Glencore has agreed to sell a 30 percent stake and all of the gold and part of the copper output from its Ernest Henry copper-gold mine in Australia to Evolution Mining for A$880 million ($670 million) as part of its plans to reduce debt.
Under the agreement, Evolution will acquire all future gold and 30 percent of future copper and silver produced from the LoM Area at the mine, the companies announced on Wednesday.
Glencore will purchase the copper and silver payable (in concentrate) delivered to Evolution for cash at market value.
Evolution will also contribute 30 percent of production and capital costs associated with copper concentrates in respect of the LoM Area.
Both companies have also entered into a strategic alliance in respect of potential future regional acquisitions and the parties have made a commitment to cooperate on exploration activities in the region surround Ernest Henry, Evoluation added.
This transaction forms part of Glencore’s debt reduction plans announced on 7 September 2015, noted Glencore.
The deal – still subject to regulatory approvals – is expected to close by the end of fourth quarter 2016.
This agreement recognises the Ernest Henry mine as a world class copper-gold-silver mining operation with significant potential going forward, Glencore said.
Glencore owns 100 percent of Ernest Henry Mining which owns and operates the mine. Glencore will continue to manage the day-to-day operations at the mine.
The mineral resource at the mine in Queensland is estimated at 96.1 million tonnes grading 1.17 percent copper and 0.59 g/t gold for 1.1 million tonnes copper metal and 1.8 million ounces gold. The processing plant currently has capacity of around 8.5 million tonnes per year and is scalable up to around 11 million tonnes per year.
The Australia-listed Evolution owns and operates seven gold mines in Queensland, New South Wales and Western Australia. Its gold production totalled 803,476 ounces in fiscal 2016.
Glencore will report its half-year results later on Wednesday.