Key Highlights

  • Carnaby is now a Wholly Owned Subsidiary of Evolution and has been removed from the ASX official list.
  • The transaction was valued at about A$213 million when it was announced in July.
  • Carnaby shareholders were offered 0.0682 new Evolution shares for each Carnaby share held.
  • An updated feasibility study on Greater Duchess is planned over the next 12 to 18 months.

Evolution Mining (ASX:EVN) has completed its Acquisition of Carnaby Resources, the Queensland copper-gold explorer that held the Greater Duchess project near Cloncurry. The transaction, valued at about A$213 million when it was announced in July, was carried out through a scheme of arrangement, under which Carnaby becomes a wholly owned subsidiary of Evolution and is removed from the ASX official list.

Carnaby's scheme booklet, registered with the corporate regulator in September, set out an indicative timetable with the scheme meeting on 26 October, the second court hearing on 29 October, a Record Date of 3 November, implementation on 10 November and delisting of Carnaby (ASX:CNB) on 11 November. Evolution's original target of completing the deal by mid-November has therefore been met.

Terms of the deal

Carnaby shareholders were offered 0.0682 new Evolution shares for every Carnaby share held at the record date. Evolution already held roughly 13.7 per cent of Carnaby, so the scheme covered the shares it did not own.

Ineligible foreign and small-parcel holders were to have their entitlements sold through a sale facility, while Carnaby Options were to be cancelled for cash.

A scheme of arrangement differs from a Takeover bid in that it requires approval from the target's shareholders at a meeting and then from the court. Once the court approves and the scheme becomes effective, it binds all shareholders, including those who voted against it. That structure allows an acquirer to secure full ownership in a single step, which in this case delivered Evolution complete control of Greater Duchess.

Glencore arrangements and Ernest Henry

A condition of the transaction was the termination of Carnaby's existing tolling and offtake agreements with Glencore. Concentrate from Greater Duchess is instead expected to be sold to Glencore under Evolution's existing Ernest Henry offtake arrangements.

The strategic logic rests on geography. Greater Duchess lies close to Ernest Henry, Evolution's copper-gold operation in north-west Queensland, and the company has said the project could add potential production of around 10,000 tonnes of copper a year to that hub. Chief executive Lawrie Conway said in July that the proximity of Greater Duchess "provides an opportunity to increase copper production at Ernest Henry".

What still has to be proven

The 10,000 tonne figure is a potential production estimate, not a committed output level, and it depends on further technical work. Evolution plans to complete an updated feasibility study on Greater Duchess over the next 12 to 18 months. That study will need to confirm mining methods, haulage or processing arrangements, costs and the timing of any development before a final Investment decision is made.

There are also practical questions that the available reporting does not resolve, including the total number of new Evolution shares issued, how quickly Greater Duchess material could be integrated into Ernest Henry's operations, and what approvals may be required. Integration risk, metal prices and cost Inflation could all influence the eventual economics.

For Evolution, the completed deal secures control of a nearby copper-gold asset that it already knew well as a shareholder. The next milestone the company has disclosed is the updated feasibility study, which should give a clearer view of how much Greater Duchess could contribute and when, and whether the project warrants a formal development decision alongside Ernest Henry.