Evolution Mining Limited has entered into a binding agreement with Glencore to acquire all shares in Ernest Henry Mining Pty Ltd, the owner of the world class Ernest Henry copper-gold mine located approximately 38 kilometres north-east of Cloncurry, Queensland for A$1 billion.
In November 2016 Evolution acquired an economic interest in Ernest Henry via a joint venture structure with the asset managed and operated by Glencore. Under the transaction, these joint ventures will expire, and Evolution will receive 100 per cent ownership and operatorship of the asset.
This will result in Evolution’s copper production increasing, lowering its All-in Sustaining Cost per ounce and cementing its position as one of the lowest cost gold producers in the world.
The economic effective date of Evolution’s interest in Ernest Henry is 1 January 2022. The transaction is expected to complete on 6 January 2022.
Additionally, a new offtake arrangement has been agreed for 100 per cent of Ernest Henry’s concentrate to be sold to Glencore on standard market terms that will also take effect from 1 January 2022.
Evolution’s Executive Chairman Jake Klein said: “We have long coveted to own Ernest Henry. It is a world-class asset in Australia and one which we know extremely well due to our successful investment in the asset in 2016 and proud that it will once again be 100 per cent Australian owned. The acquisition is consistent with our strategy, materially improves the quality of our portfolio and delivers both strong cash flow and mine life extension opportunities.
“The site management team have an outstanding track record of operational delivery and we are delighted they will be joining Evolution and look forward to working with them to make this an even better operation.
“We are also pleased to be continuing our strong relationship with Glencore and that the product will continue to be treated in the local region at their Mt Isa smelter and Townsville refinery.”
Ernest Henry commenced as an open pit mine in 1998 and transitioned to underground mining in 2011.
The current shaft underground mining operation employs a low-cost and highly efficient sub-level caving ore extraction method. There is also an underground primary crusher and ore handling system. Ore is brought to surface via a one kilometre shaft with a hoisting capacity in excess of 6 Mt per annum. The operation also has an effective and sophisticated above and below ground water management system.
Copper, gold and silver are recovered from the ore using traditional grinding and flotation methods in the concentrator. The plant has a current processing rate of ~6.8Mtpa (8.5Mtpa capacity and scalable to ~11Mtpa). The concentrator incorporates grinding (four mills), conventional flotation and dewatering. A single copper-gold-silver concentrate is produced by a rougher and a three-stage cleaning circuit. The concentrate is treated at Glencore’s Mt Isa smelter (~150km trucking distance) and metal is refined at Glencore’s Townsville refinery.
Glencore recently commenced a pre-feasibility study on the extension potential below the current mine footprint which is expected to be completed in the September 2022 quarter. The study activities will include confirmation of the capital estimate, mine design and production plan. Key decisions around the optimal materials handling solution and options for additional power will also be addressed. Drilling will continue to develop ore body knowledge with 15 kilometres planned during the 2022 calendar year.