01/05/2015 - 09:54

Evolution buys $9m Phoenix stake

01/05/2015 - 09:54

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Evolution Mining has bought a large stake in a local gold mining company with tenements near La Mancha's mines and processing plant near Kalgoorlie, which Evolution is also buying.

Evolution buys $9m Phoenix stake
Phoenix Gold's Castle Hill project near Kalgoorlie.

Evolution Mining has bought a large stake in a local gold mining company which owns tenements near La Mancha's mines and processing plant near Kalgoorlie, which Evolution is also buying.

Evolution has subscribed for up to 105.9 million shares in Phoenix Gold in two tranches at an average price of 8.5 cents a share, for $9 million.

It will give Evolution a 19.9 per cent shareholding in Phoenix, which owns tenements (including its flagship Castle Hill project) near La Mancha’s Frog's Leg and White Foil gold mines and the 1.5 million tonnes per annum Mungari processing plant.

“The close proximity of the Phoenix tenements to the newly built Mungari plant provides obvious synergies and further strengthens our position in this important region following the proposed La Mancha transaction,” Evolution executive chairman Jake Klein said.

“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.”

Evolution said the Phoenix tenements were geologically similar to the Frog's Leg and White Foil mines.

Last week, Evolution announced it had finalised its purchase of La Mancha’s assets in exchange for 322 million shares worth about $300 million.

Upon completion of the Phoenix transaction, Evolution will nominate a director of its choosing to Phoenix’s board.

Phoenix said having Evolution as a new strategic partner meant it could start work in the June quarter on an accelerated exploration program on its Zuleika shear gold projects.

Managing director Jonathan Price said the agreement the investment would provide additional financial capacity for the company to advance its growth strategy.

Phoenix plans to allocate 60 per cent of the funds towards exploration at Zuleika.

Evolution shares lost 2.5 per cent to 97.5 cents a share at 9:45am.

Phoenix Gold shares gained 16.4 per cent to 9.2 cents.

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