Evolution Mining to expand two gold mines in Australia
Evolution Mining (ASX: EVN), Australia’s third-biggest gold miner, announced on Monday that is going ahead with two major expansions plans at its Mungari and Ernest Henry operations.
The company also said it would be paying special attention to any assets that Newmont (TSX: NGT; NYSE: NEM) might shed after the world’s largest gold producer closes the multi-billion acquisition of Newcrest Mining (TSX: NCM; ASX: NCM).
At Mungari, in Western Australia Evolution has earmarked A$250 million ($222.2 million) to expand capacity at the processing plant, which will extend the mine’s operational life by 15 years to 2038.
Managing director and CEO Lawrie Conway said the plant update is also expected to unlock a large regional resource base, lower all-in sustaining costs and boost production.
The Mungari plant throughput capacity will increase from two million-tonnes per year (mtpa) to 4.2 million tpa, boosting annual gold production from 135,000 oz. to 200,000 oz. between 2027 and 2032.
The miner was forced to shelve the project at Mungari, located 600 km east of Perth and 20 km west of Kalgoorlie, in June last year over what it called an unsustainable local labour market.
“The expansion was always envisaged and formed part of our due diligence when we acquired the Kundana and East Kundana properties in 2021,” Conway said during Evolution’s Investor Day. “Having successfully integrated the operations, this is now the next logical phase of making Mungari a cornerstone asset of Evolution.”
Work is set to begin in the December quarter and is expected to take 30 months to complete, with commissioning scheduled for mid-2026.
Ernest Henry extension
Evolution also announced it had completed a prefeasibility study for the expansion of its Ernest Henry copper-gold mine in Queensland, which extends the productive life of the operation by 17 years to 2040 and doubles ore reserves.
The company will now progress to the feasibility study phase, it said.
“In under 18 months of owning 100% of Ernest Henry, we have doubled copper and gold reserves and extended the mine life out to 2040. By any measure this is an outstanding achievement,” Conway said in a separate statement.
Evolution said it had committed A$15 million to the feasibility study and A$7.5 million to the upcoming drilling program to deliver a “further significant mine life extension.”
The Sydney-based miner also informed investors it had successfully restructured its debt maturity profile to increase balance sheet flexibility.
This was achieved with a US$200-million US Private Placement (USPP) and the replacement of the existing A$590-million term loan facilities with a reduced A$300 million four-year term loan facility.
The result of this restructure and rescheduling will be an additional A$445 million of liquidity available over the next three years that was previously scheduled for term loan repayments.
Evolution highlighted there was no increase to its overall debt level.
