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Researched by Industrial Info Resources (Sugar Land, Texas)--Newmont Mining Corporation's (NYSE:NEM) (Denver, Colorado) purchase of the Cripple Creek & Victor (CC&V) surface gold mine in Colorado falls in line with the company's strategy of replacing its higher-cost, shorter-life assets with less expensive, more enduring ones, according to Newmont executives.
Newmont announced Tuesday it will buy the mine from AngloGold Ashanti Limited (NYSE:AU) (Johannesburg, South Africa) for $820 million, plus a 2.5% net smelter return royalty for gold production from potential future underground ore. Industrial Info is tracking two CC&V expansion projects worth $785 million. The open pit mine is located near Florissant, Colorado, about 100 miles southwest of Denver.
Newmont plans to fund the acquisition by issuing 29 million common shares, supplemented with cash from company reserves. AngloGold Ashanti said the sale will help it simplify its portfolio, as well as put $820 million in its bank account.
The acquisition is anticipated to add between 350,000 and 400,000 ounces of gold per year in 2016 and 2017 to Newmont's production, at all-in sustaining costs of between $825 and $875 per ounce, which is in keeping with the company's goal of holding such costs under $1,000 per ounce.
In 2014, CC&V produced 211,000 ounces of gold, resulting in an adjusted gross product of $48 million. The mine began producing gold in 1995 and is Colorado's leading producer.
The mine is permitted to run through 2026 at the current production rates, according to Newmont.
Newmont is "clearly progressing on our strategy to strengthen our portfolio by replacing higher-cost, shorter-life assets with lower cost, longer life assets in favorable jurisdictions," said Chief Executive Officer Gary Goldberg during a conference call. On June 5, Newmont announced it reached an agreement to sell its Waihi open pit gold mine in New Zealand to OceanaGold Corporation (Melbourne, Australia) for $101 million in cash, a $5 million contingent payment and a 1% net smelter royalty.
Newmont is already familiar with open pit and heap leach operations, and the CC&V mine is located in Colorado's historic mining district, "so we understand how it works and we know the neighborhood," Goldberg said. He added he believes Newmont can lower direct mining costs by 10% at CC&V and improve mill recoveries by 2%.
The mine is two-thirds of the way through a $585 million expansion, which includes a new mill to augment production, a new leach pad and a recovery plant. The mill started production in the first quarter and is expected to reach full production later this year, Goldberg said. He added there is potential further growth in both surface and underground operations, but those "require further evaluation."
Industrial Info is tracking 20 active Newmont mining projects worth $11.22 billion. This includes 11 projects, valued at $9.7 billion, which are in the planning phases; and nine projects, valued at nearly $1.5 billion, that are in the construction phases.
For related information, see February 23, 2015, article - Newmont Mining Takes Hit from Prices, Divestments in 2014, Puts 2015 Sustaining Capex as High as $950 Million.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Newmont announced Tuesday it will buy the mine from AngloGold Ashanti Limited (NYSE:AU) (Johannesburg, South Africa) for $820 million, plus a 2.5% net smelter return royalty for gold production from potential future underground ore. Industrial Info is tracking two CC&V expansion projects worth $785 million. The open pit mine is located near Florissant, Colorado, about 100 miles southwest of Denver.
Newmont plans to fund the acquisition by issuing 29 million common shares, supplemented with cash from company reserves. AngloGold Ashanti said the sale will help it simplify its portfolio, as well as put $820 million in its bank account.
The acquisition is anticipated to add between 350,000 and 400,000 ounces of gold per year in 2016 and 2017 to Newmont's production, at all-in sustaining costs of between $825 and $875 per ounce, which is in keeping with the company's goal of holding such costs under $1,000 per ounce.
In 2014, CC&V produced 211,000 ounces of gold, resulting in an adjusted gross product of $48 million. The mine began producing gold in 1995 and is Colorado's leading producer.
The mine is permitted to run through 2026 at the current production rates, according to Newmont.
Newmont is "clearly progressing on our strategy to strengthen our portfolio by replacing higher-cost, shorter-life assets with lower cost, longer life assets in favorable jurisdictions," said Chief Executive Officer Gary Goldberg during a conference call. On June 5, Newmont announced it reached an agreement to sell its Waihi open pit gold mine in New Zealand to OceanaGold Corporation (Melbourne, Australia) for $101 million in cash, a $5 million contingent payment and a 1% net smelter royalty.
Newmont is already familiar with open pit and heap leach operations, and the CC&V mine is located in Colorado's historic mining district, "so we understand how it works and we know the neighborhood," Goldberg said. He added he believes Newmont can lower direct mining costs by 10% at CC&V and improve mill recoveries by 2%.
The mine is two-thirds of the way through a $585 million expansion, which includes a new mill to augment production, a new leach pad and a recovery plant. The mill started production in the first quarter and is expected to reach full production later this year, Goldberg said. He added there is potential further growth in both surface and underground operations, but those "require further evaluation."
Industrial Info is tracking 20 active Newmont mining projects worth $11.22 billion. This includes 11 projects, valued at $9.7 billion, which are in the planning phases; and nine projects, valued at nearly $1.5 billion, that are in the construction phases.
For related information, see February 23, 2015, article - Newmont Mining Takes Hit from Prices, Divestments in 2014, Puts 2015 Sustaining Capex as High as $950 Million.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
