Newmont Mining Corp. will acquire the Cripple Creek & Victor gold mine in Colorado from AngloGold Ashanti Ltd. for $820 million in cash, plus a 2.5% net smelter return royalty for gold production from potential future underground ore.

“The Cripple Creek & Victor gold mine represents a value-accretive opportunity for Newmont to improve mine life and costs in a favorable jurisdiction,” said Gary Goldberg, Newmont president and CEO. “Consistent with what we’ve achieved elsewhere, we believe we can lower direct mining costs by up to 10% through improved productivity and optimization. We also look forward to learning from their experts and welcoming their experienced workforce to the Newmont team.”

The Cripple Creek & Victor gold mine’s expansion — which includes a new leach pad and recovery plant, and a new mill to augment production — is about two-thirds complete. Acquiring it will support Newmont’s strategy to lead the gold sector in value creation by adding between 350,000 and 400,000 oz per year (oz/y) of gold in 2016 and 2017 at all-in sustaining costs of between $825/oz and $875/oz. The move also strengthens Newmont’s reserve base.

Newmont has generated nearly $1.5 billion through asset sales over the last two years. The company lowered its all-in sustaining costs by 18% and its net debt by $1.4 billion in the first quarter of 2015 compared to the prior year, and remains on track to deliver new, profitable gold production from its organic growth projects. These include the Turf Vent shaft in Nevada, producing in late 2015; Merian in Suriname, producing in late 2016; and Long Canyon Phase 1 in Nevada, producing in 2017.

The Cripple Creek & Victor transaction is expected to close in the third quarter of 2015, subject to regulatory approvals and the satisfaction of other conditions precedent.

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