Evolution backs Phoenix with $9m

UPDATE 2.35pm: Acquisitive gold miner Evolution Mining will take a 19.9 per cent stake in Phoenix Gold by investing $9 million in the company to help it ramp up exploration at its Goldfields projects.

The deal follows Evolution's decision to buy La Mancha Resources' nearby Frog's Leg and White Foil gold mines in an all-scrip deal worth $300 million.

Phoenix said the new strategic partnership between the two companies demonstrated Evolution's confidence in its asset portfolio, recognised the potential of its broader gold projects and provided additional financial capacity to deliver on the company's growth strategy.

Under the terms of the deal, Evolution will subscribe for 105.9 million new Phoenix shares at 8.5 cents, representing an 18 per cent premium to the 10-day, volume weighted average price (VWAP).

The investment will be handled in two tranches with the second subject to shareholder approval.

If approved, Phoenix and Evolution will develop an exploration program in the June quarter with exploration drilling expected to commence in the September quarter.

Phoenix managing director Jon Price said the company had more than 15 kilometres of strike immediately north of the Kundana gold field that remained largely untested.

"We look forward to working closely with the Evolution team as we continue the search for the next significant gold discovery in the WA Goldfields," he said.

Evolution's executive chairman Jake Klein said the close proximity of the Phoenix tenements to the newly built 1.5mtpa Mungari processing plant (part of the La Mancha acquisition) provided obvious synergies and further strengthened the company's position in the region.

"In addition, we see benefit in sharing the geological knowledge between our discovery teams to increase the probability of success in this world-class gold camp," he said.

Phoenix Gold shares jumped 0.9 cents, or 11.39 per cent, to 8.8 cents at the close while Evolution shares were off 1.5 cents, or 1.5 per cent, to 98.5 cents.