Australia-based Evolution Mining has signed a deal to acquire the Red Lake gold complex from Newmont Goldcorp in Canada for $375m in cash.

Under the terms of the agreement, the company will also pay an additional $100m in contingent consideration upon the discovery of new resources.

Located in western Ontario, Red Lake is an underground gold mining complex comprising the Red Lake and Campbell complexes.

Evolution has committed to investing $100m on existing operations and a further $50m in exploration at Red Lake over the first three-year period after the deal is completed.

In 2018, 276,000 ounces of gold at an all-in sustaining cost of $988 per ounce was produced at Red Lake. The site is forecast to produce 150,000-160,000 ounces of gold at an AISC of $1600/ounce this year.

The transaction of the Red Lake gold complex will be funded by a new five-year $407m loan facility

The company said that the acquisition will be financed through an A$600m ($407m) loan facility of a five-year term.

Evolution Mining executive chairman Jake Klein said: “Red Lake is an undercapitalised asset which, through a committed investment in development and exploration, is intended to become a cornerstone asset in the Evolution portfolio.

“The camp has significant exploration potential which, coupled with its relatively unexplored recent past, provides significant upside potential for Evolution to extend the longevity of the operation well beyond its current 13-year life of mine plan.”

Under the $100m contingent payment terms, Newmont Goldcorp will receive $20m from Evolution Mining over a 15-year period for each one million ounces of new gold resources added to the existing Red Lake resource base.

Newmont Goldcorp noted that the contingent payment is applicable to the first five million ounces of new resources.

The company intends to use finances from the deal to support its capital allocation priorities of returning cash to shareholders, maintaining an investment-grade balance sheet, and investing in a new portfolio.

Newmont Goldcorp president and CEO Tom Palmer said: “This transaction both strengthens our balance sheet and provides ongoing exposure to new discoveries at Red Lake.

“Evolution is a highly respected and responsible gold producer who is committed to the success of Red Lake and who we believe will prove a great partner for surrounding communities and stakeholders.”

The transaction is expected to be completed in the first quarter of 2020.