Evolution Mining Ltd. agreed to pay $550-million for Barrick Gold Corp.'s Cowal mine in Australia's New South Wales to add what it said is a "world-class" operation.
The deal to buy the mine from the world's largest gold producer is Evolution's second acquisition since April and expands its operations to seven assets in Australia, the Sydney- based mining company said today in a statement.
"This is a cornerstone asset for Evolution, and it will generate a significant amount of cash for us," Executive Chairman Jake Klein said today in a phone interview. "It's a world-class asset."
Gold producers completed acquisitions worth $18 billion last year as the largest companies, including Barrick and Newmont Mining Corp., reduce the size of their portfolios to cut debt and lower costs.
Evolution will fund the Cowal deal by seeking to raise about A$248 million ($194 million) through a share offer, it said in the statement. The producer has agreed a new A$400 million five-year term loan and refinanced and increased the size of an existing revolver facility to A$300 million.
The Cowal mine produced 268,000 ounces of gold last year at an all-in sustaining cost of about $740 to $775 an ounce, according to Barrick.
Selling Cowal makes "a significant contribution to our debt reduction target while further focusing the geographic footprint of our portfolio," Barrick Co-President Kelvin Dushnisky said in a separate statement. Toronto-based Barrick is also seeking to divest mines in Papua New Guinea and Chile.