The Evolution Mining Ltd (ASX: EVN) share price has returned from its trading halt and is pushing higher.
At the time of writing, the gold miner’s shares are up 3% to $4.20.
Why is the Evolution share price pushing higher?
Investors have been bidding the Evolution share price higher today after responding positively to its acquisition announcement yesterday.
That announcement revealed that the company has signed an agreement with Northern Star Resources Ltd (ASX: NST) to acquire its assets in the Eastern Goldfields of Western Australia for $400 million.
These assets include 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.
Management believes the assets represent an important strategic opportunity for Evolution to consolidate the region, optimise the value of its existing infrastructure, and capture significant operational synergies. It highlights that the main acquisition assets are within 8km of Evolution’s Mungari Operations.
Why were its shares in a trading halt?
The Evolution share price was placed in a trading halt so that the company could launch an equity raising to fund the acquisition.
According to an update today, Evolution has successfully completed a $400 million fully underwritten institutional placement at a price of $3.85 per new share. This represents a discount of 5.4% to where the Evolution share price was trading prior to its halt.
A share purchase plan will now be undertaken, aiming to raise a further $50 million. This will be at the lower of the placement price or a 2.5% discount to its five-day volume weighted average price at the closing date.
Evolution also notes that ministerial approval has now been received under the WA Mining Act. This will allow Northern Star to transfer legal title of the assets to Evolution, which means the transaction is now unconditional. As a result, management expects completion to occur in late August.
Evolution’s Executive Chairman, Jake Klein said: “We are delighted with the level of support from shareholders for the Institutional Placement, reflecting their endorsement of this pivotal transaction that will transform Mungari to establish the operation as the fourth cornerstone asset in the Evolution portfolio.”
One broker that was pleased with the acquisition is Credit Suisse. This morning the broker upgraded Evolution’s shares to an outperform rating with an improved price target of $4.70. It has made double digit earnings per share estimate upgrades to reflect the acquisition.