Evolution confirms La Mancha talks
UPDATE 1.20pm: Evolution Mining has confirmed it is in talks with Egyptian billionaire Naguib Sawiris over the possible purchase of La Mancha Resources' Goldfields assets.
The admission follows a report in WestBusiness today revealing La Mancha was looking to offload its Frog's Leg underground and White Foil open pit mines and the 1.7 million tonnes a year Mungari processing plant with an asking price of $400 million.
Evolution announced this morning its discussions with La Mancha were ongoing and no terms had been agreed to yet.
"These is no certainty that these discussions will lead to a transaction," the company said in a statement.
However industry sources say Evolution has entered a period of exclusivity with Mr Sawiris' La Mancha Resources following a selective sales pitch that is understood to have included the likes of acquisitive players Metals X and Northern Star Resources.
Neither La Mancha nor Evolution would comment yesterday, and it remains unclear whether Mr Sawiris will achieve anywhere near his lofty sales price ambitions.
La Mancha's WA operations are the Frog's Leg underground and White Foil open pit mines and the 1.7 million tonnes a year Mungari processing plant. Mungari's $110 million development was only completed last year.
The La Mancha assets are near Northern Star's Kundana operation and last year produced 147,000 ounces at all-in costs of $US961/oz.
The La Mancha portfolio, which comes with a three million ounce resource at 2.1 grams per tonne, is well regarded. However, sources say Mr Sawiris wants to cash out to focus more capital on La Mancha's African ambitions.
Evolution managing director Jake Klein has said his company's portfolio, including the Edna May mine near Westonia, are performing at levels and profitability that allow him to consider corporate deals. He has flagged a 36-month window to make the most of weak asset prices.
Speaking to MiningNews.net in Hong Kong yesterday, Mr Klein predicted that ownership of up to half of Australia's gold output could change hands in the next two years.
Northern Star, Metals X and South Africa's Gold Fields have proven the most acquisitive though Evolution has also been seen as a player, including in the race to buy Barrick Gold's Cowal mine in NSW.
Mr Sawiris moved into WA three years ago when he bought La Mancha off its French masters in a $480 million cash deal and followed up in 2013 with the $141 million acquisition of Alacer Gold's half-share of Frog's Leg. The subsequent commitment to build Mungari made Mr Sawiris one of the Goldfields' biggest producers, with a workforce of 200.
Evolution shares closed down one cent at 84 cents.
