In an interesting turn of events, mid-tier miner Evolution Mining has picked up a sizeable stake in WA-based gold producer Tribune Resources (ASX:TBR) that was previously confiscated by ASIC.

Evolution (ASX:EVN) dropped $41.3m on just over 11 million shares, which gives the gold producer a 19.9 per cent stake in Tribune.

The majority partner in Tribune’s East Kundana joint venture is Evolution’s rival Northern Star Resources (ASX:NST).

The East Kundana project is located adjacent to Evolution’s 1.7-million-tonne-per-annum Mungari processing plant, which sits about 20km west of Kalgoorlie in Western Australia.

“While the underlying strategy has not been disclosed, EVN is also the owner/operator of the Mungari project, which consists of a relatively new processing plant and both an open-pit (White Foil) and underground (Frog’s Leg) mine,” RBC Capital Markets mining analyst Paul Hissey said.

“These assets are effectively exploiting the same mineralized trends as NST at both its wholly owned and JV operations adjacent a shared lease boundary.”

The news edged Tribune’s share price up 3.4 per cent to an intra-day peak of $4.01.

Tribune Resources (ASX:TBR) over the past year.
Tribune Resources (ASX:TBR) over the past year.

In January this year, Rand Mining and Tribune Resources rejected an “opportunistic” $150m offer for their share in the East Kundana joint venture from Northern Star.

Mr Hissey says the price Evolution paid for its stake values Tribune at around $200m — and potentially up to $300m for the stake that Northern Star doesn’t already own.

“This corresponds with a combined market cap for both TBR and RND of c.A$320m,” he said.

The East Kundana project currently hosts a resource of 10.54 million tonnes at 6.1 grams per tonne (g/t) for 2.06 million ounces of contained gold and a reserve of 6.15 million tonnes at 6.3g/t for 1.24 million ounces.

Typically “reserves” refer to discoveries that are commercially recoverable using existing technology, while “resources” are either not yet commercially viable or are mere speculation.

Both the resource and reserve at the project are high-grade, with anything over 5g/t falling into that category.

“We’re unsure of the end game; however, EVN’s entering the fray certainly ratchets up the activity in what is no doubt an appealing resource (the remaining stake in the JV) to both NST (given that it is the operator and could unlock synergies if it were to own the ground outright) and EVN, which has a mill nearby that is hungry for additional high-grade mill feed,” Mr Hissey said.

“In our opinion, NST may be more likely to baulk at price, which could preclude a bidding war, although it may well be that NST could gain the greater synergies by combining the operations/assets.

“Both of these scenarios also exclude the potential for NST to end up the operator of the entire district in due course.”

In November last year ASIC was left holding over 12 million shares, which represented 24 per cent of Tribune, after the Takeovers Panel ordered the stake be confiscated from the company’s managing director, Anton Billis.

The panel found that Mr Billis had a 60 per cent stake in the company via his own holdings and a number of associated holdings.

Mr Billis had amassed a 33.72 per cent stake in Tribune and also had a relevant interest in Rand Mining’s (ASX:RND) 26.32 per cent holding in the company.

Rand is one of Tribune’s partners in the East Kundana joint venture in the Eastern Goldfields of Western Australia. Tribune owns a 44.2 per cent stake in Rand.

The panel said Mr Billis’ relevant interest in Tribune had not been disclosed in a substantial holder notice at any time.

The panel ordered that the shareholding be vested into ASIC for sale at a later date.

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