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DENVER: “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, Australian-based gold producer with a core competency in exploration, a commitment to community development, responsible environmental stewardship and, most importantly, excellence in safety.”
Newmont this week announced that it has successfully completed the sale of its 50 percent stake in Kalgoorlie Consolidated Gold Mines to Northern Star Resources Limited receiving cash proceeds of $800 million.
The terms of the agreement had stipulated Newmont to receiving $800 million in cash for its interests in the Kalgoorlie, Western Australia located mining operation 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. In the final agreement, the $25 million payment will be credited against the purchase price for the power business or $22.5 million would be returned to Northern Star if the power business is sold to a third party.
KCGM will now be a 50:50 Joint Venture between Northern Star Resources and Saracen Mineral Holdings Ltd, which recently bought out Barrick Gold’s stake in the mine and includes the Super Pit gold mine in Kalgoorlie, Western Australia, among other deposits.
“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,” Tom Palmer, President and Chief Executive Officer was quoted saying towards the end of 2019. “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, Australian-based gold producer with a core competency in exploration, a commitment to community development, responsible environmental stewardship and, most importantly, excellence in safety.”
“The purchase of a 50 per cent stake in the Kalgoorlie Super Pit meets our key strategic objectives of generating strong financial returns and growing our gold inventory from Tier-1 mines in Tier-1 locations”
Bill Beament, Executive Chairman
Northern Star Resources
Northern Star Resources Limited recently announced their pleasure in acquiring all the shares in Kalgoorlie Lake View Pty Ltd, which holds a 50% interest in Kalgoorlie Consolidated Gold Mines Pty Ltd (KCGM) through their Executive Chairman, Bill Beament including certain additional associated assets from Newmont. The acquisition is expected to bring about some reprieve for the miner who’s earlier investment in Pogo Mine took a hit in poor grades hurting its overall production and costs in the third quarter of 2019.
The acquisition will be immediately accretive to Northern Star on an EV/Reserves, EV/Resource, P/NAV basis and earnings per share in its first full financial year of ownership (FY2021).
Currently endowed with about 80 million ounces and a sparkling gold content variation estimated to be between 45,000 to 60,000 ounces per vertical metre, KCGM for the past two calendar years has been able operate at an AISC of US$913 per ounce producing about 590,000 ounces per annum.
Combined with the previously announced agreements to sell Red Lake in Canada for $375 million and the Company’s stake in Continental Gold for $260 million, Newmont has met its divestiture target of $1.0 to $1.5 billion, with more than $1.4 billion in cash proceeds expected to be received in the first quarter of 2020. The sale of KCGM further streamlines Newmont’s portfolio, with 12 top-tier assets located on four continents in the world’s most favorable gold mining jurisdictions.
“Newmont is pleased to complete the sale of KCGM to Northern Star and hand over the asset in good order to a well-established gold producer with a commitment to safety, community development and responsible environmental practices,” said Tom Palmer, President and Chief Executive Officer. “Proceeds from the transaction will support Newmont’s disciplined approach to capital allocation, which includes strategically reinvesting in the business, strengthening the Company’s investment-grade balance sheet and returning cash to shareholders,” Palmer added.
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.