Newmont selling its half of KCGM in Australia

Newmont selling its half of KCGM in Australia

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Colorado-based Newmont Goldcorp Corp. has reached an agreement to sell its 50 percent share in Kalgoorlie Consolidated Gold Mines in Australia to an Australian company, Northern Star Resources Ltd., for $800 million.

“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 Newmont Goldcorp President and Chief Executive Officer Tom Palmer in the Dec. 16 announcement.

Newmont earlier announced agreements to sell the Red Lake mining operation in Canada for $375 million and the company’s stake in Continental Gold for $260 million.

Newmont has been operating KCGM for roughly 10 years with Barrick Gold Corp. owning the other half, but Barrick agreed in November to sell its 50 percent of KCGM to Saracen Mineral Holdings Ltd. for $750 million. Barrick’s deal closed Nov. 28.

Newmont and Barrick are also in the Nevada Gold Mines joint venture that combines its Nevada assets, with Barrick as operator. Greg Walker, the executive manager of Nevada Gold Mines, grew up in Kalgoorlie, according to the fall Mining Quarterly.

Barrick and Newmont Goldcorp are joint venture partners in Pueblo Viejo in the Dominican Republic, as well, with Barrick as operator.

Newmont also owns and operates the Tanami and Boddington gold-mining complexes in Australia.

“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 out top-tier Tanami and Boddington complexes, in addition to our active exploration campaigns across the region,” Palmer said.

Newmont stated that Northern Star will pay the $800 million in cash for its interests in KCGM, inclusive of a $25 million payment that gives Northern Star specified exploration rights, 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, according to Newmont, which expects the deal to close in early January after receipt of ministerial consent required under KCGM’s crown leases.

“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,” Palmer said.

Newmont forecast earlier this month that KCGM would produce 285,000 ounces of gold for its 50 percent share in 2020 and costs applicable to sales of $915 per ounce. KCGM’s operations include the Super Pit.

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