Why the Evolution (ASX:EVN) share price is in a trading halt

Evolution has big plans and is raising funds to achieve them…

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The Evolution Mining Ltd (ASX: EVN) share price won’t be going anywhere on Thursday.

This is because this morning the gold miner requested a trading halt.

Why is the Evolution share price in a trading halt?

The Evolution share price was placed in a trading halt this morning so that the company could launch an equity raising to fund a major acquisition.

According to the release, Evolution is aiming to raise $400 million via a fully underwritten institutional placement and a non-underwritten share purchase plan.

These funds are being raised at $3.85 per new share, which represents a 5.4% discount to the Evolution share price at yesterday’s close. Though, due to recent weakness in the Evolution share price, it is also a discount of 18% to where its shares were trading just one month ago.

The acquisition

Evolution is raising these funds after entering into an agreement with Northern Star Resources Ltd (ASX: NST) to acquire its assets in the Eastern Goldfields of Western Australia for $400 million.

These comprise a 100% interest in 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 company notes that the main acquisition assets are located within 8km of Evolution’s Mungari Operations and represent an important strategic opportunity to consolidate the region, optimise the value of its existing infrastructure, and capture significant operational synergies.

Evolution’s Executive Chairman, Jake Klein, commented: “This is a pivotal transaction that will transform Mungari to establish the operation as the fourth cornerstone asset in the Evolution portfolio.”

“It presents a unique strategic opportunity for Evolution to consolidate the Eastern Goldfields region given our existing presence at Mungari, resulting in Evolution being one of the largest tenement holders in the Kalgoorlie region.”

Mr Klein is expecting the acquisition to unlock synergies and provide the company with significant exploration potential.

He added: “The Acquisition Assets are located in close proximity to Mungari’s processing infrastructure, with all key mining operations and identified orebodies located within 8km of the Mungari mill. This unlocks the ability to capture valuable unique synergies and provides significant operational flexibility for the combined operations.”

“The Transaction improves Mungari on a production, mine life, and Mineral Resources basis. We are also excited about the exploration potential that the consolidated land package holds, which represents further mine life extension opportunities for Mungari. It also improves the overall scale, quality and mine life of the portfolio, which continues to operate exclusively in Tier 1 mining jurisdictions. Finally, we look forward to partnering with Rand and Tribune at the EKJV as we seek to optimise the value of this operation for the benefit of all shareholders,” he concluded.

The Evolution share price is down 23% year to date. Shareholders will no doubt be hoping that this acquisition is an inflection point for its shares.

Should you invest $1,000 in Evolution right now?

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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