Evolution (ASX:EVN) share price falls despite completing Mt Carlton sale

Evolution shares are in the red today…

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The Evolution Mining Ltd (ASX: EVN) share price is falling on Wednesday.

In morning trade, the gold miner's shares are down 4% to $3.86.

Why is the Evolution share price falling?

Investors have been selling down the Evolution share price today after a pullback in the gold price offset the release of a positive announcement this morning.

The price of the precious metal fell overnight amid concerns that the US Federal Reserve could increase interest rates sooner than expected.

It isn't just the Evolution share price falling. At the time of writing, the S&P/ASX All Ords Gold index is down 2.2%.

What did Evolution announce?

Failing to boost the Evolution share price today was news that it has successfully completed the sale of the Mt Carlton gold mine to Navarre Minerals Limited (ASX: NML).

As per the agreement, Evolution has received the upfront consideration of A$40 million, comprising A$26.8 million in cash and 176,565,396 Navarre shares. The latter equates to a 12.9% shareholding in Navarre.

In addition, the agreement includes up to A$25 million contingent consideration payable on cumulative gold production milestones from Crush Creek. This comprises A$5 million payable upon achievement of 50,000 ounces, A$5 million payable upon achievement of 100,000 ounces, and A$15 million payable upon achievement of 175,000 ounces.

Finally, Evolution will receive up to an additional A$25 million in the form of a 5% gold price linked royalty when the average spot gold price is greater than A$2,250/oz 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.

Why is Evolution selling Mt Carlton?

Evolution's Executive Chairman, Jake Klein, has previously explained the rationale for the asset sale.

He said: "Mt Carlton was Evolution's first development project and has generated excellent returns for shareholders since it was commissioned in 2013. With the Company focussed 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. Evolution would like to thank our employees, contractors, suppliers, the traditional custodians of the land the Birriah People, and the local community for their contribution to Mt Carlton's success. We are confident that Navarre will be a great partner for those stakeholders in the future," he added.

The Evolution share price is down 27% in 2021.

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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