Evolution Eyes Australian Spoils From Any Barrick-Newmont Deal

(Bloomberg) -- Australia’s second-biggest gold producer Evolution Mining Ltd. will compete to acquire any local assets hived off under a proposed mega-merger between North American majors Newmont Mining Corp. and Barrick Gold Corp.

Barrick will aim to sell some Australian assets, most likely to domestic buyers, if it succeeds in a takeover of Newmont, and has already had several conversations with interested parties, according to Chief Executive Officer Mark Bristow. Toronto-based Barrick has made a hostile $17.8 billion bid for its U.S. peer.

“We’d certainly be interested if he decided to dispose of those assets,” Evolution’s Executive Chairman Jake Klein said Monday in an interview with Bloomberg Television at an industry conference in Hollywood, Florida. “These things are potentially high-quality assets.”

Newmont has three major operations in Western Australia and the Northern Territory that together produce about 1.5 million attributable ounces. Barrick also holds a half-share in the Kalgoorlie Super Pit, a joint venture with Newmont. Before Barrick’s merger offer was announced, people familiar with the situation said last week the Canadian had studied teaming up on a deal with partners such as Australia’s Newcrest Mining Ltd.

While the discarded assets would attract wide interest, it may be a smaller field of parties that’d be able to raise capital and execute a deal, according to Klein. Sydney-based Evolution has carried about $1.5 billion of acquisitions since April 2015, including the $550 million purchase of Barrick’s Cowal operation in Australia.

“We’d at least be able to put our hand up and say ‘Remember us, we are the reliable group who can come up with the cash’,” Klein said in the interview.

Evolution would likely also be a seller of assets if it acquired new mines. The company wants to keep its portfolio focused on six to eight operations, according to Klein. “We don’t think bigger is necessarily better, we are much more focused on margin and profitability than on volume,” he said. “We are going to be active sellers of assets.”

The producer on Monday announced a A$41.3 million ($30 million) investment to add a 19.9 percent stake in Tribune Resources Ltd., an Australian company with a stake in a joint venture close to Evolution’s Mungari asset in Western Australia and operated by one of its competitors, Perth-based Northern Star Resources Ltd. The deal has offered Evolution exposure to the highest-grade reserves adjacent to Mungari, Klein said.

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