Newmont Goldcorp to sell its interest in Super Pit to Northern Star for $800 million

December 17, 2019

Newmont Mining Corp. has agreed to sell its 50 percent stake in Kalgoorlie Consolidated Gold Mines (KCGM), including the Super Pit Mine and its assets, to Australia’s Northern Star Resources Ltd. for $800 million. Once the transaction is completed the Super Pit Mine will have full Australian ownership for the first time. In November, Barrick Gold sold its 50 percent stake in the mine to Australian miner Saracen Mineral Holdings for $750 million (ME, Nov. 18).

Newmont Goldcorp reported that under terms of the agreement, Newmont will receive $800 million in cash for its interests in KCGM, inclusive of a $25 million payment that gives Northern Star specified exploration tenements, transitional services support and an option to negotiate exclusively for 120 days the purchase of Newmont’s Kalgoorlie power business for fair market value. The $25 million payment will be credited against the purchase price for the power business or returned to Northern Star if the power business is sold to a third party. The transaction is expected to close in early January following receipt of ministerial consent required under KCGM’s crown leases.

“This transaction generates exceptional value and further strengthens our financial position by increasing proceeds from our 2019 asset sale agreements to more than $1.4 billion,” said Tom Palmer, president and chief executive officer of Newmont Goldcorp. “Australia remains a core operating region for Newmont, and the sale of KCGM allows us to focus on investing in profitable growth and long-term value creation at our top-tier Tanami and Boddington complexes, in addition to our active exploration campaigns across the region. Northern Star is a well-established, Australian-based gold producer with a core competency in exploration, a commitment to community development, responsible environmental stewardship and, most importantly, excellence in safety.”

Combined with the previously announced agreements to sell Red Lake in Canada for $375 million and Newmont’s stake in Continental Gold for $260 million, the Newmont has meaningfully exceeded market expectations, with more than $1.4 billion in fair value cash transactions announced over the past month.

“Building on Newmont’s recently announced $1 billion share repurchase program, Northern Star’s all-cash offer supports Newmont’s disciplined approach to capital allocation, which includes strategically reinvesting in the business, strengthening the company’s investment-grade balance sheet and returning capital to shareholders. The sale of KCGM also further streamlines Newmont’s portfolio, with 12 top-tier assets located on four continents in the world’s most favorable gold mining jurisdictions,” Newmont said in a statement.

“The purchase of a 50 percent stake in the Kalgoorlie Super Pit meets our key strategic objectives of generating strong financial returns and growing our gold inventory fromTier-1 mines in Tier-1 locations,”said Northern Star executive chairman Bill Beament. “This is one of the world’s greatest gold systems, as shown by its 80 million oz endowment and the fact that it contains up to 60,000 oz per vertical meter. To put this in context, our Jundee Mine, which is itself a Tier-1 asset, contains around 13,000 oz per vertical meter.”

The Super Pit is one of the most significant gold systems in the world, with an estimated 80 million oz endowment and a world-class gold content of 45,000-60,000 oz per vertical meter.

The mine currently has an estimated reserve of 7.3 million oz and has produced on average 660,000 oz/year at an all-in sustaining cost of around A$1,100/oz over the last five years.



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