The Evolution Mining Ltd (ASX: EVN) share price has started the week on a positive note.
In morning trade, the gold miner's shares are up 3% to $3.73.
Why is the Evolution share price rising?
Investors have been bidding the Evolution share price higher this morning following a rise in the gold price and the release of an announcement.
In respect to the latter, Evolution has announced a binding agreement with Navarre Minerals Limited (ASX: NML) to sell the Mt Carlton gold mine (including Crush Creek) in Queensland for a total consideration of up to $90 million.
The release notes that the total consideration comprises $40 million payable upon completion, up to $25 million contingent consideration payable on cumulative gold production milestones, and up to $25 million contingent consideration payable in the form of a 5% gold price linked royalty. This is applicable when the average spot gold price is greater than A$2,250 an ounce in a given quarter. The royalty is payable on production from both Mt Carlton and Crush Creek from 1 July 2023 for up to 15 years.
Evolution also revealed that it has agreed to participate in Navarre's equity raise up to a maximum shareholding of 19.9% (approximately $20 million). The final holding will be determined after its equity raise has concluded.
Evolution's Executive Chairman, Jake Klein, commented: "Mt Carlton was Evolution's first development project and has generated excellent returns for shareholders since it was commissioned in 2013. With the Company focused on delivery of growth projects at the cornerstone assets in the portfolio, we believe now is the time to hand Mt Carlton over to an emerging gold producer who can focus on extending the operation's mine life."
"The exposure we have retained will enable Evolution shareholders to benefit from the future success of the operation," he added.
Updated guidance
Evolution has updated its guidance to reflect the sale. Evolution has reduced its FY 2022 production slightly to 670,000 – 725,000 ounces.
Positively, the operation's higher costs mean that Evolution lowered its all-in sustaining cost (AISC) guidance by A$40 per ounce to A$1,180 – A$1,240 per ounce.
The Evolution share price is down 30% in 2021.
