Out of the bag: Here’s why Navarre is now the newest gold producer on the block

Navarre has officially joined the ranks of Queensland gold producers after completing its acquisition of Evolution Mining’s fully-operational Mt Carlton.

The deal is immediately transformational for Navarre – with its economic interest in the Mt Carlton project (which has produced about 700,000oz of gold since 2013) – backdating from 1 October 2021.

This means Navarre Minerals (ASX:NML) will already have more than two months of free cashflow already in the bank, rather significant over the first year of ownership at current gold prices.

Remember: Evolution Mining (ASX:EVN) forecast in August that Mt Carlton would produce between 45,000oz to 50,000oz in the 2022 financial year. With gold currently going for about US$1,770 ($2,492) an ounce, Carlton could be generating revenues of between $112.1m and $124.6m, most of which will make its way on to Navarre’s balance sheet.

Margins are also likely to be substantial given the all-in sustaining cost (AISC) forecast of between $1,650 and $1,700 per ounce.

Little wonder then that managing director Ian Holland said the company was extremely pleased to complete the transaction.

“The Mt Carlton Operations are an excellent fit for Navarre as we welcome the on-site team into the growing Navarre family,” he added.

“We are excited at both the production and exploration potential at Mt Carlton and look forward to unlocking this value over the coming years for all stakeholders.”

Clear, greenfield growth potential

In addition to already flowing cash, Navarre’s new flagship also contains clearly identified near mine and greenfield exploration upside within the 815sqkm tenement package that will underpin future mine life extension and potential expansion.

These include:

mineralisation at the V2 pit extending beyond existing planned extraction
extent of underground mineralisation at V2 remaining untested
underground mining at A39
Mt Carlton United ore body remaining open at depth and along strike
Telstra Hill open pit a likely source of supplemental ore once historical drilling is verified

Other potential supplements include the nearby Crush Creek deposit, which currently hosts a resource of 126,000oz of gold grading 3.5 grams per tonne (g/t) that was delineated after just nine months of concentrated drilling.

Mt Carlton produced 58,371oz of gold in the 2021 financial year at an AISC of $1,937 per oz through its 950,000 tonne per annum plant.

Transaction terms

Navarre has paid Evolution $40m in cash ($26.8m) and shares ($13.2m) to close the transaction.

It will also pay up to $25m upon the realisation of certain agreed gold production milestones from future development of the Crush Creek project and up to another $25m on future quarterly gold production from Mt Carlton when the average spot gold price exceeds $2,250/oz.

This article was developed in collaboration with Navarre Minerals, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.