Speculation is mounting Evolution Mining could soon place its Mungari gold mine up for sale, which analysts value at between $600m and $1bn.
The understanding is the $10bn listed gold miner, controlled by Jake Klein, has had suitors interested in the West Australian asset lately, including Zijin Mining, which owns the Norton Gold Fields in Kalgoorlie.
Other WA gold miners would also likely be interested in the asset, and a sale by Evolution would be logical given it is the only asset it owns in the state.
Compared to Evolution’s Northparkes gold and copper mine in NSW and Ernest Henry gold and copper mine in Queensland, the asset is considered subscale.
Northparkes was purchased for $US475m in 2023 to gain an 80 per cent interest from China Moly.
Evolution also owns the Mt Rawdon gold mine in Queensland and the Cowal gold mine in NSW.
It has largely lost its mandate for acquisitions by shareholders after buying the Red Lake gold complex in Canada during 2019 from Newmont for up to $US475m, but later revealing production was lower than analysts had expected, causing its shares to fall.
The company may attract top dollar for Mungari should it sell now after the gold price hit record highs this year.
But, some question whether the timing would be right for Evolution to sell given it is in the middle of the Mungari 4.2 expansion project.
Last financial year Mungari, located 600km east of Perth, produced 123,673 ounces of gold at an all-in sustaining cost (AISC) of $2536 per ounce, with operating cash flow of $122.9m.
Evolution spent $135.4m during the year expanding its mill to increase processing capacity from 2 million tonnes per annum to 4.2mtpa.
The project is progressing on schedule and in budget, with commissioning expected by the end of the March 2026 quarter.
Gold production this financial year is planned to be about 125,000 to 135,000 ounces of gold at an AISC of $2550 to $2650 per ounce.
Evolution had $1.6bn of net debt according to its company accounts and posted a 158 per cent increase in net profit to $422.3m.
Merger talks
Meanwhile, there’s been some chatter in the market of merger talks between Genesis Minerals and the $2.35bn Vault Minerals, a business which is the result of a merger between Silver Lake Resources and Red 5.
Speculation has existed for some time the $2.8bn Genesis, which previously bought the gold assets of St Barbara, would purchase Vault, given the strong synergies in owning its gold mining assets close by in WA’s Leonora gold district.
However, Genesis Minerals managing director Raleigh Finlayson has said further acquisitions were off the agenda until the company could bed down assets it had recently purchased.
The understanding though is, despite this, some talks have taken place, but they were called off after Vault delivered a disappointing quarterly update.
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