RED LAKE, Ont. — Evolution Mining Ltd. says it will invest US$150 million over the next three years in the “undercapitalized” Red Lake gold complex in western Ontario after striking a deal to buy it for US$375 million from Newmont Goldcorp Corp.
In a news release, the Australian company says it plans to spend US$50 million on exploration and invest US$100 million in existing operations at the underground mining complex if the acquisition closes as expected by the end of March.
Evolution says it has also agreed to boost the price by up to US$100 million payable upon new resource discovery.
Denver-based Newmont says it will receive US$20 million for each one million ounces of new gold resources added to the existing Red Lake resource base over a 15-year period, with payments ending after five million ounces of new resources.
Since production started in 1949, Red Lake has produced more than 25 million ounces of gold. In 2018, its mines produced 276,000 ounces of gold, but production is forecast to drop to 150,000 to 160,000 ounces this year.
Evolution executive chairman Jake Klein said the company is excited to add a high-grade, long-life asset in Canada.
“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,” he said in a statement.
“Red Lake is an undercapitalized asset which, through a committed investment in development and exploration, is intended to become a cornerstone asset in the Evolution portfolio.”
This report by The Canadian Press was first published Nov. 26, 2019.
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The Canadian Press