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Newmont Mining Announces Deals

 NEM  Gold and copper producer Newmont Mining Corp. (NYSE: NEM – $24.92) announced that it had agreed to sell its Waihi operations in New Zealand to OceanaGold Corp. for $101 million. Newmont, which is based in Greenwood Village, Colo., said the deal strengthens its balance sheet and gives it more financial flexibility. In addition to the $101 million, the deal also includes a $5 million contingent payment and a 1% royalty on a recent discovery north of Waihi’s current operations. Newmont also said that it will buy the Cripple Creek & Victor gold mine in Colorado from AngloGold Ashanti and proposed a sale of 29 million shares in common stock to pay for the transaction. The producing operation will be purchased for $820 million plus a 2.5% net smelter return royalty for gold production from potential future underground ore. The mine will add 350,000 to 400,000 ounces of gold per year in 2016 and 2017. Newmont’s earnings and cash flow should progress nicely this year, assuming gold averages $1,200 an ounce. Meanwhile, the Turf Vent Shaft in Nevada and the new Merian mine in Suriname should keep gold production on the rise over the next couple of years. A small allocation of NEM can be held in a well-diversified aggressive account for eventual recovery.



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