Transaction increases proceeds from 2019 asset sale agreements
to $1.4 billion
Newmont (NYSE: NEM, TSX: NGT) (Newmont or the Company) 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, Australian-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,i 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 favorable 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 outlookii for its 50
percent 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
ounceiii
- 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.
About Newmont
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 favorable 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 recognized 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.
Cautionary Statement Regarding Forward-Looking
Statements
This release contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
which are intended to be covered by the safe harbors provided for
under such sections. Forward-looking statements used herein may
include, without limitation, estimates and expectations regarding
the completion and receipt of proceeds from the sale of the
Company’s 50 percent stake in Kalgoorlie Consolidated Gold Mines
(KCGM) to Australia’s Northern Star Resources Limited (NST),
closing and receipt of proceeds from the sale of the Company’s
interests in Continental, closing and receipt of proceeds from the
sale of Red Lake, future return of capital to shareholders and
investment in projects, future balance sheet strength, and the
Company’s 2020 outook, including, without limitation, 2020
production and long-term production, CAS, AISC and capital
expenditure. Where the Company expresses an expectation or belief
as to future events or results, such expectation or belief is
expressed in good faith and believed to have a reasonable basis.
However, such statements are subject to risks, uncertainties and
other factors, which could cause actual results to differ
materially from future results expressed, projected or implied by
the “forward-looking statements.” The sale of the Company’s
interest in KCGM to NST remains conditional on approval from the
Western Australian Minister for Finance, Aboriginal Affairs and
Lands. If the govenmental approval is not satisfied or obtained on
or before 29 February 2020, the Company or NST can terminate the
agreement. The completion payment is subject to customary
adjustments for working capital and other matters. The purchase of
the Kalgoorlie power business and retention of the USD$25 million
fee (Option Fee) remains subject to uncertainty. The option terms
provide for (i) an exclusive option period of not more than 120
days (Option Period) and a right for NST to undertake due diligence
of the power business during the Option Period. Additionally, the
parties must negotiate in good faith to agree on the fair market
value of the power business and to enter into a binding agreement
before expiry of the Option Period. If the parties enter into a
binding agreement during Option Period, the Option Fee will be
deemed to form part of the purchase price. However if, after the
expiry of the Option Period, Newmont sells the Kalgoorlie power
business to a bona fide third party, then Newmont must refund the
Option Fee, less USD$2.5 million in recognition of the value of the
exploration tenements transferred and the cost of providing
transitional services. The Continental transaction also remains
subject to receipt of certain shareholder and regulatory approvals
and other closing conditions. The closing of the Red Lake
transaction remains contingent on the receipt of regulatory
approvals and satisfaction of conditions precedent. As such, no
guarantees can be made with respect to the closing of the
transactions or receipt of related proceeds. Estimates or
expectations of future events are based upon certain assumptions,
which may prove to be incorrect. See endnotes below for assumptions
related to outook. For a more detailed discussion of risks and
other factors that might impact future looking statements, see the
Company’s Quarterly Report on Form 10-Q for the quarter ended June
30, 2019 under the heading “Risk Factors”, filed with the U.S.
Securities and Exchange Commission (the “SEC”) and available on the
SEC website or www.newmontgoldcorp.com, as well as the Company’s
other SEC filings, including the most recent Quarterly Report on
Form 10-Q for the quarter ended September 30, 2019. The Company
does not undertake any obligation to release publicly revisions to
any “forward-looking statement,” including, without limitation,
outlook, to reflect events or circumstances after the date of this
news release, or to reflect the occurrence of unanticipated events,
except as may be required under applicable securities laws.
Investors should not assume that any lack of update to a previously
issued “forward-looking statement” constitutes a reaffirmation of
that statement. Continued reliance on “forward-looking statements”
is at investors' own risk.
__________________________________
i Investors are reminded that the extent to which the Company
repurchases its shares, and the timing of such repurchases, will
depend upon a variety of factors, including trading volume, market
conditions, legal requirements, business conditions and other
factors. The repurchase program may be discontinued at any time,
and the program does not obligate the Company to acquire any
specific number of shares of its common stock. As such, no
guarantees can be made with respect to the impact of the
program.
ii 2020 outlook projections used in this news release are
considered forward-looking statements and represent management’s
good faith estimates or expectations of future production results
as of December 2, 2019. Outlook is based upon certain assumptions,
including, but not limited to, metal prices, oil prices, certain
exchange rates and other assumptions. For example, 2020 Outlook
assumes $1,200/oz Au, $16/oz Ag, $2.75/lb Cu, $1.20/lb Zn, $0.95/lb
Pb, $0.75 USD/AUD exchange rate, $0.77 USD/CAD exchange rate and
$60/barrel WTI; AISC and CAS estimates do not include inflation,
for the remainder of the year. Assumptions used for purposes of
Outlook may prove to be incorrect and actual results may differ
from those anticipated, including variation beyond a +/-5% range.
Outlook cannot be guaranteed. As such, investors are cautioned not
to place undue reliance upon Outlook and forward-looking statements
as there can be no assurance that the plans, assumptions or
expectations upon which they are placed will occur.
iii AISC or All-in sustaining cost is a non-GAAP metric. AISC as
used in the Company’s outlook is a forward-looking statement and is
therefore subject to uncertainties. AISC is defined as the sum of
cost applicable to sales (including all direct and indirect costs
related to current gold production incurred to execute on the
current mine plan), remediation costs (including operating
accretion and amortization of asset retirement costs), G&A,
exploration expense, advanced projects and R&D, treatment and
refining costs, other expense, net of one-time adjustments,
sustaining capital and finance lease payments. See the Company’s
guidance release for a reconciliation of 2020 Gold AISC outlook to
2020 Gold CAS outlook for illustrative purposes. A reconciliation
has not been provided on an individual site or project basis in
reliance on Item 10(e)(1)(i)(B) of Regulation S-K because such
reconciliation is not available without unreasonable efforts.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191216005822/en/
Media Contact Omar Jabara
303-837-5114 omar.jabara@newmont.com Investor
Contact Jessica Largent 303-837-5484
jessica.largent@newmont.com
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