Evolution Mining, OceanaGold in mix to buy Red Lake goldmine

Newmont Goldcorp’s Red Lake goldmine is based in Canada in northwestern Ontario at Red Lake.

Australian companies, including Evolution Mining and OceanaGold, are believed to be in the mix to buy Newmont Goldcorp’s Red Lake gold mine, which is one of the largest in the world.

The mine is based in Canada in northwestern Ontario at Red Lake.

Newmont is believed to be self-advised for the sale of the asset and expectations are that it could sell for about $500m.

Goldmining giant Newmont Goldcorp is believed to have been weighing a sale of the mine this year that produces 360,000 ounces of gold and employs 1180 people.

Expectations have been mounting for some time that Australian gold miners would go in search of acquisition opportunities in Canada at a time that their share prices touch fresh highs this year on the back of strong demand for the commodity and as gold hit a record high in August.

Evolution is known to have been a keen buyer in Canada and would likely call on the services of Royal Bank of Canada as an adviser, with which it has a relationship.

OceanaGold is listed in Australia with a $2.42bn market value.

The companies will come up against other parties such as Canada’s Rubicon, Kirkland Lake Gold and SSR Mining.

Newmont is selling Red Lake after it made a $US10bn ($14.74bn) acquisition of Goldcorp, which at the start of the year was the world’s fourth-largest producer, but has since become the the second-largest producer of the commodity.

In an interesting twist, Barrick Gold made a hostile takeover play for Newmont straight after it acquired Goldcorp, but Newmont fended off Barrick by reaching a deal to sell to its competitor part of its lucrative Nevada operations.

$4.42 Evolution Mining closed down 23¢ q

The pair own the Super Pit goldmine in Western Australia, with Barrick Gold in the process of selling its interest.

A sales process for the 50 per cent stake in the Super Pit is now into the second stage through investment bank Credit Suisse after first-round bids were received about a week ago.

The expectation is that Barrick’s 50 per cent interest in the mine will sell for between $US300m and $US400m ($436m-$581m).

So far, the listed Northern Star is considered the most likely buyer, but other groups expected to compete are Evolution Mining and offshore groups such as Gold Fields, Zijin Mining and Canadian miner Kirkland Lake Gold.

Advising Northern Star is expected to be Macquarie Capital.

The mine produces about 800,000 ounces of gold a year and at a later stage, Newmont is also likely to be a seller of its interest.

Barrick came close to selling its stake in the Super Pit in 2016 through Credit Suisse to China’s Shandong Tyan Home for $1.36bn, however the deal collapsed.

Elsewhere, Santos’s move to buy ConocoPhillips’ northern Australia assets for $US1.465bn was hardly a surprise yesterday after The Australian revealed in August that chief executive Kevin Gallagher was eager to buy the assets, and this column first tipped last month that talks about a deal were under way.

The focus now turns to the sale by Santos of its interest in Barossa.

Buyers of the interest may be existing owners of Darwin LNG or Barossa or its LNG customers out of South Korea.

Darwin LNG is also owned by Inpex, Eni, Jera and Tokyo Gas.

The Barossa development was 37.5 per cent owned by ConocoPhillips, 25 per cent Santos and 37.5 per cent SK E&S and the interest on offer by Santos could be attractive to a customer, potentially from South Korea.

The latest deal takes Santos’s interest in Barossa to 62.5 per cent and Santos is expected to sell down to 22.5 per cent.