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Evolution Mining shares fall 14% on Northparkes purchase funding

Shares in Evolution Mining (ASX:EVN) plummeted by 14% on Wednesday after trading resumed following a halt. The halt was to facilitate the company’s efforts to raise $525 million to finance the acquisition of an 80% stake in the Northparkes copper gold mine in New South Wales, Australia, from China’s CMOC.

This deal will provide Evolution Mining with two mines in the region, with its Cowal operation being a significantly larger gold copper mine. The total cost of the 80% stake in the mine is $A717 million. Evolution issued 138.2 million shares at $3.80 each, representing a modest 8% discount from the last sale price of $4.14 each on Monday.

The shares initially dropped to $3.52 before recovering to $3.60 just before 11 am. Additionally, the company plans to fill the funding gap with a $200 million five-year credit facility.

The overall cash consideration includes an upfront payment of $US$400 million and a contingent payment of $US75 million based on future performance. Furthermore, an offtake agreement has been established with IXM S.A, a subsidiary of China Molybdenum (CMOC), under which IXM will purchase Northparkes’ copper concentrates equivalent to Evolution’s 80% interest over the mine’s lifespan.

Evolution’s Executive Chairman, Jake Klein, expressed his satisfaction with the shareholder and investor support for the placement and the Northparkes acquisition. He emphasized Northparkes’ reliability and long-term potential, aligning with Evolution’s strategy of concentrating on a high-quality asset portfolio.

Mr. Klein also highlighted that the acquisition of Northparkes, being a cash flow generating asset from day one, aligns with their deleveraging strategy and positions Evolution Mining to continue delivering strong shareholder returns.

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