Evolution picks up La Mancha assets

Frog's Leg Gold Mine. Picture: Amy Dry/Kalgoorlie Miner.

UPDATE 2.20pm: Evolution Mining will acquire all of La Mancha's Australian gold assets in an all-scrip deal worth more than $300 million.

The company will issue 322 million new shares to La Mancha representing 31 per cent of the company's enlarged share capital.

La Mancha's Australian operations include the high-grade Frog's Leg underground gold mine near Kalgoorlie, the adjacent White Foil open-pit gold mine and the recently completed 1.5 mtpa Mungari processing plant.

Combined annual production from La Mancha Australia's operations is in the range of 130,000-160,000 ounces of gold at an all-in sustaining costs of $950 -$1000 per ounce.

The deal will boost Evolution's annual production to 530,000-600,000 ounces from six operations across WA and Queensland, at a globally competitive all-in sustaining cost of $960 -$1030 per ounce.

The combination will result in La Mancha becoming Evolution's largest shareholder and long-term strategic partner.

The two companies said they planned to establish a globally-relevant Australian-focused mid-tier gold producer.

La Mancha has agreed to provide Evolution with an initial in-principle commitment of up to $100 million of additional capital to assist in funding further value-accretive growth opportunities.

Evolution's executive chairman Jake Klein said the La Mancha assets were an excellent addition to the company's existing portfolio, and was exactly the type of high-quality, low-cost producing assets that it had been seeking to acquire.

"They are also located in a highly prospective and strategically important region of Australia that offers significant upside exploration potential," he said.

"This transaction not only delivers a high-quality asset into our portfolio but also partners us with a long term strategic shareholder who shares our vision - there can be no better evidence of this than La Mancha's in-principle commitment to invest a further $100 million to support our future growth."

Evolution confirmed media speculation earlier this month that it was in talks with La Mancha over its Australian assets.

WestBusiness revealed last month that Egyptian billionaire Naguib Sawiris was quietly shopping around his Goldfields gold operation with an asking price of up to $400 million, with Evolution Mining understood to be the leading suitor.

Evolution shares were off 1.5 cents, or 1.61 per cent, to 91.5 cents at the close.