AngloGold Ashanti Disposes US Asset

US gold major Newmont Mining on Monday announced that it would buy South African miner AngloGold Ashanti’s Cripple Creek and Victor (CC&V) mine, in Colorado, for about $820-million in cash and a net smelter return royalty. In a regulatory filing, Newmont on Monday also announced a stock offering of about 29-million shares to fund the acquisition, which would be supplemented with cash from the company’s balance sheet.

The deal also included a 2.5% net smelter return royalty for gold output from potential future underground ore. The CC&V open pit mine was currently the largest Colorado gold producer, accounting for about 211 000 oz of gold and about 110 000 oz of silver last year.

AngloGold, the world’s third largest gold miner by output, in April, revealed that it was looking for a partner or buyer for the mine as it attempted to reduce its $3.1-billion debt by at least $1-billion over the next one to three years. Large gold producers globally, including world leader by output Barrick Gold, were selling noncore assets in efforts to reduce debt and repair balance sheets in the sustained weak metals price environment.

“CC&V represents a value-accretive opportunity for Newmont to improve mine life and costs in a favourable jurisdiction. Consistent with what we’ve achieved elsewhere, we believe we can lower direct mining costs by up to 10% through improved productivity and optimization,” Newmont president and CEO Gary Goldberg said. He noted that Newmont would keep CC&V’s existing workforce.

The mine’s expansion, which included a new leach pad and recovery plant, and a new mill to improve production, was about two-thirds complete. Acquiring CC&V would potentially add between 350 000 oz/y and 400 000 oz/y of gold to Newmont’s production in 2016 and 2017, at all-in sustaining costs of between $825/oz and $875/oz.

Until the CC&V acquisition had closed in the third quarter, subject to regulatory and other customary approvals, including permission from the South African Reserve Bank, Newmont intended to place the net proceeds from the stock offering in short-term liquid investments. Should the CC&V acquisition not close, Newmont would use the net proceeds for general corporate purposes, including paying back debt, funding exploration, developing its project pipeline, paying dividends or other forms of capital returned to shareholders.

Citigroup Global Markets, JP Morgan and HSBC Securities would act as joint book-running managers for the stock offering. Citi acted as lead financial adviser to Newmont, with Goldman Sachs also providing financial advice and Davis Graham & Stubbs acting as legal adviser for the property transaction. It is our preference that if you wish to share this article with others you should please use the following link: http://www.miningweekly.com/article/newmont-to-buy-colorados-largest-gold-mine-from-anglogold-for-820m-2015-06-08


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