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NEWS

Evolution’s $1 billion birthday buy

by Michael Washbourne

ince its formation a decade ago, Evolution Mining Ltd has asset and that’s really where the benefit is.”
Ssuccessfully negotiated 12 significant corporate deals – eight Under the existing agreement with Glencore, Evolution was paying
acquisitions and four divestments. for 30% of the operating costs and capital of the operation. Outside
Executive chairman Jake Klein described the most recent of those of the agreed life-of-mine area, the company had a 49% interest
high-profile transactions – the $1 billion purchase of Glencore’s in any gold, copper and silver production and was responsible for
interest in the Ernest Henry copper-gold mine in Queensland – as 49% of the operating costs.
the “biggest and best” in the company’s storied history. Concentrate from Ernest Henry will continue to be treated at
Just days after celebrating its 10-year anniversary, Evolution Glencore’s Mt Isa smelter, with metal refined via the Swiss
announced it would assume operational control of Ernest Henry in multinational trading company’s refinery in Townsville.
early 2022, a little over five years after first entering into a lucrative Klein admitted it was very unlikely his company would ever have
agreement with Glencore for 100% of the gold and 30% of the been able to lay claims for full ownership of Ernest Henry without
copper and silver produced within an agreed life-of-mine area. the existence of that initial agreement for an economic interest in
Full ownership of Ernest Henry, about 38km north-east of the operation.
Cloncurry, is expected to reduce Evolution’s group AISC by 12% “There were a lot of sceptics when we did that acquisition and I
on an annualised basis, by virtue of treating the copper as a by- think now it’s been recognised as a very unique and innovative
product credit. transaction which was undoubtedly the stepping stone to giving
Klein said the $1 billion price tag – $800 million upfront and us full ownership,” Klein said.
$200 million payable on the first anniversary of the transaction “Our relationship with Glencore was very important in getting
completion – was worth every cent. us an exclusive bilateral engagement on the balance of this
“Undoubtedly this is the biggest and best transaction in our asset. We did have pre-emptive rights, but fundamentally it was
history,” Klein told GMJ. the relationship and Glencore’s commitment to honouring their
“It’s been a fabulous asset for us since 2016 when we acquired word that if they did consider selling the asset that we would be
the economic interest. The $880 million we paid at the time has approached first.”
already returned $1.2 billion, and last financial year returned $309 On a gold alone basis, Ernest Henry churns out 85,000 ozpa.
million in cash. However, the scale of the operation is better reflected when
“The transition to full ownership gives us the ability to focus on the measured in gold equivalent terms of 380,000 ozpa. Evolution has
growth of the asset because it’s more important to us. It has been increased its copper guidance for FY2022 to 34,000-38,000t and
very well operated by Glencore, but it’s a relatively small asset 60,000t for the next two financial years.
within their very large portfolio. For Evolution, it’s a cornerstone Full ownership of Ernest Henry means Evolution now boasts four

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