Barrick Gold has signed an agreement to sell its Cowal gold mine in New South Wales, Australia, to Evolution Mining in a deal worth $550m.

The company plans to use proceeds from the sale of Cowal gold mine in New South Wales to reduce debt by $3bn.

Barrick is set to close its office in Perth, Australia, and said that the divestment will also contribute to trim costs that are associated with this development.

"The sale of Cowal is consistent with the strategy we have outlined to create long-term value for our owners, making a significant contribution to our debt reduction target, while further focusing the geographic footprint of our portfolio."

Barrick Gold co-president Kelvin Dushnisky said: "The sale of Cowal is consistent with the strategy we have outlined to create long-term value for our owners, making a significant contribution to our debt reduction target, while further focusing the geographic footprint of our portfolio.

"We are pleased to have achieved a successful outcome following a competitive auction process in the first of several asset sales now underway."

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The Cowal gold mine has an estimated annual production of 230,000oz-260,000oz at an all-in sustaining cost (AISC) of A$850-A$900 per ounce, and is set to substantially reduce Evolution’s cost profile.

Upon closing the transaction, the company will have combined current annual production of 630,000oz-700,000oz.

The company plans to raise about A$248m ($194m) through a fully underwritten pro-rata accelerated renounceable entitlement offer to partly fund the transaction.

Furthermore, the balance will be funded by refinanced corporate credit facilities comprising an upsized A$300m ($234m) senior secured revolver and a new A$400m ($312m) senior secured term loan.

Located 40km north-east of West Wyalong, Cowal is a high-quality Australian gold asset and production at the mine is currently sourced from a single open-pit by employing conventional drill and blast, load and haul mining methods.