More deals on the radar Evolution Mining continues to evolve

Goldminers are performing strongly on the stockmarket. Picture: AFP

Only months after acquiring the Red Lake mining complex in Canada for $US475m, Evolution Mining may not be through with corporate activity.

The group is in the process of selling its Cracow underground gold mine in Queensland, with Treadstone Partners appointed to advise on the sale.

Also expected to be divested will be its other smaller Queensland mines, Mount Carlton and Mount Rawdon.

But the thinking is that those proceeds will be used by Evolution to buy another asset and reshape its own business into an even stronger performer.

What could be on its radar is unclear, but one possible fit is Canada’s Kirkland Lake Gold, which owns the Fosterville gold mine in Victoria — one of the best in the world.

However, Kirkland is about twice the size of Evolution.

Other Canadian groups could be on its agenda.

First Quantum Minerals owns the Ravensthorpe nickel mine in Western Australia, along with other mines in places such as Panama and Zambia, and is a major industry player.

As goldminers perform strongly on the stockmarket, there is appetite for equity raisings, which offers motivation for groups to embark on acquisitions.

The persisting talk is about a tie-up between Super Pit owners Saracen Mineral and Northern Star, but some are not so sure such a deal will eventuate.

Yet while many believe Evolution is looking at plenty of opportunities, analysts say its management team led by executive chairman Jake Klein is conservative.

Evolution is considered one of Australia’s leading gold producers. For the 2019 financial year it produced 756,001 ounces of gold at about $924 per ounce.

For the 2020 financial year, it is expected to produce about 725,000 ounces at an all-in sustaining cost of between $940 and $990 an ounce.

Its other assets are the Cowal gold mine in NSW, the Mungari mine in WA and the Ernest Henry copper and gold mine operated by Glencore.

Evolution Mining has $330m of net debt and $240m of cash. It reported a $147.2m net profit for the six months to December, up 62 per cent from the previous corresponding period.