NEW YORK/MELBOURNE, May 25 (Reuters) – Barrick Gold , the world’s top gold producer, has agreed to sell its Cowal mine to Evolution Mining for $550 million in a deal that will turn Evolution into Australia’s second largest producer of the precious metal.
The deal gives Evolution a large, low-cost mine that will boost its output to around 800,000 ounces a year, around one-third the output of top Australian producer Newcrest Mining .
“This is a truly transformational acquisition for Evolution,” Executive Chairman Jake Klein said after the deal was announced on Monday. “This is the high quality asset we have been looking for to cornerstone our business.”
Barrick put Cowal up for sale along with its Porgera mine in Papua New Guinea, among other assets, in an effort to cut debt by $3 billion by the end of this year.
Analysts congratulated Evolution for snaring Cowal for well below the $650 million price tag it had been expected to fetch.
“We put in what we thought was a fair price, but one which we are very happy acquiring it at,” Klein told analysts and media on a conference call, adding that the price reflected the subdued asset values in the current market.
Evolution was able to afford the bid with the backing of Luxembourg-based private company La Mancha, from whom it recently agreed to buy two small Australian mines in an all-share deal worth A$293 million ($229 million).
Evolution plans to pay for Cowal by raising about A$248 million through a sale of new shares and with new bank loans.
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