Evolution Mining Ltd (ASX: EVN) shares are worth watching after it announcing an acquisition called Battle North Gold Corporation (TSX: BNAU).
What’s Battle North?
Battle North is developing the Bateman Gold Project to become the next gold producer in the Red Lake Gold District in Ontario, Canada.
It also controls the second largest exploration ground in the district. Battle North also owns a large exploration land package of the Long Canyon gold trend near the Nevada-Utah border in the US.
What is the acquisition price?
Evolution revealed a definitive arrangement agreement at a price of C$2.65 per share for a total of C$343 million.
This price represents a 46% premium compared to the last closing price of Battle North shares and a 54% premium to the average share price over the last 20 trading days.
All directors and officers of Battle North – representing around 0.6% of Battle North’s shares – have entered into voting support agreements with Evolution to vote in favour of the transaction.
Management comments
Evolution Mining Executive Chairman Jake Klein said: “Both Evolution and Battle North started the negotiation with a clear alignment that a consolidation of the properties would create value that would not be available if they were developed and operated separately. George and his team have done a very good job at progressing the Bateman Gold Project to this point and recognise that this is an ideal window to consolidate the properties ahead of the construction of the Bateman mine which is now in its early stages.
“This acquisition provides Evolution with an opportunity to expand our footprint in the region and create value by leveraging the infrastructure of the two operations. The additional processing capacity from the new Bateman mill will also accelerate our ability to achieve our objective of producing in excess of 300,000 ounces of gold per annum from Red Lake. In the 12 months that we have been operating at Red Lake we have demonstrated that we are a committed steward of the region. This expansion of our footprint will provide us with an opportunity to build on our track record as a safe and sustainable operator for the long term benefit of a broad range of stakeholders”.
Summary thoughts
This seems like a smart buy by Evolution Mining and keeps its quality mines located in highly stable countries like Australia. I think gold miners are an interesting hedge idea against inflation and possibly market declines, though that’s not always the case.
I’m interested in Evolution Mining shares at this stage, considering the share price is down by a third over the last six months and still offers a solid dividend yield with good cashflow.
