Glencore plc and Evolution Mining have entered into a long term agreement providing for delivery of gold and copper calculated by reference to production at the Ernest Henry Mine (EHM) in Queensland, Australia.
Evolution will have a 30% economic stake in the mine and be entitled to 100% of EHM gold production, subject to an agreed life of mine and block model.
Evolution will pay A$880 million to Glencore upon closing of the transaction as well as ongoing monthly cash contributions equal to 30% of production and capital costs associated with copper concentrates.
This transaction forms part of Glencore’s debt reduction plans initially announced on September 7, 2015. The transaction is subject to customary regulatory approvals and is expected to close by the end of quarter four of 2016.
Evolution will receive the equivalent of 30% of copper and silver payable and 100% of gold payable production from EHM. Glencore will purchase the copper and silver payable (in concentrate) delivered to Evolution for cash at market value.
This agreement recognises EHM as a world class copper-gold-silver mining operation with significant potential going forward. Glencore owns 100% of Ernest Henry Mining Pty Ltd, which owns and operates the Ernest Henry mine. Glencore will continue to manage the day to day operations at EHM.
Ernest Henry is a world-class copper-gold-silver operation near Cloncurry in northwest Queensland. It currently annually produces about 60,000 tonnes of copper and about 80,000 ounces of gold in copper concentrate that is processed into copper anodes and cathodes as part of the North Queensland Copper operations. The current life of mine extends to 2027.