PERTH (miningweekly.com) – Australian gold miner Evolution Mining has struck a deal with US gold major Newmont Goldcorp to acquire the Red Lake gold complex, in Ontario, Canada.

Red Lake, which Newmont acquired through its acquisition of Goldcorp in April, is the first mine for Evolution outside Australia. CEO Jake Klein said on Tuesday that Evolution had been actively looking at assets in Canada since 2017, as the country had low geopolitical risk and high geological potential.

Evolution agreed to pay Newmont $375-million in cash on the closing of the transaction, and up to an additional $100-million on the discovery of a new resource at Red Lake.

Under terms of the $100-million contingent payment, Evolution will pay Newmont $20-million for each one-million ounces of new gold resources added to the existing Red Lake resource base over a 15-year period. The contingent payment is applicable to the first five-million ounces of new resources.

Newmont CEO Tom Palmer commented in a separate statement that the major would continue to have exposure to new discoveries at Red Lake.

Red Lake is an underground gold mining complex comprising the Red Lake and Campbell complexes, which each consist of an underground mine and associated processing infrastructure, as well as the Cochenour mine.

During 2018, the mine produced 276 000 oz of gold at an all-in sustaining cost (AISC) of $988/oz, with the operation forecast to produce between 150 000 oz and 160 000 oz in the 2019 calendar year, at an AISC of around $1 600/oz.

"Red Lake is an under-capitalised asset which, through a committed investment in development and exploration, is intended to become a cornerstone asset in the Evolution portfolio," said Klein.

He added that the company had identified a range of opportunities to deliver an operational turnaround at Red Lake.

“The camp has significant exploration potential which, coupled with its relatively unexplored recent past, provides significant upside potential for Evolution to extend the longevity of the operation well beyond its current 13-year life-of-mine plan.

“We are confident that Evolution will be an excellent and committed steward of Red Lake and look forward to continuing Newmont’s track record of safe and sustainable operation for the long-term benefit of a broad range of stakeholders including the local workforce, regional communities and the Lac Seul and Wabauskang First Nations Groups.”

Palmer, meanwhile, noted that the transaction strengthened the company’s balance sheet.

Newmont intends to use proceeds from the transaction to support the company’s capital allocation priorities of returning cash to shareholders, maintaining an investment-grade balance sheet, and investing in its portfolio.

The sale of Red Lake forms part of Newmont's plans to divest up to $1.5-billion in assets following its $10-billion acquisition of rival Goldcorp, taking advantage of higher gold prices.

Palmer previously said that there would be no "fire sale" and that it was ready to "sit tight" on assets.