By Nicole Mordant
Newmont Mining Corp has agreed to buy the Cripple Creek & Victor gold mine in Colorado from AngloGold Ashanti Ltd for $820 million, giving the world’s No. 2 gold producer an expanding asset in a mining-friendly jurisdiction.
The acquisition is an opportunity for Colorado-based Newmont to improve its mine life and costs at a time when the mining industry has been in a slump for nearly four years.
For South African-based AngloGold, the world’s third-biggest gold producer, the cash from the sale will help reduce its $3.1 billion debt pile and lower financing costs.
“This deal significantly de-risks the balance sheet without diluting our shareholders, and places us in a much stronger position,” Srinivasan Venkatakrishnan, AngloGold’s Chief Executive said in a statement.
In addition to the cash payment, AngloGold will also receive a net smelter royalty on future underground production at the mine.[pro_ad_display_adzone id=”70560″]
Newmont will issue 29 million shares in a public offering to help fund the purchase.
Reuters reported last week that Newmont was in exclusive talks with AngloGold on the acquisition, citing two sources familiar with the matter.
“Consistent with what we’ve achieved elsewhere, we believe we can lower direct mining costs by up to 10 percent through improved productivity and optimization,” Gary Goldberg, Newmont’s CEO said in a statement.
(Reuters)
