Newmont Mining has agreed to acquire the Cripple Creek & Victor (CC&V) gold mine in Colorado, USA, from AngloGold Ashanti for $820 million in cash, plus a 2.5% net smelter return royalty on potential future gold production from underground ore. CC&V currently operates as a surface mine that delivers oxidized ore to a crusher and valley leach facility. The mine produced 211,000 oz of gold in 2014 at all-in sustaining costs of $1,026/oz.
A $585 million CC&V mine expansion program that includes a new leach pad and recovery plant and a new mill is about two-thirds complete. Completion of the project will lift the mine’s gold production to between 350,000 and 400,000 oz/y by 2017 at all-in sustaining costs between $825 and $875/oz and will extend mine life to at least 2026.
Newmont will fund the acquisition with net proceeds from a common equity issuance of 29 million shares, supplemented by cash from its balance sheet.
Newmont President and CEO Gary Goldberg said, “CC&V represents a value-accretive opportunity for Newmont to improve mine life and costs in a favorable 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. We also look forward to learning from CC&V’s experts and welcoming their experienced workforce to the Newmont team. Funding the acquisition with equity allows Newmont to maintain financial flexibility while continuing to develop profitable projects.”
AngloGold Ashanti CEO Srinivasan Venkatakrishnan said, “After a competitive bidding process, we’re pleased to have arrived at a transaction that recognizes the value of this asset. This deal significantly de-risks the balance sheet without diluting our shareholders, and places us in a much stronger financial position. It puts $820 million into our bank account, saves $200 million in capital expenditure that would be required to complete the CC&V expansion, and gives us continued exposure to the asset through an uncapped royalty on future underground production.”
The transaction is expected to close in the third quarter of 2015, subject to regulatory approvals and the satisfaction of other conditions precedent.
CC&V operations are located in the historic Cripple Creek mining district in the mountains west of Colorado Springs, Colorado, about 100 miles from Newmont’s corporate headquarters in Denver. The district was discovered in 1890 and produced more than 22 million oz of gold from as many as 500 mines between 1890 and 1910. The current CC&V operations came into production in 1995.
Zijin Extends Reach With Kamoa and Porgera Purchases
Zijin Mining, China’s largest gold producer and its second largest copper producer, announced separate agreements with Ivanhoe Mines and Barrick Gold in late May to acquire significant stakes in Ivanhoe’s Kamoa copper development project in the Democratic Republic of the Congo (DRC) and Barrick’s Porgera gold mine in Papua New Guinea.
Under terms of the Zijin-Ivanhoe agreement, Zijin will buy a 49.5% interest in Kamoa Holding Ltd., an Ivanhoe subsidiary that currently owns 95% of the Kamoa project, for an aggregate consideration of $412 million. The government owns the remaining 5% and has an option to purchase up to an additional 15%.
Under the terms of the Zijin-Barrick agreement, Zijin will acquire a 50% interest in Barrick (Niugini) Ltd. (BNL) for $298 million in cash. BNL owns 95% of the Porgera mine and manages it. Under the new structure, Barrick and Zijin will jointly control BNL. The transaction is expected to be completed in the third quarter of 2015.
The remaining 5% participating interest in Porgera is held by Mineral Resources Enga Ltd. and is divided between the Enga provincial government (2.5%) and local landowners (2.5%).