Evolution Mining has signed a binding agreement to divest its Mt Carlton gold mine, including the Crush Creek project, in Australia to Navarre Minerals for up to $65m (A$90m).

Of the total deal consideration, Evolution will receive $29m (A$40m) upon completion of the transaction. This amount would be a mix of cash and equity.

The firm has agreed to take part in Navarre’s equity raise up to a shareholding of a maximum of 19.9%, worth approximately $14.5m (A$20m).

Evolution will receive up to A$25m that is payable by Navarre on cumulative gold production milestones from Crush Creek, with A$5m to be paid on achieving 50,000oz, another A$5m on achieving 100,000oz and A$15m on reaching 175,000oz.

The firm will also get a contingent consideration of up to A$25m that is payable in the form of a 5% gold price linked royalty where the average spot gold price is found to be more than A$2,250/oz in a particular quarter.

This royalty amount needs to be paid from 1 July 2023 for a period of up to 15 years on production from the Mt Carlton and Crush Creek mines.

Evolution Mining executive chairman Jake Klein said: “Mt Carlton was Evolution’s first development project and has generated excellent returns for shareholders since it was commissioned in 2013.

“With the Company focussed on delivery of growth projects at the cornerstone assets in the portfolio, we believe now is the time to hand Mt Carlton over to an emerging gold producer who can focus on extending the operation’s mine life.

“Evolution would like to thank our employees, contractors, suppliers, the traditional custodians of the land the Birriah People, and the local community for their contribution to Mt Carlton’s success.”

The sale is a part of Evolution’s corporate strategy to upgrade its portfolio quality by either acquisition or divestment.

Navarre expects the transaction to transform it into a gold producer with exploration assets in Victoria and Queensland.

The transaction is slated for completion in the December 2021 quarter.

Navarre’s economic interest in Mt Carlton has already begun from 1 October.