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Evolution Mining (ASX:EVN) shares halted for $400 million deal

Evolution Mining Ltd (ASX: EVN) shares are currently halted after announcing a capital raising to fund a $400 million deal to buy assets from Northern Star Resources Ltd (ASX: NST).

Evolution Mining’s big deal

It’s spending $400 million to buy a number of assets located in the Eastern Goldfields of Western Australia.

Those assets include a 100% interest of the Kundana operations, a 51% interest in the East Kundana joint venture, a 100% interest in certain tenements comprising the Carbine Project and a 75% interest in the West Kundana joint venture.

The main assets that Evolution is going to buy are located within 8km of Evolution’s Mungari operations and represent an important strategic opportunity for Evolution to consolidate the region, optimise the value of its existing infrastructure and capture “significant operational synergies”.

Evolution Mining said that this provides a pathway to an annual production objective of 200,000 ounces at Mungari.

The improved near-term grade profile is anticipated to increase production and cashflow.

It’s also expected to add, on a per-share basis, to its production, mineral resources and net mine cashflow.

Capital raising

To fund the $400 acquisition, it’s going to raise $400 million through an institutional placement at an issue price of $3.85 per share. That price represents a discount of 5.4% to the last closing price.

It’ll also try to raise $50 million through a share purchase plan for regular investors.

Outlook

As a result of this transaction, it has adjusted its three-year production outlook. FY22 guidance is for a range of 700,000 to 760,000 ounces. FY23 guidance is 815,000 to 875,000 ounces. FY24 guidance is 940,000 to 1,010,000 ounces.

Summary thoughts about this deal for Evolution Mining and the share price

I like Evolution Mining as a gold miner, it’s one of my preferred companies. It has a good portfolio of mining assets which is seemingly about to get stronger. The dividend record is also good in my opinion.

If I were a shareholder, I’d be happy to take part in the capital raising.

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Are you stuck wondering where to invest right now? Have you got cash 'sitting on the sidelines'? Are you looking for dividend income AND growth but don't know where to start? Rask's expert ASX analyst team has just released a full report, detailing where we'd invest $10,000 right now.

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At the time of publishing, Jaz does not have a financial or commercial interest in any of the companies mentioned.

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