Evolution Mining has acquired a stake in Glencore’s Ernest Henry Mining operations, north-east of Cloncurry, for $880 million.
The gold miner has also established a strategic alliance with Glencore in respect of potential future regional acquisitions and the parties have made a commitment to cooperate on exploration activities in the region surrounding Ernest Henry.
“Evolution has today gained exposure to a world-class mining asset in Ernest Henry,” executive chairman Jake Klein said.
“Since inception we have consistently communicated a very clear strategy of upgrading the quality of our asset portfolio to create a globally relevant, mid-tier Australian gold producer.
“This acquisition, together with the recent divestment of Pajingo, is a substantial step forward in delivering on this strategy.”
Evolution has agreed to acquire 100 per cent of future gold produced from the agreed life of mine area at Ernest Henry and 30 per cent of future copper and silver produced from the life of mine area.
In addition to the upfront $880 million payment, Evolution must contribute 30 per cent of future production costs in respect of that area.
In the 12 months to June 30, Ernest Henry produced 67,000 tonnes of copper and 88,000 oz of gold in concentrate.
In a statement today, Glencore said the transaction formed part of its debt reduction plans, initially announced in September 2015.
Glencore will continue to manage the day-to-day operations at Ernest Henry Mining.
The Ernest Henry copper-gold mine was initially commissioned as an open-cut operation in 1997 and transitioned to a wholly underground operation in late 2011.
The ore is crushed underground and brought to surface via a sophisticated ore hoisting system supported by a 1.0km deep shaft and a 1.2km network of conveyors.
Ernest Henry has an ore reserve base that supports a mine life of at least 11 years.