the strategy of the operation to unlock value. The operation currently has a 13-year mine life and provides outstanding exploration potential in Archean greenstone gold geology familiar to Evolution.

A five-year term loan of A$570 million from a syndicate of six banks has been utilised to fund the acquisition and related transaction costs. Due to the strong cash position of the business, the final term loan amount is A$30 million less than contemplated at the time of announcing the transaction. Evolution put a foreign currency hedge in place at the time of announcing the transaction to fix the US dollar consideration. This has delivered a benefit of approximately A$63 million to the final consideration amount. The amortisation of the loan is aligned to the expected ramp up in production and cash generation at Red Lake. The repayment schedule is contained in the appendix to this release with first repayment of A$20 million due in July 2020.

Evolution’s balance sheet remains strong. Post completion of the transaction and the payment of the interim dividend of A$119 million on 27 March 2020, the Company has a total liquidity position of approximately A$510 million comprising of a cash position of approximately A$150 million and an undrawn three-year revolver of A$360 million. Gearing post completion of the transaction will be within the range of 11 – 13%.

Tags: Northern Ontario / Deals & Financial / Gold / All Articles