Ramelius buys Evolution's Edna May for $90m

Ramelius Resources is set to become a 200,000 ounces per annum gold producer after acquiring Evolution Mining’s Edna May operation near Merredin for up to $90 million in cash and shares.

Ramelius will pay $40 million in cash to acquire the mine, with a further $50 million to be paid in cash, royalties and/or shares.

Edna May is of one of Evolution’s two producing mines in Western Australia, with the larger being its Mungari mine.

The acquisition will boost Ramelius’s annual gold production by about 54 per cent, with up to 205,000oz expected to be produced across its operations in the 2018 financial year.

“The acquisition of Edna May represents the next step in our stated ambition to build on the strength of our existing operations at Mt Magnet and Vivien,” Ramelius managing director Mark Zeptner said.

“Upon completion, we become a 200,000ozpa gold producer, with all operations within a one-hour flight from Perth.

“Not only does this acquisition drive a significant increase in group mineral resources and ore reserves, as a going concern it also delivers excellent returns on our initial $40 million investment with minimal capex imposts.”

Evolution chairman Jake Klein said Edna May was a founding asset of the company and its predecessor company, Catalpa Resources.

“It formed an important part of the development of both companies,” he said.

“Evolution has grown significantly in recent years and Edna May is no longer a core asset of the company.

“In line with improving the quality of the portfolio, the decision to sell Edna May will lower our all-in sustaining costs by about $30 per ounce in FY18. Our average mine life based on reserves will increase from 8.3 years to 8.7 years.”

Allens acted as legal adviser to Evolution, while Adelaide Equity Partners acted as financial adviser to Ramelius.

DMAW Lawyers acted as legal adviser to Ramelius.

Shares in Evolution were down 0.2 per cent to $2.40, while Ramelius shares were down 3.2 per cent to 38.7 cents each at midday.