Evolution Mining bolsters copper with Northparkes acquisition as mine starts up surface ops

Evolution Mining has entered into a binding agreement to acquire an 80% interest in the Northparkes copper-gold mine in New South Wales from China’s CMOC Group Ltd for a total cash consideration of up to US$475 million. Sumitomo Metal Mining and Sumitomo Corporation will retain their 20% interest in the Northparkes JV. The deal will increase Evolution’s exposure to copper to ~30% of revenue on a FY24E basis. The transaction completion is expected to occur before the end of December 2023 and is not subject to any conditions precedent.

Evolution has also agreed to enter into an offtake agreement with IXM SA, a subsidiary of CMOC, under which IXM will purchase from Evolution copper concentrates produced from the Northparkes mine equal to Evolution’s 80% attributable interest over the life of mine’s existing Ore Reserves. In addition, Evolution will assume the obligations of CMOC Limited as guarantor under the Triple Flag Metal Purchase and Sale Agreement, under which Evolution will deliver a percentage of its attributable gold and silver production from Northparkes to Triple Flag over the operation.

Evolution says it is creating a portfolio of long-life gold & copper assets and that Northparkes represents an immediate cash generating asset plus is a well-established, long-life operation. Northparkes FY24E production (for Evolution’s 80% share) is expected to be 25,000 t of copper and 38,000 oz of gold. Infrastructure and management wise, Northparkes also works for Evolution given that it is quite close to its own Cowal gold operation which is now both surface and underground. The ore reserves (100%) at Northparkes stand at 101 Mt at 0.53% copper and 0.27 g/t gold with a mine life remaining of about 30 years plus a highly prospective geology. These reserves equate to contained 537,000 t copper and 880,000 oz gold.

Northparkes is a large underground mine, and Evolution brings its own experience there with the Ernest Henry gold mine plus the Cowal gold mine started its own underground operation in 2022. Northparkes uses block caving and sub-level caving. The mill is permitted to 8.5 Mt/y with a current mill capacity of 7.6 Mt/y. This is made up of ~6.5 Mt/y from underground operations which has been supplemented by stockpiles plus this year, Northparkes started open pit mining operations for the first time in nearly 10 years and is now operating two open pits – E31 and E31 North.

The majority of production is sourced from the E26 block cave – where capital development is completed, with additional production from E26 SLC, the mentioned open pits and stockpiles. Options are also available for E22 – the next production centre – including sublevel and block caving, while preserving future extensions and lower capital intensity. Looking at E26 is more detail, in 2022, the Lift 1 North (E26L1N) project was put into production. This was a block cave extension, mining the porphyries to the north of the E26L1 and E26L2 caves and has has established a significant ore source – over 40 Mt of copper-gold ore – ready to supply the ore processing plant for the next decade.

Underground mining at Northparkes is highly automated – as far back as 2011 it has been using Sandvik AutoMine and in 2015, Northparkes became one of the world’s most automated underground mines achieving 100% of production from automated loaders, using AutoMine Fleet to run six Sandvik LH514 units operated from surface – five electric with cable reels and one diesel. The mine has estimated that automation has boosted output by about 20%. The mine was also the first in the world to use the innovative direct tip “double-mouth” jaw-gyratory crusher. Developed by thyssenkrupp and now part of FLSmidth’s offering since it acquired thysssenkrupp’s mining business, it is based on the proven BK 63-75 design and included a new, patented, spider to give the opportunity to feed the crusher from both sides, thus removing the need for a primary crusher feed (buffer) hopper and primary apron feeder. This saves a lot of space underground. This double-mouth jaw gyratory followed the success of two single mouth units installed at the mine in 2003 and 2009.

Processing includes secondary surface crushing, stockpiles, grinding mills, froth flotation and storage. A traditional sulphide flotation process is used to recover copper and precious metals into copper concentrate containing gold and silver. It is designed to process both copper-gold oxide and sulphide ore. A new A$200 million surface secondary crushing and screening facility was recently installed with Sandvik crushers. Overall process recovery is averaging 83% Cu and 71% Au (YTD).