Newmont Goldcorp (NYSE: NEM, TSX: NGT) has agreed to sell its 50 percent stake in Kalgoorlie Consolidated Gold Mines (KCGM) to Australia’s Northern Star Resources Limited (ASX: NST) (Northern Star).
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. “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 Australia-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 Company 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 favourable gold mining jurisdictions.
Newmont expects to provide an update to its previously announced 2020 guidance and longer-term outlook in early 2020. In early December, Newmont provided the following 2020 outlook for its 50 per cent interest in KCGM:
Attributable gold production: 285,000 ounces Gold costs applicable to sales (CAS): $915 per ounce Gold all-in sustaining costs (AISC): $1,035 per ounce Total capital expenditures: $25 million Newmont has the strongest and most sustainable portfolio of operations, projects and exploration prospects in the gold sector. These assets allow the Company to sequence profitable projects in its unmatched pipeline to sustain stable gold production over a decades-long time horizon in top-tier jurisdictions around the globe.
Newmont is the world’s leading gold company and a producer of copper, silver, zinc and lead. The Company’s world-class portfolio of assets, prospects and talent is anchored in favourable mining jurisdictions in North America, South America, Australia and Africa. Newmont is the only gold producer listed in the S&P 500 Index and is widely recognised for its principled environmental, social and governance practices. The Company is an industry leader in value creation, supported by robust safety standards, superior execution and technical proficiency. Newmont was founded in 1921 and has been publicly traded since 1925.