Newmont Goldcorp sells Super Pit stake

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Newmont Goldcorp Corp. [NGT-TSX; NEM-NYSE] on Tuesday December 17 announced the sale of its 50% stake in Kalgoorlie Consolidated Gold Mines Pty Ltd. (KCGM) and associated assets to Australian company Northern Star Resources Ltd. [NST-ASX] for US$800 million.

The deal includes the Kalgoorlie Super Pit Mine in Western Australia and is in line with Newmont Goldcorp’s promise to divest itself of up to US$1.5 billion worth of assets following the recent merger between Newmont Mining and Canada’s Goldcorp.

The Northern Star deal comes on the heels of the sale of Newmont Goldcorp’s Red Lake complex in northwestern Ontario to Evolution Mining Ltd. [EVN-ASX] of Australia for US$375 million in cash and contingent payments of up to US$100 million. On top of that, Newmont Goldcorp recently agreed to sell at 21.5% stake in Continental Gold Inc. [CNL-TSX, CGOF-OTCQX] for US$260 million.

Under the terms of the agreement, Newmont will receive US$800 million in cash for its interest in KCGM, including a US$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.

The US$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.

“The 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 Newmont Goldcorp President and CEO Tom Palmer.

“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,” he said.

The purchase price for the 50% stake in slightly higher that the amount received by Barrick Gold Corp. [ABX-TSX; GOLD-NYSE] which recently struck a deal to sell its 50% stake in KCGM to Saracen Mineral Holdings Ltd. [SAR-ASX] for US$750 million in cash.

The Super Pit gold mine ranks as one of Australia’s largest gold mines, with average annual production of 660,000 ounces. Operations began at KCGM in 1989 and the mine has produced 21 million ounces of gold over the last three decades.

The transaction delivers Northern Star a half share of one of the most significant gold systems in the world with an endowment of 80 million ounces and a spectacular gold content of 45,000 to 60,000 ounces per vertical metre, Northern Star said in a press release.

On Tuesday, Newmont Goldcorp shares eased 1.1% or 60 cents to $53.37. The shares are currently trading in a 52-week range of $40.01 and $54.87.

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