What could impact the Evolution share price today?
The Evolution share price will be in focus this morning after the company advised it is to acquire the Toronto Stock Exchange-listed Battle North Gold Corporation. Battle North is an emerging producer in the renowned Red Lake Gold District in Ontario, Canada. It is focused on developing its Bateman Gold Project which controls the second-largest exploration ground in the district.
Evolution has agreed to acquire all of the issued and outstanding shares of Battle North at a price of C$2.65 per common share for a total consideration of approximately C$343 million.
Evolution’s executive chairman Jake Klein commented:
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…
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 including the local workforce, regional communities and our Wabauskang and Lac Seul First Nation Partners.
The Bateman Gold Project will include a 28,000ha land package that neighbours Evolution’s Red Lake project. It also includes a new 650ktpa mill facility which is currently permitted for 450ktpa of production and expandable to 900ktpa with minimal capital.
The feasibility study estimates a mineral reserve of 3.56 million tonnes with grading of 5.54g/t for 635,000 ounces of gold. The project would have an estimated mine life of 8 years with an annual production 74,000 oz at an all-in sustaining costs of US$865 per ounce.
Evolution’s Red Lake project plays a pivotal role in the company’s growth outlook in the short to medium term. On 19 February, Ord Minnett commented that Red Lake was almost entirely responsible for Evolution’s increase in both resources and reserves in its half-year results. The Evolution share price fell by around 8% following the release of the company’s results.
Red lake is expected to contribute 125,000 to 135,000 oz to the group’s forecast FY21 guidance of 670,000 to 730,000 oz. The company’s strategic acquisition of the Bateman Gold Project will likely accelerate Evolution’s long-term objective for Red Lake of producing 300,000 to 500,000 ounces per year.
Evolution share price snapshot
Over the past year, the Evolution share price has increased by nearly 18%. However, during the last six months, the company’s shares have fallen by more than 35%. Evolution shares are also down by around 25% year to date.
Based on the current share price of $3.95, the company has a market capitalisation of around $6.75 billion.