Delivers record results to shareholders thanks to RED LAKE Operations

By Kevin Vincent

A mid-tier miner from down under is cashing in on its Red Lake investment to help take it to the next level. Australia’s Evolution Mining reported in mid-August that the company’s acquisition of the Red Lake Mine helped Evolution record Amber Adams, Interim Mine Mgr., Red Lake Operations a $300 million USD profit, up 40% from a year earlier. The company says its transformation of the Red Lake Mine is ahead of schedule as Evolution is enjoying a healthy all-in sustaining cost of $715US/oz, netting the company close to $1200 per ounce profit. In interviews with various media outlets, Executive Chairman Jake Klein said the company believes the profitability can be sustained. “We’ve got a very low-cost production base,” said Klein. “And gold prices are about $400 an ounce higher than they were a year ago.”

In its latest report to shareholders, Klein revealed that Evolution paid dividends equal to a whopping $365 per ounce. Evolution also operates five mining assets in Australia where production turned out nearly 720,000 ounces in addition to the more than 27,000 ounces they poured at Red Lake. The company’s year over year cash flow increased a substantial 45% to a record AUS$1,121 million.

The company managed the impressive return for shareholders without compromising safety as their reportable injuries were reduced by 18% over the same period a year earlier and the COVID pandemic protocols quickly introduced by the company in early 2020, meant there was no impact on production. Red Lake is an underground gold mine.

The operation is comprised of the Red Lake, Campbell and Cochenour mines over a strike length of 7km. The Cochenour mine is connected to Red Lake by a 5km haulage drift, with ore processed at the Campbell Mill.

ADDITIONAL RESOURCES

Evolution acquired the Red Lake complex from Newmont-Goldcorp in late 2019 and assumed operation in the spring of 2020. While Newmont-Goldcorp was willing to hand over the Red Lake operations to an Australian competitor, the final deal was clearly constructed in a way that Newmont was confident they were walking away from a potential cash-flow bonanza.

Evolution Mining signed the deal to acquire Newmont Goldcorp’s Red Lake gold complex for $375m in cash. As part of the agreement, Evolution Mining will also pay an additional $100m in contingent payments upon “discovery of new resources”.

Under the $100m contingent payment terms, Newmont Goldcorp will receive $20m from Evolution Mining over a 15-year period for each one million ounces of new gold resources added to the existing Red Lake resource base. Newmont Goldcorp noted that the contingent payment is applicable to the first five million ounces of new resources.

The company intends to use funds from the transaction to support its capital allocation priorities of returning cash to shareholders, maintaining an investment-grade balance sheet, and investing in a new portfolio.

In late 2019, Newmont Goldcorp president and CEO Tom Palmer said: “This transaction both strengthens our balance sheet and provides ongoing exposure to new discoveries at Red Lake.”

Mining at the Red Lake complex, now owned by Evolution, started around 1939. Today the company has Collaboration Agreements in place with the Wabauskang and Lac Seul First Nation groups.

Re-entry into underground and processing areas has been progressing smoothly

Amber Adams, Interim General Manager Red Lake Operations, told investors recently that the company is investing heavily at Red Lake to access higher volumes of ore. The company says mine life expectancy is more than 11 years and the long-term target is 300,000 to 500,000 ounces per year.

Adams says the company is budgeting heavily over the first three years at Red Lake to accommodate more technology, attack higher grades and increase production.

A major summer forest fire in the Red Lake area forced the company to temporarily suspend operations. Evolution Mining Limited advised in mid-August that operations at the Red Lake gold mine, had resumed following the municipal led evacuation of the region due to the threat of the nearby forest fire.

“Due to the outstanding efforts of the Ministry of Natural Resources and Forestry, together with strong support from the local community, the fire was safely contained before reaching the townships,” said Klein. “All residents of the broader Red Lake community, including our Evolution employees and contractors, are safe.

There has been no damage to any of the operation’s infrastructure and, due to the diligent work of Evolution’s site team, re-entry into the underground and processing areas has been progressing smoothly.” Klein says Red Lake remains on track to deliver planned, third-quarter gold production.

This article was originally published in the recent Mining Life & Exploration News. To stay current with all of the latest in mining news and in-depth articles, subscribe now for your free copy delivered right to your door. Email info@canadiantradex.com your request to be added to the distribution list today! Or call us directly at 705-264-2251. For a limited time, subscription is free. International locations will receive digital copies.