Surface facilities of the Red Lake complex that will shortly be owned by an Australian miner. (Image: Newmont Goldcorp)
DENVER – Newmont Goldcorp of Denver, Colo., has agreed to sell Red Lake Mines Ltd. to Evolution Mining of Australia. Evolution has agreed to make a cash payment of US$375 million upon closing in the first quarter of 2020, plus up to another US$100 million contingent on new resource discoveries.
Evolution will pay Newmont Goldcorp US$20 million for each one million ounces of new gold resources it adds to Red Lake over a 15-year period. The arrangement covers the first five such discoveries.
The Red Lake gold mines are located in the Northern Ontario town of the same name. At one time the Red Lake deposit was the highest grade gold mine in the world, with grades over a half-ounce, but grades from the zones currently being mined have declined. Guidance for 2019 was 265,000 oz. of gold at an all-in sustaining cost of US$935 per oz. There were also anticipated sustaining capital costs of US$35 million and development capital costs of US$40 million. Goldcorp took a write-down of US$664 million on Red Lake in 2018.
Newmont Goldcorp says the deal will strengthen its balance sheet and maintain its exposure to new discoveries at the mines. Proceeds from the transaction will also be used to return cash to shareholders and invest in new properties.
Detailed information about Red Lake seems to be a bit difficult to locate this week. Newmont Goldcorp has removed most references to Red Lake from its website, and Evolution (www.EvolutionMining.com.au) has not yet added any.